Lords Sitting of 12 March 2003

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

The Archbishop of Canterbury
Rowan Douglas, Lord Archbishop of Canterbury—Was (in the usual manner) introduced between the Lord Bishop of London and the Lord Bishop of Durham.
The Duke of Norfolk—Sat first in Parliament after the death of his father.

Clerk of the Parliaments: Retirement of Sir Michael Davies, KCB
The Lord Privy Seal (Lord Williams of Mostyn): My Lords, it is my duty to notify your Lordships that I have received the following letter from the Clerk of the Parliaments, Sir Michael Davies:
"Dear Leader of the House, I should be grateful if you would inform the House that I have asked the Prime Minister to submit to Her Majesty the Queen my resignation from the office of Clerk of the Parliaments with effect from Monday, 14 July. The Prime Minister has indicated to me that Her Majesty will be informed.
I shall have held the office for some 6½years, during a period of very great change in the House of Lords. The composition of the House, its working practices and its administration have all been more fundamentally altered during my clerkship than during that of any of my predecessors. The issue of further House of Lords reform remains unsettled, but I believe that it is now right to make way for someone who will take forward the many management and procedural reforms which have recently been introduced.
It has been an immense privilege to have held my historic office at such a challenging time. I have enjoyed my 39 years in the House of Lords more than I can say. I cannot imagine a friendlier place in which to work and I shall take my leave with nothing but happy memories. I shall follow with great interest any progress towards further changes in the House of Lords, trusting that its current role in our parliamentary system is enhanced rather than diminished.
Please would you convey to all Members of the House my thanks for their friendship, co-operation and many kindnesses throughout my career.
Yours sincerely, Michael Davies".
Following receipt of Sir Michael's letter, I consulted the Lord Chancellor, the Leaders of the other two political Parties in the House and the Convenor of the Cross-Bench Peers, and it has been agreed by us all that a successor to Sir Michael should be appointed following a trawl among the staff of this House, the staff of the House of Commons and the staff of the devolved Assemblies. That decision should in no way be seen as a criticism of the manner in which Sir Michael's colleagues at the Table have been seen to perform their duties, but rather as a recognition that modern appointment procedures should apply to this very senior and crucial post. The timetable set out for the trawl should mean that the recommendation of a successor to Sir Michael can be made to Her Majesty early in May.
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I am sure that it will be your Lordships' wish, in due course, to pay tribute to the service of Sir Michael in this House. I am advised that the proper manner of doing that is for the Leader of the House to table a Motion recording the House's appreciation of Sir Michael's services.

Smoking
2.44 p.m.
Baroness Galeasked Her Majesty's Government:
How many people have successfully given up smoking due to the smoking cessation services; and how many people they would expect to give up smoking if smoking were to be banned in all workplaces.
Baroness Andrews: My Lords, between April 1999 and September 2002, over 481,000 people set a date to quit smoking with the help of NHS smoking cessation services. When followed up four weeks later, nearly 245,000 had successfully quit. There is good evidence that smoke-free workplaces encourage smokers to quit or to reduce consumption. Precise figures are not available for the United Kingdom.
Baroness Gale: My Lords, I thank my noble friend for that reply. Today is No Smoking Day so I ask the Minister what strategies are in place to assist people to give up smoking, bearing in mind that in the interests of promoting a healthy workforce, more effort should be made to protect people from passive smoking? Is she aware that sensitive groups, such as the 2 million people in this country who suffer from asthma, are affected by passive smoking in the workplace and that it could be a barrier to employment? Does she agree that more measures should be put in place to protect such people?
Baroness Andrews: Yes, my Lords. I can think of no better way to mark No Smoking Day than for the no smoking champion of the House of Lords to ask such a Question. We are committed to informing people about the dangers of passive smoking and to encouraging them in their workplace to persuade their employers to withdraw smoking facilities. We are funding new research projects to find out what employers can and will do in different workplaces, including small and medium enterprises where there is a real problem. The Department of Health is co-ordinating and funding tobacco control alliances in local areas to persuade people of the dangers of passive smoking. More recently we have been putting together new packages of public education and information resources in the media to raise awareness.
Baroness Northover: My Lords, does the Minister welcome, as I do, the World Health Organisation's draft convention on tobacco control? Does she recognise that as the first such global public health

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measure it is a significant breakthrough? Even though it has its limitations, will the Government sign up to it in May?
Baroness Andrews: My Lords, we certainly support the convention and have supported it all along. Some of our provisions are ahead of the convention. There are 192 countries involved which is excellent and we shall give it our full support.
Lord Peston: My Lords, is your Lordships' House defined as a workplace? If so, is it not about time—particularly today—that we gave a lead on this matter and banned smoking throughout these premises?
Baroness Andrews: My Lords, the definition of the House of Lords as a workplace is fraught with difficulty. I cannot give a definitive answer on that. Recently we have had before us some revolutionary proposals. However, there may still be a whiff of cordite in the air, so we shall have to wait to see what the House authorities think about it.
Lord Geddes: My Lords, is the Minister aware of the 2001 official survey, Smoking related behaviour and attitudes, which among other findings, found that only 9 per cent of people worked in places, including the open air, where there were no restrictions on smoking? I declare an interest as a paid-up member of the Lords and Commons Pipe and Cigar Smokers' Club. Can the Minister give an assurance that such minority interests will not continue to be victimised?
Baroness Andrews: My Lords, I believe that 3 million people still work in environments where smoking is permitted and are affected by smoking. While we respect the rights of the individual, we are concerned that passive smoking is dangerous and we are doing all that we can to encourage employers and employees to create smoke-free environments.
Lord Elis-Thomas: My Lords, the Minister will be aware of the Motion passed in the National Assembly for Wales, promoted by Mr Alun Pugh Assembly Member, that indicated that the Assembly demanded or requested primary legislation in Westminster to enable the Assembly to regulate smoking in public places in Wales. Will the Minister indicate whether there has been discussion within government at Westminster on this matter and whether it is likely that time will be made available in both Houses of Parliament for such important legislation to be enacted?
Baroness Andrews: My Lords, today is an auspicious day on which to say that Wales has often been a source of inspiration, as has Ireland where there is to be a public ban on smoking. Wales has made a decision in principle that it would like to have such a measure and the matter is before the Secretary of State for Wales.
Baroness Hayman: My Lords, is my noble friend aware that while the measures on workplace smoking
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that she has announced are welcome, there is still considerable concern about the delay in government implementation of the approved code of practice on smoking in the workplace? Is she aware that that is of concern not only to those trying to quit smoking, but also to those who cannot, but want to, exercise the freedom not to work in a smoke-filled environment and to those who are at risk of death and disease from passive smoking?
Baroness Andrews: My Lords, I respect the noble Baroness's role in promoting the effects of passive smoking particularly in relation to cancer. We are still consulting on the advisory code of practice. We want to get it right, particularly for the small and medium enterprises that are often located in areas of poverty and disadvantage. We will carry on as speedily as possible with the prospect of introducing it.
Lord Janner of Braunstone: My Lords, can my noble friend indicate how many people in the United Kingdom she expects will die during the next 12 months as a result of active and passive smoking respectively?
Baroness Andrews: My Lords, the annual figure for deaths from smoking is about 120,000. However, we are looking at the smoking cessation service that we have introduced—I do not want to puff the Government too much—and other countries are judging it to be world class. We hope that that figure will reduce.
Baroness Hooper: My Lords, does the noble Baroness agree that an unfortunate side effect of firms operating no smoking policies in the workplace is that people smoke outside buildings and to enter those buildings one has to walk through an ashtray? Can the Government think of a way to persuade those who operate no smoking polices to provide ashtrays for their employees to use?
Baroness Andrews: My Lords, I agree. There are few more pathetic sights than to see people standing in the road outside buildings smoking. I am pleased to say that as of the end of the month the Department of Health will have closed all its smoking rooms. We are promoting that idea across Whitehall, although I do not believe that we shall provide ashtrays outside buildings.
Lord Carter: My Lords, are the Government satisfied that their policy for achieving a reduction in the number of people who smoke is reaching lower income families and other socially disadvantaged groups?
Baroness Andrews: Yes, my Lords. We have always treated attending to such groups who smoke as a priority. There is a higher concentration of smokers at the lower income scale. The health action areas will prioritise and through our research we have noticed that we are making more impression among those on income support than among others.

Dangerous Drivers Causing Death
2.52 p.m.
Lord Mackenzie of Framwellgateasked Her Majesty's Government:
Whether they have any plans to change sentencing provisions for causing death by dangerous driving.
The Minister of State, Home Office (Lord Falconer of Thoroton): My Lords, we intend to increase the maximum penalty for the offence of causing death by dangerous driving from 10 years' imprisonment to 14 years' imprisonment. That follows our report on the Review of Road Traffic Penalties published in July of last year. We intend to legislate as soon as parliamentary time allows.
The Criminal Justice Bill contains provisions that will empower the courts to impose indeterminate sentences on dangerous drivers causing death who are assessed as presenting a significant risk of significant harm to the public.
Lord Mackenzie of Framwellgate: My Lords, I thank the noble and learned Lord for that Answer with which I am delighted. Is lie aware of the case of Ian Carr who, on New Year's Eve, drove a stolen car and crashed into the saloon car of the Sawyer family, killing little Rebecca Sawyer, aged 6 years, and seriously injuring her baby sister? Ian Carr fled the scene. He was found to have 89 previous convictions, one of which was for causing death by dangerous driving.
I thank the noble and learned Lord for his Answer because I was going to ask whether he would bring in an indeterminate sentence which would enable the authorities—and I hope that he will agree with me—once someone was released as a result of an indeterminate sentence, to take him or her hack into custody before the commission of a further offence. That would mean that the horrors that were visited on the Sawyer family on New Year's Eve would not be repeated.
Lord Falconer of Thoroton: My Lords, I was aware of the case of Ian Carr who was sentenced to nine and a half years' imprisonment for causing the death of Rebecca Sawyer and for seriously injuring her baby sister. I was also aware that Carr had on a previous occasion been convicted of causing death by dangerous driving and that he had committed 89 other traffic offences. Victims of such crimes often feel that crimes with those kind of consequences are not treated seriously enough. He was sentenced, as I have said, to nine and a half years' imprisonment. There are too many cases where people have been sentenced at the top of the range, which indicates that the maximum is not enough, and that is why we intend to increase it.
Lord Bradshaw: My Lords, will the noble and learned Lord give us an assurance that the Director of Public Prosecutions, who in fact brings cases and not the police, is not under any kind of performance or
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incentive regime to prefer lesser charges than causing death by dangerous driving so that he may achieve a higher success rate?
Lord Falconer of Thoroton: My Lords, it is for the Crown Prosecution Service to bring each prosecution. It is well aware that manslaughter is a possible charge in cases where gross negligence occurs. It makes a judgment in each individual case. There are no performance targets in relation to how many causing death by dangerous driving or manslaughter charges it brings. It must make its judgment on the basis of the evidence presented to it.
Lord Monson: My Lords, does the noble and learned Lord agree that what is needed is the creation of an intermediate offence of causing death by careless driving, with a much lower maximum sentence but involving compulsory disqualification for an extended period?
Lord Falconer of Thoroton: My Lords., the Department for Transport produced a consultation paper last year or the year before which raised that specific issue. It is a difficult issue to decide whether or not the charge itself should be changed. People are becoming increasingly aware that a road traffic incident which causes death is as serious as any crime. Therefore, it should be more easy to prosecute.
Viscount Simon: My Lords, does the introduction of an indeterminate sentence herald the stopping of the tariff system? Furthermore, are there any plans to increase the maximum penalty for driving without due care?
Lord Falconer of Thoroton: My Lords, as far as concerns the indeterminate sentence, "tariff", which is a reference normally to a life sentence, is the punishment aspect; the indeterminate sentence deals with where one is still a danger to the public. The case referred to by my noble friend Lord Mackenzie is that of a man who when in a car was a real danger to the public—see the 89 offences and the fact that he killed two people in two separate incidents. He remains a danger to the public. As long as he remains a danger to the public, he should remain in custody. There is no present intention to change the penalty for careless driving.
Lord Phillips of Sudbury: My Lords, first, given that the Government have—I think it is fair to say—flooded the statute book with new criminal offences to an unparalleled degree, and, secondly, raised maximum sentences left right and centre, to what does the noble and learned Lord ascribe this general and unique state of affairs?
Lord Falconer of Thoroton: My Lords, I think it would be unfair to say that we have flooded the statute book with new offences. Yes, the noble Lord is right that we have increased the maximum penalty from time to time in relation to a number of offences. The

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reason, as in the case of causing death by dangerous driving, is that the courts, which make the decisions, feel that the maximum is not high enough. If there are a large number of cases where one is at or near the maximum, that is an indication that the tools of the court are not adequate to deal with the kind of crimes coming before them.
Lord Carlisle of Bucklow: My Lords, does the noble and learned Lord agree that the right way is to increase the maximum available to the courts, as he is doing, rather than introducing mandatory sentencing?
Lord Falconer of Thoroton: My Lords, I assume the reference is to mandatory minimum sentencing. There are cases where mandatory minimum sentencing is appropriate; for example, in relation to the gun crime charges where we are going to introduce a mandatory minimum sentence. The reason for so doing is that it sends the strongest possible message that a particular sentence will be dished out for a particular crime.

Homes: Energy Efficiency
2.59 p.m.
Baroness Maddock: My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In so doing, I declare an interest as a trustee of the National Energy Foundation.
The Question was as follows:
To ask Her Majesty's Government what steps they are taking to ensure wider awareness of the standard assessment procedure, to inform prospective house buyers of the energy efficiency of their homes.
Lord Evans of Temple Guiting: My Lords, whenever a new home is built in England and Wales its energy rating, calculated in accordance with the SAP, is required to be prominently displayed inside. When parliamentary time allows, the Government will legislate to introduce sellers' packs in England and Wales. We propose that sellers' packs should include an energy report containing an SAP energy rating. The energy report and the SAP will be made compliant with EU directive 2002/91/EC. That will enable prospective buyers of new and second-hand homes to understand how energy efficient the property is.
Baroness Maddock: My Lords, I thank the Minister for that reply. I am sure he will be aware that in a survey carried out by National Energy Services and De Montford University, it was found that although it has been law for new houses to display their SAP rating, that was not the case on 98 per cent of building sites. Indeed, three-quarters of sales negotiators on sites did not understand the SAP rating and at least half of them did not even know that it existed. Can the noble Lord assure me, given that we are awaiting parliamentary time, that the Government will take
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urgent action to get the building industry on side on the matter? It has been law for two years. How on earth are we to persuade and influence buyers of houses in their decisions if that basic information is not available at the point of sale?
Lord Evans of Temple Guiting: My Lords, the report to which the noble Baroness refers is an extremely good report: well written, well balanced, comprehensive and constructive. It informs the Government that, as she said, our wish that every new home should have an energy rating displayed is simply not working. It explains why and points out the way forward in a constructive manner. Among other things, it suggests improving the design of the SAP notice and a new impetus by the home building industry to ensure that that part of the building regulations is strictly enforced.
The Government will shortly publish for consultation a draft housing Bill that will include provisions to introduce sellers' packs in England and Wales, in line with our manifesto commitment. The Bill will contain provision for a home condition report, which will include a report on energy efficiency. Obviously, that will take time. In the meantime, the Office of the Deputy Prime Minister is conducting urgent talks with the building trade to try to get what is already law acted on immediately. As the noble Baroness said, it is unsatisfactory that, two years later, that important government objective is not being implemented.
Baroness Gardner of Parkes: My Lords, having listened to the comments of the noble Baroness, Lady Maddock, does the Minister agree that the system is not clearly understood even in relation to new property? But he has said that in the sellers' packs, everyone selling a second-hand home will have to provide details of the standard assessment procedure for energy. If I were to offer my home for sale when the sellers' packs are introduced, exactly how would I go about having it assessed? Who will do the assessments? How will the public know about that? If they do not understand the procedure for new build, how will they even begin to understand it for second-hand homes?
Lord Evans of Temple Guiting: My Lords, there is no disguising that there are huge problems. One of the most interesting parts of the report explained why the provision has not been implemented. The report states that there are logistical problems in getting SAP notices in the correct site at the right time in the first place, let alone in ensuring that the notices are kept safe on a busy site or sales office. When the draft housing Bill is published for consultation, the points raised by the noble Baroness will form part of the consultation process. We must find a satisfactory conclusion.
Lord Geddes: My Lords, perhaps to the Minister's surprise, I welcome all of his replies in response to this Question. I am sure that he is aware of the current system in Denmark, whereby all homes, be they

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apartments, flats, houses, second-hand or new, are assessed for energy efficiency. The certificate that goes with the property makes a significant difference to the value of the home when it is sold. Will the Minister encourage his colleagues to promote that avenue as hard as possible, because it makes sense for all concerned?
Lord Evans of Temple Guiting: My Lords, I am grateful to the noble Lord for mentioning the example of Denmark, of which we are fully aware. As part of the consultations that we are now commencing with the building trade to help to solve the problem before the new Bill is published, we are considering the Danish example. As the noble Lord said, if we can implement that provision here, we shall have no problem with the matter.
Lord Clinton-Davis: My Lords, should not the lawyers representing prospective purchasers raise an inquiry about that matter at the very beginning of the transaction? In that way, every potential purchaser would know what was the liability.
Lord Evans of Temple Guiting: My Lords, I agree that what my noble friend describes is the central point of the sellers' pack, which will be part of the Bill to be published as early as the end of this month.
Baroness Hanham: My Lords, while remembering that the sellers' pack did not receive an enormous amount of support last time, whose responsibility is it to provide the notices and ensure that they are on display? What liabilities and redress are there for people buying property for which that information is not made available? What redress do they have against whoever is meant to have displayed the notice if they do not receive the correct information?
Lord Evans of Temple Guiting: My Lords, I am aware that the notion of the sellers' pack has already been before this House and did not receive universal acclaim. Because of the general election, that provision was lost but will now be reintroduced. It is impossible for me to say what will be in the draft Bill, because I have not read it, but we shall certainly want to consider the issues raised by the noble Baroness when we discuss it in the House.
Lord Ezra: My Lords, the Minister referred to the recently issued European directive on energy efficiency in buildings. Have the Government worked out a programme for its implementation in this country? Is it their objective for an energy efficiency certificate to be issued for all buildings?
Lord Evans of Temple Guiting: My Lords, the Government have accepted the EU directive. It came into force on 4th January 2003 and allows three years, until January 2006, to effect transposition—with a
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possible further three years for full application of some provisions, including those on energy performance certificates.
Lord Berkeley: My Lords, most noble Lords and other people buy and sell houses using estate agents and wonder what they get for their 2, 3, 4 or higher per cent fee. What discussions have the Government had about getting estate agencies involved, in addition to the suggestion of my noble friend Lord Clinton-Davis?
Lord Evans of Temple Guiting: My Lords, as far as I know, we have had no discussion with estate agents. We consider that the problem must be solved and settled with the building trade, which, as has been said, is obliged under law to provide certificates for new houses but is not doing so.

Western Eye Hospital, Paddington
3.8 p.m.
Earl Howeasked Her Majesty's Government:
What is the future of the Western Eye Hospital, Paddington.
Baroness Andrews: My Lords, the ophthalmology services at the Western Eye Hospital in Paddington are part of St Mary's NHS Trust. Plans for the future of those services are currently being re-examined to determine the best option for how they should be provided in future to patients in north-west London. One option is to keep services at the Western Eye Hospital; other options include moving the service to a more modern environment. A decision will be made following publication of a report at the end of March.
Earl Howe: My Lords, I thank the Minister for that reply. Was she as concerned as I was to read in Monday's press that that prestigious hospital may have to close because its new premises, being built under the private finance initiative, will not be big enough to accommodate it? Will she do everything possible to ensure that that does not happen because, if it does, it will result in the loss of an international centre of excellence and in the fragmentation of ophthalmology services across London?
Baroness Andrews: My Lords, I agree entirely that it is an excellent centre. It is used by 70,000 people a year and has a very high reputation. I can reassure the noble Lord that closure of the hospital is not an option. The intention is that the services will be reviewed in the light of the problems caused.
I shall explain my understanding of how the problems arose. When the outline business case for the Paddington basin, which is an exciting project bringing together Harefield Hospital, Brompton Hospital, St Mary's Hospital and so on, was given the go-ahead in October 2000, it was written to comply with building notes available at the time. They already took account of the need for single accommodation.

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But guidance published later, in October 2001, proposed what it defined as consumerism, but it actually meant providing patients with more privacy and space. We have had that in mind for a long time. When it was published, after the outline business plan was completed, it was not taken into account, which was regrettable. It has had a significant impact on plans for the Paddington basin.
But the current review with the strategic health authority is looking at a different range of options. The object will be to keep teaching and research intact, and to continue to provide the excellent services offered at present.
Baroness Thomas of Walliswood: My Lords, does the Minister agree with me that the story as she recounts it, particularly the failure to take on board at a draft stage new requirements of space for patients, indicates a breathtaking level of ineffective, poor decision-taking? That is particularly the case because it puts in danger an extremely important facility. We have all been slightly reassured by her answers on the continuing work of the Western Eye Hospital itself.
But that leaves open another question: how will the financial problem be solved? As I understand it, the construction of the new hospital, in which there is not room for the Western Eye Hospital, depends upon the sale of the site on which the Western Eye Hospital is constructed. Can she reassure us that, despite that, the Government will be able to maintain the extremely important facility?
Baroness Andrews: My Lords, the noble Baroness asked whether I was in despair as to how the decision came to be taken. It is not a matter for me to judge. But the review will look at the circumstances that gave rise to it. We will have more answers when it reports. The NHS made clear in its plan that we were concerned that patients should have more privacy and space in new build hospitals. I know that all noble Lords support that. There is good motivation for it.
On funding, there is no reason why the services should not continue to operate and to flourish. But the missing millions of pounds that will result if the hospital is not sold will be a matter for the trusts and the project managers.
Lord Elton: My Lords, if the new building will not be big enough to house the whole present hospital, how will it be possible to continue without fragmentation of the service that it provides, as my noble friend asked?
Baroness Andrews: My Lords, it will be for the review to examine that matter. Among the options will be to find another location. As I said, we shall have to wait and see what emerges from the review.
Baroness Noakes: My Lords, will the Minister comment on the effect of the loss of the sale proceeds of the Western Eye Hospital on the value for money of
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the PFI scheme at Paddington? Will not the loss of those proceeds mean that the PFI scheme will probably not deliver value for money, and, therefore, should not go ahead?
Baroness Andrews: My Lords, the decision was taken in terms of the planning of services. PFI has not yet kicked in. At present, the project is looking for partners. I am not sure that the noble Baroness's question is strictly relevant or one that I could answer. As I said, it is a matter for the trust itself and the able hands of those who will run it.
Baroness Gardner of Parkes: My Lords, is it correct that there are only two such eye hospitals in London, the other being Moorfields? Can the Minister assure us that, whatever happens or wherever the hospital is relocated, it will continue to cover that half of London?
Baroness Andrews: My Lords, the noble Baroness is correct. The hospital takes patients from all over London. I am sure that it will want to continue the service to the patients who depend on it at present. A diagnosis and treatment centre might be set up, for example, to make cataract services more swift and efficient. I am sure that it would want to serve exactly the same people as it does at present.
Baroness Northover: My Lords, does the Minister remember the debates that we had during the previous health Bill in which concern was expressed that specialised medicine might be lost under the new reorganisation? This strikes me as a case in point. Here is a national specialist centre, providing a service for not only London, which is in danger of being spread all over the site because nobody looked out for it.
Baroness Andrews: My Lords, that is exactly why I said that the intention is to keep the specialist teaching and research intact, and why part of the genius of the idea is that Imperial College London research is on site also. I think that that will be successful. We want to preserve that at all costs.
Baroness Hanham: My Lords, I am sure that the House is aware that I am chairman of St Mary's Hospital, so I listen to the debate with considerable interest. Does the Minister accept my assurance that the intention is to maintain the service at all costs? It is a valuable, well-run specialist service, with university teaching and research attached to it. There is no intention of disseminating the service beyond the borders of north-west London. It is a valuable part of the medical services within this part of London. Will the Minister accept those assurances?
Baroness Andrews: My Lords, I am absolutely delighted to do so.

Begging
3.16 p.m.
Earl Russellasked Her Majesty's Government:
What consideration they have given to the possibility that the proposal to outlaw begging might be found to he contrary to Article 2 or Article 3 of the European Convention on Human Rights.
Lord Falconer of Thoroton: My Lords, Section 3 of the Vagrancy Act 1824 as amended already makes begging in a public place an offence. On conviction, the offender may be sentenced to a maximum fine of £1,000. We have no plans to change the formulation of the offence or to increase the penalties. No one in this country should beg. We need to protect more vulnerable people from being drawn into street activity and to guard against the sustaining of harmful drug addictions.
The White Paper on anti-social behaviour published today looks at making the offence of begging recordable. Making the offence of begging recordable would enable the police and the courts to take into account the full range of begging offences and other criminal offences. In addition, after three fines, courts would have the option of imposing a community penalty, which could involve drug treatment. We do not consider that the measures would contravene Articles 2 or 3 of the European Convention on Human Rights.
Earl Russell: My Lords, I thank the noble and learned Lord for explaining the Government's intentions better than whoever recently informed the press did. I hope that the Minister received notice of my request to know also how many people are at present subject either to total or partial benefit sanctions. Does he agree that if people are deprived of income, and if thereafter an attempt is made to prevent them achieving an income by begging, there is a risk that that double whammy might be held to cross the threshold of destitution used to establish inhuman or degrading treatment under Article 3 of the European Convention on Human Rights?
Lord Falconer of Thoroton: My Lords, I received several conflicting accounts of what the noble Earl's supplementary question would be. But one of them was that that he would ask that question.
Benefit sanctions fall into two categories. The first is where the conditions of the benefit are such that, if you do not comply with them, you lose all or part of the benefit. The best example is jobseeker's allowance. In 2001–02, 193,001 were so sanctioned. The noble Earl will know that research on the effect of that sanction was carried out and published. Loss of benefit had a significant impact on the respondents. Some had fears of falling into debt and some were able to claim hardship payments. Respondents differed in how the disallowance or sanction had influenced their behaviour, Very many of them ceased the conduct that led to the sanction, for example, refusing to carry out directions in seeking jobs.
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There is a second, separate category; namely, where benefit sanctions are imposed as a result, for example, of non-compliance with a community sentence. The number of people so sanctioned between 15th October 2001 and 3rd January 2003 was 612.
Lord St John of Fawsley: My Lords, does not the proposal further to penalise beggars run contrary to something of even higher authority than the European Convention on Human Rights, namely the beatitudes? They declare unequivocally and unreservedly, "Blessed are the poor". Why should such people be penalised further, when they are in desperation?
Lord Falconer of Thoroton: My Lords, as I made clear to the noble Earl, Lord Russell, the proposal is not designed to penalise such people further or to increase the amount of the fine. The purpose is to record the fact that someone has been fined. If he or she has been fined on three occasions, it will be possible for the courts to impose a community sentence that might help them to get out of the circumstances that led to begging. Many of them are dependent on drugs. A community sentence could help them to deal with that.
Baroness Sharpies: My Lords, does the noble and learned Lord agree that many of the beggars on the Underground are foreigners and very possibly, I imagine, illegal immigrants? What can we do about them?
Lord Falconer of Thoroton: My Lords, one sees that people of a range of nationalities are involved. The right thing to do is to make sure that we have a record of the occasions on which such people have come up against the authorities so that we do not just go on and on imposing a fine but do more intrusive things to help them.
Baroness Williams of Crosby: My Lords, does the Minister recognise that many asylum seekers, genuine or not, have no idea that they must make an immediate claim for benefit on their arrival in this country? Recent research by some of the detainee visitors' boards shows that, in several airports, there is no clear indication in different languages that that is a requirement for receiving benefit. Some of the people begging are simply unaware that they could have made a claim and have no means of support.
Lord Falconer of Thoroton: My Lords, there should be notices at all embarkation or arrival ports for aircraft, or whatever, indicating the position. I agree that proper notice should be given. The Question was about begging and about what happens when someone comes up against the law. The proposal that has been made is that the courts should not simply go on fining such people but should make sure that they can intervene in other ways. Members in all parts of the House will applaud that.
The Countess of Mar: My Lords, some time ago I asked the noble Lord, Lord Bassam of Brighton, what the point of fining beggars was. What is the success rate for recovering the money that such people are fined?
Lord Falconer of Thoroton: My Lords, I do not have those statistics. The noble Countess makes a good point. It indicates why it is sensible, after a beggar has been fined on several occasions, that the courts should try something else rather than simply fining them again. That is why making the information recordable and giving the courts the power to pass a community sentence after the third offence may be a more productive way forward.
The Lord Bishop of Derby: My Lords, does the Minister agree that, as well as the effort and energy put into outlawing beggars, a good deal of effort, energy and other resources could be put into helping organisations such as the Salvation Army that do their best to keep beggars off the streets in a humane and caring way?
Lord Falconer of Thoroton: My Lords, I agree entirely. An example might be the work into which the Government put significant resources to help people who were otherwise sleeping rough into hostels and, beyond that, into more permanent accommodation. I agree with the point made by the right reverend Prelate.
Earl Ferrers: My Lords, is the noble and learned Lord aware that, although there may be great sympathy—quite correctly—for people who are poor, there is not a great deal of sympathy for beggars? I was once accosted by a beggar who, when I declined his invitation, referred to me as "an effing judge". In that instance, he was incorrect in his use of both the adjective and the noun, although it may have been a reflection of his view of the judiciary. Having had no success with me, he turned and accosted some young ladies, again without success. When a police car arrived, he took cover.
The inference to be drawn is that he knew that he was doing wrong and that the police have an effect. Such incidents cause great distress to people in the streets, who do not like to see them happen. That does not mean that people are not sympathetic to someone's condition.
Lord Falconer of Thoroton: My Lords, I am not sure which the noble Earl found more offensive—the "effing" or the "judge". I apologise to all the judges in the House—and to all the others. The noble Earl makes a valid point. There are many reported incidents of aggressive begging, which causes considerable distress to people using public places. That is why it is important to deal as effectively as possible with begging, for the sake of the people who use the streets and of the beggars themselves. They should not be in the degrading position of having to beg.

Business of the House: Debates this Day
3.24 p.m.
Lord Williams of Mostyn: My Lords. I beg to move the Motion standing in my name on the Order Paper.
Moved, That the debate on the Motion in the name of the Lord Brennan set down for today shall be limited to three hours and that in the name of the Lord Redesdale to two hours. —(Lord Williams of Mostyn.)
On Question, Motion agreed to.

Anti-social Behaviour
3.25 p.m.
Lord Falconer of Thoroton: My Lords, with the leave of the House, I shall now repeat a Statement made in another place by my right honourable friend the Home Secretary. The Statement is as follows:
"Mr Speaker, with permission, I wish to make a Statement on tackling the scourge of anti-social behaviour.
"In recent years, we have made significant progress in tackling crime and disorder. In the past six years, crime is down by more than a quarter, street crime reduced dramatically. The chance of being a victim of crime is the lowest in more than 20 years. Yet, the fear of crime remains high. No one will believe that crime has fallen, unless they experience it in their own lives and those of family and friends.
"More than one in three consider that anti-social behaviour is still affecting their quality of life. Over 30 per cent are intimidated by gangs hanging around their neighbourhood. Too many lives are affected by the irresponsibility, disrespect and loutishness of others.
"Anti-social behaviour can affect people physically and emotionally, undermining health and destroying family life. It can also hold back the regeneration of our most disadvantaged areas, creating the environment in which crime can take hold.
"Where enforcement is poor and anti-social behaviour goes unpunished, criminals learn that they can get away with lawlessness. That is why we are now leading a new drive to work with individuals, families and communities to build effective action.
"Rights and responsibilities must go hand-in-hand. This White Paper and the legislation to follow aim to put in place support and help for those who are prepared to accept it, and clear, speedy, and effective enforcement, when they are not.
"Our public spaces should be open for everyone to use freely. Our streets should be free of loutishness, gangs of drunken hooligans, or drug dealers capturing the lives of young people. Neighbours creating noise and nuisance, and those intimidating others, are a blight on our society.

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"Those who do not suffer this, should not get in the way of protecting those who do. That is why we will crack down on noise and nuisance. Fixed penalty notices of £100 w ill be available to environmental health officers. Persistent abuse will lead to a reversion to probationary tenancies, court action and fast-track eviction.
"Automatic rehousing is no longer an option. Children of persistently anti-social and dysfunctional families will be offered new intensive fostering. Tenants and landlords must share responsibility. Anti-social tenants will lose their right to buy.
"But we intend to go further. Tenants must not be allowed to make the lives of others a misery. We will empower local authorities to license landlords, so that they no longer automatically receive direct benefit payments. We will also consult on the appropriateness of measures to withdraw from individual tenants the automatic right to be granted housing benefit. Where the problem is caused by pubs or clubs, environmental health officers will have the power to close them.
"Unscrupulous drug dealers can exploit weak tenants and owners of property. New fast-track closure powers for crack houses will enable the police to act decisively in sealing such properties.
"But gangs of youths can often be the catalyst for further crime, as well as intimidation. We will enable the police to designate areas experiencing high levels of anti-social behaviour, within which new powers to disperse groups causing trouble will be available. We will merge these powers with those of child curfews, to enable unaccompanied children out late at night to he removed from the streets.
"We are well aware of other forms of behaviour threatening neighbourhoods. We have already announced measures to tackle the misuse of air weapons and the availability of replica guns. We will make carrying an air weapon or imitation in a public place an arrestable offence. We will support wholeheartedly the new proposals to restrict the sale and use of fireworks.
"But we recognise that family problems, poor educational attainment, unemployment and alcohol and drug misuse, can all contribute to unacceptable behaviour. These do not constitute an excuse, but we must act to enable people to rebuild their lives. We will take cross-government action to provide support, while ensuring the principle of 'something for something'.
"No longer should an individual child disrupt a school, nor should inaction by parents disable that child for the future by non-attendance at school. Parents have a duty to ensure that their children are in school and behaving. Persistent failure will result in parenting orders, fines, or fast-track court action.
"We will support families to overcome their problems, through parenting classes and new fast-track parenting orders. We will examine residential provision as a compulsory part of education and rehabilitation.
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"At the heart of anti-social behaviour is a lack of respect for others—the simple belief that you get away with whatever you can get away with
"We need the help of the community as a whole in changing the culture: parents to instil a sense of responsibility and respect; communities to build the confidence to provide witnesses and to stand up to the thugs; and businesses to accept their responsibilities.
"Record police numbers; the historic reform of police pay and regulations; and the new extended police family, including community support officers, specials, street and neighbourhood wardens, all have their part to play.
"We have an effective armoury of measures; fast-tracked, slimmed-down anti-social behaviour orders, acceptable behaviour contracts, and parenting orders. Since August almost 2,000 fixed penalty notices have been issued in the four pilot areas. We are clear that breaches of orders must he treated decisively.
"We must slim down bureaucracy, free up the police and enforcement agencies to do their job and engage the public, business, and landlords, in creating a safer, saner world.
"I would like to thank all those who have contributed to this White Paper and for the co-operation of ministerial colleagues in this cross-government drive to rebuild civic society.
"I know every Member of this House believes that families should teach respect, that had behaviour must be dealt with decisively, and that there is a need to restore pride in our communities. This is the challenge we face in the decade ahead. I ask the House to support the measures I have outlined today as a contribution to that endeavour".
My Lords, that concludes the Statement.
3.33 p.m.
Baroness Anelay of St Johns: My Lords, I thank the Minister for repeating the Statement made a short while ago by his right honourable friend in another place. For the past 18 months, we on these Benches have been talking about the importance of "re-establishing the neighbourly society" and "recapturing the streets for the honest citizen". The Minister's excellent catch-phrase, "respect and responsibility" is remarkably similar. I do not complain about that—far from it.
The similarity of our language derives from the fact that we and the Government share the same diagnosis of the same problem. We both recognise that there has been and still is, in too many parts of Britain, a retreat from civilisation. We both recognise the truth behind the "broken windows" thesis that has guided American cities in their successful efforts to reduce low-level disorder and crime.
We both recognise that if our children are to grow up into the people we want them to be, they need to grow up in a society that is orderly and respectful and not on streets that are controlled by gangs and drug

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dealers. The difference between the Government and ourselves is not one of diagnosis, but of what the cure should be.
Since the Government came to power, they have battered us with 15 Bills dealing with crime and disorder. Legislation continues to pour out of the Home Office at a rate of knots. The problem is quite simply that we doubt today whether the latest battery of proposals will prove any more effective than the last at curing the problems which we both diagnose to be undermining our civil society.
The simple fact is that the gangs on the streets—the drug dealers—do not show any signs of avidly reading the Government's block-buster tomes of legislation. They go their own way confident that their activity will go unchecked.
Of course, we all recognise that police numbers are important. And of course we all recognise, as the Minister did today, that it is important that they should not be tied up with bureaucracy. However, I am afraid that that is precisely what this Government have done to the police. It is important that the police are set free to do their real job of policing.
Will the Minister assure the House that when these new orders are introduced, they will not go the same way as child curfew orders that have never been issued? Will he assure us that they will not go the same way as the night-time courts that now appear to have been abandoned after costing—according to Written Answers in another place—£6,000 an hour and £7,000 a case?
How will parenting orders be any less bureaucratic than the anti-social behaviour orders that have proved so difficult to obtain? I noticed one slight deviation in the text delivered by the Minister from that delivered by the Home Secretary in another place. With regard to the reference to tenants not being allowed to make the lives of others a misery and the Government empowering local authorities to license landlords, I noticed that the noble and learned Lord omitted that the people to be licensed—that is, the landlords—would be designated private-sector landlords. Will the Minister tell us whether the omission was simply a slip of the tongue or was there something more significant about it?
The Minister says that children of persistently anti-social and dysfunctional families will be offered new intensive fostering. Why cannot the Children Act 1989 achieve that? What is "intensive fostering"?
I note that the White Paper states at paragraph 2.24 that the Government will take powers to enable intensive fostering to occur as an alternative to custody. On what basis would this be enforced by the courts? Would it be by the family proceedings court or by the youth court? That is an important issue.
During Question Time, there was an important Question from the noble Earl, Lord Russell, regarding begging proposals. Today, the Government have made much in the press and on television of their new measures concerning begging and the enforcement of the existing vagrancy laws. Will the Minister expand
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on his helpful response to my noble friend Lady Sharpies? Will the Minister assure the House that in any legislation on begging they will differentiate between the types of beggars? He alluded to that, but he was not clear. Will the Government differentiate between organised gangs who approach begging as a lucrative business; aggressive beggars who terrorise people on our streets and, in London, on the Underground; and between those who are genuinely the damaged and vulnerable people in our society who need help to overcome the difficulties they face and not penalties to thrust them further into problems? Has the Minister read and taken note of the powerful briefing note provided to noble Lords by Crisis, entitled, Compassion Not Coercion?
Today, the Minister announced a huge raft of detailed proposals. They deserve much scrutiny since they involve cross-departmental co-operation on a grand scale. It is astonishing that the Government have published this document only four weeks before the Bill is to be introduced in another place, if the Government's Whips Office is to be believed.
I am ever the optimist: I would not survive long here if I were not—I mean, in this House, not on these Benches. Therefore, I hope, for the sake of the future of our society, that the Government begin to think about a coherent, long-term strategy for the programmes that lift our young people off the conveyor belt to crime. In future, I hope that the Government listen more carefully to their own Social Exclusion Unit whose recent advice is that they should let existing legislation settle down and be effective instead of hurrying into a panoply of penalties for the sake of one good PR day.
3.38 p.m.
Lord Dholakia: My Lords, I, too, thank the Minister for repeating the Statement. There is no dispute that we believe and share in the goal for a more respectful and less abusive society. The Government measures have been based on the experience of anti-social behaviour orders which were introduced under the Crime and Disorder Act 1998. These are civil orders which become criminal only when they are breached.
We are concerned that ASBOs, as they are now termed, tend to distract the public from the continuing failures of six years of law and order policy, rather than contributing to the coherent development of successful existing policy. Existing research points out that ASBOs are cumbersome, costly and difficult to enforce. NACRO—a body which I chair—found that the average ASBO costs more than £5,000 to enforce and takes more than three months to obtain. More than one-third of ASBOs were breached within the first nine months of issue. That does not build much confidence in the present system.
It would be helpful to know whether the Government have sought a more holistic approach, combining enforcement with preventive initiatives tailored to local conditions. Examples of good practice include the use of acceptable behaviour contracts and parental control agreements, along with youth

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schemes to provide activity programmes and mentoring. I suggest that the noble and learned Lord should look at the ASBO contract introduced in Islington, where the whole family is included in the process of designing the contract. It is then evaluated and monitored.
Perhaps I may ask the Minister whether the definition of anti-social behaviour is clear. Evidence points to confusion among local authorities over how to identify and respond to problems that are rife in certain areas. The Crime and Disorder Act 1998 defines anti-social behaviour as acting in a manner,
"likely to cause harassment, alarm or distress to one or more persons not of the same household".
Home Office research shows that ASBOs have been used in response to behaviours as diverse as graffiti, noise, trespass, assault and prostitution. The public wants long-term policies that deal effectively with crime and the causes of crime. Local solutions—devised locally—which gain the confidence of the community are worth any number of centralised solutions. If more was invested in the many good schemes providing incentives and rewards for good behaviour and effective discouragement for bad, then we really would begin to deal with the causes of crime rather than chasing after the consequences.
The reduction of alcohol and drug abuse, the use of guns and knives and violent crime should he the central thrust of government policy. That is why dealing more effectively with crack houses is welcome. But further criminalising beggars will simply marginalise people already existing on the edge of society. Beggars need support and routes hack into settled lives, not ever-longer criminal records.
It should be the role of central government to provide the funding necessary for local policing, community safety and youth work. There is a real danger that the Home Office is suffocating the efforts of those who have to bring about change in our local communities by the use of more and more unrealistic legislation.
We shall study carefully the measures that will require further legislation. We accept that anti-social behaviour acts as a catalyst for more serious crime and disorder. However, we must strike the right balance. Large numbers of our young people are law-abiding and lead useful lives. However, if breaches of ASBOs continue at the present level, their impact on the criminal justice system will be substantial. The fact that we have more than 72,000 people in prison is a clear sign that many pre-emptive measures could be taken. We need to identify the legal measures outlined by the noble Baroness, Lady Anelay, before using ASBOs.
Evidence so far shows that more than three court hearings have been required before a decision was reached on an anti-social behaviour order. What plans has the Minister drawn up to ensure that the same will not happen with future orders?
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Overall, we would support measures which include enforcement, prevention and education. We trust that those aims will be reflected in the forthcoming legislation.
3.43 p.m.
Lord Falconer of Thoroton: My Lords, I am grateful to the noble Baroness, Lady Anelay of St Johns, and to the noble Lord, Lord Dholakia, for the welcome they have given to the Statement. Obviously we need to examine closely the detail of the Bill when it comes through.
Perhaps I may deal first with the specific points raised by the noble Baroness. She asked whether intensive fostering will be enforced by the family court or the youth justice court. The provision indicates that we would envisage intensive fostering being made available both in relation to Children Act proceedings and in relation to criminal proceedings. Thus both courts will have a role to play.
She asked whether these ASBO proposals will go the same way as the child curfew order. ASBOs have now been up and running for a number of years and are providing real help. Acceptable behaviour contracts have been in place for some time and also provide real help, as do parenting orders. Furthermore, as I indicated when repeating the Statement of my right honourable friend the Home Secretary, fixed penalty notices are also up and running and they, too, provide real help. However, we need to address the problem identified by the noble Baroness in her remarks. The measures we have proposed will bring comfort in relation to that.
As regards the issue of begging, the noble Baroness asked whether we intend to draw a distinction between the various types of beggars. Making begging a recordable offence and ensuring that after three convictions the court has available alternative actions will make it possible for courts to draw the kinds of distinctions that are needed. It is also worth bearing in mind that begging may be one emanation of a problem, but where there is intimidating or aggressive behaviour, it may be another kind of crime altogether.
The noble Baroness pointed out that a Bill was expected imminently. Yes, we expect to see the legislation during this Session. We need to be ready for it because the problem is urgent and urgent measures are needed to deal with it. She also asked whether there was a difference between what I said in the Statement and what was said by the Home Secretary. My role is simply to repeat that which has been said in another place. If I failed to repeat the Statement with precise accuracy, that was my mistake. I simply repeat rather than originate Statements. Perhaps I may confirm that "designated private sector landlord" is the correct phrase. It means that in those areas where there is a problem, then and only then can a landlord be so designated.
The noble Lord, Lord Dholakia, asked the Government to think about prevention as well as punishment. I agree absolutely with him; we have to adopt an holistic approach. I support and endorse all

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he said about considering ventures such as the acceptable behaviour contracts introduced in Islington. They have worked well in helping to reduce problems within the local community.
The noble Lord said that ASBOs are expensive and that in some respects they are too complicated to secure. He pointed out that sometimes it can take as many as three court hearings to have an ASBO put in place. We have sought to address the problems of over-complication and over-complexity in the Police Reform Act 2002. As a result, it is now possible to impose an interim ASBO straightaway, so that the protection is in place. That has cut down considerably on bureaucracy. The cheapest ASBO was one obtained in Manchester at an estimated cost of £300, so it is possible to secure the orders in a cost-efficient manner.
The noble Lord was right to note that, where a specific problem exists, the court saying, "You shall not do this. If you do, you will be subject to the criminal law", is a right and sensible approach. But it should be regarded as only one part of the armoury now available to the police and local authorities to combat anti-social behaviour.
The noble Lord said that more clarity is needed as regards what is meant by anti-social behaviour. He went on to draw our attention to the definition set out in the White Paper, referring to the Crime and Disorder Act 1998. Anti-social behaviour is defined as,
"where a person has acted in a manner that caused or was likely to cause harassment, alarm or distress to one or more persons not of the same household as himself".
The noble Lord will know better than I that such behaviour can manifest itself in a hundred ways and in a hundred locations. However, the effect of that behaviour is immediate, real and personal for the community which has to endure it.
The noble Lord commented on the position with regard to beggars. He made the point that we should be careful both in relation to begging and ASBOs that we do not increase the size of the prison population. I have already indicated that the move will be to make begging recordable and to allow for a community sentence to be passed after three occasions. Some 700 ASBOs have been granted. I should stress, however, that such anti-social behaviour can be as corrosive in a community as can many of what may be regarded as more serious crimes. Therefore, in appropriate cases, one needs the ultimate sanction.
3.48 p.m.
Lord Waddington: My Lords, one passage in the Statement indicates that where problems of anti-social behaviour are,
"caused by pubs or clubs, environmental health officers will have the power to close them".
Is that a reference to pubs and clubs being used by drug dealers? Is it a reference to drunken behaviour that spills out on to the street, adding to anti-social behaviour? If so, is it suggested that an environmental health officer could close a pub or a club without
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recourse to the courts? If not, what does that statement mean? Surely it is an illustration of the fact that while this Statement is strong on rhetoric, it is extremely difficult to see exactly what specific measures the Home Secretary has in mind.
Lord Falconer of Thoroton: My Lords, the noble Lord has rightly referred to two possible areas, one where loud noise is generated or people gather in large groups close to a pub, causing distress and harassment to the neighbourhood; or, secondly, where particular kinds of crime, including drug dealing, are carried on at a certain pub.
Subject to appropriate safeguards that are referred to in the White Paper, power is given to close down such places if the effect on the neighbourhood is such that they should not be allowed to continue operating.
Baroness Howe of Idlicote: My Lords, I, too, welcome the many measures outlined in the White Paper leading, in the words of the noble Lord, Lord Dholakia, to a more respectful and less abusive society. The White Paper also refers to the early identification of children at risk and the legislation that is to follow. How will the resources required to achieve these aims be split? Given that the cost of anti-social behaviour and worse can be considerable if it is allowed to develop, should not the emphasis be on the identification of children at risk at an early age?
Lord Falconer of Thoroton: My Lords, I endorse what the noble Baroness says about the need to take preventive measures. We need to identify at the earliest possible stage children and young people who might become engaged in anti-social behaviour and take steps to divert them from such conduct. We thoroughly endorse such an approach. We shall produce a Green Paper soon which will deal specifically with that issue.
But it is not a question of either/or. It is not possible to say to the community, "All our focus is on preventive measures and therefore we shall not do anything about the crime or anti-social behaviour that is going on at the moment". We need to emphasise both because both matter. If we do not deal with the immediate effects of crime and anti-social behaviour, the community will lose confidence in its own future. A community that has proper protection is much more confident in ensuring that its children and young people grow up and have gainful lives rather than being sucked into crime and anti-social behaviour.
The noble Baroness asked how the resources would be split between the two aims. I cannot give a precise figure. It is almost impossible to calculate what the percentage will be. We have to concentrate on both because they are equally important.
Lord Stoddart of Swindon: My Lords, I wish to ask the Minister two questions. First, as regards the crackdown on noise and fixed penalty notices, it appears that environmental officers are to be allowed to make judgments which, as anyone familiar with the difficulties that can exist between neighbours will

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know, will need to be the judgments of Solomon. Is the environmental health officer to be judge, jury, enforcer and so on? Will there be any right of appeal against failure to pay the £100 fine?
Secondly, has the Minister considered that the deplorable behaviour in our streets, on our housing estates and between people has come about because of a lack of respect between people themselves; because of a dumbing down in education and on TV; because of a lack of respect between teacher and pupil and child and parent; and because of the awful, vicious programmes shown on television every day and every night at virtually any hour, particularly when children are about?
Has the noble and learned Lord seen the latest study from the United States which seems to prove what everyone previously denied—that vicious, awful television programmes have an effect on children's behaviour which follows them into adulthood?
Lord Falconer of Thoroton: My Lords, as to fixed penalty notices, we propose that where there is excessive noise and an appropriate warning has been given, which will be for a short period of time, if the noise does not stop the local authority—in effect, the environmental health officer will make the decision—can issue a £100 fixed penalty notice. That is a straightforward, sensible way of dealing with noise, which can occur late at night and be very disturbing. If the person does not pay or wants to challenge the penalty notice, he can go to court. It is an unbureaucratic, sensible way of dealing with the problem.
The noble Lord asks: is there a lack of respect between individuals in our society? Yes, there is. That lack of respect is one of the reasons why anti-social behaviour is perceived to be on the rise. Is it caused by the content of television programmes? I suspect that, in the case of some television programmes, it is. I do not know about the research referred to by the noble Lord, hut I suspect that the content of some programmes does have an effect in terms of people's lack of respect. One must seek to increase people's respect for one another and the way they treat each other in their daily lives.
Lord Hylton: My Lords, I agree with my noble friend Lady Howe and welcome the general direction of the Statement. I note what was said about educational under-achievement. Do the Government accept that truancy from school, which can lead to exclusion and suspension, is where a great deal—perhaps not all—anti-social behaviour arises? What extra resources have been allocated to deal with these matters? How effective have been the measures taken so far?
Lord Falconer of Thoroton: My Lords, I agree with the noble Lord, Lord Hylton, that once truancy starts it leads to a whole range of other problems. The White Paper on anti-social behaviour focuses specifically on
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truancy and provides a range of measures, including parenting contracts, which seek to reduce the incidence of truancy.
I also agree that when a point is reached where a pupil has to be excluded—which may be reached in order to deal with the problem of the other children in the school—it is very important, as we have committed ourselves to doing, to ensure that opportunities for proper education are provided for the excluded child. The more people are cut off from education, the more chance that crime and anti-social behaviour will grow.
Perhaps I may provide the noble Lord with the specific resource figures through correspondence.
Earl Russell: My Lords, have Ministers found what I have found through my experience both as a parent and as a teacher—that is, that the way people discharge their responsibilities to me shows an uncomfortable correlation with the way I discharge my responsibilities to them? Does the noble and learned Lord agree that the keystone which closes up the arch of rights and responsibilities is the responsibility of governments to keep their subjects alive? In this context, during Questions the Minister referred to research on the way people survive benefit sanctions. Can he, either now or in writing, give me the references for that research. Ministers have often recommended me to research on the subject; I have looked in all the places they mentioned but I have never found the information I sought.
Lord Falconer of Thoroton: My Lords, the noble Earl skilfully uses the Statement to return to an issue he raised during Questions. The papers that I have in relation to research into the effects of benefit sanctions are DSS Research Report 11, TSO 2000 and DSS Research Report 116, ISO 2000. If the identification numbers are wrong, I shall write to the noble Earl and tell him so.
I agree with the proposition put at the outset of the supplementary question to the supplementary question to the Starred Question—namely, yes, the way in which a person behaves towards one is determined by how one behaves towards the other person.
Lord Carlisle of Bucklow: My Lords, returning to the Minister's answer to my noble friend Lord Waddington, he said that where the problem is caused by pubs or clubs, environmental health officers will have the power to close them. Do not the police or the licensing authority have an existing power to close a public house on objection being taken to the continuation of its licence? Is it proposed that environmental health officers should have the right, without applying to anyone, to direct a public house to close in the way the police now can?
Lord Falconer of Thoroton: My Lords, the noble Lord is correct in his reference to the existing licensing provision. The White Paper makes it clear that where there is, for example, excessive noise and, as a result, significant anti-social behaviour in a neighbourhood,

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the environmental health officers, subject to appropriate safeguards, will have the power to close a premises, which does, as the noble Lord identifies, represent a change.
The Earl of Listowel: My Lords, will the Minister elaborate on the proposals for intensive fostering? How many children are likely to be involved? Where will funding for the placements come from? Is he concerned about the shortage of foster carers in certain areas? What impact will the proposals have due to that factor?
Lord Falconer of Thoroton: My Lords, as regards the proposal in paragraph 2.2 and following paragraphs of the White Paper, it is obvious that, both in relation to proceedings brought under the Children Act 1989 and in the youth court, intensive fostering—that is, placing a child away from its current environment and in the care of foster parents experienced in dealing with the kinds of problems that the child may exhibit—would be a very sensible alternative. I do not know how many children will be involved. The numbers of foster parents available to provide the intensive fostering can be built up only slowly over time, and they are a rare commodity. Where the resources come from will depend on the extent to which the focus is on the social services and the extent to which it relates to the criminal justice system. It will take time to build up, but it is an important resource both for social services and for the criminal courts.
Baroness Thomas of Walliswood: My Lords, I am sure I am not the only person who is concerned about dysfunctional families. We know that such families are the single greatest predictor of offending behaviour. I myself have been involved, as a school governor, in ejecting from a school a child who, at five years old, was already totally unmanageable, even by experienced teachers. He came from such a family. What can we do at an earlier stage in the life of the family?
We know that such families can be cyclical. You cannot learn to be a good parent unless you yourself have been properly parented. "Respect" does not merely mean that of the child for the parent, but that of the parent for the child. We learn respect only by being respected. What can we do to intervene at an early stage and teach those who do not have the skills—who may even realise that—how to be good parents?
Lord Falconer of Thoroton: My Lords, that is an incredibly difficult but well-judged question. First, we must identify the children at risk. Secondly, we must make sure that the response to the child and the family is properly co-ordinated—not trying merely to deal with the problem as it develops at school but looking at whether the social services have a role. Thirdly, we must regard the problem as a family problem, not a childcentric problem. Parenting classes are often viewed with suspicion by families; but subsequent research indicates that parents say that they wish they
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had received that kind of help earlier. Fourthly, we must look at health problems. Fifthly, we must look at whether a family is involved in drug or alcohol abuse, which is frequently a predictor of trouble.
One could continue at length. The three critical factors are: early identification; a co-ordinated response; and someone having responsibility for ensuring that a co-ordinated response occurs. It is not a complete answer, but I suspect that there would never be a complete answer.
Lord Brooke of Sutton-Mandeville: My Lords, is the Minister aware that the first use of the word "civilisation" was by Mirabeau in 1757? It is therefore a youngish articulated concept. Does the Minister have views or suggestions on how individuals within the silent majority can make anti-social behaviour less likely?
Lord Falconer of Thoroton: My Lords, one of the things that happens when anti-social behaviour starts—for example, if a park or a street look increasingly untidy—is that the rest of the community begin to let their standards drop. So they begin to drop litter. If they step outside their front door and see a "tip" outside, that reduces the standard of their own conduct. How can society as a whole react? People can refuse to accept that kind of anti-social behaviour and ensure that what they see around them does not necessarily lead to a drop in their own standards.
Lord Bradshaw: My Lords, I declare an interest as vice-chairman of the Thames Valley Police Authority. Last Monday, I was at Slough magistrates' court. There were no probation officers—because there are no probation officers: there is no one to do the job. There is a grave shortage of court clerks and barristers—legal representatives are hired in by the Crown Prosecution Service on a jobbing basis. They are not professionals.
The police have put huge resources into Slough. The wall of the police station is covered with the names of people who have been arrested for street crime—which is what the Government want. But the courts system and the probation system are creaking at the seams. There are not enough officers. People cannot be found a place on a drug placement scheme because there are no places. The magistrates are told not to send people to prison because the prisons are bursting at the seams. The firm that collects people to take them to prison—Premier Prisons—does not do its job efficiently.
I am afraid that the anti-social behaviour order is a very good layer on the top, but I can assure the Minister that the foundations are awful. Is something being done to address these extremely serious problems?
Lord Falconer of Thoroton: My Lords, the spending round in 2000 increased resources to the criminal justice system. So, since SR 2000, the numbers of police and prosecutors have gone up. The picture that the noble Lord gives of the courts system is not borne

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out by the statistics, save in one respect, because they have been dealing for the past 10 years approximately with the same number of cases.
There is certainly a difficulty in relation to the Probation Service, but the spending on probation has risen by about 50 per cent since 1997 and in the past year by about £70 million. So the numbers have risen, but the demands being made on the Probation Service have increased, for all of the reasons that we have been discussing. The difficulty is not that people do not want to become probation officers. They have to be trained. There is not an endless supply.
It should be remembered that the number of prosecutors has risen; police numbers have risen; the courts are not dealing with any more cases; and we are asking the Probation Service to do more and more—and rightly. We must be patient while the stream of people with qualifications are trained to deal with this work.
So far as concerns prisons, there are about 72,000 people in prison. That is a large number. But the way in which the Prison Service has dealt with the problem over the past five years is very impressive.
We need to do lots to make the criminal justice system work better. I believe that we are going in the right direction. I believe that we are increasing the amount of resources. These problems cannot be dealt with overnight. One of the biggest issues is getting the trained manpower to deal with them. I was amazed by one remark made by the noble Lord, Lord Bradshaw. He said that there is a shortage of barristers. I have never heard that before.

Consolidated Fund (No. 2) Bill
Brought from the Commons endorsed with the certificate of the Speaker that the Bill is a Money Bill, and read a first time.

Corporate Governance
4.9 p.m.
Lord Brennanrose to call attention to the issues of corporate governance, following the recent reports on non-executive directors, auditing and accountancy; and to move for Papers.
The noble Lord said: My Lords, in a capitalist system there is an inevitable tension between two aspects of human behaviour. One is greed; the other is trust. It is by the resolution of this tension that we control greed, and yet recreate trust where it needs to be recreated. That is the task that we shall debate.
The 1990s were an era of "boom". A German banker commented earlier this year that, in his experience, booms diminish vigilance, induce complacency, make for sloppy thinking and, above all, lead to hero worship. Who are the heroes of the 1990s?
M r Kenneth Lay, who regularly appeared before the United States Congress to demand deregulation, abhorred any public intervention into commercial
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activity because with deregulation and without public intervention they could set about their task of maximising shareholder value. The message was preached and we listened, but the time came when we realised that it was not the right message, and that the messengers were those who had given in to greed. By doing so, they had foregone the trust which it was their duty in corporate life to maintain.
Enron involved activities with five major banks. It led to the demise of Arthur Andersen and now involves law firms subject to civil and potentially criminal actions. It was followed by the very substantial accounting irregularities revealed by Xerox. A firm called Sprint was described by a Wall Street commentator as a "serial governance abuser". He was right, because the company spent its time creating stock options which, when thought not to be generous enough by the recipients, led to them demanding that the board reprice the options so as to make them more advantageous.
As for investment banks, the present chief executive officer of Credit Suisse First Boston described its activities in the 1990s as those of a "giant casino". It has suffered a 25 per cent drop in the discretionary funds given to it by outside investors, and it has made provision against action by the Securities and Exchange Commission and other claimants of 600 million dollars.
Companies, accountants, directors and banks all to some extent fell into the problem of greed and, as a result, trust was lost.
I hope that I have not exaggerated this history, nor would I wish to infer that it is representative of the way in which we think and act in this country. However, we cannot take matters for granted.
In Holland, a month ago, Royal Ahold, the third biggest food retailer in the world, declared accounting irregularities of around 500 million dollars. The share price has fallen by 60 per cent. Alltran in France has been threatened with prosecution for giving false information to the markets. Camroad in Germany suffered the indignity of a chief executive officer beginning a seven-year sentence for creating a balance sheet based on fictitious sales. Last year, Elan in Ireland suffered a substantial drop in its value because of off-balance-sheet activities.
Those actions, both in the United States and in Europe, are not separate from the community in which we live as ordinary people. They lead to pensions being lost, savings vanishing and jobs going. They lead to a substantial drop in the financial net worth of corporate activity and, above all, they damage investor confidence. That confidence must be restored; jobs and savings must be protected; and action is required, at least with regard to listed companies.
I accept the sense of the comment that nobody can completely eliminate the determined fraudster, and nobody can guard in every way against the ingenious mind that will find its way around regulation and voluntary controls. However, that does not mean that we should not try our best to ensure that it does not happen.

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If your Lordships will forgive the crudity of the introduction, I shall speak on the bosses and the books. I begin with the bosses and the issue of power. The role of non-executive directors, as envisaged in recent debate and by the Higgs report, is to ensure that three things are avoided: first, lack of independence; secondly, weak oversight; and, thirdly, excessive pay to executive directors.
Allowing for the debate that will take place about the Higgs report, one can crystallise the role of non-executive directors, briefly but accurately. Their central job is how to deal with the chief executive officer—how to choose him and, having chosen him, how to evaluate his or her performance continually, with an eye to good financial standards. That is a short but, I hope, appropriate encapsulation of the duties of a board.
Who would best fit that requirement? The objective observer would say that it would be the non-executive director, because he or she does not have an immediate interest in terms of compensation or career such as executives have. It is the non-executive director's role to make the balance between the entrepreneurial drive of the permanent staff, coupled with intelligent comment and, when appropriate, pointed criticism. Surely, that is what the Higgs report seeks to achieve. At least half the board should be non-executive; independence should be strengthened, and there should be a clear separation between the roles of chief executive officer and chairman.
The CBI's reaction to the Higgs report was a little disappointing. Of the 100 heads of the FTSE companies approached to answer the questionnaire, only 61 were able to do so. That is a low response from such a small number of companies to what is probably the most significant report about corporate life that they will face in the next few years. The response is in the form not of a report, but of a summary of a questionnaire reviewing the answers to four questions.
The response to two of the questions is an extreme reaction against two Higgs' suggestions. Respondents objected, first, to the suggestion that the nominations committee should be chaired by an independent non-executive director and, secondly, to the role suggested for the senior non-executive director in relation to the chairman of the company. The voting response showed a more balanced reaction to two other suggestions: first, that there should be a meeting once a year of non-executive directors without a chairman; and, secondly, that the roles of chief executive and chairman should be separated. As yet, we have no response in terms of CBI thinking about independence, systems of appointment, training or tenure. I hope that it will come soon.
The critical question that comes next after attempts to control the power of chief executives and chairmen is that of pay. Whatever we thought a few years ago about rewarding the entrepreneur, as we were told, "high payment required"—and looking to just the recent past—the fact is that the payments reached levels that could properly be described as grotesque.
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Share options are the vehicle for such reward. As one is maximising shareholder value, the inevitable temptation to any ambitious man or woman is to maximise the value of his or her share option. That objective is perfectly reasonable if it balances with the long-term development of the company. It is not reasonable if it becomes the primary objective.
Therefore, the recent Smith recommendations about audit and remuneration committees are surely unexceptional. The first recommendation is that they should be made up of entirely independent directors, one of whom should have relevant financial experience. The second is that they should monitor the performance of the company's auditors. The third is that they should exercise special care as to non-audit services. Europe will add to those recommendations. Internal Market Commissioner Bolkestein is about to issue voluntary proposals on corporate governance. The noble Lord, Lord Sterling of Plaistow, is reported in this morning's newspapers as saying that these proposals from Higgs—and others like them, I infer—
"create mistrust, are highly divisive and will stifle entrepreneurial drive".
I disagree. As he said:
"The objective of a board is based on trust",
but the higher objective is that the investor and the public should have trust in corporate integrity.
I am happy to say that I can be brief on auditing and accounting, because I understand that the major firms and the thinkers in this field have accepted the general thrust of the audit report of the Co-ordinating Committee and the new accountancy approach which has led to some significant proposals. Other changes include: Sir David Tweedie, a very persuasive and powerful proponent of UK practices, to be the new head of the IASB: by 2005, all listed companies within the European Union to follow the standards of that board; and by that year, if possible, convergence between us and the United States on accounting standards.
I conclude by suggesting that it will be good for corporate life and good for all of us if business schools emphasise the principles of good corporate governance as part of training and if we in Europe set up a European Centre for Financial Standards to investigate how they are presently working, how they might need to be changed and how corporate life can properly be educated about them.
The proposals in all these new reports, although they may be debated in detail, are surely tough and yet measured. There has to be a correct balance between rule making and playing by the rules. If you do not play by the rules, you cannot be too upset if you face some rule making. The question is how we strike the balance. In the debate which I hope that we will now enjoy, the balance must be determined by society, not by the corporate world. Democracy is the counterweight to capitalism. We in Parliament debate how that counterweight should strike the balance: the least amount of regulation, but the greatest amount of

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trust to be expected, all in the service of corporate profit and health, for the general good of the community. I beg to move for Papers.
4.24 p.m.
Lord Freeman: My Lords, I congratulate the noble Lord, Lord Brennan, on this important debate. It is almost one year since he introduced a similar debate and it is timely that we should return to the subject. He has painted skilfully on a very large canvas. In the limited time available to me, I intend to focus on just a few points. I agree with a good deal of what he said in specifics, particularly about the Higgs report. I shall come to that in a moment. I declare a number of interests which I have registered but in my judgment they are not relevant to this debate because I speak for myself and based on my experience.
In the debate 12 months ago, the noble Lord called for no complacency and for action. He pointed to the events in the United States to galvanise both public and private sectors in this country into action. That has happened. Thank goodness we had a co-ordinating group chaired by two very able junior Ministers to, as it were, look after the great number of reports that have been presented by both the professions and the public sector. I should like briefly to record some of the most important ones. There was the government review of the regulatory framework to which the noble Lord, Lord Brennan, referred; the report of the Office of Fair Trading; the Treasury Select Committee report; the Higgs report; the Smith report—and, incidentally, Sir Robert is the chairman of the Financial Reporting Council, the new regulator of the accountancy profession; professional guidance issued by the leading professional accountancy institute in England; and the Report on a Modern Regulatory Framework for Company Law in Europe, the chairman of which was Mr Jaap Winter, published just before the end of the year.
In my judgment, the response in the United Kingdom in the 12 months since our previous debate has been measured, proportionate and practical. There is much to be welcomed. I have four points to make in as many minutes. It would be helpful if the Minister responded to some or all of them in his reply. The first is on Europe. I think that it would be fair to say that the United Kingdom has had a record of leading reform of corporate governance ahead of other European nations. Looking back over the past 12 months, particularly to the recommendations on auditor independence from the European Commissioner last May, I think that the United Kingdom has responded well by accepting all the recommendations. Briefly, the recommendations are that the audit partner must rotate every five years; that there should be a cooling-off period, rather like that for the Civil Service, so that an audit partner could not work for his or her client within a period normally of two years; and tighter controls on the non-audit work done by auditors for their clients.
As the noble Lord, Lord Brennan, said, Frits Bolkestein, the Commissioner for the Internal Market, plans to publish an action plan, as he calls it, in May,
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to begin the process of setting common corporate governance requirements across Europe. That is to be welcomed, and I am sure that the United Kingdom will encourage the Commissioner in that endeavour. However, the Commissioner himself has quite rightly said that, as each nation has a different history of company law, each will have its own approach to corporate governance. That must be right. I think that his rather enlightened approach to this important subject is to be welcomed.
My second point is on the United States. Thank heavens that we have in this country an approach based partly on a voluntary code. Companies have either to comply with the suggested Higgs requirements on non-executive directors or with Smith on the audit report or explain why they are not complying. That approach seems better than the prescriptive, legalistic approach in the United States. Following Sarbanes-Oxley—the legislation governing the audit and accountancy professions—the SEC has produced literally thousands of pages of regulations, which are either already implemented or to be implemented. We have adopted a different approach, which I very much welcome.
There is a specific problem in relation to the United States which the right honourable lady Patricia Hewitt, the Secretary of State for Trade and Industry, is fighting together with Commissioner Bolkestein. I am sure that your Lordships will wish to encourage the Minister to raise it with the Public Companies Accounting Oversight Board—the oversight board—the new regulator in the United States set up by the SEC, because the Americans seek to regulate UK and, indeed, for that matter, European auditors and accountants if they carry out work for companies that are listed in the United States. So there is double jeopardy and double regulation, which I argue is unnecessary. I hope very much that the Minister will be able to confirm that the policy of Her Majesty's Government is to pursue with the SEC the need to recognise that other countries, particularly in Europe and above all in the United Kingdom, have high standards of corporate governance and regulation of auditors and accountants. The Americans should not seek to begin again the process of regulation of companies that are listed in the United States and audited in Europe.
Thirdly—here I find myself in agreement with the noble Lord, Lord Brennan—the Higgs report is to be welcomed in its entirety. I think that most fair-minded people reading the many recommendations—frankly, many of them have been misunderstood by colleagues in industry and commerce and, indeed, by some newspapers—will recognise that they are prudent and sensible. All of them should be welcomed. The Secretary of State for Trade and Industry is right to welcome the report. I mention one of the many recommendations; namely, that the nominations committee should not be chaired by the chairman but by an independent director, with the chairman sitting on that body. That seems to be a sensible way forward

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in terms of best practice as one is thus better able to widen the pool of non-executive directors who wish to serve on the boards of companies.
However, there is one problem with the Higgs report and that is the speed with which it seeks to be implemented—a few months after its publication is far too short a period. When changes were made to the codes 10 or 15 years ago there was a much longer period of consultation and explanation. I plead with Mr Howard Davies of the FSA—the body ultimately responsible for the introduction of the code—to take a few more months to ensure that the code can be explained fully to the companies it covers.
I agree with the noble Lord, Lord Brennan, that the Smith report is excellent. Let us have its recommendations introduced immediately. I have heard no criticism, either within the world of audit and accountancy or in business, of the recommendation that audit committees—we touched on that matter in the debate last year—should govern appointments, pay and the non-audit work of auditors. I hope that when the Minister replies to the debate he will be able to give some indication of when the Companies Bill might be introduced and whether draft clauses could be discussed by your Lordships and another place before we get that Bill. Frankly, a Bill in draft, discussed by your Lordships and another place before it is introduced, is much to be preferred. We have only to compare the recent examples of the Communications Bill discussed in another place and the Licensing Bill to appreciate that argument.
4.34 p.m.
Lord Sharman: My Lords, before I begin I must declare an interest. My business interests are set out in the Register of Members' Interests. Particularly relevant to the issue we are debating is the fact that I sit on the boards of three listed companies in the UK and I am the former chairman of KPMG where I continue as a paid adviser.
I should like to thank and congratulate the noble Lord, Lord Brennan, for the opportunity to debate once more the issue of corporate governance—a year ago we discussed the Enron collapse—and the issues affecting corporate governance and audit and accountancy. A number of inquiries have taken place which I shall not list, as the noble Lord, Lord Freeman, has already done so. The reports, certainly as regards the UK—I echo the noble Lord's comments in that regard—have proceeded on the very well proven approach based on broad principles rather than strict rules. To my way of thinking that has the great advantage of recognising the critically important point that no two boards of directors are the same or operate in the same manner.
Mr Higgs is to be congratulated on the approach he took in understanding that good governance is concerned with the behavioural aspects of boards as well as their structure. The Higgs report—I wish that more people had read it in total—makes clear that he takes that into account in making his
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recommendations. I believe that is important as at least part of the reason for the failure of Enron, WorldCom, and other companies to which the noble Lord, Lord Brennan, referred, was due to the fact that they operated in an environment with a strict set of rules for auditing, accounting and governance. Strict sets of rules generate an industry composed of accountants, lawyers and investment bankers who design schemes to get round the rules. It is much easier to overcome the objective of the rules than to circumvent a principle based approach.
As the noble Lord, Lord Freeman, said, it is also worthy of note that by and large the reaction of the market-place to the reports is positive. The reports have been well accepted, particularly as regards the recommendations on auditors, audit committees and accounting and their regulation. It is important to recognise the way in which the market-place and the system of regulation work in this country. In that regard credit is due to some of the institutional shareholder associations. Back in April/May of last year the ABI wrote to the chairmen of all the audit committees of the FTSE 100. It followed that up with a subsequent letter to the chairmen of the audit committees of the FTSE 250. In that letter it drew attention to developments in audit committee practice, procedure and policy. It specifically drew attention to the examples of two companies—Unilever and Rio Tinto Zinc—that had addressed those issues in their annual reports. The ABI asked that all FTSE 100 companies should consider doing the same thing. Some time later, Phillips, an international company based in the Netherlands, published its own audit committee charter or terms of reference and policy on auditor independence. That was published over the web and was a first.
As a result of those initiatives audit committees and boards started to re-evaluate their own policies and procedures. As a result best practice was quickly disseminated. I am therefore not surprised that many of our larger companies will have no difficulty whatever in complying with the recommendations of Sir Robert Smith.
I wish that I could say the same about the Higgs report. There has of late been somewhat more noise as regards the recommendations of Mr Higgs. The concern seems to be that the Higgs recommendations will undermine the role of the chairman. Although that is a concern that is easy to understand, particularly if one is a chairman as I am, Higgs makes it very clear in his recommendations that that is not his intention. He says that the chairman,
"has a pivotal role in creating the continued conditions for individual director and board effectiveness".
It is worth remembering that of the 55 or so recommendations that Higgs makes only some six or seven are the cause of the noise. Like the noble Lord. Lord Freeman, I believe that we should accept the report. There are, however, three issues on which I wish to comment as they constitute anomalies.
I beg to differ with the noble Lord, Lord Freeman, on the nominations committee. It is illogical to expect the chairman to carry out that pivotal role and yet at

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the same time not chair the committee. We should remember that the committee is not solely concerned with the appointment of non-executive directors. It appoints the chief executive and chief financial officer. In many cases, it appoints the key executive directors. The chairman has to work with them as a team.
Higgs's recommendations on the interaction of the senior independent director and other non-executives with the shareholders has also created some disagreement. It is accepted by most people that involvement of the institutional shareholding bodies with the companies in which they invest would be desirable. We want to see more of that. The only issue that arises is how we do that and who does it. Higgs recommends a role for the senior non-executive director that is beyond question. He is a backstop. That is Higgs's principal recommendation. If no one else can deal with the problem for the shareholders, the senior non-executive director should.
How do we then understand the themes and concerns of the general body of shareholders? It might well be preferable to suggest a similar approach to that which Higgs suggests between the chairman and the chief executive. Who is responsible for what in the board should be defined, reduced to writing and agreed by the board. With it, there should be the objective that the whole board should understand the themes and issues important to its shareholding base.
The final area about which I am worried is that the chairman and chief executive have no provision for rotation, yet the suggestion is that individuals on the non-executive body rotate every six years. I am not sure that having a rotating body of non-executives every six years, with the chairman and chief executive semi-permanent, will increase the effectiveness of corporate governance. More stability in the body might be desirable.
We have before us the results of a considerable body of work. I am confident that if we proceed along the route of tried and tested approaches of principles followed by "comply or explain", we will make good progress in further developing effective corporate governance. Let us get on with the implementation. We do not need any more reports.
4.43 p.m.
Lord Haskel: My Lords, I congratulate my noble friend on introducing the debate. His timing is excellent. The consultation on the Higgs report ends on 14th April, and surely a debate of this nature must be a helpful contribution to the consultation.
I wonder if my noble friend has visited Halifax. In the 19th century, Halifax prospered through business and industry and, after Sir Charles Barry had done a pretty good job building the Houses of Parliament, the people of Halifax decided to engage him to build a town hall to celebrate their commercial success. The phrase "corporate governance" had not been invented then, but the citizens of Halifax decided that they wanted the key to their prosperity to be written on the front of their town hall. The two-word inscription is still there and reads, "Act Wisely". To me, the simple
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principle that action and wisdom go together describes corporate governance perfectly. It also deals with the greed and trust mentioned by my noble friend.
I can look back on a career of 30 years in the textile business, which is how I know Halifax. In spite of the list of wickedness given by my noble friend, in this country it has always seemed to me that poor strategies have been a bigger destroyer of businesses than wickedness. Business is a pretty risky affair. Action without strategy or direction rarely succeeds in doing the things that really matter and make a lasting difference. That is why corporate governance is about involvement in a business, not just policing it. I therefore agree with Higgs about enlarging the role of non-executive directors, but I would also like to see it deepened.
Of course it is right that companies should state their values, which will indicate how they will deal with people, conduct their business and behave in their relationships with other stakeholders. However, that has to be more than mere words. No one could argue with a company that stated its core values as respect, integrity, communication and excellence, but those were the stated core values of Enron. They were the words on the banners outside its offices in Houston. They are a modern version of the inscription on Halifax Town Hall, I suppose. The point is that simple compliance with having core values is not enough. Non-executive directors have to be sure that those values are part of a company's culture, and have a part in how a company operates. That needs deeper involvement. Corporate governance is about involvement, not just rules.
I agree with the noble Lord, Lord Sharman, in that we should not run the risk of a prescriptive rulebook becoming a barrier to innovation. Innovation is where our future lies. We cannot hold back technological change. We cannot and should not try to slow the growth of developing countries, and we cannot compete solely on the basis of costs. Our response to faster change and greater competition cannot be protectionism. It has to he innovation, and that is encouraged not by policing behaviour but by getting the strategies right. That is the task of the directors.
I agree with Higgs that non-executive directors have a role to play in instilling a culture of integrity. However, others have an even greater role, such as the professional institutions, particularly the accountants and also the lawyers and bankers, who lowered their standards and allowed themselves to become poachers. They must raise their standards once again so that they become gamekeepers.
But other professional organisations such as engineers, human resources, technologists and designers have an important role to play in addition to supporting their members in their professional work. They agree with me that, in addition, they must give their members the comfort and support of decent values and high standards of integrity to help and support them through the market-driven turmoil of their daily work. At a time when the public are wondering how much they can trust business, it seems

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to me that in that way they can perhaps give confidence to the public and comfort to those who have to work every day in the rough and tumble of a difficult business environment. Extending corporate governance to the professions in that way would do a lot to raise ethical standards, which is one of the purposes of the Higgs report.
I also agree with Higgs on the need to widen the pool of non-executive directors and to introduce new blood. We need more, because Higgs is asking for more of them and I am saying there should be deeper involvement. Directors understand that they owe a duty to the company. They are accountable to the shareholders and indeed are responsible to all the stakeholders. To fulfil those duties fully, a director needs to be involved in a company's reputation, its key relationships and its innovation as well as the financial risks. There are many courses, seminars and meetings to explain and discuss all those tasks. However, it seems that we have not seriously set about increasing the pool of non-executive directors and ensuring their professionalism, especially if we are to have senior non-executives.
How is that done elsewhere—in the Civil Service, the police or the Army? How do they promote the meritocracy that Higgs seeks? The answer is that they have a staff college. In this country, we have more than 50 business schools. For some time, I have been suggesting that one of them should turn itself into a staff college for non-executive directors. I refer to a college where people can enter themselves or be sent for a part-time or full-time course to acquire or polish up the skills and knowledge that they need to be an involved non-executive director; a college that can be at the centre of excellence for best practice; and a college that can be part of active share ownership. Such a staff college could borrow the words from Halifax town hall because its task would be to equip non-executive directors to act wisely.
4.50 p.m.
Baroness O'Cathain: My Lords, like previous speakers, I thank the noble Lord, Lord Brennan, for bringing this interesting subject to our attention. In doing so, I must declare an interest. I have been on boards of FTSE 100 companies for 20 years and for many years a member of audit committees.
I have lived through all the developments since then, which have been classified by some as the "bad old days". As in every part of life—be it corporate, political, national or even international—there were, and probably are, bad practices. I welcome any suggestions guaranteed to improve the perception that our corporate governance can be relied upon to be honest and transparent. In terms of our reputation, both nationally and internationally, nothing else is acceptable. I deliberately use the word "perception". The word haunts us all the time but it has become central to so much that we do, even here in the House of Lords.
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As we are time limited I shall not dwell on the current "perception" of the operation of boards of directors. We have had masses of negative comment. I accept the old adage that there is "no smoke without fire". However, in my experience, boards of directors have worked very hard to fall in line with the demands of successive reports—Cadbury, Greenbury, Hempel and now Higgs—not to mention the continuous recommendations relating to other business issues such as accountancy. The latest recommendation is the Smith report on audit committees and the combined code of guidance.
Boards of directors of all the companies of which I am aware have examined those reports and given a big welcome to much of the content. There is undoubted value in the reports but I fear that we are now getting to the point where boards spend more time making sure that all the corporate governance proposals are met than dealing with very important issues such as strategy. The noble Lord, Lord Haskel, mentioned strategy, and I thought that I would repeat it.
All these proposals are of a "best practice" nature. They are not encapsulated in law. However, the concept of "comply or explain", which has now been brought to the fore by Higgs, seems exceedingly prescriptive. I know there is a feeling, which is quite widely felt, that it is only a matter of time before we are presented with a raft of draft legislation. That will prove exceedingly lucrative for squads of lawyers, as the Higgs report is proving to be to consultants who are peddling advice to boards, and to headhunters already rubbing their hands in glee in anticipation of a huge demand for new independent directors. However, is it going to improve overall performance of British companies and, by extension, the performance of corporate Britain?
Before dealing with the points that concern me greatly I believe that it is not frivolous to point out that the stream of reports on the subject of corporate governance resulting in the "something new" part in each succeeding report has two results. First, proposals have become so numerous that they could well act as a deterrent to truly independent, experienced directors of proven expertise who decide that the approach is becoming just a box-ticking exercise that limits their input to the board by virtue of the preponderance of "measuring up to the best practice" proposals. One company secretary sent me 16 pages of changes to existing practices which must be considered and, fortuitously, today gave me a further checklist of how best we can carry out the proposed evaluation of the board. I refer to paragraph 11.22 of the Higgs report. The latest document he has presented me with is composed of two parts. The first deals with the performance evaluation of the board and consists of no fewer than 62 questions, each of which requires comment, not just box-ticking. That is in line with the guidance in Annex J of the Higgs report. The second part deals with the performance evaluation of independent directors. There are 10 questions requiring detailed comments on each individual independent director. In the case of this particular board, there are eight independent directors, so I have

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to ruminate at length on the answers to 70 questions. Unfortunately, I cannot fill in my own evaluation. The costs of running the board could well escalate to such a level that shareholders would be quite within their rights to object.
Let us not forget that the business world has been inundated by prescriptions to improve corporate governance. I shall give a few examples. In the US, there is Sarbanes Oxley, which is the only one encapsulated in law; in France there are two reports, Vienot in the late 1990s and Bouton this year: and there are also all of our reports, which I have already listed. My slightly facetious mind is reminded of a song from "Annie get your Gun"; it is, "Anything you can do I can do better". The process is in danger of taking over. Business entrepreneurship, creativity, the ability to be light on one's feet in grasping opportunities and the ability to compete worldwide could be hampered by concentration on that process.
The really serious points, which have already been mentioned, include the recommendations relating to the choice and role of the chairman. It is crazy to suggest that the chairman should not be chairman of the nominations committee. I am afraid that I cannot agree with the views of my noble friend Lord Freeman on the nominations committee. The proposal is just crazy. The operation of the board depends so much on the chemistry of the board, as demonstrated by the ability of the chairman to have respect for, and trust in, all the directors. How could that be achieved without the chairman's input and, indeed, leadership in the final selection of a proposed independent director? After all, as has been said, that is a pivotal role. A pivotal role not being chairman? How?
Secondly, the only situation in which it would be in the interest of the company for the senior independent director to approach the shareholders would be in the case of a weak chairman who was not up to the job. In such a situation, that should be done by the whole hoard, not just by the senior independent director who might have a not-so-hidden agenda. That would also result in a two-class board, signalling demise of the unitary hoard. I believe that most people in British industry and commerce would agree that that is a good thing. A pivotal role for the chairman? I think not.
The third serious point is that the cost of all of this has so far been passed over. What about the additional reporting requirements—chunks of it—in the annual report? What about the costs of consultants to assist in carrying out the performance review? I have already alluded to costs of headhunters. Costs, cost, costs, my Lords, just at a time when we are all struggling to survive.
The definition of independence makes passing reference to a person being,
"independent in character and judgement".
Those are pretty fundamental personal characteristics, which are so basic that they are unlikely to be diminished in any way irrespective of whether the person sits on a board for six years. That period actually equates to a period of 72 days if one measures the contribution and effectiveness of the director by
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attendance at and contribution to board meetings. The noble Lord, Lord Haskel, said that integrity should be introduced. Does he mean that people should be trained to have integrity? Surely people either have integrity or they do not as a basic personal characteristic. If the director has that independence of "character and judgement", how come he or she is in danger of losing those basic characteristics to a point that they,
"could affect, or appear to affect, the director's judgement"?
I quote from lines four and five on page 37. In my personal experience, the longer that one is on the board the more independent one becomes. Let us remember that to lose the services and contribution of an experienced director on the spurious basis of lack of independence, based on a fallible description of independence, is unjustifiable in fact. If it works, do not fix it.
In the time available to us—I am about to overrun—we are certainly not in a position to enumerate concerns or to consider more carefully the more positive points. I hope that if the Government feel minded to encapsulate the recommendations of the Higgs review, they will think long and hard and give your Lordships' House much more time to consider the matter further.
4.58 p.m.
Lord Holme of Cheltenham: My Lords, in thanking the noble Lord, Lord Brennan, I point out that I intend to concentrate more on the values that inform the policies and practices of public companies than on the structure of governance. Before doing so, I apologise to the Minister and to your Lordships' House that, not knowing that there would be a Statement this afternoon, I find myself in the situation of having to be at a long-standing commitment in Greenwich at seven o'clock. I may have to leave shortly before the winding-up speeches, for which I apologise.
Ideally, the values of companies should work together with the right structures of governance. However, my point is that to concentrate exclusively on codes, rules and regulations can easily miss the point. After all, the old Soviet Union had, on paper, a most impressive constitution of checks and balances. The Germans, as always, have a word for what I want to talk about—the issue of values. They speak of the Geist—spirit—which is necessary to bring to life the bare bones of formal institutional blueprints. The noble Lord, Lord Haskel, has already referred to that.
Companies are human institutions like any other. They are not value-free, except perhaps in the minds of academic economists. Rotten leadership produces rotten companies, as Enron and others have recently reminded us. Conversely, integrity produces good companies.
First, I shall say a brief word on Higgs. Much of the report is timely and good common sense, and I welcome that, but I find two of his conclusions dubious. Here, I declare an interest as a former member of the board of Rio Tinto, a FTSE listed company, with a continuing role as adviser to the

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chairman. Although I believe that it is right to identify a senior independent director and right that institutional investors should, at times of crisis, have access to him—in practice, they do anyway—I consider it entirely wrong that he should beat a path around the City confusing everyone as to the company's normal investor relations.
Incidentally, I believe that one useful and appropriate function for SID—perhaps we should call him El Cid to distinguish him from the British Gas shareholders—might be to make him the ultimate destination for internal whistle-blowers who cannot find satisfaction for their concerns through the specified channels. That would be a proper check and balance for SID.
Then we come to the issue of the chairmanship of the nominations committee. Here, I agree with the noble Baroness, Lady O'Cathain. I can see no case for taking this pivotal role out of the hands of the chairman, one of whose key responsibilities is to build and balance a team. Indeed, the more the chairman is placed, à la Higgs, in a quasi independent mode—non-executive only, not having been a former CEO of the company—the less easy it is to see why that responsibility should be taken away from him.
I now want to revert to the question of sound values, which should be reflected in the way the company is managed and how it does its business. I believe it is idle to pretend that the leaderships of large companies do not face a significant deficit in trust and public confidence. It is often said that we have moved from a "tell me" world to a "show me" world. A great deal of urgent thought is going on in a number of leading companies as to how, by a clear demonstration of the right policies in action, confidence can be earned and trust restored.
That requires leadership from the top of the company—the boardroom. But, if it is to be more than public relations, it also requires ownership on the part of all the employees, and it is noticeable that one of the key drivers to improvement in corporate standards is the wish of able young people to join companies which they feel they can respect. A recent survey by Environics International, the global research company whose advisory board I chair, showed that 83 per cent of employees of large companies believed that the more socially responsible their company was, the more motivated and loyal they were.
Therefore, the key desirable characteristic of a healthy corporate culture is responsibility. By that, I mean that, without diluting in any way the accountability to the shareholder for the creation of long-term value—and how difficult our financial system makes it to keep eyes fixed on the longer term—the company should seek to exercise care, consideration and high standards in all its key relationships with consumers, customers and suppliers, host communities and, above all, its employees. Power in a democratic society—large companies do have power—should always be exercised accountably and responsibly.
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That is why the publication on corporate social responsibility, Making Good Business Sense, which I co-authored with Sir Philip Watts, now chairman of Shell, on behalf of the World Business Council for Sustainable Development, recommended that every company should set out clearly what it stands for and the standards of conduct by which it should be judged and then get on with living up to the commitment. A growing number of companies have joined Shell and Rio Tinto in doing exactly that.
In my view, alongside responsibility, the other two cardinal virtues are transparency and a sense of proportion. The merit of greater openness, subject to reasonable commercial confidentiality, should be obvious. Transparency on the part of a company removes suspicions; it allows boardrooms to learn from their mistakes; and it promotes greater confidence all round.
As for a sense of proportion, perhaps I may mention one issue to which the noble Lord, Lord Brennan, referred in his introductory speech. It is an issue where reason seems to have fled from some boardrooms—that of grossly excessive remuneration. It is what Warren Buffett, the sage of Omaha, two days ago called "obscene pay". This contagion has spread from the United States, often carried on the wings of so-called "remuneration consultants" whose recommendations, curiously, always seem to ratchet package levels upwards and never downwards.
Of course, the world of senior executives is internationally competitive and of course exceptional performance should be commensurately rewarded. But what, in some cases, seems merely to be excessive greed, in bad times as well as good, must be curbed if the social acceptance of the useful role of business in society is not to be fatally damaged.
Others have spoken eloquently about setting the right framework. That is important. But if we are to have more than a culture of box-ticking—bare compliance, as it were—and if we are to have a culture of compliance-plus, it is also important to build on the wish of companies themselves to do better in restoring trust. Therefore, my plea for responsibility, transparency and proportionality is in that spirit.
5.6 p.m.
Lord Fyfe of Fairfield: My Lords, I, too, congratulate my noble friend Lord Brennan on initiating this debate. Inevitably my contribution is conditioned by my own personal experience. I want to concentrate on the Higgs report.
Until I retired from full-time business around two-and-a-half years ago, I was chairman of the Co-operative Group, the CWS, chief executive of the Midlands Co-operative Society, a director and vice-chairman of the Co-operative Bank, a director of the Co-operative Insurance Society, and the chairman of a footwear multiple. Therefore, I believe that under those circumstances I have breached several provisions of the Higgs report.
Frankly, at the time I undertook those responsibilities, I did not feel that there was a risk of any conflict of interest or, indeed, of my

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responsibilities being excessive. But, with the benefit of hindsight—we all have that—I believe that perhaps there were occasions when I took on too many responsibilities and perhaps, at times, there were areas of conflict. Therefore, I believe that Higgs has much to contribute in that sphere. Now I have learnt my lesson. Since I retired, I have confined myself to the chairmanship of the Unity Trust Bank.
The debate on chairmen and chief executives has been fought and won and very few large companies now embody both roles in one individual. From my own personal knowledge, a chairman requires a chief executive and a chief executive requires a chairman. But I want to focus on several items in the Higgs report which some may consider relatively trivial in the scheme of things.
First, I turn to the subject of the ubiquitous SID—the senior independent director. This paragon will attempt to resolve concerns that have not been satisfied by consultation with the chairman or the chief executive. I submit that if that process is necessary, there is something wrong with the chairman or the chief executive, perhaps both. If such a matter arises, surely it is a concern for the board as a whole and should be tackled as a whole. It may demonstrate that something is lacking in the ability of the chairman or the chief executive to solve the problem. In my opinion, SID could become a glorified complaints officer or a focus of discontent. That could lead to disruption in the boardroom and to politics in the board. From my experience of boardrooms, some directors are much more adept politicians than many of the inhabitants of the Westminster village.
I take issue with some speakers on the nomination process for non-executives. If a chairman elected by his peers as capable of chairing a company is not capable of or responsible for chairing the nominations committee, I would submit that a problem exists with that chairman who in those circumstances, as has been said, has a pivotal role. Who should serve that function? Does the ubiquitous—I should not have used that word because it is too complicated—SID come into the scheme of events once again to perform that function and so exaggerate his own importance?
Incidentally, it is not easy to recruit non-executive directors. Capable people with the time, the sense of responsibility and the knowledge to undertake the functions do not grow on trees. Thank heaven that the days have gone when simply by being a Peer or a knight one could be granted a relatively easy passage to a boardroom.
Tenure of office concerns me. While two three-year terms may be appropriate for some companies, the Higgs proposals do not appear to have regard for the size and complexity of some businesses. I speak from personal experience. I was chairman of the Co-operative Group which covered a wide sphere. Overall, all directors were responsible for retailing, farming, travel, funeral, banking, insurance, manufacturing and other sectors. Could any non-executive director entering such a job attempt to master the complexities of that business in two three-year terms? My experience is that non-executive
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directors become of real value only when they have had considerable experience of a large business and have become involved in it.
On the remuneration committee, Higgs makes the passing comment that the chief executive's opinion and the chairman's opinion should be taken into account. I do not believe that that is strong enough. The chief executive should always be in attendance. He does not necessarily have to be a member of the remuneration committee but he should always be in attendance at the remuneration committee meetings when the remuneration of his executive colleagues is being discussed. Who better to measure the strengths and weaknesses of his executive colleagues than the chief executive who works with them on a daily basis? Of course, he should not be involved in deciding the remuneration of the chairman or the non-executive directors.
There are many depressing aspects of corporate greed and downright incompetence in British business. I shall not go into them; it is not part of the Higgs remit. I hope that many of the sensible comments that he makes can go some way to alleviate that. I welcome many parts of the report, but there is little point in companies heading for Carey Street—I am being old-fashioned—or heading for Canary Wharf protesting that they have ticked all the right boxes. That would be no consolation whatever to shareholders. Business has failed to regulate itself so often that governments must act, but at the same time they must create the environment in which business can prosper. There should be sensible, although not necessarily benign regulation but not over-prescription. While the report has much to commend it there are some areas in which it lacks practicality and common sense, but common sense is not very common.
5.15 p.m.
Lord Stewartby: My Lords, I join other noble Lords in thanking the noble Lord, Lord Brennan, for giving us this timely opportunity to debate a topical subject. Like others, I must declare various interests. Perhaps I may do so in an omnibus way. My current commitments are listed in the register, but at one time or another over the past 30 years I have been a non-executive director of 10 public companies. Currently I am chairman of the audit committee of two financial companies and, for my sins, senior independent director. Not surprisingly, in the past few months my workload has increased exponentially.
There is a great deal of sense in the Higgs report. Inevitably, public comment on it will have focused on those areas where there is a case for disagreement. I do not propose to run through a catalogue of points about which I am a little unhappy. I certainly shall riot open up the subject of the senior independent director, because I believe that it has had more than enough attention outside this Chamber. On a personal basis I am a little anxious about what it may imply.
I want to comment on one or two points to illustrate where I believe that Higgs has become too prescriptive. Independent non-executive directors feature

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prominently in the scheme that is now being developed and I wonder whether public expectations of the capacity and effectiveness of non-executive directors are being exaggerated. They play an important role that must be undertaken properly, but some discussions on the subject seem to imply that they can sort out everything on their own, which of course they cannot because they are part of a unitary board. Nevertheless, Higgs has bravely offered a definition of "independent". Most elements that he quotes are entirely reasonable—for example, a conflict of interest in a business connection with another company or a former employee—although a couple appear to me to be arbitrary and not entirely realistic, at least in the light of my own experience.
The first is that if two members of the board of company A are also members of the board of company B, they are both deemed not to be fully independent on either board. I do not believe that that is necessarily sensible. The right kind of people will not be contaminated by having a connection with someone on another board. As the noble Lord, Lord Fyfe, has said, these days it is not easy to recruit good non-executive directors and particularly ones who are willing to serve on audit committees and remuneration committees. I believe that we should limit by an artificial criterion the factors that enable one to qualify. In my experience, one of the most useful ways of judging whether someone will be a good contributor to a board is to have some experience of how he or she already performs on a board. Therefore, knowing his or her performance in another context is a positive advantage.
Sometimes the press give the impression that directors are recruited on a golf club buddy basis. That is far from my experience. These days, most large companies use head hunters because the role of a non-executive director is very complex and responsible and it is not easy to find people capable and willing to carry out such a role. That area makes me uncomfortable.
Another part of the definition of independence relates to the time that board members have served. Six years is far too short for many businesses. That issue needs to be addressed. Anyone who sits on a board for 10 years and at that point ceases to have independence of mind should probably never have been on it in the first place. If one cannot handle that kind of experience, how on earth can one have the independence of mind needed to make the necessary contribution?
One or two long-serving directors on a board arc very useful. Not only do they have historical perspective and know what arguments were previously brought for and against when business issues arise, but over time they can acquire a feel for a company and a feel for the way that the board and the management operate: they get a "nose" for things. If one cuts them off just after they have become really useful, one tends to harm the effectiveness of the board. Certainly, that has been the case in all the companies that I have served.
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Both the points which I have raised by way of illustration could be markers for careful reappraisal. If they were, rather than a description of what is expected to be normal practice, it would be valuable. I do not see why they should not be seen in that light. That brings me to the final key point about comply or explain. There is already in the corporate governance industry—because one has to call it that—a tendency towards box ticking. Corporate governance is becoming an industry in its own right. The pressures will be towards compliance rather than explanation, even when compliance may provide a less suitable answer.
I believe that a company should have a board that it needs for the proper direction and management of its business. It should be very sensitive to the Higgs requirements, but it should not be in any way ashamed to provide a robust justification of where it does not comply.
In conclusion, one of the best things about Higgs is that it recognises that detailed legislation on all these subjects would not be in the interests of the process we are all trying to promote. It is important that he and the Government have reached that view. But it will be absolutely essential, if the Higgs formula is going to work well, that companies that arc well run and properly governed should not get black marks for choosing explanation rather than compliance where they think that that is the proper course.
5.23 p.m.
Lord Marsh: My Lords, I say at once how much I enjoyed the noble Lord's remarks. I was becoming increasingly depressed by what seemed to be moving towards an uninterrupted "love-in" over a document which I think is significantly flawed.
I declare my interests. I have been a director, as have all speakers in the debate, of 18 companies. I was chairman of 10 of them. They were based variously in Toronto, Montreal, New York, Paris, Hong Kong and London. So I am interested in what goes on elsewhere. I should also declare that I am not only currently the chairman of an investment trust, but that it happens to be a split-capital investment trust. It has paid off all its zero dividend preference shareholders everything they expected on 20th December last year, which was when they expected it. I get that matter out of the way before someone goes to the Library.
The noble Lord, Lord Brennan, opened the debate, as always very effectively, by listing all the terrible things that have happened. They were concentrated understandably very much on what has been happening relatively recently in the United States. I shall come on to that. I say in passing only that he listed the various professions that were usually to be

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found involved in these activities. But I could not understand why he left out the lawyers, some of whom played a prominent part in the Maxwell débâcle.
Lord Brennan: My Lords, I thank the noble Lord for giving way. He was not concentrating sufficiently. When he looks at tomorrow's Hansard, he will find that they figure clearly in the list.
Lord Marsh: My Lords, I am glad that I did not misjudge my affection for the noble Lord.
There was also a reference to the fact that "confidence needs to be restored". My basic criticism of the report—and for me it is a serious one—is that it assumes a level of amateurism at board level which has not existed in this country for some years past. Few human institutions ever achieve perfection and the company boardroom is no exception. But the changes that have taken place over recent years, starting in the mid-1980s and going right through the 1990s, have produced a much more sophisticated and effective corporate governance and financial regime in the United Kingdom and—I am sticking my neck out—it is certainly in advance of that in the United States.
Yet some people are still living in a world where they conjure up this bogey board that is comprised of old colonels and which puts each other's mates on it. Of course there are small hoards that do, but there is a degree of personal liability—and I shall return to that subject—which hovers above every director of a public company. As I have often said, I have never been particularly moral, but I am distinctly cowardly on these occasions and board members do not take kindly to people they cannot rely on and trust nowadays.
So my first point is that the situation has changed. Of course corporate management needs to be continually monitored because change is a constant feature of a modern global business. But the suggestion so often implied in this country that corporate incompetence exists on a scale which threatens a systemic failure is simply not true. If it were true, we would not have the high performance of our businesses in this country in industry and, in particular, in commerce.
I do not believe that Enron could happen today in this country. Having recently had to approve the audit committee report of a company I chair, I was then handed a 13-page draft letter to the auditor which explained in great detail how each member of the board fully understood and took responsibility for every single issue identified in the report and accounts. I do not complain about that. I believe it is a very good thing. But it exists to an extent which is not the case in some other countries.
On that point,. one area where we are weak and where the Americans are ahead of us is that people who commit offences which they must know as directors are "dodgy"—to use the vernacular—should go wherever possible to gaol. If that is not possible, they should at least be disqualified. That did not happen in Maxwell as a result of the embarrassment it would have caused both political parties and it has not
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happened in a number of other cases. That is one way far more effective than any other to get discipline into such companies.
So what does that 120-page document bring to the British boardroom? Much of it—surprisingly, given the high reputation of the author—is a series of statements of the obvious that make it difficult to take the rest of the report seriously. I shall cite only a couple of the many similar exercises in banality. In a paragraph on the company secretary—let us remember that the report is addressed to members of boards—it states:
"The role of the company secretary is important in the provision of information and more widely in supporting the effective performance of non-executive directors".
Another paragraph states:
"The company secretary has a wide range of responsibilities but among those most central to enhancing non-executive director performance are the facilitation of good information flows, provision of impartial information"—
and it continues at length and states:
"All the board also need a clear understanding of the role of the company secretary".
If I found that I had joined a board whose members did not understand the role of the company secretary, they would not see my backside for dust.
I choose another example at random. Much of the document views the appointment of hoard members as one would that of executives—but they are not the same. There is, for example, a,
"Pre-appointment due diligence checklist for new hoard members".
It states that the first question that candidates should ask themselves is:
"What is the company's financial position and what has its financial track record been over the last three years?".
Other questions include:
"What are the exact nature and extent of the company's business activities?",
and,
"Who owns the company … ?".
A candidate who would not have already obtained that information should not be allowed out on his own at night, much less join a board.
I am running over my time, for which I apologise. Basically, no board can function effectively unless its members trust and respect each other. Several noble Lords have effectively said that no board can be left to its own devices. The role and responsibilities of directors of public companies are unique within the company. They are not the same as the role of a middle rank executive; that produces constraints and is why directors will usually seek someone with some understanding of board procedures, not necessarily with experience of serving on a hoard, but a senior executive with experience of being called before the board.
This is a bad report.
5.33 p.m.
Lord Paul: My Lords, I, too, thank my noble friend Lord Brennan for initiating this debate. I declare an interest as chairman of Caparo Group, a United Kingdom industrial company.
I applaud attempts to amend our business policy and to institute structural reforms of businesses. I therefore welcome the Higgs and Smith reports and hope that we continue to maintain a discussion about mending flawed institutions.
However, the Confederation of British Industry's recent survey of company chairmen suggests that business leaders do not agree with all of the structural reforms proposed in the Higgs report. There is a reason for that concern. If we create too many structural regulations and limitations, running a company may become difficult. For instance, it simply does not seem practical to have directors watching over each other. That would take executive directors' time away from more productive work, making even perfectly honest businesses less efficient and less competitive. Although such efficiency losses would be worthwhile if we could thereby eliminate corporate fraud from our economy, the fear is that such institutional reforms might fail to bring about true change in business practices.
To my mind, there are two issues. The first is that the key to corporate governance is the accountability of individuals and corporate bodies and a clear understanding by shareholders, employees and the community of the obligations and duties of corporate managers. Further work is required in that area. For example, my company Caparo sued for negligence the auditors of a public company that it acquired in which the directors had perpetrated a massive fraud. The case came to your Lordships' House, where it was ruled that auditors owed a duty of care only to the company, not to the investors, shareholders or any other stakeholder.
Although one can accept that as a correct interpretation of the law, it runs contrary to popular belief about the role of auditors in corporate governance. So, in addition to establishing a framework of corporate governance, more needs to be done to communicate to stakeholders at large what are the exact duties and responsibilities of individuals and corporate bodies.
The second issue is more concerned with the future as, so far, we in this country have been fortunate. When a corporate leader comes to believe in material success as an end in itself, no matter what it takes to acquire that success, structural obstacles to fraud and corruption become just obstacles—to be overcome, to be surmounted.
An entrepreneurial individual who has managed to lead a powerful company successfully has already proven his comfort with risk and willingness to face obstacles fearlessly. We must therefore address the most fundamental aspect of corporate governance, which is the personal honesty and integrity of business leaders. For a company to be successful—for it to benefit not just its shareholders but its workers and the
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community that it serves—its managers must act ethically. Wealth can be a menace that can sometimes lead decent people astray. I do not say that power and wealth will always corrupt. But although a businessman without ethics may be financially successful, his success will come at the expense of the community at large.
So how can government encourage self-restraint in those who would misuse wealth and power? To be really effective, restraint—restraint that stems from a sense of responsibility and therefore produces moral obligations—must come from within the individual, not from legislation. We are not born with restraint; we must learn by example. Those who accept the need for moral values must expound those principles. As a Parliament, we must embrace discussion of personal ethics and responsibility.
I am hopeful that an emphasis on personal integrity will become an important part of all future discussion of corporate governance. Sadly, we are seeing a new bumper crop of trouble in the business world. We have again seen that the root cause has been greed, coupled with the abdication of personal responsibility. Let us, then, not shy away from an ongoing discussion of how to ensure that ethics—norms of honesty and integrity—become entrenched in the mindset of the entire business world.
5.39 p.m.
Viscount Chandos: My Lords, I join noble Lords in thanking my noble friend Lord Brennan for his initiative in proposing the debate on this important subject and for the clarity and elegance of his introduction. I declare my interests, listed on the Register of Members' Interests, as the chairman of one listed company, an independent non-executive director of another and the director of a number of private companies.
My 15 minutes of fame last year, when I was named runner-up to the noble Lord, Lord Razzall, in the number of directorships declared in the Register of Lords' Interests, illustrates the difficulties of being prescriptive about the number of directorships that might properly be held, given that many of my entries related to a single activity as a venture capitalist. The Financial Times, adopting the journalistic standards of the Sunday Sport—"Elvis Presley is alive and well and sits on the Enron audit committee"—tried then to draw a conclusion on corporate governance and the relationship between Parliament and business, based on an analysis conducted with the thoroughness and logical coherence of a last-minute undergraduate essay.
By contrast, the Higgs report has steered deftly through the opposing rocks of complacency and over-prescriptiveness. Whatever refinements and amendments might be proposed should be warmly welcomed. In the time available, I shall concentrate my comments on the Higgs report. But I welcome the equally helpful and valuable report chaired by Sir Robert Smith.

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The expressions of outrage emanating from some of the past and present chairmen of our largest companies do not represent a sensible contribution to this important debate—it is more like the harumphing of bull elephants confronted by the need to walk a little further to find their water hole. I hope that, if in the future my noble friend Lord Brennan introduces a third debate on the subject, some of the distinguished FTSE chairmen and chief executives past and present who are Members of your Lordships' House will be able to put their views directly to noble Lords.
Although corporate governance in the UK is generally good by international comparison and has been improving, we should recognise the many and varied imperfections that have existed and, to some extent, persist. My happy memories as a board colleague of the noble Lord, Lord Marsh, cannot reduce the extent of my disagreement with him on that point.
Ten years ago, the ubiquitous Sir Roland Smith, whose multiple directorships prompted the Financial Times to propose a Roland Smith index of companies, was asked, shortly after his removal as chairman of British Aerospace, what was the most important attribute in a non-executive director. "Loyalty", he cried—and I do not think he meant loyalty towards the interests of shareholders.
Much more recently, when I was advising a substantial listed company, I expressed surprise to one of the non-executive directors at the financial commitments that had been made by the chairman to activities far outside the company's core business without any identifiable process of board approval. "Ah!", said this pillar of the City establishment, "you must understand that we have continued to be run very much like a family company".
Let me read from an announcement made to the London Stock Exchange:
"Following a preliminary investigation … it is clear that all but a small proportion of the company's cash holdings are no longer under the company's control. The exact whereabouts of the company's funds are still being investigated. However, it has been established that most of the company's funds have been transferred to associates of Orb a.r.l.".
The date of the announcement was 10th January 2003. The company, Izodia plc, may not be a household name, and the sums missing—"only" £30 million, I understand—may not rank with the greatest corporate disasters, but it is a timely reminder to guard against complacency.
That last example provokes this question: what do we believe good corporate governance is intended to achieve? Are we most concerned about protecting companies, their shareholders and employees from the foolishness of fools or the knavery of knaves? I believe that it is both, equally. The comments of my noble friend Lord Haskel on that point were correct.
As my noble friend Lord Brennan said, it is undeniable that well-planned fraud is difficult for an executive director, let alone a non-executive director, to detect in time. But an effective board should preside over systems, controls and a corporate ethos that minimise the risk of such fraud being perpetrated.
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Companies must take risks to survive, let alone to grow. Sometimes that risk is encapsulated in a strategic decision—or a series of decisions—in which the whole board will have been intimately involved. Whatever the quality or the independence of the non-executive directors, those strategic decisions will sometimes be wrong, occasionally disastrous. But an effective board, once more, with non-executive directors who are, as my noble friend Lord Haskel advocated, constructively involved as well as rigorously vigilant, should improve the odds of success, which, as those of our colleagues who may be at Cheltenham would confirm, is what it is all about.
As the noble Lord, Lord Freeman, said, the Higgs report as a whole should be welcomed because its recommendations should contribute to the effectiveness of boards in both the areas that I have just outlined. I do not believe that the recommendations regarded as most contentious— the role of the senior independent director and the chairmanship of the nominations committee—represent a real threat to the authority or effectiveness of a company's chairman. What is more, those recommendations are always subject to the principle of "comply or explain". In particular, Mr Higgs has justified his decision not to propose separate guidelines for smaller listed companies by the ability of companies to explain their reasons for incomplete compliance.
It is on that key issue that I should like to end. "Comply or explain" lies at the heart of the non-prescriptive approach of the Higgs report and is crucial to the workability of the proposed system, particularly for smaller companies. However, what the principle requires to work is the commitment of institutional shareholders to give the time to assess each company's explanation of partial compliance; otherwise the desired flexibility of Higgs will be lost and its guidelines will instead become by default a rigid set of rules. The institutions, which in my experience have been generous in their provision of time to consider and agree selective non-compliance by a company one-hundredth the size of a top-20 FTSE group, face a significant challenge in maintaining that standard as their caseload continues to grow.
5.47 p.m.
Lord Barnett: My Lords, I join those who congratulated my noble friend Lord Brennan on initiating this important debate. I have registered a number of modest interests in non-executive roles in minor companies that are not strictly relevant to Higgs. I assume from the title of the debate that it refers largely to Higgs. There have been many other reports before Higgs—the Cadbury report, the Greenbury report, the Hampel report, combined codes, corporate governance codes, the "Winter group" in the European Union and the Myners report. To those reports we now add Higgs.
In the short time available, I shall not deal with the detail of Higgs. I shall concentrate on the central question of corporate governance: who controls the

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major companies, and who should control them? I refer not only to the FTSE 100—some large companies drop out from time to time.
I share many of the views expressed by the noble Lord, Lord Marsh, on the Higgs report. I found much of it trivial and vacuous, to be honest. I shall give some small examples. Page 5 states:
"The board is collectively responsible".
Well, that is a shock to us. It is stated on the same page:
"The chairman has a pivotal role".
He certainly has a role. Page 6 states:
"All directors should take decisions objectively in the interests of the company".
That is a surprise; maybe some do so. On page 77, under the heading "Principle", the report states:
"Every listed company should be headed by an effective board".
Well, there you are. That is what needs to be done. Talk about a statement of the obvious, as the noble Lord, Lord Marsh, said; that is precisely what those are.
We did not need Higgs to tell us the action that was needed. Nevertheless, there are, in those 120 pages, some items with which I agree. There are some proposals that are worth consideration. Certainly, the status quo is not an option, and action is needed.
There is some confusion in the Government's position, if I may say so to my noble friend who will reply to the debate. As usual, I am not sure whether the DTI or the Treasury is in charge of the matter. There have been many Treasury statements about who is backing or not backing the Higgs report or letting it go by the board. Perhaps, my noble friend will tell us. In the most recent article in the Financial Times, we are told that the Government back Higgs. I will be interested to hear my noble friend clarify the Government's position today. He usually accepts my advice: he did so yesterday with regard to excessive remuneration, although he did not tell me what he considered to be excessive.
I hope that he will confirm today that the Government do not have in mind legislation to implement Higgs. That would be the last thing that we need. I assume that my noble friend can tell us that he proposes to have a code-based system and that the code will he in the charge of the Financial Reporting Council, even though, as we are told in some quarters, the FRC is likely to water down Higgs. I will be interested to hear from my noble friend what he would do if it proposes to water down Higgs, which I would not mind.
We are told that the chairman has a pivotal role. That is true, whether he is an executive or non-executive chairman. The chief executive, the finance director and the chairman run the major companies; we need not dispute that. Who appoints those people? That is what I want to concentrate on. Who keeps them in their job, when they do a disastrous job? That is a crucial matter, but it is not a matter for legislation.
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Legislation cannot decide who is a good chairman or a good chief executive. It is for the owners of the company to decide.
Not enough has been said about the owners of companies. In most FTSE 100 and other large companies, the owners are not the small shareholders; more than 70 per cent of ownership is in the hands of major institutions. Often, those institutions are not doing the job that they should do. They are responsible—or should be—for the appointment of non-executive directors, who play a crucial role in making sure that the management of a company does a decent job.
My noble friend Lord Fyfe of Fairfield made the good point that good non-executive directors do not grow on trees. That is true. Institutional shareholders are not doing the job. Too many non-executive directors do not or cannot either do the job or give up enough time to do it. That is a challenge to the owners of the company. We do not need to be told that they need integrity; of course, they do. They need competence, as well; they must be able people. Too many are appointed because they are friends of the chairman or the chief executive—not all, but too many. As I said, legislation will not produce better non-executive directors.
The real answer must be for the owners of companies to do the job that they should be doing on behalf of all the shareholders. The major institutions do little or nothing of the job that they should do. If they do anything, it is usually too late. The first solution must be for those major institutions—not the Government—to ensure that non-executive members of boards of companies in which they have a major shareholding are not just cronies, if that is the word, but are good, able people of considerable integrity and ability and do not sit on too many other boards.
The job should include a proper internal audit system. Happily, I do not think that we are likely to have another Enron-type affair here, for the reasons that have been given. Fraud involving collusion between the chairman, the chief executive, the finance director and the senior audit partner would not be easy to spot for even the finest, most able non-executive directors. However, if, at least, there were a proper internal audit system—however costly—there would be a chance of spotting it. Without it, there is no chance. Good non-executive directors will ensure that there is a good internal audit system, and their appointment is the responsibility of the institutional shareholders who own the companies. They are not doing the job: I hope that we can ensure that, in future, they will.
5.55 p.m.
Lord Williamson of Horton: My Lords, in intervening in the debate, I declare an interest as a non-executive director of Whitbread plc and a member of its audit, nomination and remuneration committees.
In recent years, there have been several reports—good, for the most part—on corporate governance.They have generated a large corporate governance

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industry. I suppose that, like me, all company directors receive their daily postbag of invitations to seminars and breakfasts on the subject. The reports have also generated a remarkable facility among company secretaries for inserting ticks in appropriate boxes.
Now we have the Higgs report, and with it has come an element of unjustified polarisation between the assumption that all the report's conclusions are, almost by definition, good and the opposite view, summarised by the Financial Times headline,
"FTSE 100 chiefs oppose Higgs reforms".
The Minister may say that the Government are more selective in their approach to the Higgs recommendations. If so, I shall be glad to hear that. However, the impression of a polarisation of views is evident in press and other comment.
It would be odd if, after so much attention has been paid to corporate governance, a report were to come forward that was worthy of complete acceptance or rejection. That cannot he the case. There is a series of recommendations: some desirable, others a matter of judgment and some likely to have only a marginal effect. I am in favour of proposals to widen the range of persons—male and, particularly, female—suitable and willing to serve on company boards. I am also in favour of separating the role of chairman and chief executive, not so much as a matter of corporate governance or propriety but because both jobs require a substantial commitment of time and attention. Whatever is done with regard to other recommendations, it is important that nothing be done that, perhaps inadvertently, diminishes the role of the chairman, who has the greatest responsibility for the health of the company.
Some other recommendations are rather innocuous. I would not be prepared to go to the barricades about them, particularly if two things were recognised. First, different circumstances in different companies may make it undesirable to follow a particular recommendation. Secondly—this is self-evident—a company should always indicate why it has not followed a recommendation.
I shall make two more general comments on matters to which I attach importance. First, I am surprised by the assumption that a board consists of two blocs of members—the executive and non-executive directors. In the direction of a company, it is just as likely that there will be disagreement among the non-executives as it is that there will be disagreement between the executives and the non-executives. The fear that executive directors will be hell-bent on some dangerous scheme, while the non-executives restrain them, is, to say the least, an excessively simplified view of the difficult choices on a company's development that the whole board must make. In short, non-executives have a role, and improvements in the way in which it is performed, resulting from the attention given in recent years to corporate governance, are, generally, good. But it is hardly realistic to think that they can, in themselves, determine the development of a company.
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Secondly, it is naive in the extreme to suppose that there is a direct and necessary relationship between passing the good governance tests and running a profitable company for the benefit of its personnel, shareholders and the country.
Some facts about past experience, like the facts about loss of value by public companies even before 11th September, are rather uncomfortable. However, I should like to refer to them in order to emphasise that further action on good governance may be desirable in itself but that it does not—I repeat, not—necessarily correlate with good financial results. Even that paragon of financial comment, the Financial Times, in an editorial on Monday stated:
"Investors have seen share price collapses in companies such as Marconi, BAE and Reuters whose corporate governance would have fallen foul of Higgs",
at least implying that there was some connection.
Some of the companies which have gained most in value have been least compliant with past recommendations on governance; and some of the companies which have lost most value have been most compliant on governance. For example, looking at the total return to shareholders of the FTSE 100 companies in the five years ending 2001—thus excluding any distortion from recent political events—some companies made very good increases, but the bottom quartile made a negative return. In short, their shareholders would have done better to put their money on bank deposit, because it was worth less to shareholders at the end of the five years than at the beginning.
However, we also note that these poorly performing companies scored the highest marks for corporate governance; and the best performing companies scored the lowest marks for corporate governance. We must not confuse the form of corporate governance with the reality of long-run total shareholder return. Furthermore, the salaries of the chief executive officers of the worst performing companies were higher than the salaries of the chief executive officers of the best performing companies.
I do not want to be misunderstood. I do not say that that implies that the whole of the corporate governance industry should be thrown on the scrap-heap. On the contrary: I have already indicated that I fully support some important recommendations of the Higgs report. However, the past experience that I have quoted deserves serious reflection, particularly in a period when many pension funds are holding shares in companies which have fallen disastrously in value.
My own conclusion is a more general one. Our prime objective today should be to do all that we can to ensure that we do not have widespread loss of value in public companies. That means attention should be given to the burdens of bureaucracy, taxation and too much short-termism—issues which we all know are wrong—and that we do encourage shareholders to give a lot of attention to a link between salaries and performance. In short, not the form but the substance.
6.3 p.m.
Baroness Cohen of Pimlico: My Lords, I, too, thank my noble friend Lord Brennan for introducing the debate. It is extremely timely. We speak of little else in the City. I have been dying to give my own views rather than listening to other people.
Against that background, I declare an interest; I am chairman of a smallish FTSE company and a director of the London Stock Exchange. That makes it particularly important to state that my views are my own. The London Stock Exchange has not yet had the opportunity to take a collective view on both Higgs and Smith; and I should not wish to label them with mine.
Both the Higgs and Smith reports arise out of a statement of objection—as so often occurs—to the state of affairs in America that led to the strong regulatory reaction of Sarbanes Oxley. On thinking about what went quite so wrong in the United States of America and in the conduct of major US companies, it is important to understand that their attitude to accounting—to "doing the numbers"—at that time was very different from our attitude in the United Kingdom. It is odd that I, a lawyer, am defending the accountancy profession, but I think that we always did it differently.
We do not always get it right, but auditors of United Kingdom companies are looking for and certifying that the accounts represent a "true and fair" picture of what is happening in the company. That was not a concept that United States' companies adhered to very much. They believed that there were rules applying to a set of accounts. Within those rules you put your best foot forward—you put down what you could get away with. In the United Kingdom, I believe that our auditors—whatever their omissions and difficulties—have always started from the basis of a "true and fair" account.
That is very different from the American concept of "aggressive accounting", when one tries to do one's best. Of course, there are all sorts of other conflicts and difficulties in US corporate life. but I believe that at the bottom of the worst excesses lays the concept of aggressive accounting—only tell as much of the truth as you absolutely have to, as opposed to the concept of a "true and fair" view of the company.
I always start with the accounts because I believe that they are truly important. Therefore, I have only trivial reservations about Sir Robert Smith's suggestions. Sir Robert and I were colleagues in The Charterhouse Group. He ran a distinguished venture capital operation. No man is better equipped to get at the truth of a company's accounts than a serious venture capitalist who bets his name and reputation on just that ability.
However, I have some reservations about the recommendations of Mr Higgs. I hesitate to offer them because I have been around long enough to remember the cries of grief and outrage from some quarters that greeted the recommendations of Sir Adrian Cadbury.
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"Three non-executive directors", we cried in horror. "Chairman and chief executive not to be the same person". "Woe to this fair country."
Although in 20years I may turn to what I say today and wince, I believe that the recommendations of Mr Higgs would, if implemented, make the role of a chairman substantially more difficult. And I speak as a chairman. I need to chair the nominations committee. I need to speak directly to my shareholders, at the same time, and, roughly speaking, say the same as my chief executive officer. If shareholders do not trust either of us, they are quite capable of organising a coup without the help of a senior non-executive director. They would probably use the press; they do not need a senior non-executive director.
The Higgs report is also stiff with recommendations which to a small company will come very expensive. At the company which I have the honour to chair, I would have to appoint another two non-executive directors, in addition to the three we already have, in order to out-number my executive directors. In terms of pay, rations and management, we would be grossly top-heavy. When I raised that point with Mr Higgs recently, he said that all his recommendations were on a "comply or explain basis".
"Up to a point, Mr Higgs" and for that matter, my noble friend Lord Chandos. Tell that to the institutional shareholders who will. I believe, ultimately be driven by their own structures to force us all to comply with every last bit of it—whatever it turns out to be. All right, there are distinguished and visionary institutions which will accept an explanation rather than compliance, but most of them will force us through the whole course—whether this be a code or a basis for legislation. Therefore, I am very anxious about some of the more onerous recommendations.
I agree that more non-executive directors are needed. I have never shared the view that there is a self-selecting crony group of people appointing each other to company boards. If there were such a group, I wish it would ask me to join. But it does not apply to women: I am quite, quite sure of that. I am sure, too, that the noble Baroness, Lady O'Cathain, would support such a group. I do not think that either of us have ever been appointed to a job other than by grinding through the executive search process.
However, there are difficulties with widening the scope. Unless there are to be two classes of non-executive director—one of whom is not required to sign the onerous documents which state that we have looked at the system of financial control, that we are satisfied that it exists, and that we are satisfied that it works—a good deal of technical training will be necessary if the ranks of non-executive directors are to be widened, for instance, into the ranks of academics or other useful groups. Quite a serious training requirement will arise, which I know a good many people are thinking about. I hope, too, that the business schools are considering it, because we shall need new types of recruits if we are to have more and better non-executive directors.

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Finally, I would observe that if you want to limit the number of non-executive directorships held by an individual—I think that should be done, or perhaps I am just jealous—then the pay will have to be better. The going rate for a non-executive director is £25,000. If someone has retired early and is serious about maintaining their income as a former senior executive, then quite a number of non-executive directorships are needed to make up the pay. Furthermore, the sheer weight of demands being made on non-executive directors means that we shall have to think about paying them more.
That remark takes me back to the point I made earlier about the burden on small companies. Some of the proposals will prove to be excessive and top-heavy. With those reservations, on the whole I welcome both the Higgs report and the debate.
6.11 p.m.
Lord Berkeley: My Lords, I congratulate my noble friend Lord Brennan on the debate. I certainly support the Higgs recommendations and I am pleased that the Government do so as well. I believe that the House, too, has given a general welcome to the proposals this afternoon.
The Higgs report relates to public companies, but I suggest that the Government should set an example by including certain relevant parts of it in the rules governing non-departmental government bodies, or quangos, which is the term I shall use during my remarks. It is easier to say. I cite the Strategic Rail Authority as an example of a quango that would benefit from some of the recommendations. In doing so I declare an interest as chairman of the Rail Freight Group.
I should like to look at some of the recommendations that might be relevant to a quango such as the SRA. There are many similarities in relation to corporate governance. First, I turn to shareholders. Let us be clear: quangos have shareholders in the form of government, Parliament and us, the taxpayers. Secondly, turn to the question of whether there should be a separate chairman and chief executive. Many noble Lords have commented on this. Higgs has recommended that the roles must be separate, but within the Strategic Rail Authority they are not. The noble Lord, Lord Williamson of Horton, suggested that the roles were too much for one person if they are properly to run a company. I agree with him. We should note that effectively the SRA is managing the railway system.
Within the SRA, the chief executive is the accounting officer responsible to Parliament for reporting on finance and keeping within budget, while the chairman's role is probably to ensure that the shareholders and outside interests are involved. Those interests include parliamentarians, local authorities, pressure groups, real customers, the media and many others. Of course it is also necessary for the SRA to comply with all the relevant legislation, directions and guidance sent out rather frequently by the Secretary of State. I suggest that all that is too much for one person to handle properly.
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Luckily, however, the chairman and chief executive of the SRA have a board that meets every two weeks or so. But who appoints the board? Higgs has recommended that the board should be appointed by a nomination committee not chaired by the chairman. One or two noble Lords have disagreed with that proposal. The Secretary of State appoints the board of the Strategic Rail Authority on the recommendation of the chairman. As many public limited companies have noted, it can be said that the board comprises a nice, cosy group of friends—although I realise that my noble friend Lady Cohen would not agree with that Comment—who have every incentive not to ask awkward questions or rock the boat. Perhaps the Higgs recommendation that the board members should sometimes meet formally without the chairman being present would help.
Then we have the customers, or shareholders. Passengers are represented by a statutory body, the Rail Passengers Council, whose duty it is to look after passengers' interests. Who funds that council? It is the Strategic Rail Authority. That is rather like a public limited company funding its own shareholder action group and then complaining loudly if the group disagrees ever so slightly with company policy. I do not think that that quite follows the Higgs line of thinking. He would probably veto such a system. But that is what is happening on the railways.
Another Higgs recommendation states that separate independent directors should be made available to shareholders so that they can raise concerns if contacts with the chairman or chief executive—who is the same person, of course—do not resolve them. That is an excellent idea that again could equally well apply to the Strategic Rail Authority.
Higgs noted that fears are still being expressed that an individual can wield too much power, which may be detrimental to a company or its shareholders. However, the power of patronage, be it financial, in terms of employment or in some other form, makes change quite difficult to achieve. The only forms of redress usually available to shareholders is to sell their shares or to form an action group. It is more difficult for quangos. One can seek redress through the National Audit Office or through judicial review, but some might say that either of those options is possibly a bit nuclear. You would not want to do that every day.
The SRA is in a position similar to that of many plcs at the moment. Apparently it is short of money, while its shareholders—its customers—in spite of their financial reliance on the authority, are becoming increasingly vocal in their complaints about its operation and management. However, they seem unable to do very much about the situation. So I want to urge the Government to set a constructive example here. It is clear that they wish to see the Higgs recommendations implemented in the private sector. I suggest that they could also be implemented. where appropriate, in the public sector. As many recommendations as are relevant and possible could

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be applied to quangos such as the SRA. I believe that the authority and other organisations like it would work much better as a result.
6.16 p.m.
Baroness Hayman: My Lords, I am grateful to my noble friend Lord Brennan for introducing the debate and to my noble friend Lord Berkeley for taking on the Higgsian spirit of widening the pool of contributions. I thought that I might be the only speaker so to do. I had begun to feel some trepidation, not to say a little regret, that I do not have a remunerated non-executive directorship to declare in speaking in the debate.
I was most taken by the comments of my noble friend about the capitalist system when he introduced the debate. He referred to the tensions between greed and trust created within the system, as well as the importance of the role of good corporate governance in seeking to resolve those tensions. Of course we live in a mixed economy, one that also has a public sector, a not-for-profit sector and a charitable sector. As my noble friend Lord Berkeley remarked, the principles of good corporate governance are just as important in those sectors as they are in the commercial sector. Indeed, Higgs recognised that in parts of his report. Furthermore, the issues of creating trust, maintaining accountability to stakeholders—who are sometimes more diverse, complex and difficult to identify than shareholders—and the difficulties of reporting and measuring success are challenging for those involved.
Here I have interests and experience to declare. Although I have not had experience as a non-executive director in the private sector, I have been a non-executive director—that is, a governor—and chair of a school governing body; the chair of an NHS trust, a unitary body with executive and non-executive members. I am now a trustee—a non-executive—of a small charity and of a non-governmental departmental public body, the Royal Botanic Gardens at Kew. Lastly, I chair a charity whose turnover amounts to a quarter of a billion pounds a year and employs some 3,000 people. The charity has real responsibilities and accountabilities and must face real issues about reporting standards, as well as real issues about its responsibilities towards donors. Thus we have to be sure that we have in place the right processes for reporting.
I have no desire to be overly prescriptive in any of the different areas of the mixed economy. Equally, however, I do not think that we should be overly Panglossian in assuming that at the moment we are doing everything right. The challenges in some of the sectors I have described—particularly in regard to the recruitment of non-executive trustees—are particularly acute. The selection, the induction and the assessment of performance of those who take on non-executive roles are very important. It is sometimes most difficult to achieve in an area where people are not paid. It is sometimes very difficult for trustee bodies to bring in those disciplines because people are giving of their time in a totally voluntary fashion.
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However, it is not impossible that they are not doing their job in the best interests of donors and the people who are meant to be the recipients of services. As government uses the voluntary sector more and more in the delivery of public services, these issues will come more and more to the fore.
I look with some interest at the ways in which Higgs can be applied. As I said, there are already new accounting standards in the charitable sector, which will be developed. Reporting standards will equally be developed. The "comply or explain" principle is perfectly appropriate. It is a counsel of despair to say, "It is a perfectly appropriate system but it will not work because the regulators will not follow it properly". It is up to everyone concerned—the Government, the organisations and the regulators—to make sure that it does work and that the explanation can be just as positive and important as the tick-box compliance, which none of us wants to see.
Perhaps I may conclude by saying a couple of words about widening the pool. Some 20 years or so ago in the public sector I had experience of widening the pool of those who became governors and those who became involved in the governance of the health service. Widening the pool—in what, for the purpose of today's debate, would seem to be the reverse way—by bringing people from the private sector into public sector administration was absolutely the right thing to do. It was enormously valuable. The people involved enriched and improved the standards of governance in many areas of public life, as they do in many areas of charitable life.
But I never heard anyone who came in and took up those roles say, in simple language, "This is a doddle compared to my real life. There are no complexities here. There are no challenges here. There are no skilled people working here. There are no talented managers working here". Quite the reverse. They were always seized by the number of constituencies, the number of stakeholders, the complexities of some of the relationships and the nuances of not having some of the ordinary, simple levers to pull or the ordinary measures of share performance, profit or whatever by which to judge performance. It is against that background that I endorse the recommendations in Higgs.
Much has been said about the difficulties of recruiting good non-executive directors. I believe that there is a pool of people in the not-for-profit, voluntary sector with the diverse backgrounds described by Higgs. I hesitate to include women as part of the "diverse background", although apparently we are meant to do so. Women have always been more in the foreground for me and I am not sure that that is the right way to look at the issue.
A conversation was related to me recently about a head-hunter who had found a candidate who completely fitted the personal specifications drawn up by the board. He put forward the woman's name and was told, "No, I am sorry. We had a woman once and it did not work". It is a sad reflection, but it is not unique.

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I hope that the recommendations in Higgs in regard to diversity and looking into the wider pool will be carried out in the spirit of improvement and meritocratic appointment, not of political correctness.
6.25 p.m
Lord Razzall: My Lords, I join every noble Lord who has spoken in thanking the noble Lord, Lord Brennan, for introducing this important debate. I join every noble Lord who has spoken—apart from the noble Baroness, Lady Hayman—in declaring an interest: I hold the directorships stated in the Register of Members' interests. As the noble Viscount, Lord Chandos, has risen to his and my defence, I shall not intrude on private grief and further lambaste the Financial Times for its misrepresentation of his and my position on its front pages in August. I shall leave that to the noble Viscount's words, which are recorded in Hansard.
It is obvious from the polite debate that has been conducted in your Lordships' House that there is absolute fundamental disagreement between the two sides of the argument. Apart from congratulating the noble Lord, Lord Brennan, on having introduced the debate and the importance of the issue, there was not one thing said by either the noble Lord, Lord Marsh, on the one hand, or the noble Viscount, Lord Chandos, on the other, with which the other would agree. We should recognise that there is a fundamental disagreement, both in the City and in the political debate, on this extremely important issue.
I endorse the point made by the noble Viscount, Lord Chandos—more subtly than I propose to do. We have a number of chairmen and chief executives of FTSE 100 companies in this House who found the time to come and vote for a wholly appointed House—presumably on the basis, with which I agree, that their expertise would be relevant to a debate such as this. It is therefore a great pity that, with one or two notable exceptions, few of them could find the time to give us the benefit of their expertise direct. It is a great shame.
Even the background for the debate would not be agreed by the two sides of the argument. On the one side, a number of noble Lords take the position adopted by the noble Lord, Lord Marsh. They believe that Enron and WorldCom could probably never happen here and that the strength of our corporate governance provisions already in place would be sufficient. That is not a view which the noble Viscount, Lord Chandos, would necessarily share.
As to the perceived excesses of boardrooms, many years ago a Tory Prime Minister referred to the "unacceptable face of capitalism" in regard to the behaviour of the Lonrho board at that time. The view has been ably expressed by many noble Lords that most of the excesses of the past have been dealt with already and that the Higgs report is not closing the stable door after the horse has bolted but is closing a door that does not need to be shut. On the other side of the argument, a number of noble Lords believe that further steps need to be taken.
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There is a view—I know that the noble Baroness, Lady Cohen, has not been allowed into the club, and I share her view—that FTSE 100 companies have far too often appointed directors from other FTSE 100 companies who share the company's ethos, in particular in regard to boardroom pay. It is a view which some noble Lords have and others do not.
There is also the view—although one or two corporate colleagues would not necessarily share it—that if you get your friend onto the board as a non-executive director he is unlikely to move for your removal if the company is not doing well. Again, I suspect that that is a view which would split your Lordships.
I hope that when the Minister replies to the debate he will answer a number of questions in regard to the Government's position on these issues. It is all very well for us to have our different views—if we debated this subject for a further three hours, I do not think we should arrive at a consensus—but the Government are in a position to do something about it. These are my direct questions for the Minister to address in his reply.
First, does he believe that an Enron or a WorldCom could happen to one of our major FTSE 100 companies? My view is: Enron less likely, WorldCom more likely—because even with the best corporate governance structure in the world it is difficult to regulate for what was clearly a fraud. What happened at Enron related more to accounting rules. I should welcome the Government's view. Is the Minister prepared to say that the current corporate governance rules—both those that have been implemented and those that will be implemented following the Higgs report—make a situation such as at Enron or WorldCom unlikely?
Secondly—a point raised in the past by my noble friend Lord Sharman which is germane to the accounting position—is the Minister in favour of the National Audit Office being given power to audit the private sector? We understand that the NAO would like to be able to do so. It does not have the same problems as leading firms of chartered accountants as regards a potential conflict of interest in terms of consultancy income.
Thirdly, assuming that the Higgs report is implemented in full—initially for the FTSE 100 companies and thereafter for all the listed companies, down to 350 in number—where will the pool of non-executive directors come from to enable the proposals in the Higgs report to be fully implemented, particularly in the light of the increased directors' liability that directors of major companies, or indeed any company, will necessarily incur, and in the light of the trade-off between those risks and liabilities and the likely fees that will be made available to that pool of non-executive directors?
Fourthly, what position do the Government take on "comply or explain"? Do they say that if almost all companies are simply explaining and not complying they will introduce legislation? Or will they simply say that the doctrine is "comply or explain" and so long as people are explaining, it is not the Government's role

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to legislate? What will the position be from the point of view of the Stock Exchange, the ABI and new listings? It is all very well for regulations to be introduced on a "comply or explain" basis for existing companies. but what will happen to new companies? Will the insurance organisations—the ABI, for example—or the pension fund organisations start to say, "We are not prepared to accept the explanation; therefore you have to comply"? "Comply or explain" will not work in an environment in which the quasi-regulatory bodies are simply telling firms to comply.
Finally, are the Government prepared to contemplate a consideration of the idea floated by Sir Lain Vallance—an experienced former chairman of FTSE 100 companies, currently the deputy chairman of one of our major banks and a former president of the Confederation of British Industry—that company law should be amended so that, on the appointment of directors only, it is a case of "one shareholder one vote"? In other words, that, as a shareholder in a company, the noble Baroness, Lady Miller, would have exactly the same vote as would the Pru. That idea has been floated by Sir lain Valiance. I do not know why I picked on the noble Baroness, Lady Miller. It is just habit, I think.
Baroness Miller of Hendon: You always do!
Lord Razzall: My Lords, are the Government prepared at least to consider that idea put forward by Sir lain Valiance?
6.35 p.m.
Baroness Miller of Hendon: My Lords, why should the noble Lord, Lord Razzall, change the habit of a lifetime?
Like the noble Baroness, Lady Hayman, I cannot declare an interest as a non-executive director because I am not one and it would not be wise to say that I was. However, that does not stop me having a view on what I believe a non-executive director should be able to do. I have been a chairman of voluntary organisations and a charity, and a director of various commercial enterprises.
Unlike an executive director, a non-executive director need not have a detailed technical knowledge of the business that he is entering. I used my experience within a very short time of becoming a member of the Monopolies and Mergers Commission. We found ourselves dealing with aspects of the contact lens business, the cost of music tapes versus compact discs and allegations of predatory pricing in bus services. It was a quick learning curve.
One of the points that I found interesting was that one entered that process without necessarily having any preconceptions. That is quite a good idea, if you are very knowledgeable as a non-executive director, if you have an understanding of administration and business, if you have integrity, if you have worked in large businesses and if you have a grasp of all the matters involved—and confidence, which is essential.
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No less important is to have the strength of character to be truly independent of the main board—particularly as you may possibly have an overbearing chairman or managing director. It is your job to look round and see what is going on. You need not be frightened to open your mouth and say what you think and, if necessary, have the strength of character to do something about it.
With those personal views in mind, I read with interest Mr Higgs' job description of a non-executive director. While I have no difficulty in agreeing with what he calls "the key elements" of the functions of a non-executive director—under the headings: strategy, performance, risk and people—I do find it strange that it is suggested that he should also,
"provide entrepreneurial leadership … ensure the necessary financial and human resources".
I thought that entrepreneurial leadership was the province of the executive directors in the day-to-day operation of the company. Otherwise, there would be no difference between the two types of directors; and the non-executive director would have onerous duties and responsibilities without the powers vested in the main board. I think that that is quite dangerous.
Perhaps this is the right moment to congratulate Mr Higgs on the speed with which he conducted his consultation and produced the report, right on schedule as promised. Similarly, Sir Robert Smith and his colleagues are to be congratulated on their comprehensive report of their inquiry, commissioned by the Financial Reporting Council, which was published at the same time as the Higgs report.
When the report was presented to the other place on 29th January, my honourable friend the Member for South Suffolk, gave it a general welcome—which. I suppose, puts me on that side of the fence. He did, however, mention a number of matters that are of great concern to us—I suppose that puts me on the other side of the fence. His points were not fully answered then, but I hope that the Minister will be able to answer them when he replies. I shall come to them later.
The Secretary of State announced in another place that the Auditing Practices Board should,
"take over from professional bodies the responsibility of setting standards for objectivity and integrity".
She said, furthermore, that there would be a new professional oversight board in place of the Ethics Standards Board, and that,
"a new independent inspection unit, located within the FRC, should take over from the professional bodies responsibility for monitoring audits of listed companies, major charities and pension funds".
Thirdly, the Secretary of State said that,
"the long-delayed investigation and discipline board should come into operation quickly".—[Official Report, Commons, 29/1/03; col. 883.]
She promised that the package should be implemented as soon as possible, with changes to the regulatory structure being made immediately.

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An implementation steering group has been set up which includes the noble Lord, Lord Borrie. I am sorry that the noble Lord is not in his place. I hope that we shall have some news of progress and a possible timetable for completion of that implementation. That does not mean that I want everything done quickly, as the noble Lord, Lord Barnett, said, but it would be nice to know whether the Government have any ideas on the matter.
How do the Government intend to implement those parts of the Higgs report that they accept? The urgent need for clarification on the mode of implementation arises from the fact that articles in the press during the weekend made it clear that the report has not been received with undiluted enthusiasm. In fact, that may be an understatement. For example, we found a quote that said the Tesco board left Higgs on the shelf. The Times business section carried the headline, "Top chairmen condemn Higgs". The Daily Telegraph headline said, "Top chairmen close ranks against Higgs". It may not be possible to achieve a voluntary code of practice, which is why I asked what the Government intend to do, how they intend to do it, and when.
I now come to our reservations about the report. We agree with Higgs, and disagree with the CBI, on the matter of separating the roles of chairman and chief executive officer. That is a useful proposal, enabling one to keep a check on the other. However, one size may not suit all, and in small companies which have a history, or in a family company, that should not be across the board. In many companies, it has proved successful to have one person doing both jobs. Neither Mr Higgs nor the Government should override the wishes of shareholders. If the Government intend to legislate on that point, there should not be an absolute prohibition. That would be pretty awful.
In this country, we can congratulate ourselves on a regulatory regime that is better than most in the world of commerce—including, and especially, that of the United States, which has been the home of some recent major financial scandals. Of course, we have also had problems with companies such as Barings and Marconi. A sharp tug on the reins by a non-executive member might have prevented those difficulties from occurring. I refer not to the problem of fraud, but to things that have not been run properly.
It is regrettable that no amount of regulations, ethical standards or codes of professional conduct can prevent the consequences of greed, corruption, incompetence, folly and, in some cases, fraud. In the end, the best safeguards for companies' shareholders, workers and creditors, is the integrity and conscientiousness of those in the position of authority. There is nothing better than that—it is a very good thing.
My honourable friend Tim Yeo pointed out in another place that
"any change to existing practice must he scrutinised for its effect on Britain's competitive position and whether it makes wealth creation easier or harder".—[Official Report, commons, 29/1/03; col. 884.]
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Self-regulation should be the preferred option for professions such as accountancy.
The Secretary of State told my honourable friend that the new regime would not apply to the alternative investment market companies, and did not reply to his query about the regime's application to foreign companies listed in London. Surely, that is a loophole. Why is it thought that investors, workers and creditors of that kind of company are less deserving of protection?
We share the concerns of the CBI about the recommendation that shareholders should have the right to meet with the so-called senior non-executive director. If something is going wrong, the board should be involved at that level, not one individual senior director. The CBI thought that might he divisive in the board; I believe that it probably would, and I am not sure how it would help in the long term.
Higgs also made the suggestion that half the board should be non-existing—I mean, non-executive—directors. They had better exist, or we would really be in trouble. We do not believe that half the board is a practical proportion for the smallest of companies. We suggest that smaller companies would exclude companies outside the FTSE 350.
In conclusion, in common with other noble Lords, I thank the noble Lord, Lord Brennan, who introduced this important debate on the Higgs and Smith reports. We have had the opportunity to scrutinise and discuss them in a way in which Members in another place have not. As the noble Lord, Lord Razzall, said, we may not have reached agreement, but it justifies your Lordships' House as a democratic forum that we can discuss these matters.
Lastly, this country has a reputation for financial integrity and probity. Despite the occasional breaches by the odd rogue or villain, that makes us still an important world financial and commercial centre. We hope that the strengthening of controls as recommended in the Higgs report, without imposing impractical or impossible restrictions, will enhance our reputation and help to add to the wealth of the nation by encouraging investors and institutions to base themselves in our country.
Lord Hiaskel: My Lords, the noble Baroness, Lady Miller, referred to the noble Lord, Lord Borrie. He had intended to speak, but he is unwell.
6.46 p.m.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville): My Lords, I congratulate the noble Lord, Lord Brennan on initiating this timely debate. I agree that we should never forget the human consequences of the financial scandals that have occurred in recent years. I also agree with almost everything that he said about non-executive directors and board remuneration. I am pleased that the noble Lord, Lord Freeman, believes that our significant reforms have been "tough and measured". That is how we would like them to be seen, and it is important that they are seen in that light.

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The noble Lord, Lord Razzall, suggested that the House was totally split on this issue, but I disagree. There seems to be almost overwhelming support for what we are doing—with the exception of the noble Lord, Lord Marsh, who was in a small minority. However, that is where he is normally most happy, so I was not deeply worried about it.
We all recognise that sound corporate governance and reliable financial statements are vital for sustained investor and market confidence. There is no doubt that the failures in the United States shook that confidence severely, and continue to do so. The consequences of a lack of faith in our markets should not be underestimated. Lower share prices, higher costs of capital, lower investment and a more risk-averse attitude to innovation can all, to some extent if not totally, be traced back to the catastrophic collapses of Enron, WorldCom and Arthur Andersen.
I agree with the noble Baroness, Lady Cohen, that there are differences between UK and US accounting. As she said, the UK relies heavily on a principles approach and a true and fair view. That emphasises the substance of accounts over the form, which is a strength. The US relies much more on detailed rules, which tends to promote a different approach. However, it is wrong to be complacent about the UK's position. For example, the UK Auditing Practices Board recently warned about the dangers of aggressive earnings management in the UK. The problems with Enron and WorldCom may have been less likely to happen here than in America, but we cannot be certain. The Higgs report recommendations, and the other changes that we are making, will help to make such problems less likely to occur here.
We need to take a long hard look at corporate governance issues across the piece. The Co-ordinating Group on Audit and Accounting (CGAA) was established to ensure that auditing and accounting issues raised by the Enron collapse were addressed thoroughly by appropriate regulators. Separate reviews were taken forward by Derek Higgs on the role of non-executive directors and by Sir Robert Smith on audit committees, as well as a DTI review of regulation of the accountancy profession.
I listened carefully to all the points made about the various reports and reviews, and I shall address the specific points in due course. First, however, let me stress that the proposals need to be seen as a mutually supportive whole; they should not be judged in isolation.
Some of the proposed changes address the issues from a boardroom perspective, some from the perspective of the auditors, and some address the issue of oversight and regulation. The overall objective is to raise standards of corporate governance, strengthen our accountancy and audit professions and provide for a more effective system of regulation of those professions.
In her Statement to the House on 29th January, my right honourable friend the Secretary of State for Trade and Industry strongly welcomed the Higgs
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report and emphasised its importance. She highlighted Derek Higgs's conclusion that at least half the board, as well as the chairman at the time of appointment, should be independent; that all members of the audit and remuneration committees should be independent; and that the separate roles of chairman and chief executive should be reinforced. She also stressed how crucial she thought it was that appointments should be made on merit—not, as is the case for over half the appointments at present, through personal contacts and friendships.
However, my right honourable friend also stressed that that was not a regulatory approach. The way to raise corporate governance standards is to use the existing, very successful approach of the combined code guidance. The principle is "comply or explain", whereby a company—for example, a small listed company—that is unable or considers it inappropriate to comply with the recommendations can, as now, explain why it is not doing so. Its shareholders and the market will judge whether that explanation is a reasonable one.
Since publication of the Higgs report, we have seen plenty of media coverage about its implications. I agree with the noble Lord, Lord Brennan, that the CBI's response was disappointing. I am glad that the noble Lord, Lord Freeman, and the noble Viscount, Lord Chandos, were supportive of its overall approach. We are well aware of the responses to what I thought were very selective and biased questions from the CBI. Of course we note the concerns. However, the institutional investor community is supportive of the report, and many in business have supported the report's findings.
As the Secretary of State said, there is a strong belief that British corporate governance is the best in the world. The Government are committed to maintain that position, but we cannot afford to be complacent. The Secretary of State has already made clear to Parliament, and confirmed in her Mansion House speech, that the Government welcome the Higgs report. We think that it marks an important contribution to corporate governance and restoring investor confidence.
I am delighted to be able to give the noble Lord, Lord Barnett, an answer which he has not already given me. The recommended changes to the combined code are presently out for comment under the auspices of the FRC. It is the FRC that is responsible for the combined code, not the Government. The FRC has invited comments by 14th April on the proposed changes to the combined code before it issues a definitive revised code. I am sure that the FRC will consider all the comments it receives. The issues now need to be considered carefully and debated sensibly, and that is what the FRC will do.
I should add—I thought that there was no mystery about—this that the Treasury and the DTI were both very much involved in all the work, particularly in relation to the co-ordinating committee. The two departments worked very carefully on the matter, as we both have an interest in it. I think that joined-up

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government is a rare commodity and that, when we come across it, we should celebrate it and not consider it a demonstration of lack of clarity about responsibilities. I should also add that we are not considering legislation. We are working on the principle of "comply or explain". I am, however, not saying that we would never change that.
It is worth remembering that Derek Higgs publicly consulted last June. He saw and spoke to a great many players during the conduct of his work and took soundings with the major representative organisations on his proposals as well as doing detailed research, the results of which are available on the review website. I have stressed that the corporate governance improvements—not just Higgs. but also Sir Robert Smith's very important recommendations on the role of audit committees—are not about regulation or coercion, but rely on the very effective mechanism of "comply or explain". However, we must also recognise that Enron raises issues about "who guards the guards"—about the role of the auditor, the relationship between the professional accountancy bodies and the independent regulators, and about the enforcement of standards. That is why my right honourable friend announced in her Statement on 29th January a number of tough new measures to ensure independent oversight and auditor independence. Various issues have been raised concerning those measures and I shall attempt to address them in a moment.
First, I should like to set out the main changes that we have announced. There is to be a unified national body to oversee the accountancy profession—an expanded Financial Reporting Council, under Sir Bryan Nicholson—with three clear responsibilities: setting accounting and audit standards, enforcing or monitoring them and overseeing major accountancy bodies. That body will be more accountable and transparent. The setting of auditor independence standards by the Auditing Practices Board under this new structure, and a new unit for inspection of major audits, mean a tougher independent challenge of audit. Those roles will become clearly independent of the professional bodies.
The changes to the oversight regime, when combined with the recommendations of Sir Robert Smith's review, to which I have referred, will help safeguard auditor independence. Specifically, they will provide a clearer and stronger role for audit committees in approving the auditor and the purchase of non-audit services, backed up by stronger combined code provisions and detailed guidance, and tougher ethical standards for the audit profession. These standards are to be set by a fully independent body with independent monitoring and discipline. Finally, and importantly, we are toughening up enforcement of the accounting requirements through a new more proactive regime which will make more effective use of Financial Reporting Review Panel and FSA expertise.
I turn to some of the specific points raised. I very much agree with the noble Lord, Lord Haskel, about the need to widen the pool of non-executive directors and to deepen their involvement. Non-executive directors must not be seen simply as policemen; they
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must be seen as bringing valuable skills and knowledge to the board and to help rather than hinder the achievement of competitive advantage. Derek Higgs placed strategy at the top of the list—alongside performance, risk and people—as the main elements of the role of a non-executive director. He described the non-executive director's role as a constructive challenge and contribution to the development of strategy. Research commissioned for the review showed that there was no contradiction between the strategic and monitoring roles of the non-executive director.
I assure the noble Lord, Lord Freeman, that we will certainly continue to pursue with the SEC the point that it should take account of the excellent regulation in this country. There has been a recent visit to the United States and I think that we may be making some progress.
The noble Lord, Lord Freeman, also asked about the timing of the new company law Bill and how we will handle it. We will bring forward a Bill as soon as practicable. However, as I am sure he will appreciate, this is a task of great scale and complexity. We are considering having a pre-legislative committee as a useful device to help take forward that legislation. He was also right to say that the EU is proceeding on the very sensible basis of "one size does not fit all". We agree that that is the right approach.
The noble Lord, Lord Sharman, raised a number of points, including whether to allow the chairman to chair the nomination committee; the role of the senior non-executive directors in relation to investors—which I think is rightly described as the back stop approach in the Higgs report; and rotating the board of non-executive directors. I do not want to get into the detail of the specific proposals now because, as I said, they are being reviewed and consulted on by the FRC. However, I should like to clarify the position, not for the noble Lord, Lord Sharman, but possibly for other noble Lords. He was quite right to describe that approach as a backstop. It would operate only when communication between the chairman and the investors had essentially broken down and there was a lack of confidence. Only then is it envisaged that the senior non-executive director would take action. Such action seems very practical and not to be a threat to the chairman's overall role.
As regards the rotation of non-executive directors—the noble Lord, Lord Stewartby, also raised that point—Higgs says that there is a need to be flexible on that issue. He accepts that there will be cases where a non-executive director remains on a board for longer than six years and recommends that shareholders should be asked to re-elect non-executives each year after they have served for nine years. That seems an eminently practical approach.
The noble Baroness, Lady O'Cathain, asked whether the proposed changes would raise the performance of a board. If the changes prevent a few of the failures of corporate governance that we have seen in recent years, they will be worth while. The

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essence of regulation is that it should be proportionate. We believe that the proposed changes are proportionate to the seriousness of the issues involved.
The noble Baroness also asked what would happen if investors and a board were unhappy with a chairman. She suggested that they and the board should confront the chairman. In my experience that is not the way these things work. Having another channel of communication between board members, investors and the chairman may result in action being taken in circumstances where board members are not at all keen to tell the chairman that he should not be in charge of the board.
I agree with the noble Lord, Lord Holme, that companies need respect and trust if they are to operate effectively and recruit idealistic young people. The noble Lord, Lord Fyfe of Fairfield, mentioned the senior independent director. The detail of the Higgs report makes clear that that is a very limited role in particular circumstances.
The noble Lord, Lord Stewartby, may not have been selected at his golf club, but the record shows that half of non-executive directors are selected on a personal basis. It is interesting to note that only 4 per cent have a formal interview. Therefore, in general, the system is open to charges of cronyism, which is something we all want to avoid.
I agree with the noble Lord, Lord Marsh, that standards of corporate governance in the UK are certainly very much higher than they were in the past. However, it is a mistake to be complacent. The boards on which the noble Lord has sat may be comprised only of paragons of good sense and virtue. However, I think that the noble Lord, Lord Sharman, who has probably had experience of more companies than the rest of us put together, would agree with me that in the past many non-executive directors joined boards without being aware of all the activities or of the financial practices of the company that they joined.
I agree with the noble Lord, Lord Paul, that corporate governance rules will always struggle to control energetic and skilful entrepreneurs. However, government and investors must try to make certain that the rules are as good as they should be. We cannot rely on society providing a stream of individuals of great personal integrity, although we should in all areas try to stress the importance of personal integrity.
I agree with the noble Lord, Lord Williamson, that we should not see boards in terms of two blocks of executive and non-executive directors. But, equally, we should appreciate that they have different roles. I agree with him that it is crucial to have a strong link between remuneration and performance. That is why we introduced the remuneration regulations 2002.
The noble Lord, Lord Berkeley, mentioned the parallels between corporate governance and quangos. There are important similarities, but we should always remember that they are not exact. We should see what can be learnt from Higgs but not think that one can
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make exact comparisons. The existence or not of shareholders is an important difference here and one that cannot be ignored.
The noble Baroness, Lady Hayman, referred to the same issue. She mentioned some of the difficulties of applying the Higgs principles to the voluntary and public sectors. It is valuable to explore those issues, even if it is sometimes difficult to apply the principles to voluntary work.
The noble Lord, Lord Razzall, asked whether the National Audit Office could audit private companies. I do not think that the Government have any strong views on that issue. It is not a particularly important issue in terms of corporate governance one way or the other. I do not believe that we have considered the question of the imbalance of each shareholder carrying the same "weight" as regards certain decisions. Perhaps that is because that is not a very good idea. It seems to me that that is not an idea that commends itself immediately to many people.
I was surprised to note that the noble Baroness, Lady Miller of Hendon, appeared to move in two directions at the same time. Apparently, she wants a detailed timetable for the implementation of the regulatory changes but she does not want action to be taken too quickly. We have already begun to put the regulatory changes into practice. Some changes will be implemented quicker than others. I am sure the noble Baroness is not surprised to hear that the fact that Tesco left the report on the shelf does not move me strongly one way or the other.
In summing up, I welcome the debate. These are important issues and not easy ones. We may all agree as regards the overall objective, but, as the debate has shown, there is more than one way of achieving that objective. Of course, these are issues that are being grappled with around the world. The US has already made its response—a strong and immediate response—through the Sarbanes Oxley Act. The European Commission is taking forward work on both corporate governance and auditor independence—work which the UK is in a good position to influence and lead. Others such as Australia and Japan are also carrying out fundamental reviews.
If Enron has shown us anything, it is that these are truly global issues, not national ones. But I think it is fair to say that the UK's response has been widely recognised around the world as sensible and effective. It is neither knee-jerk and disproportionate, nor complacent and foot-dragging. It is tough where that is needed but measured and mature, building on our existing, well respected system of corporate governance. That is the basis on which we shall go forward.
7.7 p.m.
Lord Brennan: My Lords, the continued vibrancy of British corporate life has been richly illustrated this evening by our finding out that the noble Viscount, Lord Chandos, and the noble Lord, Lord Marsh, manage to sit together on the same board. I thank

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them both for their contributions. I thank the noble Viscount, Lord Chandos, for making sharp satire appear merely delicately sardonic. I thank the noble Lord, Lord Marsh, for eventually being able to overcome his natural capacity for reserve.
I thank all other noble Lords who contributed to the debate, especially those who gave us what I call wisdom. I refer to the noble Lords, Lord Barnett, Lord Paul and Lord Haskel, on my side of the House, to the noble Baroness, Lady O'Cathain, and the noble Lord, Lord Stewartby, on the Conservative Benches, and to the noble Lord, Lord Holme, in particular on the Liberal Democrat Benches.
We can extract from the contributions three conclusions. First, we are in a process of consultation about something that is immensely important. It is not just a matter of avoiding another Enron situation but of ensuring competence in British corporate life. That requires a balanced debate about how to match commercial freedom with public protection. In making a balanced judgment we should surely apply good values. Finally, we should take action sooner rather than later. I commend the Government's expedition and the clarity of the exposition of the Government's views by my noble friend the Minister. I hope that we shall not discuss the subject again next year. I beg leave to withdraw the Motion.
Motion for Papers, by leave, withdrawn.

Missile Defence: Fylingdales
7.9 p.m.
Lord Redesdalerose to call attention to the policy implications of the decision to upgrade the United States Missile Defence Programme at Fylingdales; and to move for Papers.
The noble Lord said: My Lords, I start by thanking the Government for giving us the opportunity for the debate. There could have been a government debate, but they kindly allowed us to have this debate in respect of the recent debate on Iraq.
The debate will not be a long one, as we do not have a long list of speakers. I wondered why that was, as I find the issue of immense importance. There are two reasons. The first is that the issue is probably overshadowed by Iraq, but that is also incredibly pertinent to the debate. The comments by Donald Rumsfeld over the weekend about the unilateral position of America in its approach to Iraq is of consequence to the development of the National Missile Defence system. If it is to lead to the defence of this country, there will have to be a joint effort between America and its allies. It would be extremely worrying if the missile defence system, which originated as the National Missile Defence programme, did not defend all America's allies equally.
The second reason is because, in a Statement on 15th January 2003, the Minister repeated the words of his right honourable friend in another place. Summing up on that debate—I apologise to him for quoting his words back to him—he said:
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"We are announcing that it is the Ministry of Defence's and the Government's preliminary view that the request from the United States, which has not itself decided on a deployed missile defence system, for the existing equipment at Fylingdales to be upgraded should be given permission by the British Government. That is all. We are not making a decision today about whether or not the United Kingdom requires a missile defence system. That is something that we and Parliament must consider, and that will be done in due course. We are simply announcing that we are tending towards the view that we should be prepared to allow the United States' request".—[Official Report, 15/1/03; col. 264.]
That sounds eminently reasonable, and gives the impression that the decision has been taken for a minor change.
Indeed, the decision at Fylingdales appears to be a minor upgrade of software and hardware. It does not include massive changes at Fylingdales at present. However, what is being done has huge ramifications for international stability. The changes at Fylingdales hammer a nail into the coffin of the Anti-Ballistic Missile Treaty that was allowed to lapse on 13th June 2002. Obviously, that was a bilateral agreement between the United States and Russia. Those who said that there could have been problems with the Russians on the subject have said that their acquiescence means that they do not see it as something of great import.
There is an alternative view. The Russians are not in a position to implement a missile defence system of their own and the Cold War is over. Nevertheless, as they hold a large number of nuclear missiles, the implication could be that they see missile defence as a threat, viewing it as an offensive weapon against a state with few nuclear weapons for first-strike capability. That could be a reason for Russia not to disarm the number of nuclear weapons that it might. I put that forward only as a hypothesis, but it could be extremely dangerous. Over the next few years, we all hope that the number of nuclear warheads held by Russia and the United States will decrease, but that might not be the case, which is of real concern.
A missile defence system, if seen in any other light, could be seen as having an offensive capability against a country with limited strategic capability. I speak of China. That is obviously not the reason for developing missile defence. However, the implications for strategic thinking in China would be worrying. It would see its limited strategic arsenal countermanded by an effective missile defence. That might lead to the escalation of its own nuclear weapons to counter that check. I put that forward only as a hypothesis, not as a realistic scenario. However, it will be in the background thinking of all those who deal with nuclear policy in other countries.
Another question with relevance in this country is this: with an effective missile defence system, what is the role of our own nuclear deterrent or that of, say, France? I put that forward only as a thought for the Ministry of Defence. Our nuclear deterrent is based on the principle of mutual assured destruction. If that principle is broken down by missile defence, is there any need for us to spend scarce resources on nuclear capability, as we will obviously be spending a vast amount of money on missile defence? We will have to

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meet its cost somehow. There might be a trade-off between having nuclear capability and paying our dues towards the procurement of a missile defence system.
The Minister will counter those arguments by saying that, at the moment, missile defence does not exist. The technology does not exist to make it work, but is being developed quickly. However, it is the declared intention of the US Administration that it should be a priority. They are moving with such speed on it that there is also talk of the deployment of an untried system in Alaska in the next two to three years, and a second system in California. It seems unfortunate to move with such speed, because so much money will be spent on trying to procure the system that it might destroy the whole concept of the system itself if military spending in the US has to be cut back. The Administration have procured an enormous amount of money for missile defence. They have upgraded their defence spending by 50 billion dollars a year, much of it to meet the costs of missile defence.
The concept is not new. It goes back to the Reagan era and the Strategic Defence Initiative or Star Wars. That system of space-based lasers foundered on the problem of technological feasibility. One of the victories of Star Wars is the claim that the Russians could not afford to counter it. However, we have to ask whether the present-day system is affordable. There are some worries about the technology about which we are talking, such as the short-range interceptors that will be positioned around rogue nations to intercept ballistic missiles shortly after launch. I foresee a number of problems with that. It assumes that countries around rogue nations will be used for the deployment of American missile systems, which could be destabilising in many parts of the world.
The second issue is that the ballistic missile would be counteracted when it left the Earth's atmosphere in the space/air area, which has real implications. How would that be done? If it was done from a launch from Earth, Fylingdales would pick up any such launch and an interceptor would be launched at that point. Is that technology currently feasible? Discussions on this issue have started to refer to basing weapons in space to counteract the space flight of any missile. That involves the weaponisation of space, which has real implications for the future. The Minister might respond that that is for the future but it is worth discussing now. Space-based weapons can be seen as a threat to almost any nation on Earth.
I turn to point defence, which would be for specific targets, such as small cities or installations that could be used in a missile defence programme, including Fylingdales. If the missile defence system is brought to a conclusion, we and the Americans might feel that it was necessary to defend Fylingdales with a point defence system. That would cause much concern to those living in Yorkshire because it would involve basing missile systems around the county. There is also the issue that point short-range interceptors when dealing with incoming missiles are most effective when
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nuclear tipped. That might be totally unacceptable. I realise that at this point no such missile defence system has been developed and that all of this is for the future.
The Government may say that it is inherently responsible for a government to consider this country's defence against the threat of a ballistic attack from a rogue nation. I must admit that I agree. The point of this debate is not to attack the Government's policy. We must in future make a measured judgment. I do not believe that we can say that this is the end of the argument and that there is currently no such issue. It will obviously involve much debate within the MoD and throughout the country—this issue will affect us all.
Is a ballistic attack the only threat that we face? Obviously not. By developing a missile defence system, we might well make it more attractive for potential aggressors to use other forms of delivery. If one wants to deliver a nuclear weapon, one could simply put it in a container, wrap it with lead and send it freight to one of many ports in the world. Current detecting systems would not pick up a nuclear weapon in a freight container. That is an horrendous scenario. One could also go for the non-nuclear option. Nuclear weapons are expensive to produce. As the situation in Iraq shows, chemical and biological weapons are much smaller, easier to mass produce and can be shifted around more easily than a nuclear weapon.
We must also consider the extent to which missile defence is cost effective in that scenario. The cost to the country will be huge. The Americans are obviously paying for the system's research and development. However, is it realistic to expect that we will not have to fork out for the cost of a missile defence system in this country? The cost of such a system could run into billions. The defence for that approach has been advanced. British industry, which has definite capabilities and expertise in missile defence and interceptor technology, will benefit from that. The future benefits must be carefully considered. Analysis of the Star Wars initiative showed that this country benefited financially hardly at all from its industrial research on the programme. We must also question whether the Americans will want to share the system's information technology. I am summing up—
Lord McIntosh of Haringey: My Lords, we are into the 17th minute now.
Lord Redesdale: My Lords, I apologise; I have gone over the time. I had a piece of paper that referred to 20 minutes for starting.
I end with a point raised in the First Special Report. It states:
"We deplore the manner in which the public debate on that issue of the upgrade has been handled by the Ministry of Defence. It has shown no respect for either the views of those affected locally by the decision or for the arguments of those opposed to the upgrade in principle".
The Government have countered that argument in their response. This debate will not finish at this point; however, this is the starting point for any debate.
My Lords, I beg to move for Papers.
7.26 p.m.
Lord Powell of Bayswater: My Lords, looking at the list of speakers for this debate, I rather get the feeling that I am gate-crashing a private party. Listening to the opening speech of the noble Lord, Lord Redesdale, I am a hit worried that it is the sort of private party at which hallucinogens will be passed around. However, I am grateful to the noble Lord for initiating this debate, which gives me the chance to put a rather different point of view.
My involvement with missile defence goes back some 20 years, to the discussions that the noble Baroness, Lady Thatcher—the then Prime Minister—had with President Reagan about his strategic defence initiative in 1983. Like her, I have always supported the concept but recognised from the beginning the immense technical difficulties of building a defensive system, which meant that it would inevitably be many years before a deployable system would be available. Also, it was clear that it would never be 100 per cent effective, which is why it is essential to retain nuclear deterrence alongside defence.
In the 20 years that have passed since President Reagan's initiative, substantial progress has been made. Technical advances have now brought a first-generation system of missile defence within sight. It is not by a long chalk President Reagan's original vision of a global space-based system; it is a land-based system, which will provide a degree of protection against missile attack from rogue states with limited arsenals and against accidental launches.
One would have to be particularly ostrich-like to fail to recognise that both of those dangers have increased and will increase further as a growing number of unscrupulous yet relatively unsophisticated states get their hands on long-range missile technology. Indeed, the need for missile defence becomes clearer almost every day. The North Koreans have resumed testing of their ballistic missiles, just as the noble Lord the Minister warned this House on 15th January they were likely to do. They have the declared aim of developing the capability to strike the west coast of the United States before long. It does not require much of a jump from the evidence of North Korea's programme to understand the likely long-term ambitions of other rogue states in North Africa or the Middle East, whose missiles could one day—possibly quite soon—pose a threat to Britain and Europe as well as to the United States.
Ballistic missile defence also has a vital role in preventing the US and the UK from being deterred by rogue states. To make the point: if Saddam Hussein today had nuclear-tipped missiles capable of hitting London—let alone New York—would British and American troops be on Iraq's borders? My answer is: only if we had missile defence to protect ourselves.
Of course, missile attack is not the only danger facing the US and the UK, as 11th September demonstrated. But just because ballistic missile defence does not protect against every conceivable threat, that does not mean that it is unnecessary or repugnant. In practice, ballistic missiles are likely to
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remain the rogue state's weapon of choice. They are easy for dictators to control, and they have a higher probability of getting through than alternatives such as hand-carried WMD materials, against which the United States is strengthening homeland defence. In that perspective, ballistic missile defence can be seen as an adjunct to improved homeland defence.
The downside of ballistic missile defence has been consistently exaggerated and distorted. Over the years, we have heard endless dire warnings from European governments and from the opponents of missile defence in this country that pressing ahead with such defence would be destabilising, would undermine arms control and would jeopardise relations with the new Russia. Actually, none of those calamities has happened or is likely to happen. Instead, developing missile defences has gone hand-in-hand with a commitment to a far greater reduction in ballistic missile and nuclear warheads than we would have dreamed possible only a few years ago. Therefore, missile defence is needed, and it is compatible with reductions in other weapons and with strategic stability.
Turning to the present issue, now that the Americans are confident enough of the progress of the technology to prepare for deployment of a first-generation system, they are seeking to upgrade, here in Britain and also in Greenland, the radar facilities whose role will be to give early warning of any attack on the US. It is hard to think of a more benign purpose than that—providing warning of an impending attack so that our closest ally can defend itself.
The Government have been absolutely right to indicate willingness to agree to the upgrading of Fylingdales, which will be an essential part of a future defence network. That is, of course, only a first phase, and I have no doubt that the Americans will have further requests to make in the years ahead—to which I hope our response will he equally prompt and positive.
For the reasons that I have given, we should also consider how the United Kingdom and Europe can benefit directly from the protection of ballistic missile defence. In his Statement of 15th January, the Minister said that the Fylingdales upgrade would indicate no commitment to further missile defence deployments. I accept that it is too early for decisions on that. But I hope that the Government will, at the very least, monitor closely the progress of ballistic missile defence technology within the United States so that they are able to understand the potential implications—and the obvious advantages—of missile defence in protecting the United Kingdom as well.
Informal studies have shown that the cost to the United Kingdom of buying a first-generation, land-based defence system would not necessarily be prohibitive or detract from other essential defence programmes. Moreover, given our important role in the defence of the United States against missile attack, we are surely well placed to bargain for access to missile defence on highly advantageous terms in exactly the same way as we have benefited from the

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Trident missile programme. And not only should we benefit from the defence but we should participate in the technology and eventually the production of the defensive system.
In conclusion, I encourage the Government to look ahead in their defence planning to ensure that Britain has the whole range of systems needed to defend us against new threats, an effective nuclear deterrent, beefed-up homeland security and, in time, the protection of missile defence.
7.33 p.m.
Baroness Miller of Chilthorne Domer: My Lords, I declare an interest as the vice-president—or, at least, one of them; there are several of us—of the Council for National Parks, and I shall speak first in that role.
The Minister will be aware that the decision to change the use of RAF Fylingdales, which is what the term "upgrade" means, raises the possibility of the need for further development. That has particular implications in planning terms because RAF Fylingdales is situated within a national park—the North York Moors National Park. As my noble friend Lord Redesdale said in his excellent introductory speech, the term "upgrade" is rather disingenuous.
The initial lack of consultation with the park authority and, indeed, with the public on the change of use runs contrary to well-established policy. It was greeted with dismay by many, including the Council for National Parks and, I believe, the Commons Defence Committee. In PPG7, planning guidance is clear on the matter of development in a national park. I know how much this Government value the purpose of national parks because that was restated frequently by the Government and by Members of these Benches in this House during the passage of the Countryside and Rights of Way Act.
I believe that the types of issue that must be considered by a development test include the requirement for a demonstration of exceptional circumstances and of public interest before any major development can proceed. They must also include the availability of alternatives—both alternative sites and alternative ways of meeting that need. In my opinion, that test may prove to be especially important. Does Britain, let alone the park, need this development? Lastly, the development must pass the test of the impact on the statutory purposes of the park and on the local economy.
Therefore, I am pleased that Dr Lewis Moonie, Parliamentary Under-Secretary of State at the Ministry of Defence, met representatives of the Council for National Parks and agreed a way forward. I believe he has given a written undertaking that any major changes at RAF Fylingdales will include a wide and timely public consultation and, indeed, clarification concerning the use of RAF Fylingdales to track space debris, both military and civil. I believe that the Ministry of Defence is preparing an environmental report that will address the planning and environmental impact and sustainability issues raised by this so-called "upgrade".
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That is particularly welcome, as is the greater recognition that the Ministry of Defence intends to give to the protected landscape status of any of its core sites that fall within a national park. I should place on record the help given by the Minister's noble friend Lord Judd in ensuring that both sides—the Council for National Parks and the Ministry of Defence—were able to resolve upon that path within a fairly short time. I hope that, in his concluding remarks, the Minister will be able to put on record that the events in the North York Moors National Park were an exception. I also hope that the Minister has re-emphasised to his department, as I believe he has, the value of protected landscapes.
I turn briefly to my own feelings about this matter. It evokes for me strong memories of the early 1980s at Greenham Common. If Fylingdales is developed as a base in the way that the US Government envisage, I believe that we may well see another Greenham Common-type protest against the use of our country as a kind of island outpost of the United States. The anger that people in Britain felt then will be rekindled. The protests of recent weeks have made the Government aware that people in this country do not wish to be part of the United States' current military plans. People may well not wish to be part of any future US military plans, and certainly not without much consultation.
Greenham Common politicised a generation of women and enabled many of us to find our voice. I believe that recently a new generation has found its voice. At present, it is using that voice to express its disquiet about the situation concerning Iraq. Young men and young women, along with many of the older generation—I do not believe that they are ostrich-like, as the noble Lord, Lord Powell, implied a moment ago—simply do not believe in the same vision of the future. I believe that when the situation with Iraq is resolved one way or the other, people will expect the Government to consult widely on whether to allow Britain to become a missile launch pad. People will expect to be able to use their voice during that consultation.
7.39 p.m.
Lord Wallace of Saltaire: My Lords, I declare an interest as someone with a house in Yorkshire who intends to retire to Yorkshire. One of the main pleasures in my life is walking through Yorkshire's national parks. Although the pyramid of Fylingdales is not a particular eyesore, the "golf balls" of Menwith Hill are one thing that hit me every time I walk from Airedale into Wharfedale.
I particularly welcome the contribution of the noble Lord, Lord Powell, to the debate and I wish that there were more like him. As he rightly said, this is a very important issue. The issue of weapons of mass destruction is one of the most difficult on the international agenda and we all need to discuss it.
One problem with the way in which the Government have handled the issue is the pretence that it is purely a technical decision. They announced that they had

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received a letter from the United States on 17th December and that they were to consult widely, but on 15th January they announced that after wide consultation, during a period in which most people were happily occupied with other issues, they were minded to accept the proposal.
This is not a technical change; it is a fundamental change in the main purpose for which Fylingdales was intended. Fylingdales was a radar base intended to detect missile attacks from the Soviet Union in a Cold War context. We are now talking of Fylingdales being part of an American missile system based on different threats.
As regards the threat, I am increasingly sceptical about the way in which an American-led debate talks of weapons of mass destruction as though nuclear, chemical and biological weapons all fall into the same category. Nuclear weapons are easily delivered on ballistic missiles. I am not sure that I agree with the noble Lord, Lord Powell, if I understood him correctly, that ballistic missiles are likely to remain rogue states' weapons of choice. There are many other possible delivery systems now, including the dreadful, what I should perhaps call dual use technologies such as civilian airliners, container ships and so on. They are so much cheaper than ballistic missile systems that I fear that we are moving towards those different kinds of delivery systems. Incidentally, we are discovering that the threat from rogues in the world—not necessarily from rogue states, but non-state actors—is that they have the ability, particular with chemical and biological weapons, to deliver with a high degree of accuracy and they may not require to use nuclear weapons.
What should be the appropriate response of Her Majesty's Government? The first question that we should ask and what worries me most about this is whether we should look for containment of the threat within an arms control regime or whether we should leave it up to the United States to define the nature of the threat and of the response. After all there is a long history of a number of people—Donald Rumsfeld being one—wanting to bust the nuclear arms control regime and space-based arms control and to put into effect a dominant American approach to global security.
The SDI has been mentioned by the noble Lord, Lord Powell, but the current debate started with the 1998 report to Congress commissioned by a Republican majority in Congress led by Donald Rumsfeld. Since the new Administration came into power the drive has been led by the most ideological Republicans. John Bolton was here in November telling us all that we had to get on board because the Americans were going ahead anyway.
I am unhappy about an allegedly left of centre British Government accepting an agenda defined by the right wing of a rather divided Republican Administration in Washington. The Minister shakes his head, but that is what it looks like. The absence of any attempt so far by the British Government to put the matter of missile defence back into a multilateral context causes us concern.
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On an appropriate response, we have to ask whether we are happy to tag along behind an American system, designed to protect the United States without any reference to the European allies. Yesterday I was reading a Heritage Foundation paper on my computer that said that of course it is in America's interests to keep the Europeans as divided as possible because then they will not pose any threat to the United States. We continue to define the nature of the case. In recent months they have been successful, as the Heritage Foundation paper said, in ensuring that the Europeans stay divided. The British may have helped in that regard.
On the nature of the current threat, it now comes from the south and the east. The Americans may be better off if this kind of radar were in Bulgaria or Italy. A European framework appears appropriate. In terms of the credible potential threat, if missiles cross British territory they are likely to travel first across Italy, France, Greece and the Balkans.
On UK sovereignty and British democratic accountability, I am becoming increasingly used to the idea that in matters of national security the Government operate on the basis of the Royal prerogative and do not report to Parliament. Yesterday, when reading up on the subject, I was struck by how differently the Danish Government have approached the same request to upgrade the Thule radar. Much more detailed information was available to the Danish Parliament on what the United States have asked and there was information on how the Danish Government will respond.
The Minister kindly sent me a letter on the leasing issue in response to my unanswered question of some months ago. It points out that there is no lease to govern Menwith Hill or Fylingdales because the agreements are not legally binding. It also points out that under assurances given to the American authorities in 1955, and again in 1976, the site will be made available for a period of 21 years. Unless my arithmetic is wrong, that means that the assurances ran out in 1997. Perhaps the Minister could tell me where we are now, why Parliament has not been informed at least in principle about the state of play and why the Danish Government can inform the Danish Parliament of such matters when the British Government believe that it is not necessary to do so.
There are real questions about democratic accountability and about British sovereignty. Fylingdales and Menwith Hill are riot US sovereign base areas, but the British Government appear to operate as though they are. I understand that there are almost no Americans attached to Fylingdales. I gather that the current number is one. I also understand that there were over 1,000 American personnel at Menwith Hill and since 11th September 2001 that number has increased considerably. That has not been reported to the British Parliament, but that is the word that has filtered through to people like me.
We also understand that Menwith Hill is used not only for space-based infra-red systems related to the missile system, but also for a whole range of other

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activities, including, if recent reports are to be believed, listening in on America's allies in relation to what policy they may take on votes in the UN Security Council.
The democratic acceptability point that my noble friend Lady Miller suggested is a real one. At a time when we have declining trust in the United Kingdom in the overall approach to global security of the current American Administration, the acceptability of the current arrangements is likely to be thrown into question.
That leads me to two other points. What about the potential cost? I love the phrase used by the noble Lord, Lord Powell, that the cost will not necessarily be prohibitive. I think that means that it will cost an awful lot of money, but it may not mean more than, say, a 25 per cent increase in the defence budget. I hope that that is the case. If the United Kingdom is not simply to serve American needs then we need a more open debate about how far we need to participate. If the United Kingdom is to go down that road, we need to do so with partners. How far do we tag along behind the United States or do we raise this matter with our partners in Europe with whom we share the likely threat? I repeat that arms control regimes are cheaper, as well as better. The pursuit of robust multilateral enforcement regimes is a preferable response to the unilateralism of the kind propounded by John Bolton, Donald Rumsfeld and others.
Then there are references to hopes that British industry will benefit if we join in. In the early stages of the strategic defence initiative, I remember well that being one of the supposed advantages for Britain. We did not gain very much. It is likely to be an illusion again. Treatment of the British defence industry is so different from that of other sectors of industry. Our hope that our defence industry will be cut into these deals is increasingly open to question. We are also told that in order to keep the industry going we must approve active pursuit of defence sales to countries which are not entirely stable. There are also some large issues there.
I end by saying that we on these Benches strongly endorse the criticism of the House of Commons report published in January on the way in which this decision has been taken. That was very strongly put. I entirely agree with it. We call for a much more cautious approach to an issue which is important, to a decision which is not purely technical and to a broad new threat which we need to discuss with all our allies and not simply to accept a ideologically-driven debate by the Right of the Republican Party in the United States.
7.51 p.m.
Lord Vivian: My Lords, we are grateful to the noble Lord, Lord Redesdale, for introducing this debate today. Your Lordships have expressed a number of most interesting points.
On these Benches we have consistently supported the Fylingdales upgrade and have warned of the potential risks and loss of trade to British industry if
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we do not participate. In our opinion there is no dispute about the threat. The need for missile defence is beyond doubt and we should be fully committed in principle to global defence now.
An assessment has been made that currently there is no significant immediate threat to the UK from ballistic missiles. However, Iraq, North Korea, Iran and Libya cause serious concern as they have developed, or are seeking to develop, or acquire ballistic missiles of increasing range. Some already have active and relatively sophisticated ballistic missile programmes and weapons of mass destruction. However, in this debate there is no time to comment any more on the ballistic missiles of North Korea, Iran and Libya.
Iraq is the most immediate threat to global security as it possesses the combination of missiles and weapons of mass destruction—and has used them in the past—and is seeking to develop long-range ballistic missiles. There is no time to go into specific detail, but what has happened to the 25 Scuds and their 50 warheads covertly retained by Iraq? What has happened to the remaining Al-Samoud 2 missiles and their 567 Volga engines and what has happened to the documents relating to the propellant used in these prohibited missiles?
Iraq possesses and has useable offensive chemical and biological weapon capabilities, which include warheads for the Scud missiles filled with nerve agents, anthrax, botulinum toxin and aflatoxin. It has used chemical and biological weapons and killed horrific numbers of Iranians and Kurds, and hundreds of thousands of its own Marsh Arabs. Very recent press reports reveal that Iraq has built secretly a new and potentially lethal unmanned drone that could spray chemical and biological weapons on advancing troops. That was recorded on page 14 of the latest 173-page report from the United Nations weapons inspectors, which was declassified last Friday. This find appears to support allied claims that Iraq has continued to produce the means to deliver banned weapons of mass destruction. It was not declared by Iraq and is a further violation of UN resolutions.
Turning to chemical and biological agents, where are the 550 x 155 mm shells and the 450 R400 aerial bombs filled with mustard gas and the remaining 80 tonnes of mustard gas? Where are the 6,500 chemical weapon bombs? What has happened to the VX nerve agent, the 11,000 litres of botulinum toxin and the 10,000 litres of anthrax? All these chemical and biological substances could be delivered by ballistic missiles if Iraq continued to produce those missiles.
Terrorist organisations are unlikely to use long-range ballistic missiles as a means of delivery as it would be beyond their financial means and even acquisition from off-the-shelf is unlikely. These terrorist organisations are more likely to deliver weapons of mass destruction by covert means such as in suitcase bombs or packages.
However, the role of Fylingdales should enable the USA to develop and enhance its ideas and emerging technologies to produce ultimately a layered missile

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defence system. The plan is not to destroy large numbers of missiles as in Star Wars, but to provide a capability with a less extensive global protection system against a limited strike programme involving far fewer ballistic missiles. Royal Air Force Fylingdales has been in operation since about 1963 as one of the radars that provide early warning of ballistic missiles against the United Kingdom, western Europe and the USA. It monitors continuously what is happening in space and the launch and track of rockets from sites within its field of view.
Implementation of the agreement to the US request would give the USA protection from missiles from the Middle East, but it brings no immediate defensive missile cover to the UK unless ground or sea-based interceptors are also located in south-eastern Europe. Some local people are concerned that the upgrade to the hardware and software programmes will increase radiation emissions to dangerous levels. The current levels are safe and many times lower than the safety limits set by the authorities. The Secretary of State has said there will be no change in the power output of the radar and no health risk to people or livestock should arise.
However, there is no need to co-locate interceptors with the radars. The upgrade of the USA radars at Fylingdales will provide us, at no cost to the United Kingdom, with a vital building block on which missile defence for this country and for our European neighbours could be developed if the need arose. Surely we should preserve the possibility of such defences protecting the people of the United Kingdom. Some argue that Fylingdales will become a target once it has been upgraded. However, there is no evidence that it will be at any more risk than it is now even with a terrorist threat, and since the end of the Cold War it could well be argued that it is less of a risk.
Some of the implications stemming from missile defence are that the United States is now looking at working closely with friends and allies to develop defences, which enhance global security in the face of potential threats from rogue states. It has also refocused its efforts on the much more limited and realistic aim of defending against potential threats. The United Kingdom needs to maintain the ability with its allies to intervene in regional crises where our national interests or international stability are threatened, or the will of the international community is being flouted. We need to be prepared for a scenario in which a state carries out a regional act of aggression, and then seeks to deter intervention by threatening population centres with ballistic missiles and weapons of mass destruction.
The agreed upgrade does not in itself commit the United Kingdom to any greater participation in the United States missile defence programme. It does, however, keep open the prospect of acquiring missile defence capabilities for the UK, should we desire such protection at some point in the future, but it may well be a very expensive, although necessary, option. The risk to the UK from ballistic missiles and hence the desirability of a missile defence system will be driven by the inimical intentions of other states and
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improvement in ballistic missile technology and accuracy, and not by the existence of the US missile defence programme. Safety lies in recognising threats as they arise, and in taking proactive steps to address them.
On the issue of international stability, the aim is to tackle limited threats from states of concern with emerging missile capabilities, which seek to acquire and threaten to use ballistic missiles and weapons of mass destruction in contravention of widely accepted conventions.
It has been said that we are trying to protect ourselves and friends and allies from threats from countries that may not be deterred by our possession of nuclear weapons, reserving the right to use them in specific circumstances. However, future decisions on the existence of effective missile defences should help to dissuade any states that might be weighing up whether to embark on the costly and technically difficult path of developing or procuring ballistic missiles and weapons of mass destruction in the first place. It is important to consider missile defence in the context of emerging threats from states that pay no attention to the safety and welfare of their own people.
I end my comments with statements from the Prime Minister and the Chief of Defence Staff. The Prime Minister said:
"There is a threat to our security from unstable states acquiring nuclear weapons … and if you can develop a defensive system, and this is a defensive system, that can give us some protection against that, I don't think that is the wrong thing to do. On the contrary I think there is merit in it".
The Chief of the Defence Staff said:
"If there is a defence system around which we can make use of, then it must be essential for us to investigate it … It would benefit the Country in the longer term".
I agree with those statements and that it is right for the United Kingdom to have agreed to the upgrade for the Fylingdales radar, not least because of the importance of the United States/United Kingdom special relationship. In addition, the upgrade will improve the vital early warning capability and we shall retain the opportunity to keep open the prospect of future missile defence for the United Kingdom and the potential for UK industrial participation.
Missile defences threaten no one and the capability would have to be used only if a ballistic missile had been fired. Once such a missile is in the air and threatening a devastating impact, it is unthinkable that anyone could not want to be in a position to shoot it down. I reiterate that we should be fully committed to global missile defence now.
8.2 p.m.
The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Bach): My Lords, I thank the noble Lord, Lord Redesdale, on securing the debate and all noble Lords for their contributions. It has certainly been an interesting discussion However, having heard both defence and foreign affairs spokesmen for the Liberal Democrats, I am left in a dilemma. The noble Lord, Lord Redesdale, may be able to assist me. In spite of the many words spoken

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with passion by both noble Lords, I still do not know whether the Liberal Democrats support or oppose the decision made by Her Majesty's Government. That is not an academic point; it is an important one. The Liberal Democrat Party is a serious political party. It must have views on whether the Government's decision is a good or a bad thing. I hope that we shall hear what is its view.
Lord Redesdale: My Lords, I thank the Minister for giving way. As I said in my speech, if he reads it carefully, we are concerned about how the Government reached that decision. We do not think that they needed to reach it with such haste. We had hoped that there would be a great deal more debate. We are not opposed to a missile defence system and have not said that we oppose it; we just wish that there had been more debate about the implications before we moved forward. We may well support missile defence and the decision at this stage; we are just concerned about the implications for the future.
Lord Bach: My Lords, I am grateful to the noble Lord, but it must be me. I still do not know whether that is a yes or no about whether the Liberal Democrats support the Government's decision. That is probably the best answer I shall receive, but I still do not know whether they support the Government's decision to agree to the United States request for an upgrade of Fylingdales or not. From what their spokesman in another place said, it is impossible to tell. Having heard the debate today, I still do not know. It is quite important that the electorate should know.
Lord Wallace of Saltaire: My Lords, the system is unproven in the United States. The decision to deploy missiles in Alaska has been criticised by many in the US Congress, because the system is still experimental. Our case is that it is unnecessary at this stage for the British Government to give such a rapid reply. There is room for debate—especially about the multilateral framework within which we should have replied.
Lord Bach: My Lords, I am afraid that I am still none the wiser as to whether the answer is yes or no to that government decision. As a serious political party, it is my view that the Liberal Democrats should tell us. This is a perfect debate for them to do so. I take the view that they have declined to do so.
I begin with the position that we have reached. Back in October, my right honourable friend the Secretary of State for Defence set out the Government's thinking on the development of ballistic missile defence systems and called for debate on how missile defences might be relevant to the United Kingdom's own strategy for dealing with the potential threat from ballistic missiles.
We have been criticised about timetables. That criticism is completely unjustified. On 9th December the Ministry of Defence published a discussion paper to inform the policy debate. On 17th December we received the request from the United States
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Government seeking permission to upgrade the early warning radar at Fylingdales for missile defence purposes.
The Government were keen to encourage people to make their views known: in Parliament, where there were opportunities for debate on 15th and 22nd January; in two public meetings attended by the Defence Secretary in North Yorkshire on 6th January; in a large number of letters and e-mails to the Ministry of Defence; and through the House of Commons Defence Select Committee. The committee's report, which has been referred to tonight, was published on 29th January. It recommended that the United Kingdom should agree to the upgrade. It, at least, was decisive.
Once the Government were confident that they had taken all the views and arguments into account, we were able to come to a final decision. The fundamental test was whether the upgrade would ultimately enhance the security of the United Kingdom and the NATO alliance. It does so by providing the opportunity in future to defend our country and the European continent against the increasing threat from ballistic missiles armed with weapons of mass destruction. Those missiles do not, we believe, present an immediate threat to the United Kingdom population. But it would be an irresponsible government who could claim that such a threat would never develop. RAF Fylingdales would be a crucial building block on which protection for this country could be acquired. Therefore, as I informed noble Lords on 5th February, we have now replied to the United States Government agreeing to their request.
We have debated today the policy implications of that decision. The most important point is that the upgrade of RAF Fylingdales does not imply any commitment to greater participation in the US missile defence system. The US has not requested the basing of interceptors in the UK; nor has it any plans to site an X-band radar in this country.
The United States has, however, offered to extend missile defence coverage to the UK as the evolution of the system permits and subject to appropriate political and financial arrangements. At the appropriate time, the Government will need to consider whether we wish to acquire missile defence capabilities for the United Kingdom. That would involve broad consideration of the strategic circumstances of the time, including an analysis of how the threat is developing and the technological solutions available, and an assessment of the approach that offers best value for money. The insight that the Government and industry will have of the US programme will be of great benefit in informing that analysis. But that would be a discrete decision some way downstream.
I shall now outline the implications for RAF Fylingdales. Visitors to the station are often astonished to discover that it is controlled and staffed entirely by the Royal Air Force. The only US military presence at the base is a single liaison officer. I emphasise again that Fylingdales is a British base. It will continue to he controlled by the UK. Operational

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command will continue to abide by the principle of joint decision-making. The radar will continue to play a crucial role for Britain within the ballistic missile early warning system as a whole. That system of radars and satellites provides warning of ballistic missiles heading towards the UK. It also tracks all objects in low space orbit around the earth. We have access to all the data that we require for those two missions from the whole system, and those arrangements will continue after the upgrade.
Noble Lords will be aware that the upgrade involves no new development, no expansion of the base and no changes to the radar's external appearance. The power output of the radar is also unaffected. As the noble Lord, Lord Redesdale, said, the upgrade essentially involves the modification of computer hardware and software within the base. When a ballistic missile is launched, the upgraded radar will be able to track the incoming missile accurately enough to enable it to be intercepted. Other than in that extreme circumstance, the radar will be in missile defence mode only for brief testing periods. The UK will have access to the data generated during those periods as well.
I reassure the noble Baroness, Lady Miller, whose expertise in environmental matters is well known throughout the House, that the Ministry of Defence has been in close touch with the North York Moors National Park Authority about the upgrade, as I think she knows. It is preparing for the planning authorities a detailed report that will include environmental and health issues. But I am afraid that the noble Baroness is wrong in what she says is envisaged for Fylingdales. It is not a change of use. The radar will continue to play a crucial role for Britain as an early warning radar. Its missile defence role would be used only to track a real incoming missile or for training for around a few hours a year. Nor is it a major development. Indeed, there is no development work at all. It is, frankly, a computer upgrade.
The noble Lord, Lord Wallace of Saltaire, commented on leasing arrangements for both Fylingdales and Menwith Hill. I am grateful to him for referring to my recent letter to him. I shall try to make the position as clear as possible. As he said, there is no lease for RAF Fylingdales. The base is not made available to the United States visiting forces (USVF). It is, and will continue to be, commanded and operated by the RAF. The United States visiting forces have never been granted a lease to occupy RAF Menwith Hill, which is a joint US/UK base. The presence of the USVF at RAF Menwith Hill is governed by the NATO SOFA—the Status of Forces Agreement 1951. There are additional confidential government-to-government arrangements covering administrative matters. But before noble Lords get too excited about that, it is not peculiar or special to Menwith Hill. It exists at all USVF bases in the United Kingdom.
In 1955 and again in 1976, in order to facilitate the commitment of funding by the US Congress for investment in the base, the US authorities were assured of security of tenure at Menwith Hill for a period of 21 years. The arrangements were an administrative mechanism, were not legally binding and did not
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constitute any form of renewable lease for the site. In 1997, the assurance expired, and no further such security of tenure assurance was required.
Menwith Hill has nothing to do with missile defence. In 1997 the US no longer required the security of tenure assurances that we had provided in the past so that Congress investment could be secured, so they were allowed to expire. I have taken a little time on that matter, as I know that the noble Lord has a considerable interest in it. He deserves an answer to the points he made.
Some noble Lords referred to strategic implications. The decision has no major strategic impact. It is hard to argue that it changes fundamentally the relationship between this country and the United States, two countries whose security interests have been closely intertwined for many years. Nor does it affect strategic relations with Russia and China. China has expressed some concerns, and both countries have given measured reactions to the development of missile defence. I need hardly point out that the United States and Russia are involved in an active process of dialogue to explore the possibilities for co-operation on missile defence systems.
The upgrade does not alter the strategic importance of Fylingdales as part of our ballistic missile early warning system. It will enable the United States to intercept a ballistic missile fired by a state of concern at its territory. I cannot believe that anyone would want such a missile to land.
Of course, should we so decide, Fylingdales would also in the future be able to help defend the UK and Europe, provided that it was linked to interceptors based in Europe. I have emphasised that that is a decision for the future, but perhaps it is worth briefly considering some of the issues surrounding the prospect of missile defences for this country, an issue that noble Lords have raised.
We already have a wide and comprehensive strategy to deal with the proliferation of ballistic missiles and weapons of mass destruction. It includes a wide range of measures, from non-proliferation and counter-proliferation to intelligence co-operation; and from law enforcement and conflict prevention to diplomacy and deterrence. All those will remain crucial elements of the UK's response to proliferation. For example, the UK took a lead in instigating the creation of the new Hague code of conduct against ballistic missile proliferation, a politically binding code to which more than 100 countries have already subscribed.
There can be no guarantee that that wide range of measures will be 100 per cent effective. If, at some point, a ballistic missile is launched at this country, there will be nothing more that co-operation and conflict prevention can do. The only means of preventing catastrophe—defending this country and its people—is shooting that missile down. If noble Lords will forgive me for stating the obvious, I must say that that is all that missile defence can do. It is not for killing people. It is not for threatening other countries. It cannot even attack military targets. The

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sole purpose of missile defence is to find, intercept and destroy a missile that has already been fired at us in an act of aggression or terror and may carry a weapon of mass destruction.
We should be in no doubt about the existence of that threat. The noble Lord, Lord Powell of Bayswater, referred to it. It is a huge threat to our security. It is often said that threat is a combination of capability and intent. North Korea may be a single flight test away from confirming her ability to reach Europe and the United States with a ballistic missile. Iraq has already shown intent to use weapons of mass destruction and to fire ballistic missiles at its enemies. We must not ignore the evidence.
Why do those countries and others—often with a desperately poor population to feed—choose to spend their resources on such weapons? There are two reasons. The first is that they seek to hold other states to ransom by threatening the delivery of weapons of mass destruction. The second is that they seek to export missile technology to other countries trying to acquire such capabilities. It is not exaggerating to say that the danger is spreading. We cannot just wait for a direct threat to the UK to emerge, before exploring what we might do to defend ourselves against such a threat of devastation.
The noble Lord, Lord Wallace of Saltaire, made some remarks about a left-of-centre British government and a right-wing Republican American administration. In putting the argument that way, the noble Lord forgets that, as far as concerns missile defence, the previous administration, led by President Clinton, who could not, by anyone's definition, be described as a right-wing Republican, took almost precisely the same view as the present Administration. Indeed, in some regards on space he may even have taken a different and more hardline attitude. Therefore, I do not believe that it helps the argument to compare governments of whatever political persuasion.
The question is: is there a real problem here—a real threat? The answer of Her Majesty's Government is that there is. It is not just the United States and the UK who face that increasing threat. All our NATO allies recognise the potential threat from weapons of mass destruction.
On a number of occasions the United States has made plain its willingness to extend protection to friends and allies. NATO heads of state and government agreed at the Prague summit, an important decision, to examine ways to address the increasing threat posed by ballistic missile proliferation—not just ballistic theatre missiles, but ballistic missiles that would attack homelands—and initiated a new missile defence feasibility study in that regard.
I hope that this part of my argument will appeal to the Liberal Democrat Front Bench. The Government strongly support this work within NATO. In agreeing to upgrade Fylingdales, we have opened the possibility of this radar being the foundation of a missile defence system protecting the whole of Europe.
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I want to conclude by providing noble Lords with more detail on the industrial implications of our decision. British industry—rather cavalierly dealt with in one or two speeches today—has been involved alongside the United States in research on missile defence since 1985. Industrial opportunities for UK companies will now increase, with the United States looking to bring in the expertise of a wider "international team" as its programme expands. British companies, large and small, as well as universities and research centres, have an excellent opportunity to contribute to the international effort. We are playing a major part in facilitating that.
We are negotiating a new memorandum of understanding with the United States to allow a proper two-way exchange of technical information with the UK. That is very important, not just in this field but in the wider one too. We are establishing a new missile defence centre which will form the main vehicle for bilateral discussions with the United States. It is proposed that the missile defence centre will be jointly funded by government and UK industry. Through it we shall seek to understand the missile defence architectures being developed for the defence of Europe and to influence the emerging concepts to our advantage.
Lord Roper: My Lords, the Captain of the Yeomen of the Guard made a remark when my noble friend spoke into his 21st minute. It seems that the Minister is speaking into his.
Lord McIntosh of Haringey: My Lords, I spoke after the noble Lord, Lord Redesdale, had gone two minutes beyond his time.
Lord Bach: My Lords, I am sure that this is my fault, but as I understand it, if the actual time for the end of the debate has not been reached, the Minister winding up is entitled to use that time. I am told I am wrong about that—not for the first time—by my noble friend the Deputy Chief Whip. I shall wind up if I may, but please do not leave me in mid-air.
Our objectives are to inform our future decision-making while at the same time promoting UK industry—and what is wrong with that?—to enable it to win work fairly on a value-for-money basis. Negotiating the necessary arrangements will, of course, be critical. I recently visited the US Missile Defense Agency in Washington and discussed the missile defence programme with American colleagues. I received the clear indication from the United States that it seeks the closest possible involvement of the UK—both government and industry—for our mutual benefit. Therefore, I remain confident of success. That does not mean that we are to have our own missile defence system. It means that our industry which has great expertise in this field, as conceded by the noble Lord, Lord Redesdale, should be able to compete.
In conclusion, the upgrading of Fylingdales has essentially no financial cost to this country, no environmental cost to this country and comes at no material cost to our security. On the contrary. In

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addition to contributing directly to the security of our closest ally, the upgrade keeps open the opportunity for the United Kingdom and Europe to defend themselves should a potentially ruinous threat become a reality.
The Government's decision is unquestionably in the best interests of this country's security. We shall continue to work closely with the United States and other allies to ensure that Britain has the security which it requires into the future. I hope that we may have the support of all parts of the House.
8.25 p.m.
Lord Redesdale: My Lords, it remains for me to thank all noble Lords who have spoken in the debate. They have approached the issue from slightly different angles.
Perhaps it is only fair to answer the question put to me by the Minister, because he has asked for a "yes" or "no" response to whether we are for or against the decision. I think that that is the wrong question; we cannot say "yes" or "no" because obviously we shall come to a conclusion about the matter. Our problem is that we do not believe that the decision should have been taken when it was taken. That is not only our view—we are a serious political party—it was the view also taken in the introductory statement of the House of Commons Defence Committee special report. I shall not read out the quotation at this point.
Lord Bach: My Lords, the committee goes on to state that it supports the Government's decision. Why cannot the Liberal Democrats say that?
Lord Redesdale: My Lords, perhaps I should read out the quotation:
"But by announcing on 15 January that it was his preliminary conclusion that the UK must agree to the request, he effectively prevented that debate from taking place".
The committee goes on to state that
"We can find no reason for this sudden urgency".
We believe that there was no need for the decision to be taken in such haste. Indeed, missile defence involves multi-European co-operation. The issues were not discussed in either the European Union or in NATO. The Government's decision pre-empts the conditions that have locked missile defence into a multilateral rather than a bilateral or unilateral framework.
This issue will raise its head again. The Government have reached a decision. However, I think that we are looking at a real threat. Noble Lords on these Benches support a missile defence programme that would stop a real threat to this country. No one could say that we are against the concept of a missile defence system that actually worked to prevent a threat. However, there is al present no system that works, so there was no need to rush into the decision. We believe that the country should have been given the time to make a decision. It should not have been reached as a result of the Americans simply asking for it and us agreeing to it. It is something over which we should have taken time.
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Having said that, I thank the Minister for his courteous response to many of our questions. I beg leave to withdraw the Motion.
Motion for Papers, by leave, withdrawn.

Patients' Protection Bill [H.L.]
8.28 p.m.
Baroness Knight of Collingtree: My Lords, I beg to move that this Bill be now read a second time.
On the face of it, it is incredible that a Bill such as this should be necessary. Surely patients in hospital are always given such basic necessities as food and fluid? Well, no. I am afraid that sometimes they are riot, especially if they are old and a doctor judges their life to be useless. But surely no one in hospital is being deliberately starved to death? I am very sorry to say that some are and I shall give examples.
The Bill has become necessary because, first, in 1992 a Law Lords ruling stated that it can be lawful to withdraw tube-delivered food and fluid; and, secondly, the BMA has claimed that feeding by artificial means is "treatment". So while it cannot be denied on the one hand that no human being can live without food or fluid, on the other hand, hospitals are allowed to stop giving them.
The noble and learned Lord, Lord Mustill, one of the Law Lords who gave the ruling to which I have referred, has said that the law is now left in a morally and intellectually misshapen state. The legal advice I received last week is that Britain is in contravention of Article 2 of the European convention and of the Human Rights Act 1998, which states:
"No one shall be deprived of his life intentionally".
There are no caveats or exemptions which would meet what is now happening in our hospitals.
Yesterday I received a lengthy opinion from a Queen's Counsel, who stated:
"I consider that the provision of hydration in such cases is likely to fall within the scope of the state's positive obligations under Article 2 of the European Convention on Human Rights. Failure even to advise clinicians of the importance of compliance with the principles set out in case law and with the obligations under Articles 6, 3 and 8 of the European Convention on Human Rights renders this guidance unlawful"—
that is the BMA's guidance on withholding food or fluid. So not only is failing to give patients sustenance illegal; it is illegal not to make that clear to hospital staff.
I completely agree with the well-known judgment that it is wrong to kill but,
"Thou shouldst not strive officiously to keep alive".
If a machine is all that is keeping a heart beating, or surgery will prolong a life for only a short and suffering time, I would vote for stopping the operation or the machine. But giving food and fluid is not "officiously keeping alive"; it is essential for life.
Doctors tell me that artificial feeding is distressing for the patient. Is it worse than dying or starving to death? Doctors have been feeding artificially for about

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100 years now. Have they not found ways to improve it? There is nothing in my Bill to force a patient to have a tube in his nose or a peg in his stomach if he does not want that. Nothing in the Bill obstructs good medical practice. It does not make illegal withholding sustenance from a patient who is dying when placing feeding tubes would be unduly intrusive or the risk excessive. The Bill does not impose any requirement on doctors to strive to keep alive patients who are dying.
The Government and the BMA state that the Bill is not necessary because it is already illegal to treat patients so as to cause death. If it is already illegal, why is it happening day after day?
There are many cases on record but I shall refer to only three recent ones. A lady told me last week that her much loved husband, a stroke victim, had all fluid intake withdrawn without a word to her or to him. She did not notice at first because when one visits a relative in hospital one immediately assumes that the hospital is giving the patient what he needs. But when she did notice she demanded to see the doctor in charge and demanded that her husband should continue to get fluid. This was reinstated "reluctantly", she said. Although the man is still ill today, he has made visible progress and his family even hope to have him home.
In another case, a man visited an elderly friend in hospital and found him unconscious and receiving nothing. The doctor had decided to remove the saline drip and to ban all nutrition, after which he popped off for the week-end. My correspondent was horrified. His friend was not seriously ill, just old. He contacted the man's wife and together they engaged a private consultant to visit the patient. That doctor immediately reinstated the saline drip. Last week the old man was still alive, conscious and able to speak. Incidentally, the hospital consultant complained bitterly that my correspondent had dared to interfere—though the patient may well have been dead by now if he had not.
A valued colleague and dear friend of mine, Andrew Hunter, who has been a Member of Parliament for over 20 years, supports my Bill. His wife, Jan, was seriously ill with cancer last October. He spent all the time he could sitting by her hospital bed. He did not realise instantly that her supply of food and fluid had been disconnected. When he did, he immediately expressed shock and anger: neither he nor Jan had ever given consent to any such thing. Sustenance was restored. But, when he complained, he was told that this was "normal practice". The hospital said: "We always assume it is the wish of patients' families". I find that incredible. Andrew told me that he found it hard to avoid the conclusion that the hospital was deliberately accelerating Jan's death in order to increase the throughput of patients. That cannot be right. I should be surprised if any of your Lordships could defend such an approach.
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Organisations are springing up to counter what is happening. One of them, SOS—NHS Patients in Danger, states:
"We have been contacted by hundreds of distressed and angry relatives who realised too late that their loved one's death had been deliberately brought about".
Another group has produced a human rights card to carry around like a donor card, which states that in the event of their being in hospital and unconscious or unable to speak, they want to be given food and fluid.
A television programme on this subject was screened last year. Viewers saw one old man lying in bed unable to speak who was not being given food or water. He took some 18 days to die and his awful suffering was apparent. A number of other patients in similar circumstances were shown. Many of the nurses and doctors showed kindness and sympathy, but that did not alter what was happening. This was no play; it was a programme about real people in a real hospital. Patients and relatives were real and identifiable. I think what has upset me most is the description correspondents give of their dear ones dying of thirst in front of them. One lady said that her mother had been begging for a drink and she gave her a wet sponge on a piece of stick. Her mother grabbed the sponge and she saw that her teeth were stuck to the flesh inside her mouth. Another lady whose husband was desperately asking to be given a drink thought that there was some medical reason why he could not have fluid and did not give him one. When he died, it was found that his tongue was rolled back in his mouth. I hate to contemplate the suffering that must have been caused to those people.
One colleague said, "Surely they can sue". That is not really the case. Many fear repercussions, either on themselves or on relatives if those relatives are still alive. Usually they are not—in which case, relatives tell me, money would never compensate anyway. There would be no point in bringing a case of that kind. Then there is the fear of cost. Litigation is very expensive, and there is no legal aid for this kind of case. Finally, I am told that it is virtually impossible to find a lawyer to take a case against the NHS, which is the biggest and most protected business in Europe, if not in the world.
Great suffering and distress is being caused. A hugely important international law is being breached. Legal rights and obligations are blurred and uncertain. I submit that there is a clear and present need for this Bill. I commend it to the House.
Moved, That the Bill be now read a second time.—(Baroness Knight of Collingtree.)
8.39 p.m.
Baroness Masham of Ilton: My Lords, I thank the noble Baroness, Lady Knight of Collingtree, for bringing the Bill to your Lordships' House and for her clear and powerful explanation.
For elderly and severely disabled people, to fear going into hospital, as they do now, because of the risk that they may catch an infection not related to their condition and die is a worrying situation. But it is truly appalling that they should fear that they may be denied

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food and fluids because someone plays god and thinks that their life is not worth preserving. I think of Christ, when he was dying on the Cross. He was given a sponge soaked with vinegar to aggravate his craving thirst.
Surely, if the Government want to help patients, they will do something to protect them from those real fears. Friends and relations also need support in times of anxiety. when they see their loved ones being discarded and left to die, be it in hospitals or a care home.
Members of Hitler's SS special force no doubt became hardened to the practices in the concentration camps. The practice of denying people food and fluid could become common in pressurised hospitals, and staff could become hardened to this inhumane policy and turn a blind eye, as doctors had given instructions.
People who have had strokes, for example, sometimes cannot speak, but they know what is going on. Their swallowing may be affected, and they may need to be given fluid through a drip. Their swallowing can recover, as can their quality of life. Not to be able to say that they are desperate for a drink and leaving them until their kidneys and vital organs pack up is cruel beyond words. Surely, to make patients as comfortable as possible and let them die with dignity, without being starved, should be the aim of anyone who calls themselves a member of a caring profession.
Most people who have spent some time in a hospital with long-term patients will have seen some bad practices. For example, staff may put food down out of the reach of patients who cannot reach it or feed themselves. The food is then taken away by some assistant who does not bother or even notice that the food has not been touched. The Bill might make some people who have the responsibility of feeding patients take a little more care and attention over these matters and show some TLC—tender loving care.
Someone with the experience of the noble Baroness, Lady Knight of Collingtree, would not bring such a Bill before your Lordships unless there were a real need to protect vulnerable patients. Many people do not realise that doctors no longer have to take the Hippocratic oath. Therefore, I hope that the Bill will be successful and have a quick, untroubled passage through both Houses of Parliament.
We live in pressurised times, when vulnerable patients need protecting. There should be trust, rather than fear, in our hospitals and homes.
8.44 p.m.
The Lord Bishop of Oxford: My Lords, the issue we are considering is very serious. It is absolutely right that we should be debating it in this House. I am therefore extremely grateful to the noble Baroness, Lady Knight, for bringing it before us this evening.
I should like to make it clear at the beginning that I am an unqualified opponent of euthanasia or physician-assisted suicide. Indeed, I was one of the two Anglican bishops who worked with two Roman Catholic bishops to make a joint statement to the
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House of Lords Select Committee on Medical Ethics a few years ago which took that position. However, the question of the withdrawal of nutrition and hydration which is being administered by tubes and other means is in my view much more complex from an ethical point of view.
First, although much reference is made to the Tony Bland case in these discussions, I think that we need to be wary of associating PVS—a persistent vegetative state—with conditions such as a deep coma or advanced dementia. It seems to me that, from what I have read, PVS is a distinct medical condition—not quite brain death on the one hand, but not full human life on the other, not in any real sense. The judge in the Bland case, Sir Stephen Brown, said of Tony Bland:
"His spirit has left him and all that remains is the shell of his
body".
If, for the sake of argument, that is a true description of persistent vegetative state, I do not believe that it applies in relation to those in a deep coma or suffering from advanced dementia.
With that proviso, there are some important implications of the Bland case. I believe that in many, if not inevitably in all, cases the administration of nutrition and hydration by tubes and other means is an invasive medical procedure. A summary by the then Master of the Rolls was quoted by the noble and learned Lord, Lord Goff of Chieveley. He said:
"Mr Bland cannot swallow, and so cannot be spoon-fed without a high risk that food will be inhaled into the lungs. He is fed by means of a tube, threaded through the nose and down into the stomach, through which liquefied food is mechanically pumped. His bowels are evacuated by enema. His bladder is drained by catheter. He has been subjected to repeated bouts of infection infecting his urinary tract and chest, which are being treated by antibiotics. Drugs have also been administered to reduce salivation, to reduce muscle tone and severe sweating and to encourage gastric emptying. A tracheostomy tube has been inserted and removed. Urino-genetry problems have required surgical intervention. A patient in this condition requires very skilled nursing and close medical attention if he is to survive".
In the light of that description, I do not believe that nutrition and hydration administered by such means can in any sense count as part of the ordinary care, by normal means, which is due to every patient. However commonplace now, it constitutes a medical procedure of a fairly radical kind.
As a medical procedure, the question of whether it is burdensome arises. The papal declaration on euthanasia in 1980 said:
"One cannot impose on anyone the obligation to have recourse to a technique which is already in use but which carries a risk or is burdensome. Such a refusal … should be considered as an acceptance of the human condition, or a wish to avoid the application of a medical procedure disproportionate to the results which can be expected".
He went on to say:
"It is permitted in conscience to take the decision to refuse forms of treatment that would only secure a precarious and burdensome prolongation of life".
I should make it quite clear that, in that statement, the Pope was referring to patients who were dying. Nevertheless, making a judgment about whether a

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person is dying is not clear-cut. If a person is in a very deep coma and they are kept alive only by such medical means as I have indicated and that treatment ceased, then the person would of course die. They are being kept alive by medical means, which is absolutely right if there is some hope of improvement and the treatment is not burdensome. But if there is no hope of improvement and the treatment is burdensome, the situation is very different.
When my aunt was in a very deep coma, in order to give time to see whether she would make any kind of recovery she was fed artificially by the method already described. But in due course it became clear that not only was there no sign of recovery but that the body was beginning to reject the nutrition and hydration being pumped into it. The tubes were, quite rightly in my view, withdrawn and she died. That was an entirely proper medical judgment. My worry about the Bill as presently worded is that it would hinder doctors from making that essential judgment.
The noble Baroness, Lady Knight, mentioned some extremely disturbing examples. But I submit that those examples are very different from the example of my aunt. Perhaps the BMA ought to issue further guidance in order to tighten up some procedures. However, I put before your Lordships the situation of a person who for a very long time has been in a very deep coma and is kept alive only by very radical and intrusive medical means. That seems to me to be very different from the three examples that the noble Baroness, Lady Knight, put before us.
At this point it is important to emphasise that a refusal to subject a person to burdensome treatment in the first place, and a cessation of that treatment once it has started, are, from an ethical point of view, the same, even though the latter may be a more obviously distressing course of action. A person is, say, put on a life support machine. After a time it becomes clear that there is no hope of any kind of recovery of consciousness, so the machine is switched off. It was important for the procedure to be tried in the first place. But it is equally important, if the procedure has been tried and found to be having no effect, that that treatment should be allowed to cease. It would be quite wrong for doctors to be inhibited from putting people on life support machines because of a fear that switching off such a machine at a later point was more morally heinous than not putting them on to it in the first place.
So it may be right for a person to be kept alive by nutrition and hydration through tubes, drips and other medical procedures. But the time could come in a particular case, after considered judgment by those medically responsible for the patient, that this treatment was both burdensome and had no possibility of changing the condition of the patient, in which case doctors need to be free to make the appropriate medical decision.
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Finally, I want to look at the question of intention, which is mentioned in the heading of the Bill. It refers to,
"the intention of causing the death of a patient",
although the actual offence, as proposed, is withholding sustenance from the patient,
"if his purpose in doing so is to hasten or otherwise cause the death of the patient".
Here I need to make a distinction between what might be in the mind of the medical practitioner, the actual thrust of the action intended, and the foreseen consequences of that action. From a moral point of view, not everything that is foreseen is intended, for that which is intended morally concerns not so much the motivation of the action as the main thrust of the action.
To take an analogy from another sphere of moral reflection, it is a cardinal principle of the Christian tradition of the morality of the conduct of war that civilians must not be directly targeted. Very sadly and too often attacks on military targets result in the deaths of civilians in the surrounding area. They are foreseen and they have to be taken into account when weighing up the morality of the action. But if the attack is directed towards a military target, such civilian deaths do not constitute murder.
To take another analogy closer to the issue we are discussing, the main thrust or purpose of administering morphine is to reduce the pain of a patient. The fact that that dose may shorten the life of a patient is foreseen but it is not intended in the sense that that was not what the action was directed towards. In the case of the withdrawal of tubes, drips and so on, the intention of the action is to stop burdensome treatment that is having no effect. As it has been put:
"To decide to omit non-obligatory care, therefore, is not to intend the patient's death, but only to avoid the burden of the procedure. Hence, though foreseen, the patient's death is to be attributed to the patient's pathological condition and not to the omission of care … while it is always wrong directly to cause the death of such patients, the natural dying process which would have occurred without these interventions may be permitted to proceed".
All kinds of thoughts might be going on in the minds of relatives or medical practitioners, and their mental intentions may be very varied. However, the intention of the action—its purpose as measured by what is actually done in such cases—is not to kill the patient but to relieve him of burdensome treatment that is found to be useless and that is only prolonging life in a condition of increasing distress.
For those reasons, the issue is a much more complex one than euthanasia or physician-assisted suicide, which I reiterate that I strongly oppose. I would find it very difficult to support the Bill in its present form because it would inhibit doctors from making decisions that it is essential for them to make under certain circumstances as part of the proper care that they seek to give to their patients. In certain circumstances, the right judgment is to cease burdensome treatment. In my judgment, as in that of

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the BMA, nutrition and hydration delivered by the means that I have described is a medical procedure, and a very invasive one.
8.57 p.m.
Lord Tombs: My Lords, I would first like to join others in congratulating the noble Baroness, Lady Knight, on bringing forward this simple but valuable measure, which I support. The proposition seems to me to be a very simple one—that doctors owe a duty of care to their patients. Any weakening of that long-recognised principle would have profoundly undesirable effects, leading to a breakdown of trust in the long-standing belief that doctors act in the best interests of their patients.
In recent years, there has been a disturbing number of reports of patients in hospitals having nourishment by tube withdrawn, so hastening their deaths through dehydration in a particularly unpleasant way. Sometimes, it seems, the patients' relatives have not been consulted or, worse, their wishes have been ignored.
Euthanasia is illegal in this country, yet it seems to be increasingly part of current medical thinking. For example, as has been said, the BMA has advised its members that withdrawal of artificial feeding can be considered in a wide range of conditions, not just the permanent vegetative state which underlay the Bland case of 1993. The decision of the courts in that unhappy case seems to have been taken as providing a justification for that, although the courts at all stages were careful to limit the scope of their judgment to that particular case.
The Bland case rested heavily on the clinical evidence of a permanent vegetative state, in which evidence of extensive brain damage precluded the possibility of recovery. That is clearly not the case in the BMA guidance, nor in the cases reported in the press. Those reported cases are probably the tip of a larger problem, given the secrecy of many hospitals and the notorious difficulty of establishing hard facts about the treatment administered. Those factors also militate against application by the relatives to the courts for relief from withdrawal of sustenance.
It would be wrong to suggest that the issue is a general medical problem, and it has been opposed in public by several caring practitioners with a clear view of the ethical responsibilities and legal limitations of a doctor's calling. However, as I have noted, the practice is present in a number of institutions, whether because of managerial pressure on bed space, simple medical indifference to a patient's right to life, or even perhaps a judgment that the quality of life justifies hastening the patient's death.
The Bill would simply state that actions intended to hasten death are illegal and would make the situation clear for medical practitioners and hospital managements. It would uphold the respect for life that underpins our society and would provide a clear reminder of the purpose of medicine in that society.
The courts in the Bland case called for parliamentary examination of the overall position, which has not been forthcoming. The Government and their
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predecessor can take no satisfaction from their failure to do so. But the practices that have resulted from that inactivity, coupled with a misreading of the Bland judgment, have produced a quite unacceptable position. The Bill provides a restatement of the present law in clear and unambiguous terms and, in doing so, reaffirms our society's respect for life and provides support for patients and their relatives. I believe that it is a modest and necessary measure that demands our support.
9 p.m.
Lord Swinfen: My Lords, for generations, we have held that anyone who intentionally hastens a patient's death by any deliberate act or omission commits murder. However, in 1993, the Law Lords ruled in the Tony Bland case that it can be lawful for doctors and other medical staff intentionally to kill patients in a persistent vegetative state by withdrawing food and fluids.
It has long been held that hard cases make bad law. The Bland case was a hard case—a very hard case—and has made very bad law. I welcome my noble friend's Bill and thank her for introducing it.
I expect that the noble Baroness the Minister, when she responds to this debate, will say that there is no need for this Bill, because the law already makes it illegal for doctors to withdraw sustenance deliberately to cause the death of the patient. However, in 1999, the British Medical Association published a document, Withholding and Withdrawing Life-Prolonging Medical Treatment. That document recommended the withdrawal of food and fluid by tube from a range of patients who are not dying. That included, among others, a patient who had suffered a severe stroke, Alzheimer's disease and severely disabled new-born babies.
If a mother breast-feeds her baby, is she giving medical treatment? I do not think so. When you, my Lords, have a meal or a drink, are you undergoing medical treatment? I think not.
Despite the fact that the BMA report has been condemned by a number of Christian, Muslim and Jewish organisations, including medical groups, and that there have been four Early-Day Motions tabled in the House of Commons asking the Government to make it clear that the BMA report does not represent legal guidelines, the Government have taken no action to protect patients.
As has already been mentioned, there is already anecdotal evidence, if not hard evidence, that patients are having sustenance withheld without either their consent or the consent of their relatives or representatives. That must stop. In the Bland case, the doctors had to obtain the consent of a court to withdraw sustenance. That may take a little time and cost money but it was the correct way to deal with a hard case. That course should be followed in future in similar cases.
In this country, our medical services, as we all know, are under great pressure financially and in respect of the number of cases. It would appear that once a patient reaches a certain age, the National

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Health Service might give up on them. That, I suspect, is an attempt to reduce costs and waiting lists. We appear to have forgotten the old saying that a stitch in time saves nine. If we followed the Australian principle of keeping elderly people fit and well by giving treatment early, it would, in the end, save money and also reduce waiting lists.
I support the Bill. However, in my view, there is one amendment that we will have to make in Committee—that is, to the meaning of "sustenance", as set out in Clause 1(2). I suggest that in line 8 the word "or" should be replaced by "and"; otherwise, a patient could be fed dry food with no liquid and that would make it virtually impossible for him to swallow. I welcome the Bill.
9.5 p.m.
Lord Alton of Liverpool: My Lords, the whole House should he grateful to the noble Baroness, Lady Knight of Collingtree, for introducing the Bill and laying it before your Lordships' House. I join my noble friend Lady Masham and the noble Lords, Lord Tombs and Lord Swinfen, in welcoming the way that the noble Baroness introduced the Bill this evening.
In his speech, the right reverend Prelate invited us to tilt at what I consider to be imaginary windmills. I do not believe that there is any disagreement between us about what is often called the "heroic lengths" argument. As the right reverend Prelate rightly said, we are under no obligation to keep alive someone who would otherwise die. He said that he was opposed to euthanasia, and we agree about that. But undoubtedly, if we reclassify food and fluid as a burdensome treatment, then we shall sanction euthanasia.
This morning, a letter appeared in The Times which gets to the nub of the issue that we are debating this evening. The correspondent wrote that,
"many of us assumed that nutritional requirements of patients in hospital were so fundamental we would not even imagine that there was a lack of such service … If something so basic is not given priority it is little wonder that many other aspects of hospital care are ignored, such as cleanliness and hygiene. How can management allow such ineptitude to exist?"
Food and fluid, defined in this Bill as "sustenance", have always been regarded as basic care to which everyone is entitled. Your Lordships should be under no illusions that acceptance of the withdrawal of nutrition and hydration from non-dying patients has consistently been identified by the pro-euthanasia lobby as the precursor to the legalisation of positive euthanasia. The right reverend Prelate should be under no illusion about that.
Noble Lords should not take my word for that; they should listen to these words:
"If we can get people to accept the removal of all treatment and care—especially the removal of food and fluids—they will see what a painful way this is to die and then, in the patient's best interests, they will accept the lethal injection".
Those are the words of Dr Helgha Kuhse, pro-euthanasia bioethicist, speaking in September 1984 at the Fifth Biennial Congress of Societies for the Right
1412
to Die. Dr Kuhse's views are shared by Professor Sheila McLean, who referred to Bland and similar judgments as a form of non-voluntary euthanasia.
Let us remember that in one of our neighbouring countries—Holland—precisely those arguments led to the introduction there of voluntary euthanasia, its legalisation and now involuntary euthanasia, with more than 3,000 people being killed by doctors in one year alone. When defenders of life are turned into the destroyers of life, that is in no one's interest. It is little wonder that in a recent opinion poll in Holland, the vast majority of elderly people said that they were now frightened of going to their doctor because of the reversal of the traditional roles in which doctors and nurses have been placed.
We are told by some of those who oppose it outside your Lordships' House that the Bill is unnecessary as it simply makes illegal something that is already illegal—namely, killing patients. If only it were that simple. The killing of non-dying patients in a persistent vegetative state—PVS—and similar conditions by the withdrawal or withholding of sustenance was authorised, as we have already been told, in the Bland judgment and is supported, as we have heard, by the medical establishment.
The Patients' Protection Bill is about restoring integrity and coherence to the law of homicide. Until the Bland judgment in 1993, the common law was quite clear. It was always wrong to have as the purpose of one's conduct the bringing about of another person's death for any reason other than the requirements of justice. That common law principle is enshrined in Article 2 of the European Convention for the Protection of Human Rights and Fundamental Freedoms. Prior to 1993 it was a clearly understood part of the common law that murder can be committed not only by a positive act, but also by omission in situations where there is a duty to provide what is omitted. That covered doctors who owe their patients a duty of care.
In the Bland judgment, which the right reverend Prelate has defended, it was held that to stop feeding Tony Bland was a lawful omission. It was said that tube feeding was medical treatment that the doctors were under no duty to provide because it was not in the patient's best interests, was futile and was a course of conduct endorsed by a responsible body of medical opinion. However, we have not heard that three out of the five Law Lords stated—the others not dissenting—that the aim or purpose of withdrawing tube feeding was to bring about Tony Bland's death.
In a long quotation which I believe should be read into our record—I hope your Lordships will forgive me—the noble and learned Lord, Lord Mustill, said:
"it is essential to face up squarely to the true nature of what is proposed … Emollient expressions such as 'letting nature take its course' and 'easing the passing' may have their uses, but they are out of place here, for they conceal both the ethical and the legal issues, and I will try to avoid them … The conclusion that the declarations can be upheld depends crucially on a distinction drawn by the criminal law between acts and omissions, and carries with it inescapably a distinction between, on the one hand what is often called 'mercy killing', where active steps are taken in a medical context to terminate the life of a suffering patient, and a

1413
situation such as the present where the proposed conduct has the aim for equally humane reasons of terminating the life of Anthony Bland by withholding from him the basic necessities of life. The acute unease which I feel about adopting this way through the legal and ethical maze is I believe due in an important part to the sensation that however much the terminologies may differ the ethical status of the two courses of action is for all relevant purposes indistinguishable".
Prior to Bland, such conduct was incompatible with the duty of care owed to a patient. Following Bland, conduct aimed at ending a patient's life, providing it counts as an omission, may well be deemed as compatible with the exercise of the duty of care for a patient if doctors judge that the patient's life is no longer worthwhile. Why, if the Government are so sure of their moral argument, are they misleading the public? I have a letter from David Lammy, Minister in the Department of Health in which he claims that it is untrue to state that the purpose of withdrawing food and fluid from Tony Bland was to cause his death. What other purpose could it possibly have? That is patently untrue.
The Bland case can be starkly contrasted with the case of one of my former constituents in Liverpool, Andrew Devine. The House will remember that on 15th April 1989, 96 people died at Hillsborough. Several of my then constituents were among the fatalities and others were injured. One was Andrew Devine who, like Tony Bland, went into a deep coma. Their conditions were identical. Shortly after the Hillsborough tragedy I visited Andrew and his parents. As the years passed I have followed Andrew's progress. Last week I asked Andrew's mother whether I could tell your Lordships what had happened to him in the intervening 14 years during which she and her husband had fought for Andrew's life, and she gave me her permission. Mrs Devine told me that having been told by medics that,
"Andrew will never be able to swallow or to eat food",
she felt that her son had "been written off". She was told that it,
"would be a waste of resources to treat him".
The medics also said that it would be clear within two years whether Andrew was going to make any progress. In fact, it took five years. They told his parents "nothing can be done" when quite a lot could be done and was done.
Many of your Lordships will recall the front page story from the Guardian in 1997 when Andrew's parents talked publicly about the improvements that had taken place in his health. Against all the predictions Andrew now eats heartily and eats solids. Mrs Devine is adamant that—I quote her words—
"From our point of view it was a hard enough battle to fight for the things we needed without being offered the chance to do away with Andrew".
She says,
"Starving or dehydrating someone is an unpleasant death—you might as well give a lethal injection".
Through their love and devotion Andrew's parents found the Brain Injury Rehabilitation and Development Centre at Broughton, near Chester, not because they were referred there, but because they found it via a
1414
television programme. They took Andrew to London, to the Royal Hospital for Neuro-disability at West Hill in Putney and paid for his first course of treatment themselves.
Mrs Devine argues that the law needs to be strengthened because
"economic pressures to free beds would be overwhelming; the pressure would be enormous".
And yet precisely that pressure is now being exerted, hence the need for legislation of the sort proposed by the noble Baroness, Lady Knight.
Withdrawal of feeding, including oral feeding, is now being extended to patients who are not in PVS. In June 1999 the BMA published guidance on Withholding and Withdrawing Life prolonging Medical Treatment, in which they considered it appropriate to withdraw tube feeding from,
"patients who have suffered a stroke or have severe dementia".
That unethical practice has received support from the GMC in its 2002 publication, Withholding and Withdrawing Life prolonging Treatments: Good Practice in Decision-making. Sadly, the Government have shown no intention of protecting patients from the BMA guidelines. In their latest consultation document, Making Decisions: helping people who have difficulty deciding for themselves, nutrition and hydration are referred to throughout as "medical treatment".
It is simply not good enough to say that killing patients is already illegal therefore there is no need for the Bill. The decision of your Lordships' House in Bland, its confirmation in subsequent cases and the guidance emanating from the BMA and GMC have left the law, in the words of the noble and learned Lord, Lord Mustill, quoted earlier by the noble Baroness,
"both morally and intellectually misshapen".
The Bill seeks to restore moral and intellectual clarity to the law. To allow doctors to withdraw sustenance from patients with the purpose of ending their lives subverts the law of murder. Hence the urgent need for the Bill.
As the noble Baroness mentioned, this week we have seen counsel's opinion that the BMA and GMC guidelines, in respect of the withdrawal of life-prolonging medical treatment, are unlawful. I have this evening placed a copy of the opinion in the Library of your Lordships' House.
Tube feeding or sustenance is not medical treatment. It is basic care. Many people with cystic fibrosis are fed by gastric tube and live an otherwise normal life. Others with paralysis of the throat and swallowing mechanisms feed via nasal tubes. Great progress has been made by nurses, doctors, dieticians and speech therapists working together to help those with swallowing difficulties. If swallowing is impossible, thirst should be relieved by fluids delivered by the least invasive method possible in the circumstances.
In all the time that my noble friend and I have been debating the matter, I have yet to hear a convincing explanation as to why nutrition and hydration,

1415
however so delivered, should be classified as medical treatment and not basic care. What medical ailment is being treated? Since when has hunger or thirst been considered an illness? It has even been established in the case of animals that freedom from hunger and freedom from thirst constitute two of the five welfare considerations to which all domestic animals are entitled. Surely it is not unreasonable for the same criteria to be applied to human beings.
It is deeply paradoxical that last week a shepherd was sentenced to six months in prison for not providing enough food and water for his sheep. If that had been a human being he would at least have been worth a judgment in your Lordships' House.
When the Minister replies she should clearly state, without citing the BMA or GMC guidelines, why food and fluid are considered medical treatment? If non-dying patients are denied nutrition and hydration then the inevitable consequence is death within days, whatever the pathology. By calling nutrition and hydration medical treatments the courts, the Government, the BMA and the GMC have over-medicalised sustenance and have opened the way to the killing of vulnerable, particularly elderly, patients in our hospitals. Regardless of whether nutrition and hydration is delivered by a spoon, by PEG, or by nasogastric tube, it does not alter the substance of what is being delivered. The means of delivery may be artificial—not the sustenance itself. To talk of artificial nutrition and hydration is a complete misnomer.
The noble and learned Lord, Lord Hoffmann, noted in his judgment in Bland:
"If someone allows a small child or invalid in his care to starve to death, we do not say that he allowed nature to take its course. We think that he has committed a particularly wicked crime. We treat him as if he had introduced an external agency of death. It is the same ethical principle which requires doctors and hospitals to provide patients in their care with such medical attention and nursing as they are reasonably able to give … The giving of food to a helpful person is so much the quintessential example of kindness and humanity that it is hard to imagine a case in which it would be morally right to withhold it".
The Bill focuses on the purpose of the person responsible for the care of the patient. That draws on the commonsense understanding of the notion of purpose, which is integral to the law and to ethics. We always distinguish someone's purpose in acting from other consequences—even those that may be foreseen. If a person responsible for the care of a patient withholds or withdraws sustenance with the purpose of causing death, his conduct will be unlawful.
Nothing in the Bill obstructs good medical practice. The Bill does not impose any requirement on doctors to strive to keep alive patients who are dying. The role of doctors in terminal illness is to provide as peaceful and pain-free a death as possible. The Bill does not make unlawful the withholding or withdrawal of sustenance from a patient who is in the process of dying, where, as the right reverend Prelate the Bishop of Oxford, mentioned, the risk or discomfort of the placement of feeding tubes would be regarded as unduly intrusive or excessive. That is far removed from the deliberate
1416
withholding or withdrawing of sustenance with the purpose of causing the death of a patient who is not otherwise dying.
The last thing that I want is good doctors being exposed to complaints or the risk of prosecution at the behest of aggrieved relatives. That is why purpose is the key. Those responsible for patient care should not fear the Bill. As your Lordships' Select Committee on Medical Ethics observed at paragraph 243,
"juries are asked every day to assess intention in all sorts of cases".
They could do so on the rare occasions where there was any reason to suspect that the doctor's purpose was to kill.
When sustenance is withdrawn for ethically and legally acceptable reasons, the data about a patient's clinical condition and the observations of other carers will support the person responsible for the care of the patient. Contrary to some assertions, the Bill will not encourage the practice of "defensive medicine". Nor will the Bill restrict patient autonomy. A doctor's respect for a competent patient's refusal of sustenance would involve no intention on his part other than a concern not to commit an assault, of which he would be guilty in imposing sustenance contrary to a competent patient's wishes.
Where health professionals remain concerned about the practical impact of the Bill, I know that the noble Baroness, Lady Knight, has rightly agreed to meet them further to discuss their legitimate concerns. We cannot sit back and do nothing. The noble Baroness has given some disturbing examples of the withholding and withdrawal of nutrition and hydration from non-dying patients that has inevitably resulted in their deaths. Elderly patients with dementia or strokes appear most at risk. Last July, we had a damning report from the Commission for Health Improvement following its investigation into elderly deaths at Gosport War Memorial Hospital.
I could cite many other appalling cases, many of them collected by the patient lobby group SOS-NHS, which has been mentioned, which demonstrate why vulnerable patients need the protection of the Bill. Patient groups such as SOS-NHS are especially concerned about the increasingly common practice of sedating patients and then deliberately withholding nutrition and hydration until the patient dies. Having been sedated, the patient is unable to demand sustenance and his or her distress may not be readily apparent. The death certificate will commonly state that the cause of death was the underlying medical condition, not dehydration.
Last month, Radio 4's "File on Four" programme drew attention to that worrying practice. Citing disturbing examples of over-sedation and the withdrawal of food and water, the programme-makers suggested that they raised wider questions about the effectiveness of checks and controls in our care homes and about how we care for our ever-increasing number of elderly citizens. I shall arrange to place a transcript of the programme in the Library.

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Such practices must end. The medical establishment has shown no desire to put its own house in order. Hence the introduction of the Bill. The 1994 report from the House of Lords Select Committee on Medical Ethics concluded that the Bland judgment should not be enshrined in statute. It stated:
"We consider that the progressive development and ultimate acceptance of the notion that some treatment is inappropriate should make it unnecessary to consider the withdrawal of nutrition and hydration, except in circumstances where its administration is in itself evidently burdensome to the patient".
Sadly, its conclusions have been ignored by the Government and the withdrawal of nutrition and hydration from non-dying patients has become an accepted element of medical practice. Food and water are basic human needs that should never be withdrawn or withheld if the purpose in so doing is to hasten or otherwise cause the death of the patient.
In conclusion, the pro-euthanasia lobby sees acceptance of the withdrawal or withholding of sustenance from patients who are not dying as the first major hurdle to overcome on the road towards the legalisation of assisted suicide and positive euthanasia. The noble Lord, Lord Joffe, has already placed before your Lordships' House a Bill to achieve that purpose. After all, they argue, if it is legitimate to subject patients to a slow, painful and distressing death by starvation and dehydration, surely it is more compassionate to give them a lethal injection that will ensure a swift death. We must wake up to the pro-euthanasia agenda being promoted in our hospitals. To purposefully starve or dehydrate patients to death is unethical and should be illegal. I support the noble Baroness's Bill.
9.25 p.m.
Baroness Finlay of Llandaff: My Lords, this debate is important. As a healthcare professional I must state that I think it essential that healthcare professionals act always in the best interests of the patient. Prior to this debate, I spoke to groups of physicians working in palliative care who are opposed to euthanasia, as I am. I have also taken soundings from the Guild of Catholic Doctors, which is opposed to euthanasia.
However, there is widespread concern over the Bill. The intentions behind it are good. Fluids and nutrition are a basic human need and right. To deny either with the express intention of ending life is against current law. I declare an interest, as I teach medical ethics. I have also been involved in taking decisions about how far to go with fluids or nutrition. I have agonised over such decisions with my team and all the different healthcare professionals involved.
It is almost impossible to make a prognosis predicting what will happen to a patient. At best, it is a best guess given the information available. But no healthcare professional can claim to have a crystal ball. I am not surprised at cases such as those we have heard about tonight where doctors predicted that there would be no recovery but there was an astounding one. In my own practice I have had patients I thought were dying who were sitting up having breakfast the next day. I have also had patients I expected to live for months who died within days. Making a prognosis is an impossible and very coarse art; it is not a science.
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There has been much public discussion about patients' death. But too little has been said about the importance of patients feeling assured that all is being done on their behalf to respect life and to value the days left to live, even when death scents imminent. The Bill is designed to protect the vulnerable, especially those with a non-progressing disease who are not competent to make decisions on their own care. It is indefensible to place food or fluids out of reach of patients or not to assist them to take in that food or fluid with good nursing care.
However, I contend that the Bill may complicate rather than clarify decision-making. Paramount to all interventions or treatment cessation is the patient's consent. When patients, for whatever reason, are unable to give consent or to signal competent refusal, the principle of best interest becomes the default position. That best interest should be for the patient as a person, and there should be default towards preserving life. The Bill does not mention the issue of patient consent or refusal.
As drafted, the Bill poses several difficulties. First, it deals only with nutrition and hydration by whatever means, yet oxygen is essential to life. Ventilation is often a difficult decision, but oxygen by mask is not. It is not covered in the Bill. Other aspects of care are essential too, such as turning a patient who is unable to do so to avoid pressure sores.
Secondly, although nutrition and hydration constitute ordinary care when given by ordinary means, there is some evidence that tube-feeding and total parenteral nutrition are futile and even harmful to some categories of patients. Both may be burdensome to the patient to such an extent that the patient considers the possible benefits to be outweighed by the burdens.
Insertion of the nasogastric tube is unpleasant and carries a risk of aspiration to the lungs, causing a potentially fatal pneumonia. Percutaneous endoscopic gastrostomy is an unpleasant procedure. and failure may require a more extensive operation to put a tube directly into the stomach. Such an operation is not without its risks. The feeds themselves can cause severe diarrhoea, however carefully they are controlled by a dietician.
Total parenteral nutrition requires careful monitoring and is complex to manufacture. The high costs must be considered, so that it is used when evidence supports its efficacy but not otherwise. Certainly, it should not be used randomly. Current good practice dictates that, when such interventions to deliver nutrition will be of benefit, they should be available to patients. However, it would be invidious to force any of them on all patients.
The Bill would result in defensive medical practice, rather than practice in the interests of the individual patient. Some patients dying at home unable to swallow would he moved to an in-patient unit for parenteral fluids, lest the family later accuse the doctor of withholding hydration. In 1997, the National Council for Hospice and Specialist Palliative Care Services, along with the Association for Palliative Medicine, stated that good practice suggested that decisions regarding artificial hydration should involve

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the multi-professional team, the patient, the relatives and the carers but that the senior doctor should have ultimate responsibility for the decision. The competent patient has the right to refuse artificial hydration, even if it may be considered of clinical benefit. Incompetent patients retain that right through a valid advance refusal.
The right reverend Prelate the Bishop of Oxford laid out the ethical complexities of decision making and explained the problems with intention and the double effect that could occur when there was a foreseeable but unwanted outcome. I shall try to put it simply. Four main principles underlie medical decision making: autonomy; beneficence; non-maleficence; and justice. Autonomy is concerned with the individual's decision making, and from it flows criteria for consent. However, the autonomy of one person cannot override the autonomy of another. A doctor or nurse cannot be forced by relatives or others to give treatment that is not in the best interests of the patient, as they see them. The Bill would end that situation and would force treatment, irrespective of predicted outcome and scientific evidence.
Non-maleficence—avoiding harm—and beneficence—doing good—mean that futile treatments that may be unpleasant or distressing and bring no benefit should not be administered. The injudicious insertion of intravenous lines or of nasogastric or gastrostomy tubes would be unethical when no benefit is to be had. The principle of justice requires that the patient be given the best treatment within the resources available and that resources be justly allocated. It tries to cope with the problems of rationing. The Bill will promote the inappropriate and, hence, unjust use of total perenteral nutrition, as it states that,
"nutrition or hydration, however so delivered"
are required. I fear that the Bill will be a lawyer's charter and will be unenforceable in practice. Proof of the purpose of the actions of a clinician would be difficult, although intention may be recorded in the notes.
Current guidance on care of the dying was encapsulated in Changing Gear, a document published by the National Council for Hospice and Specialist Palliative Care Services. It has been embodied in care pathways for care in the last 48 hours of life. The diagnosis of dying as a specific clinical diagnosis is difficult to make and must be made at the point at which further interventions are deemed to be futile and burdensome. Such decisions must involve family and carers and must include all those involved in the care of the patient. Interventions aimed at comfort must be continued, but those that are futile must be stopped. These patients are dying as part of their disease process. There is little evidence from well-conducted studies that nutrition or hydration improves the patient's comfort or survival.
However, other care can be absolutely crucial to comfort. Many drugs cause a dry mouth. That does not mean that the patient is dehydrated and needing a drip. It means that meticulous attention to mouth care is essential. We have already heard a vivid description of a horrifically dry mouth. I must state that there are
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many drugs that make the patient's mouth as dry as sandpaper. Putting up a drip does not deal with that; excellent mouth care is needed.
Current practice has been laid out in guidance to the professions in withdrawing and withholding treatment. I am aware that that is currently under criticism. However, it requires that decisions are made on an individual basis and that each patient is separately and individually considered. It is because I fear that that would not happen that I have difficulty in supporting the Bill in its present form. However, I respect the principles behind the way that the Bill has been brought before us.
9.36 p.m.
Lord Brennan: My Lords, perhaps your Lordships will allow me to speak in the gap.
The first principle with regard to the sanctity of life is that we should not strive officiously to keep alive those who are dying. An exception to that principle of the sanctity of life is the judgment in the Bland case, which specifically stated that it was a special case in which someone in a persistent vegetative state could have doctors justifiably withdraw medical treatment by way of artificial feeding.
The third issue that occupies this debate, and which is to be stimulated soon by the noble Lord, Lord Joffe, is to determine, outside of the exceptional states, in what circumstances medical treatment can be given or withdrawn when it has the effect of terminating life—namely, when the patient is not dying and it does not come within the definition of Bland.
I suspect that the noble and learned Lord, Lord Mustill, following his speech in Bland, would be extremely surprised to learn—and to do so some years after he said that less extreme cases than Bland should be approached with extreme caution; that Parliament must have a role; and that he did not accept that this was a medical question alone—that as a society we had accepted in large part that it is for the BMA and the GMC to determine the manner in which these decisions should be made by doctors. Do doctors have the moral or social capacity to do that? What role do families play in their decisions? What role do resources play in those decisions? Those are basic questions which we would expect this House and another place to consider.
In our society, the ultimate surety for the value of human life is Parliament, speaking for the moral will of the people. It is not, if I may respectfully suggest, government; it is not, if the noble Baroness will accept, necessarily in the Bill that she has presented; and it is certainly not in the Bill which the noble Lord, Lord Joffe, intends to present. We must be very clear that the issue of euthanasia, and that which might be thought to be euthanasia, will not go away. It is central in our social and moral debate in this country. If a resolution is not reached in this debate, there will be others in which we shall have to grapple with it.
I hope that in today's debate and later, that sentiment is borne in mind. We should be deciding questions which profoundly affect the way in which our society accepts and deals with the value of human life.
9.40 p.m.
Lord Carlile of Berriew: My Lords, I, too, congratulate the noble Baroness, Lady Knight of Collingtree, on introducing the Bill with such clarity and charm. A small Bill that deals with so complex an issue has, by its brevity, a virtue rather than a vice. If only other Bills as important as this were so brief. This is the kind of issue that is ideally suited to debate in your Lordships' House. That has been demonstrated in our short debate. The issue is one which has no party political input, raises moral issues and asks further questions on which many noble Lords have an expert view.
I support the Bill because it is about purpose and not about consequence. I f the noble Baroness had sought to render unlawful yet another consequence—there is a tendency to render consequences criminal in the modern age—then I would immediately oppose it. I believe that to be a retrograde approach and one that has been taken increasingly by the present Government and their predecessors in the field of criminal justice. The Bill seeks to declare unlawful a purpose which plainly is and should be unlawful—on moral, religious, utilitarian and legal grounds.
I am one of those who will suspend his morning ablutions if the right reverend Prelate the Bishop of Oxford interrupts them at a quarter to eight with his "Thought for the Day". I must say, however, that I do not have his confidence. I would describe my own thoughts on religion and faith as being, at best, conscientious but with confused internal wrestling on a good day, while on a had day, a complete muddle. I do not believe that my religious views, such as they are, could provide much of a foundation for anything, least of all for making a moral judgment. So I approach the issue as a lawyer and a utilitarian; thus, I hope, making a decent, empirical, moral judgment as a result.
I agree completely with the right reverend Prelate about euthanasia. I shall be in the House to oppose the Bill from the noble Lord, Lord Joffe, and I shall be in the House on any other available occasion to oppose any legislation that attempts to introduce euthanasia, either by the front-door or by the back-door, into the law of this country. The experience of other countries has shown it to be impracticable and I think it renders a great disservice to humankind.
In my view, the law needs to be made clear. This Bill makes the law clearer and I do not think that it would do anything to harm the interests of, for example, the right reverend Prelate's aunt. I believe that the Bland case did not leave the law clear. The noble Lord, Lord Brennan, spoke eloquently, albeit briefly, about the opinion of the noble and learned Lord, Lord Mustill, in that case. I agree with him. I suspect that the noble and learned Lord would be surprised to find that his comments about what he stated to be an exception have been elevated to a principle. Indeed, he is not the only Law Lord to have noted that.
I am sure that the noble Lord, Lord Brennan, had the noble and learned Lord, Lord Browne-Wilkinson, in mind as well. He emphasised in the Bland case that it was an extreme case where it could be overwhelmingly
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proved that the patient was and would remain insensate. However, the noble and learned Lord went on to say that it would be desirable for Parliament to consider the moral, social and legal issues that the case had raised. Parliament had not considered properly those moral, social and legal issues until the Second Reading tonight of the Bill put forward by the noble Baroness, Lady Knight. I think we should welcome the opportunity.
People at large tend to hold a hagiographic view of doctors. Somehow the doctor is elevated in status by society as a whole. My late father was a general practitioner. After his death, some of his patients described him in the most flattering way as a beloved physician. It was a fair view of his practice and his practices. However, even with my own prejudices in favour of doctors as a result of my experience of my own father, I have to say that sometimes doctors are quite ordinary people who find it difficult to wrestle with the moral and ethical judgments which they have to make. Indeed, we have just heard from the noble Lord, Lord Brennan, who, if I may say so, is making a handsome living out of the ordinariness of medical practitioners in his distinguished clinical negligence practice.
The law needs to be clear so that every doctor, if he looks in the right place, can read and understand his obligations on an everyday basis. The problem we are talking about in the Bill can be met at very short notice—it can be met daily—and I do not agree with the briefing that I received from the British Medical Association that the law is as free of doubt as it could be.
There has been a bit of a muddle in this debate between the British Medical Association, which represents doctors, and the General Medical Council, which is the registration body and which issues documents such as Withholding and Withdrawing Life-Prolonging Treatments: Good Practice in Decision Making published in August 2002. The General Medical Council has charge, in registration terms, of ethical matters of that kind, and failure to follow its guidance may, and sometimes will, affect the registration of a doctor.
Speaking as someone who was a lay member of the General Medical Council for 10 years from 1989 to 1999, in my view its document is not as clear as it could be. The noble Baroness, Lady Knight, referred to a leading counsel—I believe that she was referring to the well-known public lawyer, Richard Gordon QC—and he is also of that opinion. I have read his opinion, which seems to raise a number of doubts about the GMC document to which I have referred. Doctors need to know where they stand. If the GMC is unable to tell them exactly where they stand, then the general law—and that means Parliament—has to tell them.
My experience of the GMC taught me something else. It was an almost entirely positive experience which provided me with the opportunity to move on from the benign prejudices of my fattier to a much more general view of the medical profession, seeing it at its best and, I regret, occasionally at its worst.

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Over a period of 10 years, my membership of the GMC provided me with an opportunity to talk to hundreds of doctors, often in local social surroundings, about a wide range of issues but with a particular focus on medical ethics. I am left with the impression that no dutiful doctor wants to be left with a choice about the causing of death. No dutiful doctor is able deliberately to cause the death of a patient according to his Hippocratic oath—which, because most doctors no longer swear a Hippocratic oath, I take to be a metaphor for his perception of his duty. Rather it is an instinct trained into doctors; it is a practice bred in doctors that they do not cause the death of patients.
As the noble Baroness, Lady Masham, said, it is important that patients should have no fear when they go into hospital that their lives will be terminated deliberately. I believe that the general attitude of doctors, with very rare and rightly criminalised exceptions, supports that view. It would be a rogue situation in which the purpose of actions was death.
Doctors alleviate extreme suffering daily. I have had the misfortune of seeing that for myself in a family situation on at least two occasions. They give morphine; morphine sometimes hastens death. But the purpose of giving the morphine in such situations is to relieve suffering, not to hasten death. The noble Baroness's Bill does nothing to criminalise what doctors do in such situations—far from it. I understand her to support that kind of action.
Sometimes conflicting issues call for a judgment. Sometimes conflict involving nutrition and hydration and treatment brings about a conflict in a doctor's mind and he has to make a legitimate judgment. But as long as that judgment is founded on therapy, and on his calculation of how best to alleviate suffering, it is properly made. This is familiar territory to all professional people. They have to make critical judgments on critical issues, at critical times. But they should be left to make their judgment with a clear understanding of where they stand if they cross the line and deliberately cause death. That is achieved by this Bill.
What cannot be acceptable is the deliberate withdrawal of the very basis of human life—food and water, nutrition and hydration. The withdrawal of food and water cannot have a therapeutic purpose. On its own, it can only lead to death. The withdrawal of food and water cannot on its own be treatment. It is simply, as I have said, a removal of the basic requirements of human life.
This Bill provides, at the very least, a basis for greater clarity in the law. For those reasons, speaking purely personally, I support it.
9.51 p.m.
Earl Howe: My Lords, before I do anything else, I congratulate my noble friend Lady Knight on bringing forward the Bill and on her persuasive and powerful speech in moving its Second Reading. There is no doubt in my mind that she has raised a vitally important issue. I say that as someone who initially doubted, when the
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Bill first came to my notice, whether there really was an issue to be addressed in a debate of this kind. I do not feel any such doubts now; and I should add that the volume of letters and e-mails that I have received on the subject testifies to the widespread concern that exists among the public about the treatment of terminally ill and frail elderly people in our hospitals.
I begin with a statement that perhaps cannot be made often enough. The Conservative Party is against legalising euthanasia. By "euthanasia" I mean any deliberate intervention which has the purpose of ending life. That view rests on both ethical principle and pragmatism. As a matter of general principle, human life is intrinsically valuable and sacrosanct, and should be safeguarded in law and in practice. The law already recognises the special status of human life in the framing of the homicide laws and in the judicial penalties for murder and manslaughter. As a matter of pragmatism, our job as legislators is to protect the most vulnerable in society. If euthanasia were legalised, many frail and elderly people would feel pressurised into having their lives ended—they would imagine themselves to be a burden to others, or they might think or know that their relatives wished them to go. It would be a terrible slippery slope. We must never espouse the principle that some lives, such as those who are sick, disabled or depressed, are worth less than others. We are not even entitled to take such a view of our own lives. There are many cases of people who have expressed a fervent wish for euthanasia, only later to change their minds completely when the quality of their lives improved. It should not legally be within my gift to ask another person to kill me.
Unlawful killing, under English law, includes killing both by act and by omission. Indeed, in my opinion there is no ethical difference between the two. It should follow from that that, unless sanctioned by a court, the deliberate withdrawal or withholding of nutrition and hydration from a person constitutes unlawful killing. That was the position at which I started out when my noble friend's Bill first came to my attention: and it was why I said just now that initially I did not think there was a legal issue to be addressed. The significance of the Bland case, however, was that for the first time nutrition and hydration were classified by the court as constituting "medical treatment". It has never been unlawful to withdraw medical treatment from a patient when such treatment is regarded as oppressive and futile. Doctors are not under a duty to prolong life officiously by means of medical interventions when to do so is not in the best interests of the patient.
Tony Bland was in a persistent vegetative state; the Law Lords, on a majority decision, allowed medical staff to withdraw sustenance from him and he died of dehydration. That case was considered by the House of Lords on its own merits, and was not meant to act as a legal precedent. However, whether or not that was the intention, the consequence of the judgment was to act as a beacon for future medical practice. There has, I believe, been a subtle shift in medical ethics.
In its judgment on Bland, the House of Lords recommended that in all cases where the withdrawal of nutrition and hydration was being considered for a

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patient in a persistent vegetative state, a court declaration should be sought. That was reassuring. However, the BMA has made it clear that it regards that as an interim recommendation. Its recent guidance expresses the hope that,
"in future the Courts will decide that PVS cases no longer inevitably require court review, where consensus exists".
The guidelines then go further to cover non-PVS cases. They state:
"The BMA can see no reason to differentiate between decisions for patients in PVS and those for patients in other serious conditions where artificial nutrition and hydration is not considered to be a benefit, which are currently governed by established practice without the need for a legal review".
In other words, the BMA is asserting the right of doctors to decide that administering food and water may be futile for a patient who is not in a persistent vegetative state, as well as for one who is.
The type of patient referred to in this context is the adult who does not have the capacity to make or communicate decisions and who does not have a valid advance directive, as well as children and young people. Decisions to withdraw nutrition and hydration from such patients must, says the BMA, be subject to a formal clinical review by a senior clinician. The BMA admits that any decision to withdraw food and water from a patient leaves doctors open to a legal challenge. However, the guidance expressly sanctions the possibility of doctors taking such decisions under their own discretion.
The mother of a friend of mine had a massive stroke and could not move or communicate in any way. The doctors declared that she was in a persistent vegetative state and recommended the withdrawal of all fluids and nutrition. My friend did not believe them. She spent many hours talking to her mother and realised, from the blinks and slight movement of her eyes, that her mother could not only understand every word that was said but was perfectly rational. Still the doctors did not believe it. One day, however, by means of blinks, the mother was able to say to my friend that if the doctor and a certain nurse wished to conduct a sexual liaison, they should please do it outside her room. That was duly relayed to the doctor. Only then did he realise that the lady in the bed had all her mental faculties, and she was treated quite differently from then on. The standard test for PVS had never, of course, been done—the doctors had relied, wrongly, on outward symptoms.
The other category of patients directly affected by the Bland judgment is the patient who has left advance instructions about what he wants to happen to him if he falls ill and cannot communicate. Such instructions, according to the GMC, should be treated as binding. Those who sign so-called living wills, asking that they are not to be resuscitated in the event of serious and potentially terminal illness, may not realise that they may also be forgoing their right to receive basic nutrition and hydration. They are delegating to doctors, irrevocably, a decision about whether or not their life is worth saving. If the doctor decides that it is not, not only medicines and other care, but also food
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and fluid, will be withdrawn. A person incapacitated by a stroke, or in a coma, might not be cared for tong enough to see whether he recovers.
Whether the Law Lords were right or wrong to decide that nutrition and hydration constitute medical treatment is in a sense neither here nor there; debating that question is rather like dancing on the head of a pin. The issue for us is whether food and water should be regarded as separate and distinct from conventional medical treatment and whether the right for every patient, however ill, to receive food and water should be safeguarded in law.
I spoke just now of a subtle shift in medical ethics, and I believe that that is what has happened since Bland. My noble friend has referred to some very disturbing cases involving deliberate acts of omission by clinicians—acts intended either explicitly or implicitly to hasten the deaths of patients. I myself have been made aware of others. Your Lordships may have seen the letter in Monday's edition of The Times from the Marchioness of Salisbury which draws attention to the practice of withdrawing feeding from stroke patients. But Lady Salisbury also refers to reports about patients who have been admitted to hospital with conditions that are not life threatening and who are then sedated and allowed to die from dehydration. There is, I believe, a point at which anecdotal reports become a body of evidence. In my view, that point has been reached. The question is what to do about it.
My noble friend's Bill proposes that we should place an absolute ban on the withdrawal or withholding of artificial nutrition and hydration if the purpose of so doing is to hasten or cause the death of the patient. Her succinct explanation of that choice of words amply illuminated her very principled position. I wonder, however, whether she would allow me to pose one or two questions on the phraseology she has used.
My noble friend referred in her speech to food and fluid being a human right. Listening to the impressive opinion of the QC whom she quoted, I would ask whether that is actually correct. The QC's opinion referred only to hydration. The noble Baroness, Lady Finlay, with her immense direct experience of hospice care, made it clear, as I understood her, that there are circumstances in which to administer nutrition by tube, perhaps to a terminally ill patient, was the cruellest possible thing one could do to that person; for example, if the patient's bodily system could no longer cope with digestion. The GMC guidance says that, for some patients, not taking food and fluid may be part of the natural dying process. We need to take note of that.
My noble friend said that nothing in her Bill would force a patient to have a tube in his nose or a PEG in his stomach if he does not want that. But what if he is unable to communicate his wishes and has left no advance instructions? It seems to me in those circumstances that the Bill might leave doctors with no choice but to continue PEG-feeding the patient literally ad nauseam even when that might be physically oppressive to him. I hope that I am wrong in that. My noble friend can doubtless correct it.

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My noble friend did state that nothing in the Bill would prevent the withdrawal or withholding of food and fluid from a patient who is dying and where the tubes would be intrusive and the risks excessive. Again, however, I would simply ask her to explain how the wording of the Bill allows for that qualification. If the Bill became law, a doctor who believed that the kindest thing he could do for a suffering and terminally ill patient would be to withdraw a feeding tube from a patient's stomach would surely be prohibited from doing so if by that act he caused or hastened the patient's death. Furthermore, I wonder whether a court could sanction it either.
My noble friend should not misunderstand me. I believe that she has brought a very important issue to the notice of the House. Nevertheless, I know that she will agree with me that the implications of the Bill as worded need to be thought through carefully. Life is sacred, but at the same time we should never forget that life has a natural end. I ask my noble friend, if I may, whether she does not agree that in desperate cases such as that of Bland where all quality of life and all hope have gone, the kindest and most humane course is indeed to recognise that life in all meaningful senses has ended and to cease striving officiously to keep the patient alive. I hope that when she replies to the debate my noble friend will be able to explain how her Bill would allow a court to take that humane decision. As I read it, I cannot see that it would be able to.
It is for that reason that, although I support and deeply respect the intentions behind the Bill, I believe that it is appropriate to take a step back. My noble friend may be able to provide me with reassurance on the questions I have asked but I am concerned that the Bill as it stands will not do. Whether it is capable of amendment is not for me to say or judge but, in giving it a Second Reading tonight and reflecting on the powerful contributions we have heard during the debate, we perhaps need to consider whether it might not be the law that is at fault but rather the practice. If that is so, the focus of our concern should rest on how the medical profession should guide itself in future and how the approach of individual doctors to these very difficult life and death decisions can be made consistent with the letter and spirit of such guidance. The voice of Parliament in that context is, I believe, indispensable for there is no doubt that the grave worries that my noble friend has articulated today are worries held by many of our fellow citizens. Those worries, one way or another, must be dispelled.
10.6 p.m.
Baroness Andrews: My Lords, we have had a most profound debate. I say on behalf of all noble Lords who have spoken that we are grateful to the noble Baroness for giving us the opportunity to have such a debate which raises issues which concern life and death. For the reasons that many noble Lords have already mentioned it is right that we should have the opportunity to discuss these issues in a reasoned and dispassionate context. But having listened to the
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debate, I understand how difficult it is sometimes to be dispassionate when one is considering ethical issues of such a profound nature.
We have had an excellent debate. Noble Lords have covered medical, ethical and legal boundaries in relation to these very personal issues. We are discussing one of the most difficult and sensitive issues of medical practice. I hope that I may borrow the language used by the noble Baroness, Lady Finlay, when I say that these are decisions which are as agonising for the doctor to take as they are for the patient or their family to contemplate. Differing views are held on the subject, as was shown in the debate. That is clear from debates in Parliament over the past few years, from the response to the Government's consultation on Who Decides?which started in 1997, and from the concerns raised by the very difficult cases of Dianne Pretty, Ms B and Reginald Crew, which have been highlighted in the press and which all represent extremely difficult decisions. None of the decisions is more difficult than that of withholding artificial nutrition and hydration. The noble Baroness spoke with great feeling of distressing cases to which I shall return in a few moments. Those are essentially individual and personal cases. As the noble Earl, Lord Howe, said, the medical practice involved is something about which we should have grave concern.
I turn to the Bill. As a society we have a duty to provide care and support, to relieve pain and to alleviate symptoms for those who suffer chronic and terminal illness. But, above all, we have a duty to ensure that, however our law is framed, it is based on compassion for those who are suffering and those close to them.
The noble Earl, Lord Howe, spoke of the equal value of all human life. We surely all agree with that. I was disturbed by the statement of the noble Lord, Lord Swinfen, that there are some elderly people in our hospitals in whom medical staff have lost interest, and that there is a tendency to want to get them out of hospital in order to shorten waiting lists, however that is done. I hope sincerely that that is not a general opinion. I am sure that the NHS does not operate on those principles or in that way. It is right to put my response to that point on the record.
We welcome the opportunity for a debate on such complex and ethical issues. As the noble Baroness will appreciate, the normal role of the Government in relation to a Private Member's Bill, especially one which raises such profound issues of conscience, is to be neutral. The Bill anticipates a radical change in the law, so in my few minutes I want to set out the ethical and legal background to the current law and its full implications. I hope that that will help to provide a useful framework for further thoughts on the Bill.
As many noble Lords have said, the Government's current position on euthanasia—the intentional taking of life, albeit at the patient's request or for a merciful motive—is that it is unlawful. For a doctor to intervene actively to bring about a death is unlawful. Equally, a doctor who owes a duty of care to a patient and withdraws or withholds treatment without lawful

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excuse would commit an unlawful act. In so far as the Bill might be seen to restate what is already in our current law, it would seem unnecessary. The noble Lord, Lord Alton, anticipated that point.
There is, however, an important distinction in the current law between a deliberate intervention to end life and the omitting or withdrawing of treatment which has no curative or beneficial effect. It is that distinction which goes to the heart of the debate today. It rests on several fundamental ethical principles which have governed relationships between doctors and patients for many years. It is about the autonomy of patients and about their fundamental human right to have a say over what happens to their body and any treatment that they receive. Those are principles which, following the Tony Bland judgment in 1992 that has been referred to today, the courts have ruled should also apply to consideration of artificial sustenance as a form of medical treatment.
Let me set out the ethical framework to the current law. It is based on two fundamental principles, which are the right of the patient to refuse treatment and the duty of the doctor to act in the best interests of the patient. Both were referred to by the noble Baroness, Lady Finlay. There is also a major distinction in the law between patients who have the mental capacity to make their own decisions, and those who cannot. The noble Earl, Lord Howe, raised that matter. The distinctions have a long history in common law, and have been reinforced by the Human Rights Act. The Bill raises important questions about both the principles.
I shall deal with the consent principle first. We hold as a principle that the firm basis for any decision to give, withdraw or withhold treatment must be the right of the patient to consent to, or refuse, that treatment if he or she is capable of making that decision. The only exceptions are those defined in the Mental Health Act 1983. In the word of one of the judgments made in the Bland case, every person's body is "inviolate". A competent adult has the right to refuse a treatment even if that may lead to their death, and they may even exercise that right in order to bring about their own death, if that is what they want.
I want to emphasise the importance of that right to be free from unwanted medical interventions, which if forced on a patient can lead to claims for assault and battery. The right has been confirmed by the European Convention on Human Rights. I should say—a question was asked about it—that there is no obligation under the Human Rights Act to provide any form of treatment that is futile to the patient.
The second principle is that of the best interests of the patient. Our law says that no one may consent on behalf of another adult. If an adult lacks the capacity 10 consent to a treatment and there is no valid advance refusal, any decision about their medical treatment must be based on an assessment of the patient's best interests. That does not mean only their medical interests, but their quality of life, their relationship with their family and their spiritual welfare.
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Under current case law, a doctor has a duty to offer treatment that is in the patient's best interests and would benefit the patient. If he omits or fails to offer beneficial treatment to a patient, that is as unlawful as an attempt to kill a patient using a toxic drug.
At the same time, where the doctor determines that there is no benefit in medical intervention or treatment and such an intervention would not be in the patient's best interests, there is no legal justification for continuing that treatment and no duty to provide it. However, it is important to say in this context that the withdrawal of such treatment should take place only after discussion with the healthcare team and with those close to the patient to ensure that the doctor knows that the views of the patient are taken well into account.
I come to the point about food and drink being the staff—the basics—of life. I make it absolutely clear that where a patient is capable of taking nourishment, it must always be offered. The cases we have heard about of food being placed beyond a patient's reach or not offered in a way in which the patient can take it himself involve extremely bad practice.
There may be circumstances where the doctor's assessment of a patient's best interests may mean withdrawing or withholding treatment. Where that is the case, doctors and healthcare professionals are still under an obligation to make the patient as comfortable as possible, to provide the best possible care—the noble Baroness, Lady Finlay, discussed that—including palliative care in making patients comfortable. The BMA guidelines, which have been extensively referred to, although I shall not dwell on them, pay strict attention to that. There is considerable emphasis in the guidelines on making the patient comfortable, whether that involves relieving dryness of the throat or lips, or relieving pressure sores. Those are part of the normal duty of proper, decent quality care for patients.
Those two principles, "consent" and "best interests", are based fundamentally on the rights and wishes of the patients themselves. We all share that as our main concern. I stress the importance of those fundamental principles as a starting point.
I turn to some of the more specific issues raised by artificial nutrition and hydration. That is one of the most difficult areas in which such decisions are made. Artificial nutrition and hydration refers, according to the BMA definition—it is very specific—to those techniques that are used to bypass a pathology in the swallowing process, including, for example, the use of nasogastric tubes, as in the case of Tony Bland. It can also be referred to as technologically delivered feeding—the noble Lord. Lord Alton, mentioned that—which requires medical or nursing skills to administer.
We have discussed the tragic case of Tony Bland, who had sustained catastrophic and irreversible brain damage. The courts considered whether artificial nutrition and hydration are part of medical treatment and care or something entirely different. Their conclusion, based on—I quote the judgment—"overwhelming medical evidence", was that they constitute part of the medical

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treatment or care of the patient. Just as a ventilator is used to overcome a patient's difficulty in breathing, so, it was argued, artificial systems for delivering nutrition—in this case, a nasogastric tube—overcame difficulties in swallowing.
That means that the same principles apply legally to artificial nutrition and hydration as to other forms of medical treatment. In terms of the patient's interests, we heard from the noble Baroness, Lady Finlay, and the right reverend Prelate that the provision of artificial nutrition and hydration can be burdensome, whatever the method. I know from my own experience with patients with senile dementia that some forms of intervention can be particularly distressing. Patients often attempt to rip out tubes and to resist. The process is extremely distressing to patients and the family. The burden involved and whether or not it is of benefit to the patient, and therefore justified, is part of the doctor's assessment of a patient's best interests. The decision is not whether the life is worth while but whether that approach is what is good and best for the patient.
I realise that this subject raises particularly strong feelings. If we go back to the Select Committee on Medical Ethics of 1994, we see from the range of evidence presented how difficult it was for the committee to come to a judgment.
I also want to emphasise that the decision to withdraw artificial nutrition and hydration does not mean that all medical treatment should be withdrawn from a patient. Each treatment must be judged on its own merits. Much can be done to relieve suffering, particularly towards the end of life. But I stress again that doctors are still under an obligation to ensure that the patient is as comfortable as possible and they must give any care or other treatments that are in the best interests of the patient. I reiterate the point raised by the noble Earl concerning whether we are talking about law or practice when we refer to some of the issues and cases raised by the Bill.
I now turn to the Bill and shall consider in a little more detail some of the issues raised. Because we share a belief in the intrinsic value of human life and because we share the compassion which demands that we do not neglect the care of those who are dying, I believe it is extremely important to appreciate the radical nature of the change that the Bill would bring about. The noble Lord, Lord Tombs, described it as a simple and modest Bill. However, it would change the emphasis of the law from the rights and best interests of the patient to the "purpose" of the doctor and to what was in his or her mind in relation to the decision taken.
I shall be quite clear. The interpretation of a doctor's intention or intentions when making decisions in connection with the withholding or withdrawal of medical treatment is central to the way that the Bill is drafted. In contrast to the current emphasis in the law on consent, the Bill would make the doctor's purposes the test of lawfulness. That is why it has such important implications.
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Ethically, the Bill would overturn one of the fundamental tenets of medical ethics—the autonomy of the patient and his or her right to make a choice. In making that change, the Bill defines a "patient" as,
"a person suffering from mental or physical illness or debility".
As drafted, crucially that does not distinguish between a patient with the capacity to take a decision about his treatment and a patient who is incapacitated. Not only would the Bill remove the possibility of withdrawing artificial nutrition and hydration from a patient who was not capable of making that decision; it would also mean that a competent patient would no longer have the right to refuse medical treatment in the form of artificial sustenance, whether at the time or through an advance refusal of treatment, if the result of that refusal would be his death. Where a competent patient had expressed such a wish and refused treatment, the Bill would make it unlawful for a doctor to follow the patient's wishes. In other words, by shifting the law to consideration of the doctor's purpose, the Bill would effectively prohibit a patient from refusing ANH. I shall return to that point later.
Perhaps I may illustrate the issue by referring to the recent case of Ms B. Ms B suffered a ruptured blood vessel and was paralysed. She spent a year in that condition, unable to move or breathe unaided, and her treatment included being maintained on a ventilator. It was her wish that that treatment should he withdrawn. The medical team considered that other options, such as rehabilitative treatment, should be pursued, and eventually the case came to court. The issue was essentially whether Ms B was able to give valid consent to the giving or withholding of treatment. The court decided that she was indeed capable of making a fully informed decision, and consequently her treatment was withdrawn by taking her off the ventilator. Sadly, but inevitably, she died peacefully on 29th April last year.
The central point that emerges from that case, and the matter of principle that it establishes, is that a competent adult has the right to consent or to decline medical treatment, even if the decision would result in his death. That position is well established in our current law. Any exception to such a right must be seriously justified.
In practical and medical terms, I now turn to the provisions of the Bill which concern intention and purpose.
Lord Carlile of Berriew: My Lords, I am grateful to the noble Baroness for giving way. I am afraid that I do not understand the point that she has been making. The Bill as drafted deals with the doctor's purpose, if we take the doctor as the example. If the patient makes the decision that the nutrition should be withdrawn, that is not the doctor's purpose; it is the patient's purpose. I suggest that plainly the noble Baroness has overlooked the word "his" in the first clause of the Bill.
Baroness Andrews: My Lords, the point I am making is that our current law—case law and common law—rests on patient consent. That right would be overturned by putting the prior emphasis on the intention of the

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doctor to take that decision. We shall pursue these issues in Committee if the Bill receives a Second Reading. As the noble Baroness, Lady Finlay, said, it would be a lawyer's charter.
On intention and purpose, we have had an interesting debate, with contributions from many sides of the House on the issue of purpose. The implication of the Bill is that the law should consider each and every purpose of the doctor in order to decide whether an action is unlawful. The problem is how to make that work in practice. A doctor can certainly state his or her main purpose in carrying out an action or taking a decision about a patient's treatment. That statement may be sufficient to explain what has been done and the law can judge whether or not that is the case. The Bill invites us to be sceptical and to scrutinise the motive or intent of the doctor. But how can we ever know if the doctor concerned had any other purpose or interest? How can he or she prove otherwise?
The right reverend Prelate gave us many examples of the difference between foresight and intention. 'The noble Baroness, Lady Finlay, described how difficult it is to predict the outcome of medicine. Where is the line between withdrawing artificial nutrition because the doctor judges that it is futile and a deliberate attempt to harm? What is the evidence that can be brought?
The long title of the Bill speaks of "intention". In criminal law, when juries are asked to consider "intent", factors they may be asked to take into account include the probability of the outcome and the extent to which that was appreciated by the defendant even if it were not their main intention. Therefore, if a doctor knew, as a virtual certainty, that withholding or withdrawing treatment, even at the patient's request, would result in the patient's death, the doctor could still be held to have positively intended the patient's death. I am not a lawyer, but I can see that we are entering something of a minefield.
Secondly, the Bill has other serious implications for the doctor concerned. The noble Baroness, Lady Finlay, spoke of it encouraging defensive medical practice. It would, in some circumstances, mean forcing a doctor to take a decision against his or her professional judgment and to continue with treatment knowing that it was unnecessarily burdensome and of no benefit to the patient. I refer to the speech made by the right reverend Prelate. It is a significant departure from the current position whereby a doctor cannot be obliged to provide treatment or care against his or her professional judgment. It would remove any flexibility in the clinical judgment. We need to think that through very carefully.
I turn to the issue of safeguards. I reiterate that I fully appreciate the intentions of the noble Baroness, Lady Knight, and her deep and compassionate concern to see that vulnerable people are protected. That is what the Bill intends to do and we appreciate the reasons for the shift in the law proposed by the noble Baroness. Like her, the Government are concerned to ensure that vulnerable people are protected. We have gone to great lengths to ensure transparency in how decisions are made regarding the treatment of people lacking the capacity to consent for themselves.
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As part of the Good Practice in Consent Initiative, the Department of Health has developed a series of guidance, consent forms and information leaflets on consent to examination or treatment. That sets out very clearly the obligation on the doctor to act in the best interests of a patient who lacks capacity. It also includes—this is significant—a form o n behalf of adults who are unable to consent to investigation or treatment to record the decision-making process in relation to their treatment. That includes an assessment of the patient's capacity and of their best interests, the reasons for any decisions taken about that person's medical treatment, and the involvement of the patient's family—an extremely important point. It is also designed to emphasise the importance of consent as a process throughout the treatment of the patient. Trusts have been asked to implement those forms. That has been in place since April 2002.
The BMA safeguards referred to by the noble Earl, Lord Howe, and the noble Baroness, Lady Finlay, also set out extra safeguards for decisions. We have heard about them. The guidance on this issue states that all proposals to withhold or withdraw ANH should he subject to formal clinical review by a senior clinician with experience of the condition from which the patient is suffering and who is not part of the treating team and can therefore look at the situation independently. All cases in which AN H has been withdrawn should also be available for clinical review.
We are fully in agreement that the law must provide adequate safeguards to ensure that such patients are given treatment which is of benefit to them. We have a duty to ensure that the law respects the wishes of a competent patient who does not want treatment. We also have, I believe, a duty to provide adequate safeguards against futile or unnecessarily burdensome intervention on a patient's body when he or she is incapacitated and at his or her most vulnerable.
Furthermore, I believe that we have a duty to support and protect the medical practitioners who are placed in the position of having to make very difficult and distressing decisions. We believe that the balance of the law, given the thought and care that has gone into the judgment over the past decade, protects the rights of the patient and the clinical autonomy of the doctors.
I conclude by saying that this is an extremely sensitive issue. All noble Lords who have spoken have addressed the matter in extremely sensitive and personal ways. We have to strike a compassionate and principled balance. These are issues that need broad and open public debate. For that reason, I thank the noble Baroness again for creating that opportunity and I thank all noble Lords who have spoken.
10.31 p.m.
Baroness Knight of Collingtree: My Lords, at this hour I shall, I am sure, do what all noble Lords wish, which is to be as brief as possible. But there are one or two important points that need to be made.
I express my great gratitude to noble Lords who have taken the trouble to stay until this late hour and join in a most interesting, wide-ranging and, I believe,

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extremely important debate. I am particularly grateful to the noble Lord, Lord Carlile, for the wisdom of the legal judgment he has given tonight. The point of the noble Lord, Lord Brennan, must be stressed again. The problem began when the judgment with regard to Bland was made, and the very fact that it was made for a special case. Thos who made the ruling pointed out that it was a special case and not intended to change the way medical treatment is meted out. That is a most crucial point. We have indeed gone downhill since.
I say to the right reverend Prelate the Bishop of Oxford that there is nothing in the Bill—and I said this in my speech and the noble Lord, Lord Alton, stressed it again—that means that a treatment which is judged medically to be burdensome, distressful or risky, such as occasionally putting in the peg or the other method of feeding through the nose, has to be carried through. I would also stress that to the noble Baroness, Lady Andrews.
My noble friend Lord Howe put three questions to me. First, the Bill was most carefully drafted, not by me because I am not trained in parliamentary drafting. It was drafted by people who know their business and is very carefully worded. For those who accuse me of not including oxygen and so on, I can assure them that—and I have had some experience of Private Members' Bills, having had five of them passed during my parliamentary lifetime—if any Bill put forward by a Back-Bench Member either of this House or of another place is lengthy, it has no hope of ever becoming law. So the crucial point is that one must be brief. That is one reason why the Bill is brief.
Secondly, I must say to my noble friend Lord Howe that the whole burden of the Bill is in the words:
"it shall be unlawful … if his purpose in doing so is to hasten or otherwise cause the death of the patient".
I should have thought that such things as patients' notes, for instance, would make it plain either that the treatment was invasive, burdensome, or whatever, or that there was a medical reason that could be clearly stated.
In the cases that I have cited—which are all recent and real—that was not the case. I mentioned that on two occasions it was felt to be a wretched nuisance that the patient's relative or friend interfered and asked
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that the patient should be given food and liquid. If the purpose is to avoid a patient suffering, that will not be illegal—I stress that.
Thirdly, I was asked: what if the patient cannot speak or is mentally handicapped? I should have thought that some reference should be made to the family. That seems reasonable. But then it is perfectly sensible to recognise that on occasion there is no family and it is not possible to ask anyone else. Then, of course, it must be the doctor's responsibility to weigh up the suffering involved in keeping a patient alive and in starving him to death. That is fairly straightforward.
Nothing in the Bill—I speak directly to the Minister—denies the patient's right to say what he or she may want. There is not a word that suggests that the matter be handed over to the doctor, with the patient having no right. I stress again that it is surely not so difficult to judge the doctor's intentions because it must be clearly written down and explained why a procedure was or was not adopted.
As I have said, the wording of the Bill is not mine but I believe that it is legally correct and addresses an issue that must be addressed. If I were sick and in hospital, I should love to have the Minister as my nurse because she exhibits enormous gentle care and I am sure that she would carry that through in any professional capacity when looking after a patient.
What distresses me is that cases such as those that I and other noble Lords have described arise all the time but nothing stops them. It is all very well to have the opinion that we do not like it happening, but who will stop it if the Bill does not? There is such great distress and suffering. We are in direct contravention of an international law. Those who have criticised the Bill—and criticism is fair and expected in a debate—have in no way addressed that point. Surely we care about whether we meet our obligations with regard to human rights. Legal rights and obligations are blurred and uncertain.
Listening to the noble Lord, Lord Carlile, in particular, I cannot possibly do other than request that the House give the Bill a Second Reading.
On Question, Bill read a second time, and committed to a Committee of the Whole House.
House adjourned at twenty minutes before eleven o'clock.