Lords Sitting of 29 April 2004

Preamble
The House met at eleven of the clock (Prayers having been read earlier at the Judicial Sitting by the Lord Bishop of Chester): The CHAIRMAN OF COMMITTEES on the Woolsack.

Draft Disability Discrimination Bill
Lord Morris of Manchester Lord Morris of Manchester asked Her Majesty's Government:
When they now expect their new Disability Discrimination Bill to be presented to Parliament.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Hollis of Heigham): My Lords, our expectations have not changed. We are on track to introduce the Disability Discrimination Bill in this Parliament. Indeed, as noble Lords are aware, a draft is undergoing pre-legislative scrutiny by a Joint Committee of both Houses of Parliament. We will respond to the committee's report as soon as possible after it is published. Announcements on the legislative programme will be made in the Queen's Speech in the usual way.
Lord Morris of Manchester: My Lords, I am most grateful to my noble friend, as ever, and to my noble friend Lord Carter and the Joint Committee for consulting disabled people with such unfailing care. It was movingly exemplified for me by their readiness—in the Easter Recess—to visit Sir Peter Large, who is currently too severely disabled to leave home.
While I warmly acknowledge their manifold legislative achievements for disabled people, can we be assured that Ministers will move with all speed to enact the Bill, resorting if necessary to the rollover procedure now available to expedite Royal Assent?
Will they also back the DRC's call for the "reasonable adjustments duty" on public authorities to be clearly stated as an anticipatory one in the Bill: a duty owed to disabled people generally, not only to individual disabled people who request help?
Baroness Hollis of Heigham: My Lords, I am sure that the House will join me in recognising the huge achievements of Sir Peter Large over many years. Obviously, his health is a concern for all of us but he has been a great figure in the world and has done so much for the disability cause.
My noble friend asked about speed, rollover, and so on. That is a matter for the usual channels, but I can repeat again that we are on track to deliver the Bill within this Parliament.
My noble friend's third substantive question was about local authorities' anticipatory duty, as opposed to a reactive duty. The issue is whether local authorities are obliged, through their services, their functions and the public premises they own to anticipate the needs of
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disabled people by ensuring that ramps, audio loops, and so on are available. Yes, we believe that the duty for local authorities is anticipatory; we believe that the drafting makes it clear. But if, for example, the scrutiny committee believes on reflection that it is not as clear as it should be, we are willing to take this away and discuss it with legal counsel in order to ensure that we deliver transparency in the Bill. Of course, when the Bill goes through either House, it will be subject to the Pepper v Hart proceedings which make clear the intent behind the proposals.
Lord Carter: My Lords, the Joint Committee completed its deliberations this week and the report should be published in the week of 24 May. The Minister will know that the report is based on the draft Bill which is, itself, an enabling Bill, based on the framework of the Disability Discrimination Act 1995. I hope that in the light of that, the Government will be able to respond rather more quickly than the two months that they normally take to respond to such reports. I can assure the Minister that the recommendations are quite straightforward. If she could bring the process of response forward so that the Bill could be introduced before the Summer Recess, that would be extremely helpful.
Baroness Hollis of Heigham: My Lords, we will have to see what the recommendations say. My noble friend who chairs the committee is in a better position to tell the House this than I am, but my understanding is that we are due to receive the recommendations of the Scrutiny Committee on about 24 May. Normally there is a two-month period after that which would take us through to 24 July. As that is the beginning of the recess, we would lose valuable time. So if there is any way of compressing the timetable, we will certainly try to do it. However, that depends on how substantial, dramatic, surprising or worrying the committee's recommendations may be. But if my noble friend has those concerns at heart, then I am sure that he will produce recommendations which we can respond to very quickly.
Lord Skelmersdale: My Lords, the noble Baroness mentions valuable parliamentary time. Can she say by when she anticipates that full implementation of the Bill will occur? Is the end of 2006 a realistic objective? Will the publication be accompanied by the draft orders which, at one point, were promised to the Joint Committee?
Baroness Hollis of Heigham: My Lords, on the last point, my understanding is that we still hope to publish the draft regulations simultaneously with the Committee stage of the Bill, as far as possible. From my own experience, if, for any reason we are unable to do that, partly because a late Clause 15 has been introduced into the Bill, obviously there will be a very full explanatory memorandum in lieu. We want to be helpful to the House and I am sure that the House would want that.
I have no reason to think that we will not be on track to meet such a timetable in its broad terms. But the noble Lord will understand that there are aspects, not necessarily within the Bill, but associated with disability issues, such as transport, which obviously have a very long

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timetable because of requiring very heavy investment. So although we might expect to be able to meet such a proposed timetable, the noble Lord will understand that on some issues—aviation, shipping, trains, buses, and so on—there are different timetables in which vehicles will be fully accessible over a much longer period of time than 2006. However, within the substance of the Bill, I might hope to meet such a timetable.
Lord Addington: My Lords, does the Minister agree that we have taken up a great deal of time over many years asking about when legislation of this type will be enacted? Would the Minister be open to a deal that if we get this through as quickly as possible, the usual suspects will not ask any more questions about when it will happen? Surely that would free up a great deal of time.
Baroness Hollis of Heigham: My Lords, I would be severely disappointed in your Lordships, including the noble Lord, Lord Addington, if, having got the Bill through the House, they continued to ask when it would come before the House.
Lord Ashley of Stoke: My Lords, I was very sorry to miss the early part of my noble friend's Answer, so I am speaking rather in the dark. Is she aware that last Monday the Home Secretary announced that legislation on identity cards would be introduced in the autumn and on the statute book before the general election? Has she been able to give that kind of undertaking to the House today'? If not, will she bear in mind that the identity card legislation is highly controversial and, as she will gather from these exchanges, the question of a disability Bill is not contentious and should go through the House very easily? Can she give that commitment, please?
Baroness Hollis of Heigham: My Lords, I can only repeat the first Answer that I gave to my noble friend Lord Morris. Our expectations have not changed; we are on track to introduce the Disability Discrimination Bill in this Parliament. In that way, we will fulfil the commitment we made in our manifesto to extend civil rights to disabled people.

Prime Minister: Plans to Meet Senator John Kerry
11.8 a.m.
Lord Clinton-Davis Lord Clinton-Davis asked Her Majesty's Government:
Whether the Prime Minister has any plans to meet Senator John Kerry before the United States presidential election.
The Minister of State, Foreign and Commonwealth Office (Baroness Symons of Vernham Dean): My Lords, the Prime Minister has no current plans to do so.
Lord Clinton-Davis: My Lords, do not the Government agree that there should be a true balance between the Government, the Democrats and the Republicans? Even if President Bush and those around him will not acknowledge any possibility of defeat—and that will not be the first time that they have got it wrong—is it not vital that there should be a good rapport between the Government and the Democratic candidate?
Baroness Symons of Vernham Dean: My Lords, I agree about the importance of government to government relationships. Of course, party-to-party relationships continue, whatever the parties happen to be, and I include the opposition parties in this country as well as overseas. However, I am bound to say to my noble friend that government-to-party relationships become increasingly sensitive in an election year. That is true whether we are talking about an election in the world's most powerful country or, in my experience, whether we are talking about elections in some very small countries around the world. We have to be sensitive about the way in which we handle those relationships at such a time.
Baroness Williams of Crosby: My Lords, while I recognise the reasons behind what the Minister said, it is still some six months before the US election takes place. Would it not be therefore wise, in the interests of being even-handed—although we on these Benches recognise that the Prime Minister and Mr Bush are very close—to arrange some kind of meeting well before the time the campaign is under way?
Baroness Symons of Vernham Dean: My Lords, the relationship is indeed close, as was my right honourable friend's relationship with a president of a former party. My right honourable friend has recently returned from the United States. He might well have seen Mr Kerry when he was there, but that was not the way in which diaries worked at the time. I was careful in the way that I formulated my Answer. A meeting is not ruled out entirely but, as a matter of fact, the Prime Minister does not have any current plans for one.
Lord Richard: My Lords, may I take it from that answer that if Senator Kerry were to request a meeting with the Prime Minister, the Prime Minister might be prepared to smile upon it?
Baroness Symons of Vernham Dean: My Lords, I cannot control my right honourable friend's diary. I suggest to my noble friend that that would be a question of timing. I do not see any reason why there should not be such a meeting. I have indicated to your

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Lordships that such a meeting might have taken place only a few days ago had diaries worked. However, as the election draws closer, one would rightly expect the Government, when acting as government, to be circumspect about any meetings with opposition parties or with parties of the governing party—but not with the US Government. That is common sense.
Lord Tugendhat: My Lords, does the noble Baroness believe that circumstances might ever arise in which the Prime Minister would differ from the President of the United States in public?
Baroness Symons of Vernham Dean: My Lords, I thought that somebody might ask me that. I shall try to remind the noble Lord of when that has happened. The Prime Minister has differed from the President of the United States on the important issues of climate change and the Kyoto Protocol. The Prime Minister has differed from the President of the United States on his dedication to the death penalty. I have argued fiercely on many occasions with the US Administration about it. We have substantial differences with the United States on that. We also have sharp differences over trade; we have had trade disputes. The Prime Minister has spoken out forcefully against the way in which the President of the United States dealt with the steel issue. There have been frequent disagreements on territorial legislation as it has affected Cuba, Libya and, of course, Iran. There have also been frequent disputes and difficulties between us over a number of different countries. I shall instance at this point solely Cuba, because it is the one of which I had direct experience myself. We decided to resume relationships with Cuba. The noble Lord will know that we have diplomatic relations with a number of countries with which the United States does not. I think that I have been able to give the noble Lord a fairly comprehensive answer on that point.
Lord Marsh: My Lords, does the noble Baroness agree that we have a very large embassy in Washington and that it would become very difficult for diplomats if the Prime Minister were to carry on discussions with political parties? Nobody would be quite sure whether he was speaking as member of the Labour Party or as the Prime Minister. People in the Labour Party have traditionally gone to talk to their political opposite numbers. I would be surprised if the Labour Party was not doing that now—the Conservative Party surely does the same—on the basis of political party to political party. It is naïve to cloud the issue.
Baroness Symons of Vernham Dean: My Lords, I do not know whether contacts are being made by members of the Labour Party at this moment. I made a point of not asking that question, because I wanted to answer the Question of my noble friend Lord Clinton-Davis, as I must, from this Dispatch Box, as a government Minister. I, and other Ministers who are far more senior and important, understand the difference between being a party political animal and being a member of a government.

Supermarkets: Independent Watchdog
11.15 a.m.
Lord Beaumont of Whitley Lord Beaumont of Whitley asked Her Majesty's Government:
Whether they intend to appoint an independent supermarket watchdog.
Lord Triesman: My Lords, the Office of Fair Trading is currently conducting an audit of compliance with the statutory code of practice governing supermarkets' relations with their suppliers. The results are expected to be published by the end of this year. The Government will consider what action may be appropriate in the light of the OFT's conclusions.
Lord Beaumont of Whitley: My Lords, I thank the noble Lord for that Answer, which offers me rather more hope than I had expected. The matter is an urgent one. The Prime Minister has admitted that the supermarkets have an armlock on the farmers. The rate of suicide among farmers continues to rise. The rate of salaries paid to people who run supermarkets also continues to rise. That is a crying scandal and a disgrace that should be put right as soon as possible. We should not wait too long.
Lord Triesman: My Lords, if I might try to detect a question in what the noble Lord has said, I think that it was to ask whether the Government will act with the greatest possible dispatch in light of all the concerns that he raised. The answer must be "yes". All those matters should concern us. I look forward to seeing the report of the OFT. That report should be based on good evidence, because good evidence is the best way of proceeding. We eagerly await that report and the opportunity to act on it.
Lord Davies of Coity: My Lords, supermarkets have for a long time demanded greater returns from suppliers and farmers. They have wanted ever-bigger discounts and have taken ever-larger amounts. That has caused tremendous problems. Is there not a danger, if too much is done in that area, that those supermarkets will then buy their products from overseas and therefore cause much greater difficulty for the current suppliers here?
Lord Triesman: My Lords, my noble friend makes an important point. It is vital to the United Kingdom's farming industry that a high proportion of the goods that are sold in supermarkets, food goods in particular, are sourced in the United Kingdom. Supermarkets now provide many non-food goods and services. We would want those to come from United Kingdom producers and service producers if that is possible. While I know that some criticisms have been made of the supermarket industry, supermarkets are major players in the realm of employment. One of them, Tesco, employs more than 200,000 people in just under 2,000 communities across the United Kingdom.

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Supermarkets are large and dynamic players. If they can be linked with other parts of UK production, that must be in all our interests.
Lord Peyton of Yeovil: My Lords, leaving aside for a moment the virtues and vices of supermarkets, does the Minister agree that we already have a sufficiency of watchdogs? One wonders whether there is sufficient, suitable kennel accommodation for them.
Lord Triesman: My Lords, I hope that I have made the point that the OFT has the decisive role. Until the OFT reports, and in case its report contains anything on which we should reflect in that regard, we have no plans to change the watchdog. However, watchdogs get the chance to bark only if they see something that they have to bark at. More watchdogs will not alter that fact.
Lord Razzall: My Lords, while recognising the important issue that the noble Lord, Lord Beaumont, has raised, we from these Benches would sympathise with the Minister's reply that the answer is to deal with this via the Office of Fair Trading code. Does the Minister agree that there was perhaps a slightly Freudian slip in his first Answer when he said that it was a statutory code? I thought it was a voluntary code for the supermarkets. Does he not also agree that pressure could perhaps be put on the OFT to appoint a dedicated food trade inspector with particular responsibility for this area in order to reassure the public on this vital matter?
Lord Triesman: My Lords, I do not know that there is a huge amount to add to my last answer. Until the OFT report is available and we can consider whether there are any proposals of that kind, I am not sure that it would help to increase the number of inspections or inspectorates, although I understand the point. In reality, there is quite a lot of dissatisfaction about the operation of the code. I think that my noble friend Lord Whitty, in a recent press statement, drew attention to that fact. We want to see better relations between suppliers and buyers and we want to ensure that we move in the right direction when the changes take place. I have absolutely no doubt that the noble Lord's suggestion will be among the matters that we consider.
Lord Livsey of Talgarth: My Lords, the Minister says that there is no evidence on this subject. Last week, Tesco published profits of £1.5 billion, which is equivalent to half the profits of the British agricultural industry; milk producers are receiving the equivalent of 9 pence per pint for their milk; and 1,700 milk producers went out of business in the past 12 months. What further evidence is required? Surely compliance with the code has to be formally sorted out. The British agricultural industry and British farming will go right down the drain if action is not taken soon.
Lord Triesman: My Lords, I did not say there was no evidence; I just said that we needed to collect sufficient
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evidence to be certain that we are moving in the right direction. I too have read the accounts of the profits of that particular company. I would draw attention in the briefest way to the fact that those profits are generated now out of non-food items including banking arrangements and a very wide range of things. As they are not disaggregated in the annual report it is difficult to tell which parts are due to food and farming production in the first place, although of course that will be significant. Whatever people feel about the proportion of profitability in relation to agriculture, the Consumers' Association has made the point that the whole of the operation has been extremely good for consumers.
Baroness Byford: My Lords, I think that the Question deals primarily with food. Does the Minister accept that in many instances there are good relationships between farmers and the supermarkets they supply? Many of them are quite happy with the arrangements. However, others feel aggrieved by the arrangements, and one of their problems is deciding whether to jeopardise their relationship with the supermarkets by giving evidence. Can the Minister give us any guidance on how that problem can be overcome? If the Office of Fair Trading does not have the evidence, it is in a very difficult position.
Lord Triesman: My Lords, that is a very fair point. My attention has been drawn to some of the publications particularly in the farming world in which farmers' representatives have made the point that many people are anxious about providing evidence lest it should soil their relationship with the supermarkets. I can only observe that we must try to produce an environment in which people are not fearful. It is extremely hard to take the right steps unless there is as much detailed evidence as possible. I can say with confidence that the Government would take a very severe view of anything that imported undue fear into the minds of people whose evidence we need.

EU: Draft Constitutional Treaty
11.24 a.m.
Lord Howell of Guildford Lord Howell of Guildford asked Her Majesty's Government:
What proposals they have put to their European Union partners for an alternative treaty, setting out and simplifying appropriate rules for an enlarged Union, in the event of failure to agree the current draft constitutional treaty or to ratify it by one or more member states.
Baroness Symons of Vernham Dean: My Lords, none.
Lord Howell of Guildford: My Lords, I am grateful to the Minister for that short and concise but none the less slightly disappointing reply. Would it, in fact, not be prudent and in the interests of the United Kingdom and the enlarged European Union—which comes into being this weekend and we greatly welcome—to have some kind of plan B,

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especially as the noble Baroness's close and very well informed colleague Gisela Stuart MP and many other very well informed people have said that we should tear up this constitutional draft and start again? Europe needs something different and more modern from what we are being asked to look at over the next few weeks.
Baroness Symons of Vernham Dean: My Lords, my right honourable friend the Prime Minister made clear in another place last week that the Government believe that if the treaty contains our essential points—and I remind your Lordships that there is still a very tough negotiation ahead—it will be in our interests to sign it. Unilaterally proposing a completely different treaty at the moment would be unrealistic and pointless. Worse, it would be against Britain's interests because it would undermine our own basis of negotiation.
Lord Richard: My Lords, is my noble friend aware—I am sure she is—that it really would be the most extraordinary way to negotiate if, in the middle of trying to negotiate a treaty which is plan A, you should disclose to the other side with whom you are negotiating what plan B is? I am delighted that she has rejected that extraordinary proposition.
Baroness Symons of Vernham Dean: My Lords, when I looked at the Order Paper I could not help wondering about the genesis of the Question. I found it so breathtaking that I thought it could not possibly have come from the noble Lord, Lord Howell of Guildford, who as we all know is a very sensible and serious man. Perhaps he can put it to whoever in the Conservative Party thought that this was a jolly good Question to table that it is customary to finish trying to negotiate one treaty on a subject before proposing alternative wording for another one.
Lord Wallace of Saltaire: My Lords, does the Minister find it a little paradoxical that now that the current Government have adopted Harold Wilson's position on a referendum, the Conservative Opposition have adopted Tony Benn's position, which is that all other governments should be forced to renegotiate on what we think might be changed? Is she aware of any efforts that the Conservative Party may have made to discover whether any serious parties in any other governments within the EU might sympathise with its position?
Baroness Symons of Vernham Dean: My Lords, I am bound to say to the noble Lord, Lord Wallace of Saltaire, that I think he needs to have a little chat with the noble Lord, Lord Howell of Guildford, on that point. I cannot argue for what the Conservative Party has been up to. I know very well what the Government have been up to. The Government have been up to ensuring that we argue for the points I have put before your Lordships on a number of occasions. We have stated those in a White Paper and been open and quite clear about them. Perhaps the noble Lord and the noble Lord from the Opposition Front Bench need to have a quiet word together.
Lord Roberts of Conwy: My Lords, does the noble Baroness agree with the proposition put forward by Giscard d'Estaing this morning that a "no" to the constitution in a referendum is not necessarily "no" to Europe and British membership of the EU?
Baroness Symons of Vernham Dean: Yes, my Lords, I do agree with that. However, I also agree with the other very serious point that Giscard d'Estaing made—that a "no" would mean that Britain would be pushed to the sidelines and lose its influence in the European Union. We cannot quote him on the consequences—perhaps it can be done on other points—and say, "Isn't that right?", without giving the whole quote, which was that we would lose influence in Europe and be pushed to the sidelines—in effect, where we were before 1997, not where we are now.
Lord Harrison: My Lords, does my noble friend agree that the draft treaty does indeed set out and simplify the appropriate roles for the enlarged Union and that failure to ratify the proposed draft treaty will actually increase red tape for British business?
Baroness Symons of Vernham Dean: My Lords, I agree that the draft treaty sets out and simplifies the rules for an enlarged EU. What I particularly welcome about the decision on the referendum, which I believe is the right decision, is that we are now able to stop talking about process and start talking about the substance of this draft treaty. I, for one, welcome that.
Lord Marlesford: My Lords, does the Minister not realise that some of us find it a little curious that the Government appear to have been bounced into agreeing to a meeting on 18 June at which it is intended to agree the final version when, as of yesterday, the current draft was not available to the Government? Indeed, the Minister for Europe told the EU Committee of this House yesterday that the Government did not expect it until 15 May. There really is quite inadequate time between 15 May and 18 June to consider the new version. Parliament will have virtually no opportunity to comment. Given that the matter will take at least a year after any agreement that may be reached on 18 June, surely it would have been better to take a little longer on the preparation as there have been a lot of changes since December.
Baroness Symons of Vernham Dean: My Lords, I do not believe that the Government have been bounced, as the noble Lord puts it, into anything. The Government hope to reach agreement on 18 June. No one can be certain whether agreement will be reached. There are still many difficulties. Indeed, I emphasised the problems with negotiation in my answers to the noble Lord, Lord Howell of Guildford. Those are the problems that the UK Government perceive. No doubt other governments will also have problems. The noble Lord says that too short a time is available. We are very clear

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about our negotiating objectives; we do not need the full draft treaty to see that, but the matter will involve extremely hard work. Of course, your Lordships and another place will rightly want to go through the draft treaty once it is before your Lordships regarding any legislation that the Government bring forward.

Fire and Rescue Services Bill
Lord Triesman: My Lords, on behalf of my noble friend Lord Rooker, I beg to move the Motion standing in his name on the Order Paper.
Moved, That it be an instruction to the Grand Committee to which the Fire and Rescue Services Bill has been committed that they consider the Bill in the following order:

Clauses 1 to 52,

Schedule 1,

Clause 53,

Schedule 2,

Clauses 54 to 62.—(Lord Triesman.)

On Question, Motion agreed to.

Justice (Northern Ireland) Bill [H.L.]
11.32 a.m.
The Parliamentary Under-Secretary of State, Department for Constitutional Affairs (Lord Filkin): My Lords, on behalf of my noble friend the Lord President, I beg to move that the Commons amendments be now considered.
Moved accordingly, and, on Question, Motion agreed to.

COMMONS AMENDMENTS
[The page and line refer to Bill 55 as first printed for the Commons.]
1 After Clause 4, insert the following new clause—
"Removal or suspension from listed judicial offices
In section 7 of the 2002 Act in subsection (5) (agreement of the Lord Chief Justice required to the removal or suspension of a person from a listed judicial office) for "without the agreement or substitute "except after consultation with"."
Lord Filkin: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 1.
For those of us who have worked on this Bill previously it will be no surprise that the Government have taken the opportunity in another place to reintroduce this clause which was removed on Report in this House. Its effect is to amend Section 7(5) of the 2002 Act to remove what would otherwise be the Lord Chief Justice's veto over the removal of a listed judicial office holder after a proper process of inspection, inquiry and hearing.
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I sought at Report to set out clearly why the Government thought that it was important to retain this provision and to offer what I hoped were appropriate reassurances. I am happy to do so again, although perhaps not quite at the same length. I want to start by making it absolutely clear that if we thought that there was any conceivable risk to judicial independence, we would not be taking this step.
I wish to describe what will happen after devolution of justice. Perhaps that is the first point that I should mark. We are not talking about provisions that will come into effect this year. We know not when they will come in. These provisions will come into effect only when devolution has occurred and, subsequent to devolution, when the Government judge that there is sufficient stability and confidence for policing and judicial affairs to be dealt with in Northern Ireland. So we are not talking about the current environment which was discussed in a very interesting debate last night.
I turn to how the process will work under the provisions as amended by the Commons. We have discussed this. They go to the heart of the issue of whether there is any risk that a judge could wrongly be dismissed as a consequence of these measures. We should be clear about who it does not apply to. It will not apply to the removal of a Lord Chief Justice, a Lord Justice of Appeal or a High Court judge appointed before devolution of judicial functions. The removal of those office holders, were they to be found guilty of misbehaviour, would require not only the recommendation of a removal tribunal but also an Address to both Houses of Parliament. Therefore, this clause does not refer at all to that category of judicial office holder.
I turn to the remaining category of judge, I shall seek to put this more succinctly than I did on Report although I hope it was helpful that I talked in deconstructed detail at that stage. In summary, what the 2002 Act says—it is good that it does so—is that before any judge in Northern Ireland can be removed, there has to be a consideration of the case for removal by a tribunal of three people. That is different from what happened previously when effectively it was a decision of the Lord Chancellor. The three people are composed as follows: two of them are judges and one of them is a lay person. That begs the question: who chooses the two judges who will sit on the panel of three? The situation is clear. Those two judicial members will be chosen by the Lord Chief Justice of Northern Ireland in all cases except for High Court judges and above, when the Lord Chancellor will choose those two judges. Noble Lords may ask who will choose them when the Lord Chancellor is abolished—an issue that we are discussing in Select Committee—and the answer to that is the Secretary of State for Constitutional Affairs. He will choose them after consultation with the Lord Chief Justice of England and Wales, the Lord President of the Council in Scotland, and the Lord Chief Justice of Northern Ireland.

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The point I am labouring is that this panel of three will be senior significant judges appointed by people who have the strongest responsibility possible to protect the independence of the judiciary. I go further. The Lord Chief Justice of Northern Ireland can himself decide to chair any tribunal except in respect of High Court judges and above. If he has any concerns at all, he can chair the relevant tribunal himself. If he decides not to do so, it is beyond reason to think that he would not put on to the panel of that tribunal two judges in whom he had considerable confidence regarding their judgment and thoughtfulness. That point does not need to be laboured.
Therefore, the tribunal—it is proper that a tribunal should look into judicial misconduct or incapacity—is dominated by the judiciary but not so dominated that there is no scope for a lay person also to be present to give a view from a wider perspective than just that of the judiciary. We cannot see—I have scratched my head subsequently about this—where there is risk or harm in that. Noble Lords might therefore ask why we are doing this. We are doing it because it sits in the context of Northern Ireland politics and how we try to move forward in those difficult circumstances.
The Government remain firmly committed to the Belfast agreement. We have tried steadfastly to create the conditions that will allow us to get the devolved institutions up and running and operating successfully. It is self-evident to all of us that there have been problems along the way and that the process was never going to be easy. However, the situation in Northern Ireland has improved considerably compared with what it was previously, albeit it is not as good as any of us wish. I refer to the important and timely debate that we had yesterday in that regard.
The criminal justice review flowed directly from the Belfast agreement. It goes to the heart of how you seek to build confidence in the criminal justice system in civil society across all communities in that society in ways that will allow for healing, harmony and for affairs in the future to be run much more in Northern Ireland itself. The Bill is about implementing that review in a way that will help us to move forward.
In short, the Criminal Justice Review led to the Justice (Northern Ireland) Act 2002, but that Act included one measure that was not in the review; namely, a power of veto by the Lord Chief Justice. In the discussions that took place around the Hillsborough agreement, and as part of that agreement, it was argued and the Government accepted that it was not right for any one person to have a power of veto over a decision, or rather a recommendation, made by such a tribunal. I have been privileged to have experience of two Lords Chief Justice for Northern Ireland in my role as Northern Ireland courts Minister, and I find it hard to believe how anyone would doubt the integrity of such people. Nevertheless, in the society of Northern Ireland, one might with a bit of imagination understand why some would feel it important that no one person would ever be able to appoint a judge, or recommend or veto a judge's dismissal. That is at the heart of the issue.
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If I thought that the provision was likely to threaten judicial independence as a consequence, I do not believe that I would be happy to stand at this Dispatch Box. However, for the reasons that I have explained, I cannot see how a tribunal, constituted as it is, could bring forward a recommendation over which a Lord Chief Justice in Northern Ireland would wish to exercise a veto. I have given serious thought to that.
The Hillsborough agreement agreed with that measure because it was part of a process of moving forward. The Government think that this House should support the Commons because we have to be seen to stand by our agreements if we are to put pressure on other people to come up to the mark and stand by theirs. That is the nub of the matter. Therefore, I commend the Commons amendment to the House.
Moved, That the House do agree with the Commons in their Amendment No. 1.—(Lord Filkin.)
11.45 a.m.
Lord Kingslandrose to move Amendment No. 1A, as an amendment to the Motion that this House do agree with the Commons in their Amendment No. 1, leave out "agree" and insert "disagree".
The noble Lord said: My Lords, the subject matter of the amendment has been debated on no fewer than three occasions in your Lordships' House—at Second Reading, in Committee and on Report—so I shall be brief in moving my amendment.
Until the passage of the Justice (Northern Ireland) Act 2002, the dismissal of High Court judges in Northern Ireland, like the dismissal of High Court judges in England and Wales, could take place only on an address by both Houses of Parliament to the Queen.
When that Act is implemented, the situation for newly appointed High Court judges in Northern Ireland, but not for any class of High Court judges in England and Wales, will change. Henceforth, alleged misdemeanours will be considered by a committee consisting of two senior judges and one lay person. If that committee subsequently recommends dismissal, it can take effect only if consent is given by the Lord Chief Justice of Northern Ireland. In other words, the Lord Chief Justice of Northern Ireland has a veto.
If Clause 5 were to be enacted, the situation would change because the veto of the Lord Chief Justice of Northern Ireland would be removed. Thus, in the space of less than two years, noble Lords would be facing the loss by newly appointed High Court judges in Northern Ireland of not one constitutional protection, but two. Newly appointed High Court judges in Northern Ireland no longer enjoy the protection of an address by both Houses of Parliament to the Queen, by virtue of the 2002 Act. In addition, if the Bill is passed, they will lose the protection of the requirement that the Lord Chief Justice of Northern Ireland concurs with their dismissal before it takes place.

895
What a contrast with the situation in England and Wales. Under the Government's proposals in the Constitutional Reform Bill, High Court judges in England and Wales will not only retain the protection of an address by both Houses of Parliament but also, if the Bill goes through in its present form, acquire the additional protection of the consent of the Lord Chief Justice of England and Wales. What kind of signal is that sending to the judiciary in Northern Ireland?
Today, and on previous occasions, in your Lordships' House, the Minister has given a number of explanations of why the change is required. First, the noble Lord says that it is required by the Criminal Justice Review. In my submission, that is a groundless suggestion. The conclusions of the review were known to the Government when the 2002 Act went through Parliament yet the veto of the Lord Chief Justice of Northern Ireland was inserted into that Act. Moroever, nothing in the text of the review requires the veto of the Lord Chief Justice of Northern Ireland to be removed.
Secondly, it has been said, not only by the Minister, but by his honourable friend in another place, that the veto is unnecessary in any case because, in practice, it would never be used. If the veto is unnecessary, why on earth did the Government strive so hard to insert it in the 2002 Act? Equally, if it is unimportant, why are they striving so hard to remove it from the Bill?
The third reason that the Minister has given is that the requirement to remove the veto of the Lord Chief Justice of Northern Ireland is part of the Hillsborough agreement. That agreement is not a treaty. It does not bind your Lordships' House or another place. It is a political agreement. Noble Lords are entitled to take an entirely fresh view about whether the contents of the agreement merit enshrinement in an Act of Parliament. Moreover, if, in the opinion of the Minister the veto will never be used, why was it even on the agenda of the Hillsborough agreement? If it is so unimportant, why did it trouble the negotiators at Hillsborough?
The Minister has given a fourth reason this morning, which is that the membership of the disciplinary committee will be composed of senior judges chosen by the Lord Chancellor. We all agree that Lord Chancellors, present and past, have all been extremely well qualified to make such a selection. However, if the Government get their way in the Constitutional Reform Bill, we understand that the Lord Chancellor will be replaced by a Secretary of State for Constitutional Affairs who, in all likelihood, will be a political animal, probably without a legal qualification. What qualifications will the Secretary of State for Constitutional Affairs, probably located in the House of Commons, have in future to choose those senior members of the tribunal?
The most startling contrast of all is that between what the Government are trying to do in their Constitutional Reform Bill and in this Bill. In the Constitutional Reform Bill, they are saying that the judges do not have sufficient protection and that
896
Bill is designed to give them additional protection. I find it extremely difficult not to conclude that the philosophy underlying what the Government are trying to do in this Bill moves in the opposite direction; and, in my submission, there are, as a consequence, real dangers to the United Kingdom.
The tradition of judicial independence in Northern Ireland is long-standing and deep-seated, no better manifested than in the courageous decisions of so many High Court judges during the past 35 years. We must not put that at risk. If the Government want to have a system to protect judges which matches the quality of the system we have in England and Wales, I urge them to accept my amendment, wait until the Constitutional Reform Bill is enacted and then reconsider the matter. I beg to move.
Moved, as an amendment to the Motion that the House do agree with the Commons in their Amendment No. 1, leave out "agree" and insert "disagree".—(Lord Kingsland.)
Lord Filkin: My Lords, I will seize the moment. I will not respond at great length because we have previously engaged in these issues. I should make a slight correction. I am advised that when I opened the debate on the amendment, I referred to the Lord Chancellor having a veto when of course I meant the Lord Chief Justice. I am also in favour of the Lord Chancellor having lots of vetoes—but perhaps that is another matter.
The issue turns on the question: is there risk and why does it matter? I can but emphasise the points I made previously. I cannot conceive how there is a risk that a judge could be wrongly dismissed—and that would matter massively if it were so—when the procedure for investigating an apparent complaint or an issue of incapacity is so much under the control of the Lord Chief Justice of Northern Ireland. And so it should be. It is right that the Lord Chief Justice has the ability to chair the committee and appoint both its judicial members. It is also right in those very rare circumstances that it would not be he because they are of the High Court or above, and that they are determined by the Lord Chancellor or, subsequently, the Secretary of State for Constitutional Affairs, after consultation with the most senior judicial figures in the United Kingdom.
I should also have marked the fact that the Lord Chief Justice would also determine the rules and procedures of the tribunal. Therefore it is a process properly under the authority, shadow, influence and direction of the Lord Chief Justice of Northern Ireland. But that is distinct from saying that the Lord Chief Justice of Northern Ireland, acting alone, should have the ability either to sack or to block the dismissal of a judge. Even though I have put on record my view about the quality and integrity of the Lord Chief Justices I have met in Northern Ireland, it does not require much imagination to understand why that issue might cause anxiety in some quarters.

897
The Lord Chief Justice would not be able to block a recommendation from a tribunal, but would be able to ensure that its recommendation was likely to be as fair and as proper as it is conceivable to imagine. And it matters because we have to stand by our agreements if we are to expect others to do so. There is therefore no harm and this measure, as affirmed by the Commons, is right and proper for this House to support.
Lord Kingsland: My Lords, I am grateful to the noble Lord for his response and I shall be even briefer. I want to react only to one matter that he raised concerning the Lord Chief Justice of Northern Ireland being able to block a disciplinary tribunal decision.
I wonder whether the noble Lord has chosen the right description for such potential action by the Lord Chief Justice of Northern Ireland. If, as I hope he will, the noble Lord accepts that Lord Chief Justices of Northern Ireland have been appointments not only of impeccable quality but also of unimpeachable independence, the only reason why a Lord Chief Justice of Northern Ireland would wish to veto the decision of a disciplinary committee would be on jurisprudential grounds. In my submission, the word "block", in those circumstances, is wholly inappropriate.
The Minister and I have had several exchanges on this matter during the past month. I have great respect for him. He knows that on this occasion I disagree and therefore I would like to test the opinion of the House.
11.56 a.m.
On Question, Whether the said amendment (No. 1A) shall be agreed to?
Their Lordships divided: Contents, 74; Not-Contents, 134.

Division No. 1

CONTENTS

Ackner, L.

Hodgson of Astley Abbotts, L.

Anelay of St Johns, B.

Home, E.

Astor of Hever, L.

Howe, E.

Biffen, L.

Howe of Aberavon, L.

Blackwell, L.

Howell of Guildford, L.

Blatch, B.

Hunt of Wirral, L.

Bowness, L.

Inge, L.

Brooke of Sutton Mandeville, L.

Jenkin of Roding, L.

Brougham and Vaux, L.

Kingsland, L.

Buscombe, B.

Lang of Monkton, L.

Byford, B.

Liverpool, E.

Campbell of Alloway, L.

Luke, L.

Campbell of Croy, L.

Lyell, L.

Carlisle of Bucklow, L.

MacGregor of Pulham Market, L.

Chester, Bp.

Cope of Berkeley, L. [Teller]

Mancroft, L.

Dean of Harptree, L.

Marlesford, L.

Denham, L.

Mayhew of Twysden, L.

Dixon-Smith, L.

Miller of Hendon, B.

Dundee, E.

Molyneaux of Killead, L.

Eccles of Moulton, B.

Monro of Langholm, L.

Elton, L.

Montrose, D.

Ferrers, E.

Moore of Wolvercote, L.

Gardner of Parkes, B.

Noakes, B.

Glentoran, L.

Northesk, E.

Higgins, L.

Norton of Louth, L.

898

O'Cathain, B.

Rotherwick, L.

Palmer, L.

Saltoun of Abernethy, Ly.

Park of Monmouth, B.

Seccombe, B. [Teller]

Perry of Southwark, B.

Selborne, E.

Peyton of Yeovil, L.

Selsdon, L.

Pilkington of Oxenford, L.

Swinfen, L.

Rawlings, B.

Trumpington, B.

Reay, L.

Tugendhat, L.

Wade of Chorlton, L.

Rees, L.

Wakeham, L.

Roberts of Convey, L.

Warnock, B.

Rogan, L.

Windlesham, L.

NOT-CONTENTS

Acton, L.

Hayman, B.

Addington, L.

Hilton of Eggardon, B.

Ahmed, L.

Hogg of Cumbernauld, L.

Allenby of Megiddo, V.

Hollis of Heigham, B.

Alton of Liverpool, L.

Hooson, L.

Amos, B. (Lord Presia'ent of the Council)

Howells of St, Davids, B.

Howie of Troon, L.

Andrews, B.

Hoyle, L.

Archer of Sandwell, L.

Hughes of Woodside, L.

Armstrong of Ilminster, L.

Hunt of Kings Heath, L.

Ashley of Stoke, L.

Irvine of Lairg, L.

Ashton of Upholland, B.

Jay of Paddington, B.

Beaumont of Whitley, L.

Joffe, L.

Berkeley, L.

King of West Bromwich L.

Bhatia, L.

Kirkhill, L.

Billingham, B.

Lea of Crondall, L.

Blackstone, B.

Lipsey, L.

Borrie, L.

Listowel, E.

Boston of Faversham, L.

Livsey of Talgarth, L.

Bradshaw, L.

McCarthy, L.

Brookman, L.

McIntosh of Haringey, L.

Burlison, L.

McIntosh of Hudnall, B.

Campbell-Savours, L.

MacKenzie of Culkein, L.

Carter, L.

Mackenzie of Framwellgate, L.

Christopher, L.

Maclennan of Rogart, L.

Clark of Windermere, L.

Marsh, L.

Clarke of Hampstead, L.

Masham of Ilton, B.

Clinton-Davis, L.

Massey of Darwen, B.

Cohen of Pimlico, B.

Methuen, L.

Corbett of Castle Vale, L.

Morgan of Huyton, B.

Craig of Radley, L.

Morris of Aberavon, L.

Crawley, B.

Morris of Manchester, L.

Dahrendorf, L.

Murray of Epping Forest, L.

David, B.

Northover, B.

Davies of Coity, L.

Ouseley, L.

Dean of Thornton-le-Fylde, B.

Patel, L.

Desai, L.

Pendry, L.

Dholakia, L.

Prys-Davies, L.

Donoughue, L.

Ramsay of Cartvale, B.

Dubs, L.

Razzall, L.

Elder, L.

Rendell of Babergh, B.

Evans of Parkside, L.

Richard, L.

Evans of Temple Guiting, L.

Rooker, L.

Falconer of Thoroton, L. (Lord Chancellor)

Roper, L.

Farrington of Ribbleton, B.

Sainsbury of Turville, L.

Faulkner of Worcester, L.

Scotland of Asthal, B.

Filkin, L.

Scott of Needham Market, B.

Gale, B.

Sewel, L.

Gibson of Market Rasen, B.

Sheldon, L.

Gilbert, L.

Shutt of Greetland, L.

Golding, B.

Simon, V.

Goodhart, L.

Smith of Clifton, L.

Gould of Potternewton, B.

Stern, B.

Graham of Edmonton, L.

Stone of Blackheath, L.

Greengross, B.

Strabolgi, L.

Grenfell, L.

Sutherland of Houndwood, L.

Grocott, L, [Teller]

Symons of Vernham Dean, B.

Harris of Richmond, B.

Taylor of Blackburn, L.

Harrison, L.

Temple-Morris, L.

Haskel, L.

Tenby, V.

Thomas of Gresford, L.

899

Thomas of Walliswood. B.

Whitaker, B.

Triesman, L. [Teller]

Whitty, L.

Turner of Camden, B.

Wilkins, B.

Wallace of Saltaire, L.

Williams of Crosby, B.

Warner, L.

Williams of Elvel, L.

Warwick of Undercliffe, B.

Williamson of Horton, L.

Weatherill. L.

Woolmer of Leeds, L.

Resolved in the negative, and amendment disagreed to accordingly.
On Question, Motion agreed to.
12.6 p.m.

COMMONS AMENDMENT
2 Clause 11, page 8, line 20, leave out "and" and insert—00
"() after paragraph (3) insert—
"(3A) If, on an application made by a constable, a justice of the peace is satisfied that—
(a) there are reasonable grounds for believing that a person who is liable to arrest under paragraph (3) is to be found on the premises specified in the application; and
(b) any of the conditions specified in paragraph (3B) is satisfied,
he may issue a warrant authorising a constable to enter those premises (if need be by force) and search them for the purpose of arresting that person.
(3B) The conditions mentioned in paragraph (3A) are—
(a) that it is not practicable to communicate with any person entitled to grant entry to the premises;
(b) that entry to the premises will not be granted unless a warrant is produced;
(c) that the purpose of a search of the premises may be frustrated or seriously prejudiced unless a constable arriving at the premises can secure immediate entry to them."; and"
Lord Filkin: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 2. Because of some helpful, aggressive grouping by Opposition Front Benches, that amendment is grouped with Commons Amendments Nos. 8, 7, 3, 4, 5, 11, 9, 10 and 6. In the hope that it will help to shorten the debate, I shall try to explain in my opening remarks what those amendments are about.
Amendments Nos. 2 and 8 are intended to provide the Police Service of Northern Ireland with powers of entry, which can be exercised to effect an arrest under the powers of arrest without warrant under Article 6(3) of the Criminal Justice (Northern Ireland) Order 2003. The power in Amendment No. 2 applies in non-scheduled cases and the power in Amendment No. 8 applies in scheduled cases. The powers of entry can be exercised only if the police have been granted a warrant by a justice of the peace.
Amendment No. 2 provides that if a person is liable to be arrested under Article 6(3), a justice of the peace may issue a warrant authorising a constable to enter the specified premises for the purpose of effecting the arrest.
Amendment No. 8 provides that if a person is liable to be arrested under Article 2(4), a JP may issue a warrant authorising a constable to enter specified premises, again, for the purposes of effecting the arrest.
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The aim of the amendments is to enhance the powers of arrest available to the Police Service of Northern Ireland in respect of a person who breaches, or is likely to breach, a condition of his bail. I pay tribute to the noble Lord, Lord Glentoran, for encouraging us to look at these issues, which we have done, subsequent to our earlier discussions with the Police Service of Northern Ireland. We believe that they appropriately strengthen the powers of the PSNI.
However, as part of that, we had to ensure that the issue of Article 8 of the ECHR, with which the exercise of such a power would have engaged, was appropriately addressed and that Article 8(2) was complied with and the power exercised proportionately. That is why a justice of the peace must make that judgment and issue a warrant.
All the safeguards under Articles 17 and 18 of the Police and Criminal Evidence (Northern Ireland) Order 1989 will apply to the application for, and execution of, the warrant.
Amendment No. 7 makes the offences under paragraphs 1(1) and (2) of Schedule 2 to the Bill scheduled offences. Schedule 2 to the Bill creates two new offences of absconding while on bail in a scheduled case. These offences replace the offence of absconding while on bail under Section 67 of the Terrorism Act 2000.
In explanation of Amendments Nos. 3 to 5 and 11, Clause 12 currently provides that prisoners who are subject to compulsory transfers may be transferred to England and Wales. The amendments provide that prisoners may be transferred to either Scotland or England and Wales.
Before Amendments Nos. 9 and 10 were accepted in another place, Schedule 3 allowed judges, magistrates, coroners, social security commissioners, the High Court Master (Taxing) and the High Court Master (Enforcement of Judgments) to give directions to court security officers by virtue of the fact that they were defined as "persons in authority". However, other Masters of the High Court—for example, those who deal with bankruptcy—are not designated as "persons in authority", and therefore those Masters would not have been able to give directions to court security officers. The amendments address that issue.
I trust that the amendments do not cause any disquiet to noble Lords, which is why I suspect they have been agreed for grouping in this manner.
Moved, That the House do agree with the Commons in their Amendment No. 2.—(Lord Filkin.)
On Question, Motion agreed to.

COMMONS AMENDMENTS
3 Clause 12, page 8, line 42, leave out "England and Wales" and insert "another part of the United Kingdom",
4 Page 9, line 1, leave out "England and Wales" and insert "that other part",
5 Page 9, line 22, at end insert—
"(7) In paragraph 13—
(a) in sub-paragraph (1) after "1(1)(a)" insert "or (2A)(a)";
(b) in sub-paragraph (2) after "1(1)(b)" insert "or (2A)(b)"."
6 Clause 22, page 11, line 9, leave out subsection (2)
7 Schedule 2, page 14, line 14, at end insert—
"(5) In Part 1 of Schedule 9 to the Terrorism Act 2000 (c. 11) (scheduled offences) after paragraph 22 insert—

Justice (Northern Ireland) Act 2004
22A Offences under paragraph 1(1) or (2) of Schedule 2 to the Justice (Northern Ireland) Act 2004 (absconding by persons admitted to bail in respect of a scheduled offence), subject to note 1 below.""
8 Page 14, line 39, at end insert—
"(5) If, on an application made by a constable, a justice of the peace is satisfied that—

(a) there are reasonable grounds for believing that a person who is liable to arrest under sub-paragraph (4) is to be found on premises specified in the application; and

(b) any of the conditions specified in sub-paragraph (6) is satisfied,

he may issue a warrant authorising a constable to enter those premises (if need be by force) and search them for the purpose of arresting that person
(6) The conditions mentioned in sub-paragraph (5) are—

(a) that it is not practicable to communicate with any person entitled to grant entry to the premises;

(b) that entry to the premises will not be granted unless a warrant is produced;

(c) that the purpose of a search of the premises may be frustrated or seriously prejudiced unless a constable arriving at the premises can secure immediate entry to them."

9 Schedule 3, page 17, line 27, at end insert—
"() a statutory officer (within the meaning of section 70 of the Judicature (Northern Ireland) Act 1978) who is exercising functions in the building,"
10 Page 17, line 28, leave out ", (c), (d) or (e)" and insert "or (c)"
11 In the Title, line 7, leave out "England and Wales" and insert another part of the United Kingdom"
Lord Filkin: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 3 to 11.
Moved, That the House do agree with the Commons in their Amendments Nos. 3 to 11.—(Lord Filkin.)
On Question, Motion agreed to.

Employment Relations Bill
12.12 p.m.
Baroness Farrington of Ribbleton: My Lords, I beg to move that the House do now adjourn during pleasure until quarter past twelve.
Earl Ferrers: Why?
Baroness Farrington of Ribbleton: My Lords, I fear that the Whip on duty made an error of judgment about timing.
Earl Ferrers: My Lords, I thank the noble Baroness for such a courteous self-reprimand.
Baroness Farrington of Ribbleton: My Lords, I beg leave to withdraw the Motion.
Motion, by leave, withdrawn.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville): My Lords, I apologise for the slight delay.
I beg to move that this Bill be now read a second time. The aim of the Government is a stable and thriving labour market characterised by high employment, flexibility and choice, and a constructive climate of employment relations.
Through the Employment Relations Act 1999 and other legislation, we have put in place a framework for fair employment and fair pay, ensuring protections for the most vulnerable workers. We are moving from competition based on low pay and low standards to competition based on best practice, high performance and a committed, motivated workforce.
Vital to the success of this strategy has been a shift in workplace culture. We have worked with our key stakeholders to foster and support a better climate of employment relations based on partnership between employers and employees in the workplace. Over the past seven years we have seen a move towards more dialogue, and more productive workplaces. A new trend is being established on which we want to build.
The evidence shows that our policies are working. Better employment and trade union rights have not jeopardised jobs or led to industrial unrest as predicted. Quite the opposite. The UK now has the highest ever level of employment and the growth in jobs goes from strength to strength. The number of people in work at February 2004 was 28.3 million, up 183,000 on the previous three months and up 318,000 on a year ago.
We have created an environment in which business can grow and prosper. Job creation in the private sector is strong, especially in the retail, distribution, hotel and restaurant sectors. Employment in small and medium-sized enterprises has risen by over 637,000 since 1997. It is now our task to build on these achievements, moving towards high performance workplaces and worthwhile jobs.
It is against this background that I am pleased to stand before the House today to debate the Employment Relations Bill. The Bill draws together the key elements of our strategy and builds on the success of the 1999 Employment Relations Act.
I shall now outline to the House the ways in which the Bill will achieve this. We want high performance workplaces where employees are informed, involved and committed to the success of their business. We believe that the best employers thrive through good employment conditions and good workplace relations. Many of our most successful companies already work in partnership; for example, companies such as the Compass Group and Legal and General. The information and consultation directive, which the Bill

903
implements, will ensure that this standard will apply across the large and medium workplaces. Employees will have the right to be informed and consulted on key decisions affecting their future. Stories about employees hearing of redundancies by text or on the radio have abounded in the media. We do not think that that is an acceptable way to conduct employment relations and neither do the best companies.
Draft implementing regulations, which the Government have already published, are based on a landmark framework agreement between the CBI and the TUC. We have also consulted extensively with other stakeholders on the new provisions, first on the principles of information and consultation, and again on the detail of the draft regulations, as well as holding a series of roundtable discussions around the country.
We have been mindful not to ride roughshod over existing arrangements or to prescribe a "one size fits all" solution. The draft regulations will enable firms to tailor arrangements that suit their needs. Employers will of course be free to manage and to take decisions as they see fit, but the opportunity for ongoing consultation will lead to better decisions and help the process of change by creating a climate of trust and co-operation.
I turn now to statutory recognition, which is dealt with in Part 1 of the Bill. The Employment Relations Act 1999 was a landmark piece of legislation. It enshrined in law the cornerstones of our fairness at work agenda—fair minimum standards, a new culture of partnership and family-friendly working. At the centrepiece of the 1999 Act was a new procedure for trade union recognition and derecognition in the workplace, where the majority of the workforce so choose. The Government gave an undertaking to review the operation of the 1999 Act and in July 2002 we delivered on that promise with the launch of a detailed and wide ranging review.
It was said at the time that the new recognition procedure was introduced that it would be unworkable and would lead to disputes. I am happy to report to the House that the review of the 1999 Act shows that quite the reverse is true. The statutory recognition procedure has been a resounding success. We wanted it to encourage parties to resolve issues voluntarily. That is exactly what has occurred. More than a thousand deals for voluntary recognition have been agreed between employers and unions since 1998. In contrast, the Central Arbitration Committee had made 89 declarations of statutory recognition by the end of March 2004.
The statutory procedure is workable for both employers and unions and has enabled the timely settlement of recognition applications. Contrary to the gloomy forecasts that the new procedure would encourage strike activity and jeopardise jobs, stoppages from industrial disputes are at their lowest since the 1920s.
We have therefore concluded that the overall structure of the procedure, its criteria and voting thresholds, are sound. There is no case for change.
904
However, the review has identified a number of areas where the procedures could operate more efficiently and successfully.
Part 1 also contains important new measures to prevent the intimidation of workers during the period of recognition ballots, whether by a union or by an employer. Intimidation has been a problem in only a small number of cases to date, but we believe it is important that we take action to stop this type of reprehensible behaviour growing and undermining the success of the statutory procedure. There are two elements to our approach. First, the Bill ensures that access meetings between the union and the workers in the bargaining unit during the ballot period are private.
Secondly, we are importing tried and tested standards of general elections into recognition ballots. The Bill places a new duty on both employers and unions not to engage in improper campaigning activity. That will ensure that unions and employers cannot induce, coerce or threaten workers into voting a particular way or use undue influence to affect the outcome of a vote. These measures are fair and balanced. They send a clear message to both employers and unions that intimidatory behaviour is unacceptable and will not be tolerated.
The Bill contains a power for the Secretary of State to make regulations setting out what the remedies for breach of these provisions should be. It is our intention to bring forward amendments that will set out the remedies on the face of the Bill. We have taken the opportunity to consult fully with employer organisations and unions before finalising these policies.
I turn now to another major aspect of the Bill: the power to make money available for the purposes of union modernisation. I know this issue has attracted some criticism in the other place. So let me spend some time setting out the background and purpose of the fund.
We believe that unions have an important role to play in society. They are the collective voice of millions of workers throughout this country and they have a vital role to play in taking forward partnership at work. Modern efficient unions working closely with employers can help to encourage high-performance workplaces and a motivated productive workforce. Unions like other organisations need targeted support to enable them to adapt to the changing labour market, to modernise their operations and to meet the needs of their increasingly diverse membership.
The union modernisation fund will help them on the path to achieving that. We are talking about a relatively modest sum of money—£5 million to £10 million—spread over several years, to support innovative projects that would not otherwise take place.
I should like to set the record straight at the outset and say that the fund is not to be used to support recruitment drives by unions or their day-to-day activities; and it cannot be diverted for political purposes. The law on the use of political funds is clear. Unions are not permitted to spend money on political objects—including the making of donations to political parties—unless they have a separate political fund for that purpose. The law prevents them using

905
money from their general fund for such purposes or from transferring money from that fund to their political funds. Monies allocated from the union modernisation fund will go into unions' general funds and therefore will be clearly ring fenced.
The allocation of funds and the monitoring of their use will be carefully controlled. We envisage that it will operate on similar lines to the partnership at work fund. If so, unions will be asked to bid periodically for funding, and their applications would be assessed against clear selection criteria. The process would be overseen by an independent supervisory body that could advise Ministers on the ranking of projects, and, more generally, on the fund's overall operation. We would from the outset develop a clear evaluation strategy to measure the effects of the fund and ensure it achieves its stated objectives.
We intend to issue detailed rules on the fund for consultation with all stakeholders in the autumn. Informal prior consultations with key stakeholders have already begun.
I want to say a few words about the other key elements of the Bill. Part 2 deals with the law on industrial action. The evidence from the review is that on the whole the law on industrial action works well. All parties to a dispute want a speedy resolution; and the evidence is that the present law supports that. The review of the 1999 Act concluded that the eight-week protections are working adequately. Analyses by the Office for National Statistics indicate that 93 per cent of all industrial action lasts for less than eight weeks. The essential features of industrial action law will therefore remain the same. However, there are areas where we believe the law could be usefully clarified.
Noble Lords may be aware of the regrettable events at the Friction Dynamics plant at Caernarfon. Striking workers were prevented from returning to work and subsequently sacked by their employer. Although an employment tribunal found that they had been unfairly dismissed, the workers and their families have suffered unnecessarily; and we do not wish to see history repeat itself. The Bill clarifies that days when employees on lawfully organised official strike action are locked out from their workplace do not count towards the eight week protected period for striking workers.
It emerged from the Friction Dynamics case that the employer merely paid lip service to the procedures for resolving disputes. We are taking measures to ensure that does not happen again by clarifying the reasonable steps which employers and unions are required to take to resolve a dispute.
The review of the 1999 Act also concluded that the current law on information, which unions are required to provide to employers prior to industrial action, could be simplified and clarified. The Bill contains provisions to address that.
Part 3 deals with an important set of rights, which stem from the 2002 European Court of Human Rights' judgment in the case of Wilson and Palmer. The judgment concluded that UK trade union law breached Article 11 of the European Convention on
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Human Rights. We take our international obligations very seriously. We have examined the judgment in detail as part of the review and consulted with stakeholders on our proposals to amend the law. The provisions will make it unlawful for employers to offer inducements to union members to relinquish key union rights. They provide a clear entitlement for union members to use the services of their union, and will ensure that workers as well as employees are covered by these essential protections. We have also safeguarded key business concerns and protected the ability of employers to offer enhanced terms to key workers.
I draw the attention of the House to another very important provision in Part 3, which deals with the racist infiltration of unions by far right extremists. Unions are dedicated to the promotion of tolerance and equality. The actions of those who seek to undermine unions and use them as a vehicle to promote racism and xenophobia are deplorable. There is no place for such views within unions. I am pleased that we are bringing forward measures to address that. The Commission for Racial Equality supports those measures.
I have set out some of the Bill's key features. I shall mention very briefly some of the other measures. We are introducing a set of provisions to improve enforcement of the national minimum wage, as a result of a small consultation exercise that we carried out last summer. We propose to bring forward one further measure to enable enforcement officers to withdraw or amend enforcement and penalty notices where they have made an error or new evidence has come to light.
The Bill also clarifies the right to be accompanied at disciplinary and grievance hearings. It makes improvements to the procedures of the certification officer and will streamline union operations, as recommended by the Better Regulation Task Force.
Finally, we propose to bring forward an amendment to the Bill, which will provide protections from detriment and dismissal for employees who undertake jury service. The Bill will further our partnership agenda and build on the solid foundations laid down in the Employment Relations Act 1999. It does not make radical changes to the balance of trade union and employment law but brings forward a set of sensible provisions, which mainly improve the operation of existing legislation.
We recognise that there are parts of the Bill about which both employer organisations and unions have concerns, but the measures being taken forward are based on extensive consultation. Overall, we believe that we have got the balance right. The TUC has welcomed many of the changes proposed in the Bill and the CBI has broadly welcomed the outcome of the review. It states:
"The Employment Relations Act was intended to encourage the development of more dialogue and less confrontation at the workplace. The CBI strongly supports such objectives and the broad thrust of the Government's Review".

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There is a wealth of expertise and experience in industrial relations matters in this House. I look forward to the debate on the Bill and to a constructive and detailed examination of it in Committee. I commend the Bill to the House.
Moved, That the Bill be now read a second time.—(Lord Sainsbury of Turville.)
12.30 p.m.
Baroness Miller of Hendon: My Lords, this is the fourth major Bill on employment relations that the Government have introduced since they came into office. That is, without all the references to the subject in other Acts, and to say nothing of statutory instruments too numerous to count.
Before us today we have another stage in the drop by drop dismantling of the employment legislation enacted under the previous government, which brought order out of the chaos of industrial relations that had resulted in the United Kingdom being rightly described as the "sick man of Europe".
The Government are now introducing the Bill, which is very largely intended to take another slice off the salami of the industrial relations regime that served the economy so well during the 1980s and most of the 1990s. The Secretary of State told the other place:
"The recognition arrangements that we put in place in the Employment Relations Act 1999 have been a resounding success".—[Official Report, Commons, 14/1/04; col. 823.]
On the American principle of, "if it ain't broke, don't fix it", why are we being asked to tinker with the recognition arrangements in the Bill? Answering myself—I believe that it is further to strengthen the hands of the unions.
Perhaps I may remind your Lordships that the 1999 Act is based on the Government's White Paper, Fairness at Work, which was the subject of detailed and widespread consultation. Barely had the ink dried on the Act when, on 11 July 2002, the Government announced a review of it, and this Bill is the consequence. As originally presented to Parliament, this Bill contained 45 clauses and two schedules. As my honourable friend the Member for Edddisbury predicted at Second Reading in the other place, it could grow upwards and outwards rapidly. Indeed, it did. It began with 45 clauses, but like Topsy, it has just "growed" to 55 clauses.
Let me make it clear that it is not our view that everything in this Bill is bad, or that everything is unnecessary, as the noble Lord often tells me. On the contrary, just like the Curate's egg, it is quite good in parts. First and foremost, we join the CBI, the British Chambers of Commerce, the Institute of Directors, and others, in welcoming what is not in the Bill—the decision not to extend the union recognition rights to small businesses. I suspect, from remarks made by some Labour Members in the other place, that might be just a temporary reprieve until the Government introduce yet another employment Bill. We welcome the fact that pensions are not included in this
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legislation, and the fact that the eight-week time limit of protection against dismissal of strikers has not been extended, except for adding on lock-out days.
The CBI, in giving a limited welcome to the Bill, points out:
"The current legislation which is still new … appears to be working quite well".
It does, however, have some reservations about certain of the Bill's provisions, on which we shall be seeking clarification at a later stage. They include the proposed new consultation proposals. Why are these provisions, which are based on an EC directive, given effect in the Bill, rather than by a statutory instrument, as I believe is the usual practice? Also, my impression is that the Bill goes further than is required by the directive. Perhaps the Minister might comment on that when replying to the debate. If he cannot do so now, as he courteously offered to discuss any problems that I have in a meeting before the next stage, perhaps we can put that on the agenda.
The CBI, based on its members' experience, says:
"Recognition campaigns at the workplace are divisive and detrimental to performance".
The CBI has serious concerns that new proposed duties on employers to supply information to the unions, and the power of the Central Arbitration Committee to end the period for agreement about bargaining units, seriously erode the time frame for employers—and to what end? What abuses of the status quo are these two further turns of the screw designed to remedy? Perhaps the Minister could address that when he replies.
We are also concerned that there is no qualification for the duration of union membership before a worker is qualified to be counted in a demand for recognition. It seems that he need not even have paid a subscription. We shall seek to remedy this potential abuse but we trust that in the interest of fairness the Government and the unions would agree that this is a proper safeguard. The Engineering Employers' Federation suggests:
"Each of the proposed changes may, in themselves, be relatively small, but the cumulative effect of all of them is potentially quite significant".
For example, the first part of the Bill, expanded into 20 clauses, deal with union recognition. Clause 10 amends two paragraphs of Schedule A1 to the 1992 Act by altering the words "pay, hours or holidays", to,
"all of the following: pay, hours or holidays",
which the Bill now says will be called "the core topics". I should be grateful to hear an explanation of the significance of this distinction, which appears to be a distinction without a difference.
Of greater importance is the introduction of postal voting, for,
"workers absent from ballot at workplace".
On the face of it, it might appear to be reasonable for workers who do not attend at the designated workplace—itinerant workers and workers seconded to other places of employment to be able to participate in the ballot. That would be subject to the caveat that the CAC should be responsible for

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ensuring that there are adequate precautions against fraud. It seems to me that some sort of cat was inadvertently let out of the bag at Second Reading in the other place. The honourable Member for Warrington, North asked the Secretary of State to,
"look once again at the rules on trade union recognition ballots, as, in effect, they count abstentions as no votes".
The Secretary of State replied that,
"we shall be tightening up on that aspect … under the current Bill".—[Official Report, Commons, 14/1/04; cols. 823–24.]
I am advised that, in fact, Clause 7 does no such thing. Giving voting facilities to workers who it is known will be absent from the workplace is perfectly proper, but placing an interpretation either way on abstentions is something else and is entirely unacceptable. The only legitimate interpretation that can be placed on the fact that a person did not vote is that he did not vote. I invite the Minister to make it clear that that might have been an off-the-cuff remark of his colleague, not an interpretation of the Act by the Government. Such a clarification by the Minister today would save us the trouble of seeking it in an amendment.
I note that the CAC does not have procedural rules for its operations. This too is unacceptable, and we shall be calling on the Government to promulgate them, so that this powerful body has operating rules, like any other quasi-judicial body.
I will talk about the three important provisions that were introduced into the Bill during its passage through the other place. One was the change of the law as to dismissal during strike, which I have already mentioned. However, we will look to the Government to provide a clear legal definition of the word "lock-out", as distinct from any rhetorical term of abuse that is sometimes used in the course of a trade dispute.
Secondly, in Committee in the other place the Government introduced new provisions by means of convoluted amendments to the 1992 Act, which in effect enable unions to expel members for racism or for support for the BNP. We do not disagree with these worthy objectives, but care must be taken to ensure that this powerful weapon is not used by an unscrupulous leadership to get rid of political opponents, or even those who might campaign in opposition to their policies. We will need to look carefully at the clause, simply to see that it does not go too far, or further than the Government intend.
The third important provision, in Clause 51, is the provision of a hand out. The Minister said that it would be between £5 million and £10 million, but I am advised that it is probably £10 million to £15 million. That amount is just to start with, with possibly more to come. It will be given to the trade unions for what the marginal note euphemistically calls "modernisation". There is no ceiling or time limit on this open-ended fund. When you look at the possible uses of that money, your Lordships will see that it need not have anything to do with modernisation, for it can be used to,
"improve the carrying out of any of its existing functions".
Does this include the provision of strike pay? It can be used to,
"carry out any new function".
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How wide is the word "any"? Does it include political campaigning? I heard what the Minister said in his opening speech, but the Bill says that it can be used to,
"increase the range of services it offers to persons who … may become members".
That does not look as if it cannot be used for recruiting—in other words, to enable unions to offer inducements to persons to join the union.
Many noble Lords might have read today a report of Digby Jones' speech to the Institute of Directors conference yesterday, where he argued that taxpayers' money should not go to what he described as a lobby group. I think that he said something like an "irrelevant lobby group", but I was being more polite than that. The fact is that not just that subsection, but the whole of the so-called modernisation money could be nothing much more than a blatant bribe, unless all these points are clarified. In so far as a union uses the money, which it would have provided out of its own funds for its normal union services, by means of using it that way if they are allowed to, by means of some creative book-keeping, it would not be difficult to find that the taxpayers' money was recycled into political donations to the Labour party.
Perhaps it is indicative of the tenor of the Government's altitude to even-handedness in this Bill that when my honourable friends in the other place introduced an amendment against intimidation of employees in recognition ballots, it was negatived, and I believe that it was whipped by the Government. I note again what the Minister said today, and I am happy for him to correct me on that point if I have been misinformed about the result of the vote on that amendment. If it is not so, we will be introducing a similar amendment in Committee. But on the matter of intimidation, the Government have introduced Clause 28, described in the marginal note as,
"Inducements relating to collective bargaining"—
which has the result of repealing Section 17(4) of the Employment Relations Act 1999. The Minister has actually mentioned that. That subsection permits a worker to make a separate agreement with his employer, whereby in return for performing additional services with a monetary value he can receive extra pay. The Government have used the cases of Wilson and Palmer before the European Court of Human Rights as their justification for that. The Minister did say that the Government do, of course, obey European rules and results of courts, and so on.
But the Wilson and Palmer cases related to agreements banning the workers—banning them—from trade union membership. Section 17(4) provided—anticipating the ECHR decision by five years—that such an agreement was excluded; I know that well. After the subsection was passed, the TUC denounced it and demanded that what it called "the Miller amendment" should be repealed. I was immensely flattered because no one has ever named anything after me, let alone an amendment—especially not one on trade union law. But it is not for that reason that we want to see that we do something about that, because that was a negotiated compromise with the Government, which was reinstated and accepted by the

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Government without a Division. I will not take up any more time on that now. We will doubtless have an interesting debate about that later.
The Bill contains provisions about information and consultation in the workplace, which implement another EU directive. The cost of that over a 10-year period is estimated at £258 million, although the IOD suggest it could be £430 million. The Birmingham chamber of commerce reported a survey among its members showing, that 76 per cent were very concerned at the additional cost on business. The noble Lord, Lord Sainsbury of Turville, described the provision as simply the imposition of new European work rules. But they are yet another instance of directions being given on how UK companies should run their businesses and in fact could interfere with business decision-making and give scope for all kinds of over-the-top rules in the workplace.
My honourable friend the Member for Eddisbury complained, quite rightly, that the Government will be adopting the job-destroying employment model that undermines labour flexibility. Earlier this month, Germany, once the engine of European industry, reported yet another increase in unemployment, which now stands at 10.4 per cent. So I hope the Government might look at that and see whether they really want it that way.
Perhaps it is not surprising that a survey last January reported that a third of 500 workers surveyed were worried about losing their jobs. Had they known that, 100 per cent of the workers at the 200-year-old factory of Terry's of York would have expressed similar fears since their jobs are being exported next year, including some to eastern Europe. That worry transcended worries about levels of pay or long working hours. Is it not the case that these regulations, along with the many others imposed from the EC, will do nothing to give people the confidence they need that they will be able to remain in work?
In conclusion, the Bill has been most extraordinarily difficult to prepare for because it does not contain free-standing provisions that can be examined on their own merit. I see the Minister is nodding —I hope in agreement. It is a large series of bit-by-bit amendments to another Act, which was a consolidating Act, which we may well need after the Bill is passed. The Bill is a series of tweaks, adjustments and fine-tuning, and substantial amendments of that other Act. Yet, despite the considerable impact and importance of those adjustments, the meat on the Bill is still not clearly visible, and it needs to be picked out from the effect on the other Act. That is illustrated by the particularly obscure Explanatory Notes, which compare most unfavourably with the outstandingly high standards of helpfulness of the notes usually prepared for Parliament by the DTI. I certainly do not blame the officials—I can imagine that they had difficulty looking at all these Bills.
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When the Bill reaches Committee we shall certainly give it the careful attention it needs and which the Minister said he welcomed, especially as the procedures of the other place often deny giving the same kind of scrutiny that we are able to provide in this House.
12.45 p.m.
Baroness Turner of Camden: My Lords, I thank my noble friend the Minister for his introduction to the Bill. There is much to welcome in it. Trade union recognition is important, and means by which it can be achieved should be set out clearly in legislation.
Furthermore, individuals who want to belong to a union, to benefit from union services and to be represented by a union should not be discouraged from achieving these very legitimate aims by employers who wish to avoid dealing with their employees in a civilised fashion.
Part 1 of the Bill sets out the procedures by which unions may acquire recognition and the right to bargain collectively for their members. The procedures have already been explained by the Minister in his opening speech. They are of great interest to me, since much of my union career was spent dealing with recognition issues. The union of which I was assistant general secretary—then called ASTMS, now AMICUS—recruited and organised in private industry as well as in some public services. In many of the industries concerned—notably financial services—there was often no tradition of union recognition, except through what were sometimes house unions.
In the 1970s, a number of these organisations joined the union, and we then had to secure recognition and collective bargaining rights from employers unused to dealing with unions and often extremely reluctant to do so. An earlier Labour government did introduce legislation—the Employment Protection Act—which was of assistance to unions, but that disappeared under a swathe of legislation introduced by subsequent Conservative administrations.
I was therefore very interested in the new procedures proposed in the Bill and I applaud the Government's intention to ensure that the procedures are clarified. I must say however, speaking personally and based on my own experience, that they do seem to be rather complicated. Part 1, which is almost entirely concerned with recognition, takes up about 22 pages. Of course, a great deal of it is necessary—I do not dispute that. It is necessary to deal with bargaining units, the powers of the Central Arbitration Committee, what happens in amalgamations, and so on.
But why is it necessary to have a "suitable independent person", probably paid for by the union, in order for the union to communicate with the workforce? In my day, we used to campaign for recognition—holding meetings on site or adjacent to the site, getting union representatives to put out material to non-members—and we used the procedures to recruit more members, and why not? We certainly did not need a "suitable independent person" to assist with communication with the workforce.
I am not sure either about the QIP—the qualified independent person—to conduct ballots. ACAS has conducted ballots in the past, and indeed provisions

913
exist in the Bill for ACAS to have a balloting role in some circumstances. My impression is that the QIP simply adds to complication and cost.
On the ballot itself, why must the union's application—if it is to be successful—be supported by a majority of those voting, which is fair enough, but also by at least 40 per cent of those entitled to vote? Why the 40 per cent? Is a straight majority of those voting not enough?
Then there is the limitation of the right to bargain to "core" issues. Pensions are quite specifically excluded. I note that there is provision for the Secretary of State to amend that by order. But as we all now know, pensions are becoming massively important. I certainly bargained about pensions in my union career. I occasionally meet retired members who tell me that they are very grateful for what the union did for them in those days. I see no reason to rule out pensions as an issue on which there may be bargaining.
The same is true of a number of other issues— training, redundancy, redeployment, discrimination, bullying, and so on. I see no reason why these important issues—important to many workers, and perhaps even the reason why some have wanted to join a union and get the backing of union support—should be ruled out. It is wrong to limit bargaining rights in the way the Bill does.
I am however glad that the right to be accompanied by a companion in meetings with management is to be clarified, but it does not seem that the right to be represented by a companion has been effectively established—that is something we shall pursue further in Committee.
There is concern that the legislation is limited when it comes to small firms. The TUC in particular has protested that firms with less than 21 workers are to be excluded from the legislation. Yet it is often in small firms that employees are most in need of union protection. Again, this is something to which we may return in Committee.
I acknowledge that the Government are attempting to deal with the well-known Wilson case in Clause 28. This was the case that arose because of the existence of legislation which allows employers to offer inducements to employees to give up their right to be members of trades unions—the famous Ullswater amendment. I remember it well because I was very active in the House at that time. This has been held to be in breach of Article 11 of the ECHR.
The Scrutiny Committee has reported on the relevant clauses of the Bill. It has reached the conclusion that the proposed legislation in the Bill does not succeed in offering a secure protection for rights under Article 11. It has comments to offer on a number of issues—whether there is an effective remedy for trade unions—and on the matter of the employer's purpose it suggests that the words "sole or main" be omitted.
It is further suggested that the legislation should provide that each employee and trade union should be given both the right not to be offered inducements to give up Article 11 rights, and the right not to have better terms and conditions of employment made
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available to other employees who have agreed to forego these rights. Furthermore, the legislation should apply whether or not the union is recognised. I hope that in Committee we shall be able to deal with some of these points.
On the matter of industrial disputes, I note that the Government are seeking to deal with cases which have arisen of dismissal of striking workers by excluding lock-outs from counting towards the eight-week period during which there is protection against dismissal. Any improvement is, of course, to be welcomed, but why retain the eight-week period at all? ILO conventions specifically protect the right to withdraw labour and our own law legitimises such action subject to prescribed procedures having been followed. At present it is possible for a stubborn and particularly obdurate employer to prolong a dispute until it becomes possible for him to get rid of some employees he would like to do without. Again, this is something we may explore in Committee. Perhaps we can get the eight-week period extended.
So far as concerns individual rights, I welcome the protection for employees seeking to exercise their right to request to work flexibly. This is becoming increasingly important. The Government freely acknowledge the contribution made by carers. They are mostly women, undertaking duties which otherwise would put a severe strain on overworked social services. Many employers are willing to co-operate in this regard and to make flexible working available; others should be encouraged to do so.
I am also glad to note that further steps are to be taken in regard to minimum wage enforcement. Most people were shocked and horrified at the fate of the Chinese cockle pickers on Morecombe Bay. Clearly they were being exploited and paid much less than the minimum wage for the dangerous work they were doing. Had there been an effective inspectorate, perhaps this would have been exposed earlier and lives might have been saved. I realise that this is part of the larger problem of illegals, who can be exploited by criminal elements because they are vulnerable. However, something should be done to stop this unacceptable exploitation, and a more numerous and powerful inspectorate could help.
Reverting to the main thrust of the Bill, which is about recognition, the TUC has been concerned to ensure that intimidatory tactics by employers to deter workers from supporting union campaigns for recognition should be dealt with. As a result, an amendment designed to deal with this was included in the Bill in the Commons. However, Clauses 9 and 12 apply to both employers and unions because the Government want an even-handed approach. But the management of a company and a union seeking recognition are not really in a position of equality.
Trade unions campaigning for recognition must obviously offer benefits of union membership as part of the reason why employees should join. Threats or bribes from an employer made to prevent the union from gaining support—which is what the clauses aim to deal with—are by no means the same as the union

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benefits on offer as part of a recognition campaign. As the clauses stand, it would be open to an employer to complain to the CAC that the union was making offers even though it was doing nothing more than setting out the benefits of union membership. I think we must look again at this issue in Committee.
Another clause introduced in the Commons seeks to amend the laws on exclusion or expulsion of workers from unions where a member behaves in a way that is contrary to union rules. I understand that the TUC is seeking to broaden this to include the union's objectives. This is important. Whatever their rules may say, most unions have very strong policies against racial discrimination. Therefore, the replacement of the present wording,
"contrary to the rules of the union",
with
"inconsistent with the rules and objectives of the union"
might be more appropriate. Again, we would want to explore this issue further.
I repeat what I said at the commencement of my remarks: there is a great deal to welcome in the Bill—it contains many improvements, which we are very glad to see—and I look forward to exploring it further in Committee.
12.56 p.m.
Lord Campbell of Alloway: My Lords, I congratulate my noble friend Lady Miller of Hendon on her detailed and careful assessment of the provisions of the Bill, with which I agree. In particular, I agree with her comments about the costs of its imposition to business; the cumulative effect of the provisions; the question of resignation, with which I shall deal; abstention on votes and funding. I am using telegraph to save time but the House will know, having listened to my noble friend's speech, what she had in mind.
I do not question the careful criticisms of the noble Baroness, Lady Turner of Camden, to whose practical experience the House will no doubt, as usual, defer. So why should someone who some 40 years ago, when in opposition, set up and chaired the first Conservative committee on trade union law and employment relations—on which, informally, it sought and obtained the continuing advice of the trade union leaders, without which it could not have operated—presume to speak in this debate from these Back Benches at no one's behest?
The reason is that the Government's policy, as reflected in the Bill, is not in the interests of the rank-and-file membership, the employer or the conduct of business; it is not conducive to the better order of employment relations in the national interest. The Bill is a deal between the Government and the TUC. In the current climate of industrial relations, it is not in any sense able to serve to sweeten the symbiotic relationship soured by the distrust and disillusion which is about to manifest itself, again, in June at a meeting to be attended by UNISON, the RMT, the
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Transport and General Workers' Union, ASLEF, the Fire Brigades Union, and so on, and the rank-and-file membership, at which an adverse vote is predicted.
No matter of current common concern to the public and to the unions is addressed by this Bill, such as the want of improvement to our public services, on which £20 billion has been spent each year for seven years without improvement. No attempt is made to deal with the problem of common concern to the public of disproportionate disruption. The Long Title inhibits requisite reform. Long before 9/11, the Iraq war, and the EU constitution, which some people refer to as "events", such requisite reform—long overdue on such matters—was recognised by the Prime Minister. He gave an undertaking to deal with them. That undertaking has not been met, and cannot be implemented under this Bill.
The work of that committee, incidentally, was not implemented by the Heath administration, who did not like it much. It was implemented much later in the Thatcher reforms, the broad substance of which remain. This Bill disturbs the long-established balance to increase the powers of the leadership and puts it to an advantage, while putting employers and industry to a disadvantage, which inevitably slights the prospect of employment.
Within the remit of the Long Title, there is a need not only for a broader appointment to the Central Arbitration Committee, but also for procedural rules on discovery to include all branch records, for evidence to be taken on oath, for cross-examination, for safeguards to avoid jeopardising the conciliation process, and to avoid destruction of confidentiality. There is also a need, as expressed by an employers' association, for the CAC to have clear procedural rules in view of the new responsibilities concerning enforcement of their practices during statutory union ballots, and enforcement of the new information and consultation regulations. As far as the latter is concerned, it is considered that this new and very different set of enforcement responsibilities means that the CAC should have a broader spectrum of members, and in particular that its membership should include employer and employee representatives who have had practical experience of information and consultation arrangements in a non-unionised environment, and that the addition of the detailed requirements about behaviour during conciliation and mediation proceedings is unnecessary.
There is no doubt whatever, having listened to the previous speakers, that in Grand Committee this Bill shall receive meticulous examination such as was not afforded to the Trojan stalking horse, and that due note will be taken of the Tenth Report of the Joint Committee on Human Rights on the question of compatibility. I shall not take time on that on Second Reading.
The constraints of time also preclude an analysis of Clauses 1 to 16 of Part 1, regarding recognition of collective bargaining, supply of information, union communication, postal votes in ballots, notice to bring an end to bargaining arrangements, and so on. Quite simply, a recognition dispute arises either at the instigation of a single union or as a result of an inter-union dispute. The first attempt at regulation was

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Barbara Castle's Industrial Relations Bill 1971, which, in effect, on this aspect, was implemented by the Heath administration. It worked extremely well, and I remember Vic Feather saying to me that it worked well to general satisfaction—the only trouble was that it was a branch of the High Court. Of course that objection was removed long ago. We have heard today, as my noble friend Lady Miller pointed out, that not only in another place but elsewhere everything is working extremely well.
What is it all about? Why has this aspect of the longstanding balance to be disturbed? I think there is some explanation due, if everything is working satisfactorily, as to why this burden of complexity has to be imposed. Why, in subsection 2G inserted by Clause 21(4), should the union be entitled to determine who is to vote in a ballot? Why, in Sections 145A to 145E inserted by Clause 28, should the employer be prevented from offering an inducement to a worker which the worker is entitled to accept on pain of penalty, because it puts the union at a disadvantage relating to membership taking industrial action, or the provision of services? Why, in new section 145F(3), should the worker be deprived of resort to the High Court on a sort of ouster clause? These are only examples, and one could pick out all sorts of things, but there is not time to deal with them. Lastly, in Clause 47(1) and (2), why, on appeal from a decision of a certification officer, should the extant right to have an appeal on any question of fact be restricted to a matter of law, which in fact effectively stifles an appeal?
Finally, and in conclusion, what about the consequences of this Bill —and my noble friend Lady Miller touched on this in her speech—on the burden on business? What about the consequences on the prospects of employment? Those prospects are entirely dependent on demand of profitable business, save for some sort of state intervention or subvention, such as when 160,000 jobseekers have been shifted onto benefits where there is no obligation to seek work. But that is rather a one-off situation, I hope.
There has been a steady fall in productivity over seven years, as well as the mammoth shift in manufacturing, business, banking, communications, IT and other services towards cheap labour abroad, and the benefit of lower taxation. This is a commercial fact of life on the Internet which cannot be forestalled and is bound to accelerate. We stand on the threshold of a more massive spending which cannot be met without further borrowing and taxation. There is an immovable mountain of government and personal debt. Those are the circumstances in which this new burdensome tide of bureaucracy, with statutory impositions of penalties for non-compliance, is to be imposed on the employers.
You have only to read the papers to see that industry struggles with redundancy. When these provisions seep through the clogged sieve, it is not the leadership of the trades unions that will suffer from want of employment—it is the rank and file.
1.11 p.m.
Lord McCarthy: My Lords, I want to return to the approach taken by the Minister in introducing the Bill, because I rather feel that subsequent speakers on the other side so far have missed the point.
The Bill has been criticised because it modifies, adjusts, changes at the margin and adds at the margin, to the Employment Relations Act 1999. Of course it does—this is the way we approach legislation in all subjects now. We certainly do it in matters involving the law, prison reform and health service reform. We introduce Bills and modify what happened in the past, and then we pass on. That has to be understood.
I was glad that the Minister went through the past— what was done in the 1999 Act, what we are attempting to do now and what may have to be done in the future to extend the legislation and provisions for regulation of the labour market. This is a continuous process now.
It is true, of course, that in the past seven years since my party has been in office, there has been a succession of Acts. You can argue about how you count them up—my counting is not quite the same as that of the noble Baroness, Lady Miller, for example. I make it seven Acts in seven years—three general and four special, the most important of which was the National Minimum Wage Act 1998. There was also the legislation on dispute resolution, on public disclosure, and so on. In rough terms, you might say that we have been legislating every year. In addition, because we agreed to scrap the opt-out negotiated by the previous Conservative government, we have not held up—in fact, we have encouraged—the implementation of a series of directives from Europe. That, too, will continue.
In any case, it is very strange for people on the Opposition Benches to complain about this, because that is exactly what Mrs Thatcher did. It is true that if you take her first seven years, I do not think she introduced more than five such Acts. There were two concerning employment, one about trade unions, one about wages and one about sex discrimination. But they all moved on from the previous piece of legislation—that is what you do nowadays. The critical difference is the balance.
We took the view then and we take the view now that what was wrong with the successive Acts passed by the previous government—and they did not stop after seven years; in fact, the pace escalated and got more radical—was that the balance was one-sided. Two thirds of the proposals in the Bills introduced in the first seven years restricted the right to organise, the right of trade unions to run their own concerns and the right to strike. That is not a good balance.
It was said at the time that two thirds of the proposals were anti-union. That is a crude way of putting it, but reasonable. It is true that the other third was sometimes pro-worker, but many of them took away the individual rights of workers. Those that added to the individual rights of workers—most particularly, the Sex Discrimination Act 1975—were introduced because there was no way out. The

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Conservatives were very reluctant to introduce a Bill which advanced workers' rights and they got rid of them by signing the Maastricht opt-out.
The basic difference is not the number of Acts but their content and balance. The Government have been trying to restore the balance, and that will be maintained. When we consider what is being suggested in this Bill, the balance is being maintained. There are some further restorations of trade union rights—that is right and proper. Some of us on this side of the House do not think that there are enough, but that is another debate. This is a further restoration of the balance.
There were also extensions of individual worker rights, such as unfair dismissal, maternity provisions, discrimination, and so on. They have been provided and will continue to be provided because we accept the need to extend individual worker rights. There is, in fact, an essential need to do this. If we take the view that trade union organisation and the extension of collective bargaining is becoming increasingly difficult, you must have some alternative. The only alternative we have so far found is individual employment rights. That movement, therefore, will continue. There are still gaps, as I said. My noble friend Lady Turner mentioned some of the things we think must be done. The Bill contains quite a few of them.
I shall concentrate my remarks on one major gap in the Bill because I am rather worried at what has been said so far. It concerns protection against discrimination in actions short of dismissal against trade unionists. It goes back to the first time a government attempted to do something about this, in the Employment Protection Act 1975. Section 53 effectively provided for the first time that there must be some restriction on the right of employers to use action short of dismissal—not dismissal—in order to discourage trade union membership.
Part of the trouble has been that for all their expertise, the Government are not very good on history. They do not go in for history very much. The central point for them to understand is that this is the oldest trick in the world. If you read the Webbs, G.D.H. Cole and Askwith in Industrial Problems and Disputes, in the First World War, employers divided into three groups. There were the good ones who encouraged trade union membership; there were the bad ones who sacked anybody who joined a trade union; and there were those in the middle who thought they were decent chaps. They did not sack their employees for belonging to trade unions but they did not encourage them. They shifted them on to slightly better work; they promoted them to foremen; they moved them on to established status; they gave them executive washrooms; and, above all, they gave them extra money.
This was the kind, nice way of dealing with trade unionism and it is as old as the hills. It is a good thing that we have tried to deal with it by law, but we cannot do so entirely. Old Adam will always be there and there will always be employers who give trade unionists executive washrooms to bribe them out of the union.
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An attempt was made to accept that in the 1960s and 1970s, but it was not until the Employment Appeal Tribunal upheld an attempt to narrow and to destroy Section 53 of the Employment Protection Act that the Ullswater amendment was tabled in this House. My noble friend Lady Turner has mentioned it. I do not know how many noble Lords who are here today were here then, but I can remember the noble Viscount, Lord Ullswater, standing at the Dispatch Box.
Lord Campbell of Alloway: My Lords, will the noble Lord explain who is bribing whom? I never come across that kind of thing in trade union affairs. I may have misheard. What is going on?
Lord McCarthy: My Lords, I am making a speech. That is what is going on. Can the noble Lord not hear me or can he not understand me?
Baroness Turner of Camden: My Lords, I think the noble Lord is referring to washroom bribery.
Lord McCarthy: My Lords, the most traditional and common way of seeking to give trade unions less influence and power and fewer members was to offer privileges to trade unionists on the condition that they became non-unionists. One of those privileges was better conditions and better washrooms, but, above all, more money. I hope that is clear.
Matters came to head with the Ullswater amendment was tabled in 1993 at 3.45 p.m. However, the Government now have a chance to deal with the problem. They have received a clear edict that the amendment runs contrary to international obligations to which this country is committed. They have received three reports from the Joint Committee. I am a little surprised and upset that we have not yet heard a word on what the Government intend to do now. A member of the Government is to sum up. The Government must tell us. If they cannot tell us now, they should give us some indication that they intend completely to revoke that amendment, on the strength of the four concrete suggestions advanced in the latest report from the Joint Committee. Those suggestions are clearly spelt out. Words are required. If the Government do not act, we shall be back to international legal conflict. We shall be back to tribunals and courts if we do not accept the committee's findings. The only option now is to accept the decision. Of course, it will not stop executive washrooms, but it is a start. It is just an attempt to go back to the simple principles of the Employment Protection Act.
I end by going into the future, just for a few moments. Since it is a Bill of bits and pieces—and there is nothing wrong with that—there are a few positive reforms to employment protection. That is partly because it is an evolving issue, but also because, although both parties have improved employment protection, no party has so far thought about the scope for employment protection in a period when trade union organisation is falling but job insecurity is rising. What should the Government's policy be? For the most part, successive governments have been pushed into employment protection legislation by

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external factors. The Labour Party—I make no apologies for it—has been pushed by trade unions. Trade unions have stated that they should have certain employment rights. The Labour Party, as well as the Conservatives, has been pushed also by particular groups; for example, women's groups. It was not trade unions that won women's employment protection rights—until they found a friendly Minister—so much as women's groups. That was also the case with race discrimination and disability rights and so on. For the most part, changes have been brought about by external groups, when they have not been brought about by an even more external group; that is, directives from the European Union.
The Government should be thinking now about what they want to see as a government in terms of employment protection. They should be doing so not in this Bill, which is probably the last important Bill before the general election, but beyond the general election. If one looks in detail at employment protection, it is very uneven. For example, we enforce the minimum wage in one way, but we enforce most other employment rights in a quite different way. We set up ever-bigger commissions to suggest improvements in certain kinds of employment rights, such as discrimination rights, but we have no body of comparable size or importance to look at the most common case to go to industrial tribunals; namely, unfair dismissal. There is a considerable amount wrong with the way in which we deal with unfair dismissal, but nobody tries to think about a new policy. After all, the outcome of the 90 per cent of the cases that result in a positive award by the tribunal is not reinstatement, but dismissal with compensation.
I could continue, but I do not want to. It is time for the Government to think about a more coherent policy for unfair dismissal. The Government would be party to it because they had thought it out, in part, in their own election manifesto. But perhaps that is a debate for another day and another place.
1.27 p.m.
Lord Lea of Crondall: My Lords, I echo my noble friends Lady Turner of Camden and Lord McCarthy in their broad support for the Bill. I shall begin by giving some historical context to the Bill's significance. It concerns the pattern of collective agreements versus the role of the law in employment relations.
If we look at not just the European but the whole international picture, this country has been relatively light on individual legal protection for the reasons that my noble friend Lord McCarthy has indicated. It has also been light on rules governing collective representation. For various reasons, collective agreements have now been supplemented by what one might call benchmark collective rules on representation.
The Bill is historically interesting because, broadly speaking, we now have three levels of legal regulation. A debate has been taking place for the past 50 years that has resulted in the third level of regulation being built into the Bill before us today. I shall explain what I am referring to.
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The first rung of legal representation is the individual right of the worker in all companies to be able to raise a grievance and to have some rights of due process in any disciplinary hearing. In some ways, that is the most important step forward. But it cannot be isolated from the context in which trade unions play their role, which is not only at the level of representation in a grievance or disciplinary procedure, if the individual worker so wishes, but also in the balance of interests which determine the culture of the workplace— often where not a great number of workers are actually members of the union.
I have described the first rung of representation. I should just like to mention, before I come to the second rung, the third rung. This is trade union recognition through the procedure of the Central Arbitration Committee, of which I happen to be a member, through the 1999 Act, following a framework agreement between the TUC and CBI. The historic change of this Bill, and why I am glad it is on the face of the Bill rather than being introduced through regulation, is that we have the results of a framework agreement between the TUC and the CBI, against a background of the European Directive on Information and Consultation. The directive is a framework agreement at two levels. It is a classic framework agreement under the Social Chapter in Brussels. There have been some remarkable achievements since the Labour government signed the Social Chapter as one of their first acts of government in 1997. Those who think that nothing of practical benefit to workers has come from the Social Chapter, that it is all bureaucracy in Brussels, could not be more wrong. Workers have four weeks' holiday: many workers, from the construction industries through to agriculture, had never dreamed of four weeks holiday with money up front. That has been an historic advance for workers in this country. There are pro rata rights for part-time workers. The more we want so-called atypical workers to be part of a thriving economy, the more there must be some framework right for them. That has been an advance through very flexible negotiations in Brussels, and is a simple collective agreement to be understood by employers and anions in industry. With regard to fixed-term contract workers, if they are going to be part of a modern labour market, are we saying there should be no minimum benchmark rules for those workers?
We have still to crack the issue of agency workers. We have seen the recent exposure of the terrible chaos in the case of gangmasters in Morecambe Bay. Trade unions dealing with such agency workers in agriculture or construction on a daily basis in East Anglia know that this needs to be covered as well.
In some respects, the pièce de résistance of the Social Chapter procedure has been the way it has reached a conclusion—not without difficulty—on the question of information and consultation. This was agreed in Brussels, and is a relatively short text that has now been transposed, you might say, into the recommendation for national law through the framework agreement between the TUC and the CBI. This Social Chapter procedure stands in sharp contrast to the procedure used if the employers and unions cannot agree to go down the road of social dialogue. I have in mind the endless criticism of the Working Time Directive. The significance of the

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contrast between that and the procedures we have in the Bill for information and consultation, is that one has a much more complicated text because it was done as a directive of Article 118a of the Treaty of Rome, health and safety provisions, and there has been a lot of difficulty in implementing it. However, the alternative, rejected by employers, was to have done it through a framework agreement. We have the framework agreement on information and consultation. If somebody wants to say it is a revolution I think that would be stretching language, but let us say that it is. It is a revolution because for the first time—it is a debate that would have gone the other way in the trade union movement 50, even 25, years ago—a collective system of representation should be open to election of workers' representatives by all of the people in the workplace. Unions can have slates of supported candidates, but there is certainly no guarantee that the union candidates will win the election.
There are a million reasons—such as whether this could be an alternative to union recognition, or whether there could be manipulation by employers why some people have not, historically, been over the moon about that sort of approach. Now that the TUC and the unions have bitten the bullet across Europe, and this is part of the procedure, I want to say that this is an historic moment that we must welcome in order to see rung two of the employment relationship in place. It will apply to every company above a certain size. The argument about numbers began with 150, then 120; there can be arguments about the pace of progress on these numbers. But this has been a very important development, providing a context in which we are discussing this Bill.
I hope I am conveying a picture which is very different from that presented by the noble Baroness, Lady Miller of Hendon, when she said that this is a drop by drop dismantling of the Thatcher legislation and it reminds her of when we were the "sick man of Europe". I do not think that this is the most measured of her contributions on this topic.
I should like to mention the debate about the union modernisation fund. I cannot corroborate exactly what Digby Jones said—according to this morning's press—in his speech yesterday, but it would be a little rich if he wanted to describe the TUC as an "irrelevant lobby group", without somebody saying "touché". The fact is that social partners are the alternative to the sort of heavy legislation to which employers purport to be particularly opposed. On the actual substance of £10 million, over many years we have known that sums like £100 million, £200 million—it all depends what you include, such as subsidies to training courses in industry—go in the direction of the employers. There is squealing perhaps because the supposition that new Labour is about dismantling the trade unions turns out not to be true. I never thought that it was true. It is hard to believe that people seriously thought that that was the agenda. There is squealing now that we are trying to create a level playing field.
There is no doubt that we need to do some work on that level playing field. The pensions issue is one example. At the end of next month, I think, we will be
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considering a Bill on that issue. Directors of FTSE 100 companies receive something like 80 per cent of the tax benefits from the present pension arrangements, whereas workers are often left with nothing—as in the case of Allied Steel and Wire—when a firm goes into liquidation. That has to be dealt with. There is no doubt that, despite the minimum wage, inequality in income distribution towards the top end of the distribution spectrum has grown by leaps and bounds.
The trade unions are the only bulwark for ensuring greater equality. All the OECD statistics show a striking correlation between the density of trade union membership and equality. If we want a tolerably equal society, it is in the interests of public policy that we have a strong trade union movement. Whatever the Government do, they cannot ensure that. However, small steps such as those in the Bill are very welcome. I commend the Bill to the House.
1.42 p.m.
Lord Razzall: My Lords, in winding up from the Liberal Democrat Benches, and having listened to a number of speeches from both sides, perhaps I may start by bringing noble Lords back to what I should have thought was common ground—although it does not appear to be—which is that the Bill makes relatively small amendments to the previous legislation. Having listened to a number of the speeches—particularly that of the noble Lord, Lord Campbell of Alloway, who saw fit to spend 16 minutes giving us a history lecture but does not seem to have time to be in his place for the winding-up speeches—one might think that the Bill will lead to hordes of workers led by Arthur Scargill marching on Westminster. Having listened to the Minister, however, I have the impression that this is a relatively small Bill, building on the experience of the previous legislation. With one or two reservations to which I shall return, the Bill was largely supported by my party in another place, and it will be supported by my party in your Lordships' House.
I start with two general points and will then turn to the three specific areas on which we will want to touch in Committee. First, having listened to some of the language in your Lordships' House on reports this morning of comments made by Digby Jones on behalf of the CBI, I think it a great shame that, despite the fact that we appear to have probably the best industrial relations that we have had in my adult lifetime in terms of hours lost through strikes, we still seem to have coming from both the CBI and the TUC the rhetoric of confrontation that so bedevilled industrial relations in the past. As I think Malcolm Bruce said in another place either on Second Reading or in Committee, when the Government present their legislative proposals in this area, the press releases from the CBI and the TUC can almost be written in advance.
So I have some sympathy with the Minister as he tries to find a path between the two approaches of the CBI and the TUC. As someone not involved in any of those discussions or procedures, were I to be treating this as a football game, I do not think I would call it a score draw between the TUC and the CBI as regards consultation on the Bill. I should think that any

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objective observer would say that it is a pretty significant away win for the CBI. The TUC came in with a large number of pretty radical proposals that it thought should go in the Bill, many of which the Government have rejected. So to those on this side of the House who seem to suggest that this is a deal between the TUC and the Government, all I can say is, "Some deal". If it was a deal, the Government have certainly played a much stronger hand than the TUC managed to do.
That is probably not something on which the Minister will want to comment. However, it would be unfortunate if we started off our deliberations on the Bill by characterising it as a radical attempt to change employment law. It is not. It is a small attempt to improve on the workings of the previous legislation. As I said, from these Benches we welcome most of the reforms.
The second general point will be relevant when we consider the Bill in Committee. It is becoming almost a characteristic of any Bill which the Minister introduces to this House that it has probably not had proper scrutiny in another place. The Bill was passed by another place under a programmed structure, and amendments of quite fundamental importance were introduced at Report and Third Reading. Far be it from me to say that it would have changed the course of history, but, because of the programmed nature of the debate, the Liberal Democrat Front-Bench spokesman was not even called on Third Reading to indicate my party's views and reservations. That is not the Minister's fault, and he will certainly not be criticised for it. However, it gives your Lordships House greater licence to table amendments and to ask the Government to take our amendments more seriously than they would perhaps feel necessary if the Bill had had 100 per cent proper scrutiny in another place.
I see a number of heads on both sides of the House nodding at that. I hope that the Government will take those remarks in the spirit in which I intended them. From these Benches we certainly do not intend in any way to attempt to wreck the Bill.
I should like to speak to three areas of concern on which we should like to probe the Government a little further in Committee. The first concerns Clause 39, which goes much further than simply tidying up the recognition and bargaining provisions in the previous legislation. It is the start of implementing the European directive of February 2002 requiring member states to establish national systems for informing and consulting employees in undertakings with at least 50 employees. Clause 39 gives the Government power to introduce regulations to implement that directive.
Lord Lea of Crondall: It is Clause 31, my Lords.
Lord Razzall: I apologise, my Lords; it is Clause 31.
In view of some of the very high profile examples of failure to consult employees regarding closures and the fact that probably half of all private sector places of work are not unionized, the importance of these regulations and the likely future of industrial relations in this country as a result of these regulations cannot be overestimated.
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Indeed, somebody at Warwick University thought that in due course the implementation of this directive will revolutionise the way in which industrial relations are conducted in the United Kingdom.
Liberal Democrats in another place wanted to extend the powers of the Government and take them a little further down the path of implementing this directive, and we will seek to bring forth amendments in Committee to this effect.
The second area in which Liberal Democrats in another place tried to see whether the Bill was satisfactory or if there was a gap in it that could be filled was that of unofficial strikes; and whether the law as it currently stands deals satisfactorily with the position of unofficial strikes, both in non-unionised workplaces—
Lord Campbell of Alloway: My Lords, I apologise to the noble Lord for not being in my place when he started.
I agree with him on the question that he raises, but it is without the ambit of the Long Title of the Bill. It cannot be extended to deal with strikes and unofficial strikes without amending the Long Title.
Lord Razzall: My Lords, it may well be that such a change to the drafting would be necessary, but in this Second Reading debate I am trying to deal with a point of substance.
In the light of recent experience of unofficial strikes in the Post Office—to name but one organisation—we on these Benches will seek to probe the Government on whether further improvements or amendments to employment law could be put into this legislation.
The third area on which a number of noble Lords have touched—and here we have considerable sympathy with the points raised by noble Lord, Lord Campbell of Alloway, and the noble Baroness, Lady Miller—is the provision of money for trade union modernisation.
If there is one area where your Lordships need to be absolutely certain that the section is in its correct form and the necessary safeguards have been put in before we pass it, this is it. I do not wish to make a wider point. But when a Labour Government—who are significantly funded by the trade union movement—use their majority in the House of Commons on a whipped vote to pass this particular clause, then your Lordships need to be certain that the appropriate safeguards are in place before passing it.
We do not disagree with public money being made available to trade unions for this purpose—indeed we support the principle—but your Lordships have a duty to the electorate in this area in particular to ensure that the necessary safeguards are in place.
1.53 p.m.
Lord Triesman: My Lords, I have listened attentively to the debate. As ever, it has been a debate among noble Lords with a huge amount of experience,

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and the quality of the contributions has reflected that. I am grateful to everybody who has participated in our discussion here today.
A number of important and telling points have been made and I will do my best to address as many of them as possible. But first I should like to make some general points about the Bill, to underline the core arguments made by my noble friend Lord Sainsbury in his opening remarks.
Let me remind the House of the significant achievements of this Government in the field of employment relations. This is a limited list. Among other things, we have put in place fair minimum standards and fair wages for all through minimum wage legislation; paid holidays, rest breaks and a cap on the working week; flexible and family friendly working, which has provided greater choice for employees, encouraged the retention of skilled and experienced employees, and enabled employers to cope with the changing demands of their business.
My noble friend Lady Turner asked for consideration of other areas of flexibility, and I have no doubt that there will be a discussion on those points.
We have also put in place new protections against discrimination at work on grounds of sexual orientation, religion or belief, and work is under way to provide new protections against discrimination on grounds of age. Trade unions now have the right to be recognised for collective bargaining purposes where the majority of the workforce want this. It is now unlawful to dismiss workers for taking industrial action within eight weeks of the start of that action, or after that time if the employer has not taken reasonable steps to resolve the dispute. I shall return to that point when I deal with some of the detailed questions that have been asked.
In reminding the House of these achievements and in summing up the debate, the noble Lord, Lord Razzall, is right to say that it is a relatively small sequence of additions, precisely for the reasons given by my noble friend Lord McCarthy. This is a process that will continue. As the world of work changes—and we all discussed change in that light—it is inevitable that all the things that I have mentioned, and all that my noble friend Lord Lea mentioned about the gains that have been made over a period producing, as he put it, a very different picture, are matters of some importance to your Lordships.
I remind the House that these achievements have been accompanied at each step by predictions that the policies were bound to lead to unemployment, would damage business and would encourage industrial unrest or worse. No doubt we will hear the same comments made about this Bill. The arguments will be as unfounded as they have been on other occasions.
As this is an issue of such principle, this is the right moment to take up one or two of the points about the big picture that were raised by the noble Lord, Lord Campbell of Alloway, and the noble Baroness, Lady Miller.
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The cumulative effects of the legislation that has been introduced during the life of this Government can scarcely be liable to cause the damage that has been described on the one hand, and on the other be understood against a background of employment stability, the lowest rates of unemployment in living memory, and unprecedented economic progress. Those cannot both be true. I ask noble Lords to reflect on the likelihood that the rather draconian predictions are not likely to be accurate. I have the deepest respect for the way in which the noble Lord, Lord Campbell of Alloway, put it, and I know that he has had a deep interest in these matters for many years, but none the less I put that point to him.
We believe that our policies make sense for employees, that they will lead to the tolerable equality that my noble friend Lord Lea mentioned and that they will be good for business and for the economy. Our record bears this out. As I have said, we are enjoying an unprecedentedly good period in economic and employment terms. All of those advantages lie at the foundations of sound government.
The Bill takes us one stage further. It builds on our successes and sets down solid foundations for the future: a future based on high performance workplaces and high quality jobs; a future where employers, employees and their representatives are informed, involved and committed, working together for mutual benefit.
Unions play a central part in taking forward the partnership agenda and contributing to greater productivity. That has been among their greatest accomplishments. We want unions, like businesses, to embrace new ways of working and to modernise. The union modernisation fund will help to achieve this goal.
I understand the point that the noble Lord, Lord Razzall, made about wanting to ensure that the funds that go through it could not be diverted in ways that would be inappropriate. In his opening speech, my noble friend Lord Sainsbury made the point that that could not happen under political fund legislation. None the less, we believe that the modernisation issues are fundamental in ensuring that we have hard-working, stable industrial relations. I do not accept the argument advanced in the past few days by Digby Jones that 7 million organised working people constitute some kind of fragmentary lobby group. That seems to be a disparagement rather than an analysis and probably in due course he will think the better of it.
We want to ensure as a matter of sound law that the good work of unions can continue without being hindered by racists and xenophobes who seek to use unions to spread their vile message of hatred and intolerance. We have brought forward measures in the legislation to enable unions to address this. We have delivered on our commitment to review the operation of the Employment Relations Act 1999, and I believe that most of the evidence shows it is working well.
The statutory recognition procedure has been a resounding success. It has encouraged voluntary recognition in more than 1,000 cases and has contributed towards a new partnership approach between unions and employers. I

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wonder whether I might pay my own personal tribute to Sir Michael Burton for his exceptional leadership of the CAC and the efforts his colleagues have made, which have unquestionably led to smoother and better relations. The Bill will make improvements to statutory procedure, which will enhance its smooth operation and ensure that the spirit of co-operation and fair play that has contributed to his success is not undermined either by a minority of employers or unions who prefer to use intimidation rather than play by the rules that have been established.
It is an essential feature of a fair and modern society that workers are free to belong to and to be represented by a trade union, and the Bill puts in place important protections for trade union members of the kind my noble friend Lady Turner described. They will ensure that they have clear rights to use union services and cannot be induced by employers to forgo their union representation.
I will turn to some of the points about the European consultation procedures, which are very important. No one wants to see a repeat of the most unfortunate events of Friction Dynamics. The Bill will strengthen protection for workers on legitimate strike action and will ensure that employers and unions take their obligations to resolve disputes seriously.
I shall now deal with as many of the questions as I can handle in the brief time available. First, the noble Baroness. Lady Miller asked about the overall increase in employment legislation. Generally speaking, the point has been addressed by my noble friend Lord McCarthy. I will not elaborate on it—we have needed to deal with matters as the situation has changed. It cannot be said that Europe is dictating employment law, as has perhaps been suggested. The original version of the directive presented by the European Commission would have imposed a single works council model on everyone. Changes were agreed by all of the member states to give more flexibility for employers and employees to agree arrangements suited to their particular circumstances. That was the basis on which the Government agreed to it.
We have been asked why we chose not to use statutory instruments but instead chose to use primary legislation. It is not possible to implement all of the agreed CBI and TUC framework under Section 2(2) of the European Communities Act, as originally intended, without having a Bill that allows us to do so. The employment relations Bill is a timely vehicle to achieve that objective. The Bill will implement the directive. That is not in itself a convention—we have opted to do it because this is the appropriate moment to do it.
We have been asked about whether this gold plates the directive in any respect. The framework and draft regulations have been agreed with the CBI and the TUC and, as both parties agree, no gold plating is involved. We have used a light and flexible touch in the implementation process. The wording used in the clauses of the Bill makes it clear that that is the case.
The noble Baroness, Lady Miller, understandably asks why the "Miller amendment" should not be retained. Having read about the Miller amendment for
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many years, I am delighted now to sit on the Benches opposite its author. The amendment concerned the need to retain necessary employer flexibility when rewarding staff. Our proposals already adequately safeguard these key business concerns and protect the ability of employers to offer enhanced terms to key workers who they wish to retain for sound business reasons and not in a way that undermines collective bargaining. The Bill secures this in a way that balances employer interests against the necessary rights of union members.
The amendment inserted into the Employment Relations Act 1999, which pre-dates the European Court's judgment, is an important turning point. It was inserted in what is now Section 17 of that Act. That section has never been commenced and its provisions are superseded by this Bill and by the judgment.
The noble Baroness, Lady Miller asked us to define "lock out". We are a little loath to do so. The definition would not necessarily be useful. The possibility has been considered. We believe that any definition would risk covering situations which it should not and failing to cover situations which it should. We believe that it is a matter best left to the courts and the tribunals to decide in the light of the situation on the ground. The term "lock out" has been used in this legislation for many years without further definition and I do not believe that the absence of a definition has itself caused legal difficulties.
We were asked why the procedural rules for the CAC were not set out in statute. We want to provide the CAC with the necessary freedom to determine its own procedures. It has done it very well so far and it has been a signal success. Its ability to operate effectively under a senior judge has been one of its greatest virtues.
We were asked, with regard to Clause 3 and the provision of information to unions regarding proposed bargaining units, what abuses we are intending to address. The statutory procedure was designed to encourage the voluntary resolution of claims at every opportunity. The limited information which must be supplied to the union under Clause 3 is intended to facilitate agreement between the parties on what the bargaining unit should be. Such information is often revealed to the union in the course of such negotiations in any case.
Lord Campbell of Alloway: My Lords, the House will forgive me for intervening. Could the noble Lord deal with a serious problem relating to the procedure of the court? Is he prepared to consider that evidence should be given on oath? Is he prepared to consider that there should be cross-examination? Is he also prepared to consider whether the discovery rules as to procedure should include branch discovery of records, which I am told do not?
Lord Triesman: My Lords, it is probably as well if I try to address that immediately. It is a complex issue and I should be prepared to discuss it in much more detail in Committee.

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On the application to undertakings employing fewer than 50 employees, we are wary of imposing additional regulatory burdens on small firms unless there is an absolutely clear need to do so. The directive acknowledges this by giving the option of applying only to undertakings with more than 50 employees. In practice, the vast majority of UK employees—about three quarters of them—will gain new rights under the information and consultation legislation. But we will be considering good practice guidance on employee dialogue in small firms not covered by the legislation.
We do not intend to change the status of abstentions in recognition ballots. However, the Government are keen to ensure that as many workers as possible vote. It is obviously good for democracy and for the standing of the ballot result. Indeed, the introduction of postal votes, for example, in relation to industrial action ballots was designed entirely to accomplish that objective—at least that was the argument put for it by the Conservative government at the time—hence, the need to introduce the provision in Clause 7 to give workers a chance to vote by post in workplace ballots.
The significance of the changes in the wording of paragraphs 35 and 44, which are referred to in Clause 10, was discussed in the review of the Employment Relations Act. The review found that there was some confusion in the meaning of the paragraphs, which would be resolved by this kind of wording.
In all these cases, we are seeing sensible resolutions to outstanding issues. Having raised those matters, the noble Baroness, Lady Miller, is entitled to a serious answer to them. If I have missed any of her other points, I shall be happy to write to her in due course.
My noble friend Lady Turner raised several very important questions—echoed, I believe, by my noble friend Lord McCarthy—about the complexity of the procedures. I am sure that that matter will be discussed in greater detail, and therefore I would say only that the complexity is, without question, a reflection of the fact that ambiguities have been thought to exist in the processes as they stand. A great deal has been spent on legal advice in order to try to find a solid route through some of these matters, and one often ends up with as many pieces of advice as the number of lawyers to whom one turns. Even if the procedures are lengthy, the intention must be to ensure the greatest possible transparency for everyone.
To my answer to my noble friend Lady Turner, I would add that the use of a qualified independent person in ballots and suitable independent persons for the purpose of union communications is to give greater confidence to everyone involved that the matters have all been handled fairly and efficiently and so that every party can have confidence in the results.
Noble Lords will be pleased to hear that I do not intend today to go over the arguments and evidence on the 21-worker threshold or the 40 per cent ballot threshold. Much evidence relates to these areas, and I have no doubt that the matter will be discussed in Grand Committee. However, the evidence suggests
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that those are not insuperable barriers in any respect and, in fact, they place upon everyone the need to work harder to produce sensible results.
The core bargaining agenda is important. What we have—I shall not disguise it—is the basis of an agreement between the TUC and the CBI about the core topics. There is no question that other matters may well be discussed by additional routes, but they will not themselves represent the greatest level of consensus that was achieved in those discussions, which I believe were hugely valuable. I make the same point to my noble friends Lord McCarthy and Lady Turner. Again, there is a great deal of evidence in relation to the whole issue of the eight-week rule in industrial action, and I believe that that is probably best handled in Grand Committee. In short, there is at least a degree of consensus on all those matters, even if the TUC and the CBI would like us to go further.
In going through many of those issues and in considering some of the others, in the brief time available I want to touch on just one other matter that was raised—that is, the question of the JCHR report. The Government have prepared a detailed response to the concerns, which is available in the Library of the House. The memorandum explains why we consider the Bill's provisions on Wilson and Palmer to be compatible with the European Convention on Human Rights and the implementation of the European Court's judgment in that case. However. I say openly that we shall look forward to discussing that matter in detail in Grand Committee.
Lord McCarthy: My Lords, perhaps I may get one matter clear. Is my noble friend telling me that he has written something new which we have not seen and that it is now in the Library?
Lord Triesman: My Lords, I am saying exactly that. It is very recent and very new. Even yesterday, I myself was not aware of its contents but I am today.
Things are, in a general sense, working well. We were asked why we should change that position. As my noble friend Lord McCarthy said in making his point about incremental change, it makes the law more explicit and more effective.
In summing up, perhaps I may say that it is a privilege and a pleasure to be involved in this Bill. I look forward to the continuing and detailed discussions that we shall no doubt have in Grand Committee, where I am sure we shall receive the benefit of everyone's close and expert scrutiny. I completely agree with the point that any rhetoric of confrontation will not help that process. The measures contained in the Bill will take us further down the road of partnership and high-performance workplaces and will help to maintain the impressive climate of employment relations that we enjoy today, which are so fundamental to the well-being of our economy. I commend the Bill to the House.
On Question, Bill read a second time, and committed to a Grand Committee.

European Communities (Definition of Treaties) (Agreement on Enlargement of the European Economic Area) Order 2004
2.15 p.m.
Baroness Symons of Vernham Deanrose to move, That the draft order laid before the House on 26 April be approved [16th Report from the Joint Committee].
The noble Baroness said: My Lords, I am pleased to move the Motion for this order on enlargement of the European economic area. As the House is aware, the Government have put tremendous effort into ensuring that our friends in central Europe, Cyprus and Malta are able to join the European Union this Saturday. This order is a formal step towards delivering that enlargement.
I apologise for the short notice in bringing the order before the House. EEA enlargement is due to take place with EU enlargement on Saturday, 1 May. However, unfortunately the Foreign and Commonwealth Office failed to take into account the Easter Recess when calculating the 21 sitting days required between the order being laid in the House and the subsequent debate. The command paper was laid in the House on 15 April, but we should like to secure ratification as soon as possible in order to co-ordinate with EEA enlargement. Approval of the order today would allow it to be considered by the Privy Council on 6 May. If the Privy Council approves the order, the UK will be able to ratify in the week of EEA and EU enlargement. Therefore, I apologise to your Lordships. It was, indeed, a slip-up, but I hope that it will not impede our progress.
The European Commission had prepared provisional administrative measures for the eventuality that not all member states would be able to ratify EEA enlargement in time for 1 May itself. I believe that the UK can be proud of the major part that it has played in ensuring that the conditions are right for EU enlargement to take place. We shall continue to promote and support reform in the accession states, helping those countries to fulfil their potential.
The subject of the order—the agreement signed in Luxembourg on 14 October 2003—together with four protocols, which are not the subject of the order, allow the participation of the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia and the Slovak Republic in the European economic area. The EEA allows our friends in Iceland, Norway and Liechtenstein to participate in the internal EU market, bringing benefits to them and to us in terms of trade and the free movement of people. An effective internal market is crucial to the success of the EU. We must ensure that the market embraces the accession states as soon as they join so that they will be able to trade as liberally as we, or any other EU member states, already do with Iceland, Norway and Liechtenstein.
Through the EEA enlargement agreement, Iceland, Norway and Liechtenstein will make valuable financial contributions to economic and social reform in the accession states over the next five years. Under the terms of the agreement and four associated protocols, Iceland,
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Norway and Liechtenstein will contribute £415 million over a five-year period to help to alleviate social and economic difficulties in the accession states. Moreover. Norway will contribute an additional £393 million to help to facilitate the integration of the accession states into the internal market.
I believe that this is a positive measure for the United Kingdom, ensuring effective free trade between European partners. I am sure the House will agree that it is a welcome agreement that supplements part of the EU enlargement process, ensuring that the full benefits are available to all. I hope that we shall be able to approve the order today. I beg to move.
Moved, That the draft order laid before the House on 26 April be approved [16th Report from the Joint Committed].—(Baroness Symons of Vernham Dean.)
Lord Astor of Hever: My Lords, I thank the noble Baroness for explaining the order. Despite a small amount of confusion which has been apparent in the relaying of this SI, we do not propose to oppose its passage through this House.
As the Minister said, in essence this is a technical measure to translate the agreement on the European economic area signed at Oporto in 1992, to which the accession countries signed up in 2003, into a community treaty. We are pleased to see these accession countries moving forward to full EU membership at the weekend. That is something which we have always supported, and we support this measure, which is designed to allow accession countries fully to enjoy the benefits of sharing in the internal market.
However, I have a small number of points which I hope the noble Baroness can clarify. First, given that this SI relates to accession countries due to accede on 1 May, why is it being brought before us at this time so near to 1 May? What, if anything, does this SI and the translation from agreement to community treaty substantially change? Finally, when does the noble Baroness envisage that ratification will occur?
Lord Wallace of Saltaire: My Lords, we all welcome—indeed, we are all going to rather too many parties welcoming—the enlargement of the European Union which takes place this weekend. I have to accept that the Government must have found it rather easy to forget about the European economic area in all of this. The EEA is a leftover of an attempted negotiation in the late 1980s between the European Community and the European free trade area countries to provide them with an acceptable alternative to membership which did not impose on them the full obligations of participation in the European Union. As I am sure Members of the Conservative Party remember well—they were then in government—by the time those negotiations were concluded, the majority of members of EFTA had decided that there was no viable alternative to membership and that they were better off becoming full members.

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I am not entirely sure whether the Conservative opposition sees the relationship between Iceland and the EU, Norway and the EU or Liechtenstein and the EU as its preferred model for Britain's future association or whether, indeed, it would prefer to reject the EEA as well and take, perhaps, the Swiss position. I heard a Conservative on the radio the other day suggest that Norway was the ideal model for Britain's relationship with the EU. Therefore, I am very pleased that the Minister reminded us that Norway has agreed to become the largest contributor per head of financial assistance to new member states thus reminding the Conservative opposition that one does not entirely opt out of everything one does not want to have if one attempts to renegotiate. Indeed, I am well aware, as I have taken part in conferences both in Oslo and Reykjavik in the past 18 months, of an active debate within both those countries as to whether they would now be better to reconsider and become full members.
Having made that very slightly partisan point, perhaps I may say that we on these Benches welcome the agreement. The EEA is a useful minor part of the European Union's external relations. I hope that once we have got over the celebrations of enlargement, we shall have some time in this House to debate the wider issues of the European Union's relations with its neighbours. After all, its other neighbours are far more difficult than the three covered by this order.
Lord Lea of Crondall: My Lords, perhaps I may add to the point that has just been made. In everything that is done in the European Union, not only in respect of industrial free trade but many of the regulations concerning public procurement, and so forth—the list is very long indeed—Norway, Iceland or Liechtenstein do not sit at the table. Therefore, their interests are not directly spoken to at the time that such arrangements are made, and they are contributing to the funds of the European Union in the guise of the European economic area, which of course, has the characteristics described by my noble friend.
Therefore, this is a very good opportunity to underline the fact that this would be a hopeless formula for a country such as Britain. I think we shall hear more of this question as the months go by.
Baroness Symons of Vernham Dean: My Lords, I thank the noble Lords, Lord Astor of Hever, and Lord Wallace of Saltaire, for the support that they have offered the Government on this order. Perhaps I may say to the noble Lord, Lord Wallace of Saltaire, that we did not forget the EEA. As I attempted to say in my opening remarks, the delay in presenting the order to your Lordships was a miscalculation of the number of sitting days between the day the order was laid before the House and I May. I apologise again to
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noble Lords for that. I hope that that answers the point raised by the noble Lord, Lord Astor of Hever, about why this is so close to 1 May. It was not meant to be quite so close. As I have said, there was a mistake. I am grateful to both noble Lords for being so generous in passing gracefully over that point.
The noble Lord, Lord Astor of Hever, asked what real difference the order would make. It does not make any material difference to the issues covered, but extends the relationship between the European Union countries which are full members today and the three countries concerned to the 10 countries which will join us on Saturday. So it is not a question of changing the nature of the agreement; it simply changes its geographical coverage. When all the EU members have been through their acceptance process, there will be ratification in the usual way and I would not expect that to present any particular difficulty.
The noble Lord, Lord Wallace of Saltaire, asked whether the arrangements for Iceland, Norway and Liechtenstein might provide a model for the future. As noble Lords would expect, I agree very much with the points made by my noble friend Lord Lea of Crondall. We would not be happy sitting in this position in relation to the rest of Europe, but perhaps that is a debate for another day.
I re-emphasise the comments of my noble friend Lord Lea. The British Government value the United Kingdom's excellent relations with Iceland, Norway and Liechtenstein. Clearly, they contribute far more than just an effective internal market. The figures I have been able to give noble Lords regarding the very generous contributions that all three countries arc able to make over the next five years to the economic and social development of the accession countries speak for themselves. I think that her Majesty's Government would be very pleased to support any of the peoples and governments of those three countries were they to choose to apply for EU membership. We would support that wholeheartedly.
I believe that the House overwhelmingly supported the legislation ratifying the EU enlargement last year and by approving the order on the EEA today the House has had an opportunity to reaffirm its support for the inclusion of the accession states in the process of building a competitive and effective Europe. I thank all noble Lords who have contributed to this brief exchange for their support.
On Question, Motion agreed to.

Health Protection Agency Bill [H.L.]
2.28 p.m.
Read a third time.
Clause 4 [Functions: supplementary]:
Lord Clement-Jones Lord Clement-Jones moved Amendment No. 1:
Page 4, line 26, leave out subsection (7).
The noble Lord said: My Lords, when we last debated Clause 4 of the Bill, the Minister laid down what I described as a veritable barrage of legislative

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precedent in relation to his new provisions in Clause 4(7). giving the appropriate authority, by which is normally meant the Secretary of State, the power to direct the agency to have regard in exercising any of its functions to such aspects of the policies of the authority as the authority directs. and also the default powers, to persuade us that there was very good precedent for both aspects of the new amendments he proposed at that time. When the smoke cleared, however—effectively after I had read Hansard subsequent to the debate—it struck me that a number of questions remained regarding what the Minister had said.
There is no dispute between any of the Benches on the question of the default powers. They fall fair and square with virtually every other agency that the Secretary of State for Health has to deal with, whether it is the FSA, the regulators or many other bodies. It is really over the subsection (7) powers that there is some doubt.
When the Minister referred to the new subsection he referred to CHI—Iknow that that is now called the Healthcare Commission, so one must remember to change our vocabulary as time goes on—and CSCI, which I believe has not changed its name. These bodies have a very different role to that of the Health Protection Authority.
The Minister referred to chapter and verse. He referred to Section 131 of the Health and Social Care (Community Health and Standards) Act as regards CSCI, and he referred to Section 132 of that Act, as regards the Healthcare Commission.
The Minister skated very lightly over one matter— indeed, he did not mention it. This is the aspect that interested me when the smoke cleared. The FSA, which has much more analogous functions to the Health Protection Agency, does not have any power of that kind available to the Secretary of State. This is the dog that did not bark in the night. Perhaps the Minister would give us further background on the issue.
The default powers are in Section 24 of the Food Standards Act 1999. There are other powers relating to international treaties, and indeed powers to remove members of the agency, which are quite interesting in the context of the HPA Bill. But there is nothing similar to subsection (7). That seems rather strange. Could the Minister explain why we are adopting this provision when no such provision exists in the case of the Food Standards Agency? I beg to move.
The Parliamentary Under-Secretary of State, Department of Health (Lord Warner): My Lords, I am sorry that the noble Lord, Lord Clement-Jones, has such difficulty with my extensive explanation of our thinking on Report. Clause 4(7) is part and parcel of the revised powers of direction as to the exercise of functions, which we agreed to incorporate in the Bill on Report. I would suggest that removing it would not improve the Bill. It particularly goes together with Clause 4(8). So, they arc part and parcel of the same approach.
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I shall not go through the extensive explanations that I gave on Report, but I should like to focus on one particular point. I shall return to the point about the Food Standards Agency. I would remind the House that Clause 4(7) is virtually identical in terms to the wording in Section 131— subsection (1) in particular —of the Health and Social Care (Community Health and Standards) Act 2003. Whatever else we did in the Bill, we combed through it extensively and had extensive debates on whether those provisions would unreasonably fetter the independence of those bodies and on whether it would put the Secretary of State in a position rather whimsically to give directions to the Healthcare Commission and CSCI. After our debates, the Act on the statute book had virtually identical wording to that in Clause 4(7).
I reiterate to those who are concerned that Clause 4(7) will be used to prevent the agency carrying out an act that an appropriate authority did not believe to be appropriate, that that is not a backdoor way of maintaining the wider power of direction which we removed from the Bill on Report.
The fact that we have not followed slavishly the wording in the Food Standards Act means that we have not copied that Act. We have related the powers here much more to health bodies, and we have drafted the Bill accordingly. The noble Lord shakes his head. He may not like the elegance of our drafting or the wording or my explanation, but my account explains why we have framed this legislation in this way. The legislation on the Health Protection Agency, in terms of this reserved provision in relation to directions, is virtually the same wording as that used in the Health and Social Care (Community Health and Standards) Act. That is the position, and I suggest that it is not necessary to pursue the amendment.
Lord Clement-Jones: My Lords, the Minister has considerable chutzpah in coming back and virtually repeating word for word, except for a few excisions, the statements that he made on Report. Accusing me of saying that there were objections to the Government not having copied slavishly the Food Standards Act is fairly breathtaking. The point is not just that the Government have not copied slavishly the Food Standards Act; they have inserted provisions that were never contained in it. We have got away from the charge that is laid against me.
I accept the Minister's assurance that this is not a backdoor way of giving directions to the agency. It has been limited. I think that the Minister did listen. Whether he has gone far enough, we will have to judge on the actual behaviour of future Secretaries of State in the way they relate to the agency. We have on the record fairly adamant assurances at virtually every stage of the Bill that that power will be used properly and within the policy framework. The precise interpretation of the subsection no doubt will take place on a future occasion. Meanwhile, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Warner Lord Warner moved Amendment No. 2:
Page 4, line 42, at end insert—
"() But subsection (11) does not authorise a disclosure of information which contravenes the Data Protection Act 1998 (c. 29)."
The noble Lord said: My Lords, in moving this amendment, I shall speak also to the other two government amendments in this group, although they relate to slightly different issues.
Amendment No. 2 responds to a point raised by the noble Earl, Lord Howe, at Grand Committee and on Report. I am extremely grateful to him for having drawn our attention to it. We all recognise that the Health Protection Agency, in order to discharge its functions, will need to handle confidential and sensitive information. Quite properly, information of this nature needs to be subject, as a general rule, to various restrictions on its handling. There will, however, be circumstances in which the agency will need to disclose information which it holds to the other bodies with which it works, in order for the agency and those bodies effectively to discharge their functions. There will also be circumstances in which the agency will need to receive information from such bodies, again in order for both parties effectively to perform their functions.
In very many such cases, there is already legislation in place, which requires such information to be protected and provides a basis on which it can be passed to, and received from, others with whom it needs to be shared.
However, it is not possible to say that whatever functions the agency takes on under the provisions in Clauses 2 and 3, and whatever the areas within which other bodies seek its co-operation, there will always he—and in every circumstance—a clear legal basis on which the agency and its partners can share the information that they need to share effectively to perform their functions. There may be restrictions on sharing some information that the agency and its partners need to share. It is for that reason that Clause 4(11) is included in the Bill.
Clause 4(11) disapplies from the agency and its partners restrictions on the disclosure of information. It allows the agency and its partners to disclose information to, and receive it from, each other in some circumstances where they would not otherwise be able to do so. In practice, as far as we can judge, occasions when Clause 4(11) might need to be invoked will not be common. However, it needs to be there, to ensure that the agency and its partners have a lawful basis for any necessary disclosures of information that would otherwise be subject to restrictions.
It is not the case, as was suggested in some of our earlier debates, that Clause 4(11) authorises the agency to disclose personal information to an unlimited number of bodies, or to everyone in those bodies. Clause 4(11) would authorise disclosure where it was necessary for one of the functions specified; but the disclosure would still need to be in the public interest, and it would need to be proportionate if European Convention rights were engaged.
The noble Earl, Lord Howe, raised the question of whether Clause 4(11) would override the requirements of the Data Protection Act. The Bill as currently drafted does provide such an override. The noble Earl, Lord Howe, made the point that the Data Protection Act does not prevent the dissemination of personal data when that is necessary in the public interest. That is an important point, and that is why we have looked at the drafting of the Bill again.
My officials have worked closely on this with the Department for Constitutional Affairs, which is the custodian of wisdom on the Data Protection Act. They have also discussed thoroughly with the Health Protection Agency Special Health Authority and the National Radiological Protection Board—the bodies that currently carry out the functions planned for the agency—what those bodies think the practical implications of modifying Clause 4(11) might be. I am glad to say that in the light of this further work, we have come to the conclusion that it is not essential to disapply from the Health Protection Agency and its partners the requirements of the Data Protection Act. The government amendment therefore makes clear that the requirements of the Data Protection Act will apply.
Turning to the second government amendment in this group, on Report we replaced the words "one or more schemes" with "a scheme" at each point where they then appeared in Clause 8. This further minor change follows through the logic of that change, by making a similar change to the new material that we added to Clause 8 on Report.
Finally, the third government amendment is a purely technical amendment, which simply ensures that Schedule 4 reflects an amendment that we included in Schedule 3 on Report. I beg to move.
2.45 p.m.
Earl Howe: My Lords, I intervene briefly to say how much I welcome Amendment No. 2. which is clearly the product of a great deal of deliberation by Ministers in a number of departments. I am grateful that the concerns that I raised at earlier stages of the Bill on the issues of confidentiality and data protection have been taken on board as seriously as they have been. The amendment resolves a great many questions, but I ask the Minister to say something about guidance on these matters.
The Data Protection Act 1998 is a carefully considered piece of legislation, but even its closest friends would concede that its effects and implications are not always self-explanatory. The fact that Clause 4(11) will be subject to the over-riding provisions of the Data Protection Act is welcome. but the interpretation of the subsection, at a practical level, may leave many people doubtful about what they may legally do and not do. It seems that guidance is required to clarify the principles involved here, not only as to the initial disclosure of personal information and the circumstances where disclosure needs to happen, but also as to what should happen to information once it has been disclosed.

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If a local authority, in pursuit of its duty of co-operation, receives sensitive personal data of a medical nature, who in the authority, and indeed outside, should be entitled to read that information? How should it be stored? Suppose after a while there is no strict need to continue holding the data, because the matter has been dealt with, what should be done with the files? Should the local authority retain the data just in case, or should they be destroyed? All these questions arise as a matter of practice.
The Minister was helpful on Report in putting these provisions into the context of the Human Rights Act, but the duty of co-operation under Clause 5 extends far and wide. It is obvious that the more people who receive data relating to, let us say, HIV-positive men and women living in a particular area, the more scope there is for such data to permeate to unauthorised individuals unless we are particularly careful. The Health Service Control of Patient Information Regulations 2002 are clearly important in this context, but they are not referred to specifically here. It might be thought that they are overridden by the wording of Clause 4(11) I am sure that the Minister will tell me that that is not so, but it might be thought to be so.
The Minister has gone to a great deal of trouble to listen to the concerns raised by noble Lords throughout proceedings on the Bill, and he has responded most constructively to those concerns by bringing forward government amendments. I am extremely grateful to him and to his officials for all that they have done. It seems to me that in several significant, albeit small ways, the Bill is now improved. Furthermore, our debates have clarified both the underlying principles and the practical implications of this legislation, which we all agree is to be welcomed. We wish the agency well in the important work that lies ahead of it.
Lord Clement-Jones: My Lords, very briefly, we wish to support and thank the Minister for putting forward this amendment. Issues now surround the Data Protection Act, and we have already had debates on Starred Questions about whether a review of the Act would be appropriate. Many of us believe that that would be a useful way forward.
As regards the regulations under Section 60 referred to by the noble Earl, Lord Howe, the question of whether subsection (11) overrides the requirements of the Data Protection Act is important, since this has been the subject of considerable debate. This being Third Reading and the last opportunity to thank the Minister for his constructive engagement on this Bill, and for the amendments that have been made, I will do so. I join the noble Earl, Lord Howe, in wishing the agency well with the new powers that it will receive under this Act.
Lord Turnberg: My Lords. I hesitate to prolong the discussion very much, but can my noble friend the Minister confirm that the HPA has indeed had approval from the Patient Information Advisory Group, under Section 60, to use information about
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patients in the public interest without the patient's consent, under certain circumstances that, the PIAG could approve?
Baroness Finlay of Llandaff: My Lords, very briefly, I thank the Minister for having listened so carefully to all the points that have been made at previous stages of the Bill. I apologise that I was unable to be in the House the last time that the Bill was before us, but I formally thank the Minister and the noble Baroness, Lady Andrews, for the work that they did to ensure that the agency will work closely in collaboration with the service in Wales, and that the concerns have been allayed by establishing observer status on the board.
Lord Warner: My Lords, I am grateful for the remarks made by a number of noble Lords. This has been a co-operative venture, in that we have tried to make this Bill as constructive and useful as possible for the new agency. I share their views. We wish the Health Protection Agency well.
On the issue of guidance in relation to the Data Protection Act, it will be open to the agency. I am sure that it will look carefully at what has been said in this House to issue guidance to staff about the way in which the Act should be interpreted and used, based on the plentiful guidance that has already been issued in relation to that Act, and is available to all employers.
Does Clause 4(11) override Section 60 regulations? Yes, it overrides restrictions on disclosure, but only in the circumstances that I outlined, which are specified there. I will write with more details to the noble Earl, Lord Howe, on the relationship with the Section 60 provisions, and to my noble friend Lord Turnberg.
On Question, amendment agreed to.
Clause 8 [Transfer of property and staff etc.]:
Lord Warner Lord Warner moved Amendment No. 3:
Page 6, line 23, leave out "one or more schemes" and insert "a scheme"
On Question. amendment agreed to.
Schedule 4 [Repeals]:
Lord Warner Lord Warner moved Amendment No. 4:
Page 20, column 2, leave out line 33 and insert——
"In section 133(4), after paragraph (c)(i) "or" and after paragraph (d)(ii) "or""
On Question. amendment agreed to.
An amendment (privilege) made.
Lord Warner: My Lords, I beg to move that this Bill do now pass.
Moved, That the Bill do now pass.—(Lord Warner.)
On Question, Bill passed, and sent to the Commons.

Regional Development Agencies and Science
2.51 p.m.
Lord Patelrose to move, That this House takes note of the report of the Science and Technology Committee on Science and the RDAs: SETting the regional agenda (5th Report, Session 2002–03, HL Paper 140).
The noble Lord said: My Lords, I am delighted to be able to present to the House the July 2003 report on Science and the RDAs by the Science and Technology Committee. The committee looked at how to improve, to mutual advantage, the interaction between the recently established regional development agencies—the RDAs of the title—and science, engineering and technology, normally contracted to "SET".
While the committee took account of the longer experience of these matters in Scotland, Wales and Northern Ireland, I should explain that our inquiry concentrated on the nine English agencies which were set up some five years ago. Strictly speaking, only eight of those are RDAs. However, the separately established London Development Agency is essentially the same. My and others' references to RDAs should therefore be understood to include the London body.
Alongside the report, we shall be considering the Government's December 2003 response to the committee's wide-ranging recommendations. Copies of the response are available in the Printed Paper Office, and will be published in a follow-up report after this debate. We shall also need from time to time to refer to the Government's December 2003 innovation reportߞ Competing in the Global Economy: the Innovation Challenge—and the contemporaneous report of the Lambert review of business-university collaboration—which helped inform the innovation report. Both of those reports acknowledge the influence of the committee's recommendations, and I am pleased about that.
I shall also be able to draw on useful material from the RDAs themselves about their actions in the light of the committee's and these other reports. The RDAs have found the report helpful and that is encouraging and pleasing. That material too is available in the Printed Paper Office and will be published in due course.
Before turning to the key points arising from the report and the Government's response, I should like to thank the Select Committee for the honour of chairing the inquiry, and the other members of the sub-committee for making that such an enjoyable experience—most of the time. I am sure that they will join me in thanking the many people who helped us complete our task: those who provided in writing and orally much useful source material, all as published in the 349 pages of the evidence volume accompanying the report; all those involved in a valuable series of visits in England, Scotland and Wales which helped us to understand the position on the ground, as summarised in appendices to the report; our specialist adviser, Dr Marilyn Wedgwood, Pro-Vice-Chancellor of Manchester Metropolitan University, for helping us work through the inquiry's many interrelated strands—her knowledge of RDAs is phenomenal, to say the least. And
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to our Clerk, Roger Morgan, I give especial thanks as this was his last inquiry, and I, on behalf of the committee, wish him well in his retirement. We were also helped by the Clerk who followed, Christopher Johnson, and the scientific adviser, Jonathan Radcliffe. I thank them, too.
No modern economy can be successful without innovation. Much of that innovation is technological, involving the application and exploitation of SET. The English structures for encouraging innovation as a driver of economic growth were substantially changed in the late 1990s with the introduction of RDAs. The starting point of our inquiry was the effect this explicitly regional perspective is having on the national SET base.
I think it is fair to say that at least some sub-committee members started by doubting that the apparent fragmentation of influences on the national SET base could be beneficial. However, we were quickly won over by what we heard and, during our various visits, saw on the ground. RDAs' activities at the interface between economic development and SET can, when properly focused, be a potent force for good.
While the energy and enthusiasm of RDAs' board members and staff cannot be faulted, our emerging concern was that the framework within which they were required to operate meant that their activities were not always focused on the right things. To allow RDAs to focus their activities better, with consequent benefits to regional and national economics, we saw the main needs as greater coherence, longer-term perspectives and reduced bureaucracy.
To that end, the committee made 19 recommendations, addressed to the Government and others. These arise at various points in our report, but are, for convenience, collected together on pages 8 to 10. I will briefly outline the key points, and comment on them further in the light of the Government's response.
However, on a general point, it is a little disappointing that the Government's formal response deals only with the report's individual recommendations. Most Select Committee reports are more than the sum of their specific recommendations. They normally also represent a committee's considered reflection on a particular issue or area of policy. The response provides no introductory section giving the Government's overview of the role and future of the RDAs. It is therefore difficult to infer the Government's overview from the response, or to glean this from the various references in last December's innovation report.
I hope that the Minister, when replying to this debate, in order to set the context for his more detailed points, will be able to give a brief overview on the lines I have indicated. In particular, I would welcome his assurance that the Government plan to involve RDAs as vital partners in developing arrangements for the exploitation of SET.
Turning to the committee's detailed recommendations, we found that the principal handicap for the RDAs—and others—was the absence of coherent policies for the exploitation of SET. Accordingly, our key recommendation—at sub-paragraph (a) on page 8—was that the Government should involve relevant national and regional players in urgently devising and implementing a national policy

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and strategy for SET exploitation that truly integrates national and regional perspectives. I am pleased that the Government's response fully recognises the importance of filling this major gap. It mentions various activities towards this end, and I wonder if the Minister is able to update the House on the progress made and the timetable for completion.
At the operational level, we recommended at sub-paragraph (b) the establishment of a forum to enable national and regional interests to address the impact of and synergy between national and regional SET investments and, as far as possible, harmonise them. The Government's response states their belief that the Steering Group for the Research Councils and RDAs will fulfil this task. My fear is that this body may not be at a level involving the right people to resolve the operational issues. What will the Government do to ensure that their expectations for the steering group are realised? Are there any incentives for the stakeholders more actively to strive for the highly desirable national/regional synergy?
Several regions made strong representations about the mismatch between the Government's emphasis on regional development and reluctance to increase their R&D funding outside the South East in areas that are far from scientific deserts. We illustrated this with 1999 figures, the latest year for which full data were available at the time. Our recommendation at sub-paragraph (c) on page 8 was that the Government should urgently publish the latest possible information about their R&D spend per region and keep this up to date as a performance measure of support for regional economies through nationally-provided SET.
The Government's comment that regions' success in attracting others' R&D funding might be more relevant—and we accepted its value as a regional performance measure at sub-paragraph (f)—I thought missed the point of our recommendation. However, I appreciate that there are more recent data for government R&D spend per region. Can the Minister again say whether later figures show any proportionate increase for regions outside the South East?
Our final recommendation relating to overall coherence—in sub-paragraph (d) on page 8—addressed the need for an analysis of the complex issues in the demand for and supply of SET, better to inform future policies on SET exploitation. The Government's response acknowledges that the thrust of the recommendation was on target, but I should be grateful if the Minister could say whether the activity outlined in the response is now yielding the necessary results.
I now turn to our recommendations on metrics and bureaucracy. Alongside the absence of coherent policies for the exploitation of SET, we found the other principal handicap for RDAs was the government-set framework within which they were required to operate. As noted in Box 4 on page 21 of our report, RDAs are subject to a bewildering array of performance measures. Although SET is both directly and indirectly relevant to a wide range of RDAs' activities, it is mentioned only peripherally in the definition of the eleventh Tier 2 outcome concerning innovation.
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Not only were the wrong things being measured, measurements are made over periods too short to allow necessary longer-term projects to show their worth. Moreover, all that was compounded by bureaucratic demands. RDAs operate under some 1,400 pages of guidance documents which. having been developed at different times and by different limbs of government, contain many ambiguities and contradictions. Accordingly, we made a series of recommendations, at sub-paragraphs (e) to (h) on page 9, about providing RDAs with a simplified and more relevant set of performance measures and reducing their bureaucratic load.
The Government's response notes these as covering similar ground to the National Audit Office's November 2003 report Success in the Regions. Of course, our report in fact predated the NAO's report, but I welcome the indication that the committee's comments will be taken into account in implementing the NAO's recommendations. Is the Minister able to say when he expects that work to be complete?
Specifically on SET, did the Government achieve their indicated target of developing a limited set of innovation indicators by the end of March 2004?
The committee made a number of subsidiary recommendations, addressed principally to RDAs, regional business and higher education interests, about boosting regional capacity and connections on SET-related matters. Time does not permit me to expand on those, although I am pleased to report that RDAs have welcomed these and are tackling them energetically.
There is, however, one particular issue that I should like to highlight before I finish—that of public sector procurement. Small businesses are often the source of the most technologically-innovative products and services. Encouraging their growth is good for the economy and SET base at both regional and national levels. We were concerned to learn that public sector purchasing policies can actively work against such businesses. The committee heard from an Internet company that, solely on the grounds of turnover, was precluded from bidding for a project within its internationally-established competence. Another example was of a small company that could not sell its high-tech equipment needed by the local hospital other than through the German-based preferred contractor.
Accordingly we recommended, at sub-paragraph (p) on page 10, that consideration be given to the case for arrangements such as the USA's small company set aside scheme to help small firms participate in public sector procurements, either directly or as sub-contractors in larger projects. It seemed to us to be a win-win solution: small companies and their regions would benefit from the better opportunities; at the same time, the public sector would benefit from the innovation that is the characteristic of small SET-related businesses.
It is therefore disappointing that the Government rejected this recommendation, particularly as, from the limited steps described in their response to increase the success of smaller businesses in government procurements, they seem to accept that there is a real problem here.

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Two reasons are given for the rejection. The first is that such a move would run counter to the Government's objective of basing all public procurement decisions on value for money for the taxpayer. Neither of the examples I gave had anything to do with the price of the product. Even where that is an issue, however, is there not also a broader value for taxpayers' money in helping to develop a vibrant small company sector?
The Government's second objection was conflict with EC and WTO treaty obligations. However, they have presumably not stood in the way of the present limited initiatives. Can the Government really not explore whether any further elbow room might be available?
I have covered most of the recommendations and I hope that my colleagues on the committee will cover the others. I am aware of the time. I look forward to hearing the views of my colleagues on the committee and to the Minister's reply.
I conclude by observing that, as the relatively new RDAs have paid attention to the role of SET in their economic strategies, weaknesses and opportunities have become apparent in the structures intended to encourage and support SET-based economic development. While some of those weaknesses are matters of process, others are consequences of a deep-seated lack of coherence in the various policy levers. For the good of regional and national economies, all those weaknesses need urgently to be redressed. As indicated in the title of our report, SET needs to be an explicit and integral part of the regional agenda. Securing this now will help ensure our national prosperity in the increasingly challenging years to come. I beg to move.
Moved, That the House takes note of the report of the Science and Technology Committee on Science and the RDAs: SETting the regional agenda (5th Report, Session 2002–03, HL Paper 140).—(Lord Patel.)
3.9 p.m.
Lord Mitchell: My Lords, I thank the noble Lord, Lord Patel, for introducing the debate. The noble Lord was an inspirational and incisive chairman who kept us on the straight and narrow. We travelled to many places in the UK, but I have to admit some disappointment that the noble Lord was not able to get us to visit Dundee. I also have to thank the noble Lord because it was he who co-opted me onto the sub-committee for microprocessors during the next 20 years, which has led to me being on the Select Committee on Science and Technology itself, a role and a position for which I am truly grateful.
I thank Marilyn Wedgwood, our special adviser. As the noble Lord said, she has a phenomenal knowledge of RDAs, and she too was able to guide us through a difficult period of understanding how the various RDAs operate. I have to thank twice over our Clerk, Roger Morgan, for his superb work. I omitted to thank him when we had the debate on microprocessors.
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We have produced a jolly good report. I hope that those people who read it, particularly in the DTI but also elsewhere throughout the country, will take notice of what we have to say. We have made some powerful recommendations.
To be frank, I was left with a series of worries about the report itself. The first was whether we were looking at RDAs too early into their life. Many of them had been going for less than five years, and I wondered if that really was the period when we should be looking at them and seeing how they were doing. Sometimes I had the feeling that we were digging up the plants to see how they were growing. Perhaps we should look at the subject again in three or four years' time. How well are they doing? Well, I am not sure. The jury is out on this, but we certainly saw some encouraging aspects.
My other, perhaps more important, worry about the RDAs concerns how the RDAs themselves operate. I had this feeling that no sooner had they been incorporated than the normal corporatist trappings were being put into the way that they operate. The good and the great were associated with the RDAs: the directors of the public companies, the professors, the knights of the realm. But where were the entrepreneurs? Where were the real customers? We did not see very many of those, and I think that is a great pity. We went to a sumptuous dinner at the splendid offices of the Royal Society in Edinburgh. We had a superb lunch at AstraZeneca in Macclesfield. Speaking frankly, I would have preferred to have gone to the pub with the entrepreneurs in their t-shirts and jeans, and to have shot the breeze with them.
I have this overwhelming worry that the RDAs have become too posh, too grand and too out of touch, and I hope that they keep close to their prime customers, the entrepreneurs and the people who are in the regions. The job of the RDAs is to create the correct environment. It is not necessarily to back winners, and they must become accessible and not remote from the population.
The prime job, I suppose, of an RDA is to generate regional growth and regeneration, but at the moment that is actually happening before our eyes. In our major regional cities which, 10 or 15 years ago, were almost beyond hope, we are seeing some tremendous growth occurring. I think of Manchester, Leeds and Glasgow. Leeds is now a major financial centre in this country. There was an article in the Economist this week that indicated that, for the first time, more people are moving north than are moving south. House prices, as most noble Lords will know, are rising faster in the North than they are in the South. There are economic reasons that propel regional growth. It may even be said that things people might not think are important, such as the Commonwealth Games being in Manchester, or Liverpool being awarded the European Capital of Culture for 2008, actually are important, because they all demonstrate that the regional areas are nice places to live, and they will attract the key people and the key investments that we need in these areas. It is said that while 39 per cent of Newcastle University graduates used to stay within that region after they graduated, that figure is now

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close to half—another positive move. So the RDAs are not pushing against a closed door. The moves are going in that direction, the regions are becoming much more attractive, and it makes the job the RDAs are doing all the more important.
It has to be said that one of the reasons why many of our deprived areas are doing well, the North in particular, is the strong economy in this country. I know it is the usual mantra that will be heard from these Benches, but the facts are true: the lowest unemployment, the lowest inflation and low interest rates. Indeed, a smile crossed my face just the other day to read that the inflation rate is dangerously close to 1 per cent, a point at which the Governor of the Bank of England has to write to the Chancellor explaining why inflation is low. I think that is all good news. We can scoff, if we like, at boom and bust—and I know people do—but stability and steady growth are absolutely key to regeneration, and they bring their own reward. To quote a phrase, "when the tide comes in, all boats rise", and I think that is what we are seeing in the north of the country.
One of the recommendations we make in the report concerns the funding gap. It is a perennial issue that has been discussed certainly as long as I have been involved in economics. The venture capital community in this country has revolutionised investment in the UK, but there are still problems, and so there are roles for the regional development authorities. There are not many angels around who make seed investments. That is a job for institutions, whether it is the University Challenge Fund, or any other body that is supported by the RDAs. But I have found from my own experience that venture capitalists are not really interested in investments of less than £5 million. It is too costly, it takes up too much time, and, who knows, it may be too risky as well. That is something we saw when we were in Silicon Valley on the microprocessor investigation. So it is important that the RDAs are able to fund this gap. How does my noble friend the Minister, who I know has an interest in this area beyond most people, see this issue and what changes are being made with respect to funding the investment gap below £5 million.
I want to draw attention to one recommendation. The noble Lord, Lord Patel, mentioned the small company set-aside scheme, which relies on the importance of government spending on pump priming with regard to small companies. Once more, in Silicon Valley, we saw the benefit. The US Government use their spending money to give a leg-up to small companies. It is hard for such companies to get government funds—they do not know who to go to, they cannot fill out the reports, they do not have the infrastructure. We recommended in our report that the DTI should emulate US small company set-aside schemes. So I should like to ask the Minister a difficult question that I think he needs to answer.
This country is spending probably £10 billion on IT infrastructure investments—in the NHS, Defra and the Ministry of Defence—but I do not see any directive in that spending to support small companies. I should like to know why that is. I have heard the reasons, but I cannot believe them. The first is that when one tenders,
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Europe insists on pan-European Union tendering, and somehow the small companies do not lit in on that. The second is that all governments have had a lamentable history on major projects in the IT sector that have gone wrong, and if small companies are brought in the risk will be increased. Somehow it is felt that we cannot fail again with the NHS, the MoD, and so on. Frankly, I find this all a little lame. We have got to be much bolder in what we do, and we must insist that large companies involve small companies in tendering.
Finally, we have heard about the DTI report on innovation; we have heard about the Lambert report on universities and business; there are various reports from the House of Commons. Is it not possible that these reports could be co-ordinated so that we could bring forward some recommendations that make sense across the board?
3.20 p.m.
Lord Freeman: My Lords, I, too, pay tribute to the noble Lord, Lord Patel, for chairing the Select Committee, on which I was privileged to serve as a co-opted member. The noble Lord's patience, persistence and good humour are quite remarkable. I put it down to his having worked for more than 30 years with real patients in the health sector. For me, a humble accountant, not a scientist, serving on the committee has been a prolonged adult education course., learning more and more about the science base in this country and how government in the public sector can assure that we develop it, as the noble Lord, Lord Mitchell, said, to be one of the most dynamic in the world, at the forefront of events.
I think that the noble Lord, Lord Patel, was being a bit too modest when he said that very soon after the Select Committee's report was published, a number of public sector reports were published. He seemed to imply that these came in parallel. I detect a good deal of influence exerted by the committee and by the report on a number of public sector reports, which I shall mention for the record. The National Audit Office's report, Success in the Regions, was published towards the end of 2003. The Treasury published Bridging the Finance Gap, and the noble Lord, Lord Mitchell, referred, quite rightly, to the funding gap. There was also the DTI's innovation report and, of course, the Lambert review. All four reports drew in some measure—some greater than others— on the work of the committee.
I was impressed by the regional development agencies as we went around the country. The noble Lord, Lord Mitchell, in his typical fresh, invigorating style, said he thought that some of them were "too posh". The further north I went—north of Yorkshire and Humberside, through the north-west, the north-east and Scotland—the more impressed I became, particularly in the north of England, at how hard-working and how directly rooted those agencies were in the business community. I applaud what they have already achieved; I think their individual responses, which I am sure your Lordships will look forward to reading in due course, were very constructive.

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I hope that your Lordships will return, as a matter of discipline, to this subject again in two or three years' time. Parliaments have a great habit of writing reports, listening to the government's response and then all the papers get filed away in the Library. As a discipline, we, as parliamentarians, ought to return to the same subject and see what has and has not been achieved, otherwise the collective memory dissipates and our effect is diminished.
The three points I want to deal with have already been touched upon. I support what the noble Lord, Lord Patel, said about bureaucracy and metrics—that is, the measurement of innovation performance and support. Secondly, I want to refer to the funding gap and the success that universities have in spinning out high technology, with or without the support of regional development agencies. Finally, I should like to say a word on the valuable recommendation made in the report about the relationships between universities and the regional development agencies.
On bureaucracy and metrics, it was interesting to read in the National Audit Office's report which was published after that of the Select Committee that the NAO said that the DTI must allow maximum delegation—that is, delegation of responsibility to the regional development agencies. It said that the DTI,
"must give the Agencies freedom to derive maximum benefit from their private sector leadership and regional knowledge".
Those, I believe, are very wise words.
My noble friend Lord Wade and the noble Lord, Lord Thomas—whom it is very nice to see in his place both have a very deep knowledge of the work of the Northwest Development Agency, to which I pay tribute. In the agencies' response to the Government's report, they raised a very interesting point. They said that they believed that a wider approach to reducing bureaucracy should initially be dealt with at RDA chair and government Minister level. If the Minister could share his valuable experience and much appreciated work with the chairmen of the nine English RDAs, that would be much appreciated. Those discussions will surely complement what the noble Lord, Lord Patel, was talking about—the introduction by March this year of performance indicators for the support of innovation.
The noble Lord, Lord Mitchell, talked about the funding gap. Clearly there has been a problem in funding new start-up technology companies, particularly in the bracket which the noble Lord referred to—between £250,000 and £500,000 and up to about £5 million, for reasons which he spelt out very clearly. That problem is both cyclical and structural. The Government are seeking to alleviate that problem. My understanding is that detailed bidding guidance was going to be given by the spring of this year on how companies can bid for what is described as a pathfinder round of new enterprise capital funds. I am not sure whether that guidance has been issued by Her Majesty's Treasury or the DTI. Such funds are set up to support the growth of small companies which might have been started up inside or outside university with debt finance coming from the Government to support equity raised locally or nationally. That is modelled on the United
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States Small Business Investment Corporation. I am sure that many of your Lordships will have welcomed that initiative and the announcement when it was made in December last year, but we want to see some progress.
The only point I would add to what the noble Lord, Lord Mitchell, said is that in addition to the funding gap, I think there is an entrepreneurial gap. It is very difficult for academics to make that transition from university to the tough world of making money to understand how an idea is translated into a profitable company and how an idea or invention is turned into a product that is needed by the world economy. The regional development agencies have a big role to play because they are rooted in the business community and the advice that they can give to universities in particular is much appreciated and necessary.
My final point is to do with recommendation (r) and the need for greater co-operation between universities and the regional development agencies in strategic working. Universities should co-operate more, in my humble judgment, on a regional basis, in interfacing with the relevant RDA. The RDA can identify the industrial demand—what clusters of specialisation of industrial knowledge exist in the region and what, therefore, is needed in terms of support, not only from the universities within that region but also nationally. I greatly welcome the setting up of science and industry councils by the RDAs and their participation in them.
The Lambert review referred to the DTI needing to shift its pattern of regional support from projects which created jobs to those where there was an opportunity for collaboration between the regional development agencies and universities on important research and development products. It is the research and development as well as the creation of jobs which is very important. Anything the Minister can say on that would be appreciated.
I end by declaring a prospective interest. Along with Dr Kenny Tang and with Mr Ajay Vohora from Nottingham University, I am co-editing a book to be published this autumn on this very subject—the development of spin-outs from universities and how the local business community can succour and support them. In advance, I thank the Minister very warmly for having agreed to write a foreword to the book.
3.30 p.m.
Lord Methuen: My Lords, I too thank the noble Lord, Lord Patel, for introducing this debate on our report on science and the RDAs. He was an able chairman and we would not have achieved what we did without his help. It was an interesting inquiry. We much benefited also from the experience of the noble Lord, Lord Thomas of Macclesfield, whom I am glad to see in his place. His experience as a sometime chairman of the North West RDA was absolutely invaluable to us. We would also have been lost without the expertise of our specialist adviser, Dr Marilyn Wedgwood, and the support of our clerk, Roger Morgan. Roger came into the House when I was sitting on EU Sub-Committee B. Between us, he and I contributed to no fewer than four reports to the House. We also represented the House at the Eureka conferences on

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three occasions. We had extensive meetings around the country, and were able to view the practical aspects of what had been achieved, not only in England, but also in Scotland and Wales.
Those visits brought home to me the disparate nature of the problems with which an RDA is faced. Let us take Advantage West Midlands as an example. Not only does it have the benefit of the leading universities of Birmingham, Aston, Warwick and Keele on its doorstep, but also the run-down industrial areas of the Black Country, with substantial ethnic minorities and unemployment. It has the diminishing ceramics industry in the Potteries, and the rural areas of Herefordshire and Shropshire. Similar circumstances apply for many RDAs, though perhaps less so in the south-east of England. That disparity requires different solutions to promote growth in the various parts of the region. One size does not fit all. A typical solution for rural areas is the enabling of broadband communications for the benefit of both private and commercial users. The RDAs can promulgate that.
The RDAs are a comparatively new creation and there was a substantial learning curve before they began to be effective in promoting science, engineering and technology in their regions. That was in part due to the lack of staff suitably qualified to promote SET, although that situation is now being rectified.
When we were in Newcastle, we had a meeting with the North East Science and Industry Council, which comprised local people who had the relevant scientific and industrial experience and who were committed to their region's future. Such councils have a central role to play in helping to steer the region's regeneration. That point was reinforced by the Government's response to conclusion (k) in our report.
However, the regions do not operate in isolation. They must form part of a national agenda. Cross-regional co-operation and co-ordination are vital and they are occurring. Correspondingly, the regions' relationship with the research councils needs to be optimised. The formation of the steering group for the research councils and the RDAs, as mentioned in the Government's innovation report, will go some way to meeting that necessity. However, I suggest that it needs to meet more than the once a year, which I understand to be the current proposal.
I shall emphasise some other local issues. The RDA has a vital role to play in ensuring that the regional education system, at all levels, produces people with the requisite skills for the regions' industries, particularly for the high-tech industries that are now emerging. We must also remember that we need the craft skills such as those produced by the Modern Apprenticeship Scheme; that is, we need a well balanced and well trained workforce. Those people will need employment in the region. It worries me that the start-up and university spin-off companies may achieve only a fraction of what is actually required, particularly in the regions of our old heavy industry—the north-west and the north-east. Thousands of jobs have been lost there in mining and the heavy industries, yet the new start-ups and spin-offs are providing only tens of jobs each. The arithmetic does not add up.
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The regions can however maximise opportunities by providing premises for start-up companies and expert professional help during their initial years of operation. It has been remarked that many people in university start-up companies are essentially boffins and do not have the business expertise to do the job. Bureaucracy at the start-up stage needs to be minimised. We received several comments that the RDAs were too bureaucratic and too slow to respond at those early stages.
The RDAs should have a greater responsibility for identifying transport priorities and producing a regional transport strategy that covers both passenger and freight carriage by road and rail. Discussions with various RDAs suggested that central government took insufficient notice of an RDA's transport requirements; particularly for rail. A recent Commons Written Answer to Mr Philip Hammond MP stated that the powers of RDAs or regional assemblies—when they come into existence—would be limited to making proposals for schemes of regional importance to the Highways Authority or the NRA. It was emphasised to us that transport is vital to regional regeneration and the promulgation of science and technology. More note should be taken of an RDA's or a regional assembly's concerns to enable it to meet its objectives.
I am glad to see that the Government's response to our report indicates that they have taken some notice of our conclusions. I look forward to the Minister's comments.
3.36 p.m.
Baroness Finlay of Llandaff: My Lords, I too thank the noble Lord, Lord Patel, for his chairmanship of an enjoyable and interesting inquiry. I declare an interest as I hold a university position in Cardiff. I had the honour of serving on the inquiry into science and RDAs and learnt much in the process.
The Welsh Development Agency welcomed a visit from the inquiry team. The agency explained how it promotes enterprise in conjunction with universities in Wales. I hope to illustrate how the WDA has worked towards the "five Cs" recommended by our report: coherence; connectivity; co-ordination; communication; and co-operation. Our report recommended that they should apply also to the English RDAs.
The Welsh Development Agency was established in 1976. Unlike the new English RDAs, it therefore has long experience of trying to serve the people of Wales by stimulating businesses to grow in vibrant communities and to become more competitive. It has been involved in community regeneration across Wales during the decline of traditional industries, being aware that only successful businesses could create the prosperity needed. Most Welsh companies were fairly small and unable to commit large sums to corporate research and development. Although the WDA played a role in supporting science, technology and innovation since the early 1990s, that activity increased considerably following the development of the Wales Regional Technology Plan in 1996. It is now a major strategic activity.
Since devolution, a close working relationship has been established at ministerial and official level between the WDA and the Assembly, especially

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with its Economic Development Committee. The Assembly's national economic development strategy, A Winning Wales, outlined the WDA's framework, identifying developments that are key to the future prosperity of Wales, such as the Innovation Action Plan. The WDA's board is private-sector led and it meets formally with the economic development Minister at, least twice a year. It has adopted a "Team Wales" approach to bring together partners from academic institutions, the Higher Education Funding Council for Wales, local authorities, private sector providers and the Welsh Assembly government.
In Wales, the human dimension of personal networks, short lines of decision-making and responsiveness are particularly helpful drivers to a knowledge-based economy in an increasingly competitive world. Partnerships between public bodies and the private and voluntary sectors are assisted by Wales being, as Roger Jones, Chairman of the WDA described, "a two-telephone call economy". If you phone someone about a problem and they cannot give an answer, they will tell you whom to phone to get the answer. Most things in Wales are therefore two phone calls away.
Against that background, strategic links between the WDA and the university sector have developed for the benefit of all. For example, Cardiff University, which is a Russell Group member, has doubled its research income in the past four years.
The WDA supports applied and collaborative research and outreach to businesses through its Centres of Excellence for Technology and Industrial Collaboration programme, or CETIC. Six of these centres are hosted by Cardiff University, and the funding provided by the WDA enables the university to appoint commercial managers to work at the interface between industry and the academic research teams.
The WDA has been key to the development of strategic all-Wales initiatives based on a critical mass of high-quality research, such as the Wales Gene Park, which is one of the UK's genetic knowledge parks. The Wales Gene Park programme is led by Cardiff University, with links to other universities ill Wales, and the university continues to work with the WDA towards developing the next phase of the Wales Gene Park, which will include a physical infrastructure. The Cardiff Institute of Tissue Repair is another example of the WDA being a catalyst for collaborative developments.
Cardiff University hosts one of the nodes of the UK Grid: the Welsh e-Science Centre. Through financial support from the WDA's Wales Information Society initiative, the Welsh e-Science Centre has been able to appoint specialist staff to bring the benefits of the grid to industry in Wales.
The WDA organises showcase events for Welsh R&D technologies, such as the BioWales and Technology Wales events. I went to BioWales 2004 last month. It is ground-level networking and enhances innovation, bringing together people with ideas and those who are able to put those ideas into practice.
The quarterly publication Advances Wales highlights new science and technology from academic institutions, and companies undertaking R&D in
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Wales. The journal always features articles from the university sector and is distributed widely in Wales and beyond, and through the WDA's offices overseas.
The WDA "field-force", the technology and innovation team, comprises some 65 staff who work closely with businesses. It includes 16 innovation and technology counsellors based across Wales, in Cardiff, Treforest, Swansea, Aberystwyth, Newtown and St Asaph, and also commercial managers in 20 Welsh institutions. The staff individually play an important role in alerting businesses to the expertise and specialised facilities available in our academic institutions, and in bringing opportunities for collaboration to the universities.
The WDA has financially supported academics attending international conferences and trade fairs, to facilitate international research collaborations and technology marketing, and has placed students with industry and businesses to form strategic partnerships. It has collaborated with neighbouring English RDAs where there are areas of common interest, such as with the north-west in aerospace development.
The WDA has also worked closely with universities in developing and funding the Wales Spinout Programme, to support the establishment of new enterprises from Welsh universities and colleges. Through this programme alone, which is now managed by the WDA subsidiary Finance Wales, Cardiff University has created 11 spinout companies since the scheme was launched in 2000. The Wales Spinout Programme works especially well in tandem with the Treasury and Wellcome Trust-funded University Challenge Seed Fund at Cardiff University.
The Technium concept is the brainchild of the WDA and Swansea University. The WDA-managed site provides administrative support and business advice to start-ups and spin-off enterprises as short-term tenants who can then move on as their business grows. Technium is now being rolled out across Wales as cluster-related developments. The optoelectronics sector development, OpTIC Technium, has developed in north Wales, where 40 per cent of the UK optoelectronics capacity is based. The Centre for Advanced Software Technologies was also developed in north Wales, with Objective 1 funding, and the Technium concept is now at the centre of Welsh economic development strategy.
The problems of metrics alluded to in the report have been addressed in Wales, as they need to be addressed everywhere. This is about measuring performance, and was highlighted by our inquiry because GDP and job creation are crude markers of success. Metrics are the subject of collaborative research between the WDA and Cardiff Business School.
Forgive me for continuing to talk about Wales, but this is just a taste of what the WDA has done over the years, to try to find locally relevant solutions to national and international development problems. I am confident that a warm welcome to the inquiry came from the confidence of experience over time and the history of having made a very positive difference to

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Wales. To use the analogy of the noble Lord, Lord Mitchell, I personally believe that the WDA has taken root, and when we went to visit it we were not digging it up to see what was happening to its roots. I hope that the new RDAs can draw on the Welsh experience.
3.45 p.m.
Lord Thomas of Macclesfield: My Lords, I thank the noble Lord, Lord Patel, for providing the opportunity for this debate. When I first met him, the proposed timescale was six months and that frightened the life out of me, because I knew how long it would take me to assess all the ideas about RDAs. However, we did it, although we could have overrun and still hit the target. I would certainly like to thank the special adviser as well because, like the noble Lord, Lord Patel, she taught me in four weeks what would have taken me four years to learn.
I should immediately declare I was not only a co-opted member of this committee but, from 1999 to 2003, I was chairman of the North-West Development Agency. This debate follows a list of complementary reports on RDA operations and involves, for example, reducing the growth rates between regions; the future of higher education, in as much as it involves RDAs; and the provision of support to industries and business—all set up by the House of Commons. Our report predated those later reports, and it is interesting to note that, in general, they confirm our views and conclusions.
There are 350 pages of evidence, but I would like to concentrate on just one indisputable fact when it comes to research and development. It is on page 192 of the evidence, in case anybody wants to check it out. The north-west has the third largest expenditure by private business on research and development, beaten only by the south-east and eastern regions. In stark contrast, it has the third lowest public expenditure on research and development of any region except the north-east and Yorkshire and Humberside, which are the comparable regions in the north. Why is that true, and continue to be true? Does the private sector waste money in the northern regions, I ask myself? Or have we not invested sufficient resources in our northern universities?
If that was true, how would we explain that the splitting of the atom, or the facility to random access computer memory, were invented in our Manchester University, to name just two examples? But these two examples changed the world as we know it. The importance of splitting the atom is self-evident, but RAM—random access memory—gave us what we today call computers, and was invented as recently as the 1950s. Without computers, much of the world would not be able to operate as it does now. It appears to me, and to many others, to be an example of academics' and civil servants' preference for universities in the south-east or eastern regions, with many of those civil servants and academics being trained by those universities, and now living in the south-cast. Only government can change the distribution of public sector investment, and they should not be put off by the self-serving claims that it is all based on peer groups views on excellence. Only recently, a
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couple of university professors in Manchester came to me, trying to raise money for what will be a global breakthrough in medicine. They were told that if they moved south, into the "golden triangle", funding would be no problem. I am glad to say they are not going to move, and their launch will be this autumn; it will he, yet again, of global significance.
We in the North-West Development Agency pioneered the setting up of Science Council, led by Tom McKillop of AstraZeneca, and including leading scientists and industrialists from diverse groups such as the National Health Service, BAe, Pilkingtons, Unilever, AstraZeneca, BN FL and many others. At no cost to the public purse, they provide those services free, and they are very busy men and women. Such science councils are being replicated elsewhere.
We were told that science, engineering and technology in business clusters are the way forward for improving the region's GNP, and, moreover, that the DTI has all the necessary expertise in those areas. Accepting that the private sector apparently knew nothing about those areas of expertise, we asked for some of these people from DTI to be seconded to the regions. As recorded in our evidence, the DTI needed both notice of that question and time to reply. As far as I know, however, no one with such alleged experience was ever seconded to any of the nine regions of England between 1999 and 2003. I understand that that is still the position.
Only the Government can change the Civil Service's reluctance to change attitudes on regional issues, particularly within the DTI. MOR I published a report on a national study of stakeholders' views on RDAs. commissioned by the DTI after RDAs had been operating for four years. The study addressed various issues. I have all the statistics but I shall not bore the House by providing them; but some are very relevant. To the question, "How would you rate the performance of your individual RDA compared with the government office in your region?", 51 per cent thought the RDAs were better and only 9 per cent thought them worse. To the question, "How do you compare that with the local authorities in your region?", 42 per cent thought the RDAs better and only 16 per cent thought them worse. To the question, "How do they compare with all other organisations providing funding and investment?", 52 per cent thought them better and 11 per cent thought them worse. To the question on European funding—which is there for all RDAs to grab; this wits the clincher in terms of funding-60 per cent thought the RDAs better, but 72 per cent thought that the North-West Development Agency was better.
Forgive me for bringing to your Lordships' attention the fact that MORI described the north-west of England as the most successful of the nine English regions in those four formative years. The Select Committee was unsure about the new RDAs, and just five years ago the Conservative Party was totally opposed to their formation. However, the results speak for themselves.

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My conversion on the road to Damascus happened for two reasons. First, I got to know the industrialists and scientists who live in the great north-west, where 7 million people live. Although I had already been aware of it, I was again impressed by their intellectual input and commitment to the north-west. If we ever have a regional assembly, it will incorporate the RDAs and the private sector boards that make up the RDAs. It will have sole responsibility for economic development in our region. Although I know that some of my friends in the House will disagree with me on this issue, it is a fundamental point for me. I also have a lot of experience of the power and contacts of such boards. They have always given us excellent advice.
The previous speaker dealt with the Welsh experience. As a banker for 40 years I learned that, on development agencies, the Scots were way ahead of everyone else. However, when they were given a Parliament they did away with their development agency after which politicians dealt with those matters. The Welsh took a different line by embracing the private sector and all the knowledge of that sector. As your Lordships can probably tell from my accent, I am very pleased to see that the Welsh RDA is doing wonderful work.
Many people of Conservative views have been converted on RDAs. However, Damascus is a long way off for the DTI in Whitehall. We know where the policy is pinching. RDAs have never taken anything from local authorities, but their budgets and powers are continuing to come from Whitehall thanks to the effective support of the Deputy Prime Minister and the Chancellor of the Exchequer.
3.55 p.m.
Lord Wade of Chorlton: My Lords, it is a great pleasure to follow the noble Lord, Lord Thomas. I am delighted that he has been able to join us today and to give me the opportunity to congratulate him on the excellent job he did as chairman of the North West Regional Development Agency. He established it in great style. I hope that it has been able to continue in that direction. I agree with him that it is terribly important that it is business led and that all the development agencies are business led. Whatever changes the Government may decide to bring to the regions, I hope to God that they do not change that very important fact.
I join other noble Lords in expressing our pleasure in working under our chairman, the noble Lord, Lord Patel. One of the great pleasures of being part of this great establishment is to sit on Select Committees. It is always a great pleasure to meet and work with different Select Committee chairmen. The noble Lord brought his great charm and drive to a most enjoyable and, I thought, very effective Select Committee.
My noble colleagues have dealt with a lot of the detail of the report, which I fully endorse. I shall therefore make a more general point.
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In the 1970s and 1980s I was in the food export business. As a major supplier of British foods to the United States I was a member of the United States Cheese and Deli Association which brought together all those involved in that fascinating industry. On one occasion I went to the annual meeting which took place in Loews Hotel, in Dallas. We were given a major address by the then chairman of Federated Foods, an enormous conglomerate in the United States. At the appropriate time we all gathered in a vast auditorium—there were many thousands; it is an enormous industry in America—and waited for the speaker. While we waited, soft music played. A very seductive voice said, "Move forward. Move forward". So we were all ready for something very exciting. Finally, the curtains parted and on to the stage drove an enormous open-topped white Cadillac. Fastened to its front were the horns of an enormous beast. Out of it stepped a little fat man in a white suit. It was he. He walked to the front of the stage and said, "Always question the status quo". I have remembered that very clearly, as I was intended to do, ever since.
To question the status quo means innovation. It is the key to many successful businesses. It is the key to financial growth. It is the key to the growing economy and the extra wealth of our nation. It is brought about by science, engineering, technology and their application in business.
Such wealth creation is the reason why RDAs were set up in the first place. They were set up to ensure that each region of the United Kingdom could achieve the highest regional growth levels in the whole of Europe. To achieve that, there would have to be a higher growth rate in the north-west and other regions than there was in some of our wealthier regions. That could happen only by driving businesses to their limits and creating as much enthusiasm and ability in businesses as possible. That entails an understanding and knowledge at the local level. It is in small entrepreneurial businesses that the great innovation occurs that leads to benefits for products and consumers.
The message that came to me as we went through the evidence and discussed the various issues with the RDAs themselves and with all the various businesses and organisations that gave evidence to us was that the Government agreed and wanted to see growth in the regions but did not quite understand how to do it.
I was interested to receive yesterday a paper that has been brought out by the DTI in conjunction with the Treasury and Department for Education and Skills called Science and innovation: working towards a ten-year investment framework. They put down the problems and ask some questions, one of which is:
"How can the Government and the Regional Development Agencies and their equivalents in the Devolved Administrations help integrate funding of science research on a predominantly national basis with development and delivery of regional economic strategies? In particular how can Government and RDAs strengthen partnership working to facilitate more effective knowledge transfer and research collaboration?"

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The first thing they could do would be to read our report, which would go a long way to explaining the answers. The key is talking at the right level, and giving authority at the right level.
As I listened again to the evidence, it occurred to me that there was too wide a misunderstanding between the power and the influence that the RDAs could bring about, and those in central government who wanted to achieve something but were not close enough to the operators to make it happen. If we want to achieve what both the Government and the RDAs want to achieve, they must give the RDAs more power to get on with things.
They should understand that innovation is not a one-off development that can be created, but is a continuous process; and that, while something might be innovative one year, there could be something entirely different that needs to be innovative the following year. That means that they have to be close enough to the various industries involved in these changes to see how the policy can be changed and new ideas introduced in order to encourage development and to be influential and definite at the local level.
Far too much regulation was placed on the RDAs and there were far too many frameworks for fitting in with government policy. These were not flexible enough and could not be adjusted at the local level in response to these changing needs.
I hope the Government will ensure that our report is not just read and dismissed, but read, considered and acted upon. I hope they will understand that the power of the RDAs to change so much of what they want to see happen—and what needs to happen for our economy to grow—lies in that advice. Let them get on with it; encourage new ideas; give them the resources; and ensure that by monitoring effectively over a period of time we can see more innovative and exciting business developments that are going to be the key to our success.
4.3 p.m.
Lord Oxburgh: My Lords, I add my thanks to my noble friend Lord Patel for his wisdom and skill in guiding this inquiry through to a successful conclusion. I, too, wish to add my thanks to our special adviser, Dr Marilyn Wedgwood and to our clerk, Dr Roger Morgan.
Duly respecting devolved authority, the inquiry was restricted to the English regions. However, we made very valuable visits to Scotland and Wales to learn from their experience. To ensure total impartiality, we selected our chairman from Scotland.
I must confess that before this inquiry got under way and we started visiting the RDAs, I was not entirely clear how they might play an effective role in the support and promotion of science and technology. But having seen first hand some examples of their work and visited them, I am converted and am an enthusiastic supporter.
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Arguably the most important single institution that any region that believes in exploiting its science and technology base can have is a science council. An effective science council can provide a forum in which representatives of all those in the region with an interest in science and technology—whether from industry, commerce, SMEs or universities—are able to meet each other and devise a science strategy for the region.
At the very least this may provide an opportunity for all to know what research and development is going on in the region, what particular needs exist, and what specialist facilities are available. More optimistically, it may offer the opportunity for the pooling of resources and possibly for preparing collaborative applications for funding to external organisations such as central government or the EU. It can make the region aware of opportunities to strengthen the regional science base to the advantage of local industry.
An excellent example of this was the decision of the North West RDA to provide some tens of millions of pounds to facilitate the merger between the University of Manchester and UMIST. In doing so it acquired for the region what must become one of the most formidable universities in the country, extremely strong in a number of important areas of science and engineering.
The same authority saw advantage in putting money into the famous Jodrell Bank radio telescope, recognising that this historic instrument was not only able to attract able scientists to the area but was also an important tourist attraction.
Although there is scope for many different ways of operating science councils and achieving the desired objectives, it appeared to us that a particularly effective model was one in which the council stood alongside the official RDA structure and was business led, but received some infrastructural support such as a secretariat from the RDA. We saw advantage in the science council being able to offer independent advice to the RDA but without the danger of being stifled by possible RDA bureaucracy.
It was a disappointment to us to see that the research councils found it difficult to interact with the RDAs. Occasional meetings do take place, but we got the feeling that their function was rather for the councils to announce from above to the RDAs what they had decided to do, rather than to enter into a constructive discussion.
From time to time the research councils have to make decisions about the location of particular research facilities or research centres. Sometimes there are very compelling scientific reasons why these should be located in a particular place, but on other occasions there may be several equally attractive sites. Given that such facilities invariably feel that they need more money than is provided for them, partnerships with a particular RDA that had a special interest and was prepared to provide a site or a building could offer

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advantage to both the council and the region. I personally feel that this is an opportunity that the research councils are missing.
Although we came across great enthusiasm and a great deal of imagination, one could not escape the impression that some of the RDAs were in the losing game of picking winners when it came to selecting areas of technology that the region wished to promote. The trouble was that time and time again we saw the same winners picked: biotechnology, microelectronics, IT systems and so on, rather than looking for local niche opportunities. Experience shows that identifying and backing bright and energetic individuals is the way to optimise chances of success. To be fair, we did see examples of this where the regions were providing advice and inexpensive start-up incubator units in which new businesses spend their vulnerable years. In passing we discovered that one of the performance indicators used by the DTI in assessing the performance of RDAs was the number of new businesses started. Going forward, it would be much more informative to count the number that were still in business after five years. A 20 per cent success rate would be rather good.
I have just returned from Singapore, which I visit several times a year as a member of A*star, the Singapore governmental advisory committee on science technology and research. It occurred to me during my return flight that, given the population of Singapore at 3 million indigenous Singaporeans and 1 million residents from abroad, its three universities and various polytechnics and so on, it was about the size of a small English RDA, and I was a member of the Science Council.
The east Midlands region of England has around 4.3 million people. At a guess it has a score of universities and colleges, although it is hard to keep track in these days of multiple mergers. In both Singapore and the East Midlands the spend on R&D is about 2 per cent of the local GDP. Why should Singapore appear to be so successful and prosperous? I do not mean to suggest that the east Midlands is not, but I think that most people would agree that there is a bit of a difference. Why in Singapore is there a superb system of roads, an excellent underground system and a major international airport that is both architecturally and functionally outstanding? Why in Singapore do we see the startling developments of Futuropolis and of Biopolis? The latter is a complex of excellent buildings with state-of-the-art laboratories that are attracting research workers from all over the world. Indeed, I know that the Minister has visited at least some of those facilities in the recent past.
There is no time today to address the question of the success or otherwise of Singapore, but the point I wish to make is that great achievements are possible in a socio-economic-geographical area the size of our English regions. However, I make two observations. It is clear that while the RDAs are enthusiastic about stimulating economic growth in their regions, they feel that they are hampered by external bureaucratic
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control, whether it be in planning their road systems or other aspects of infrastructure, or, indeed, in being obliged by Whitehall to meet a series of key performance indicators that may have limited relevance to the problems of that particular region. They do not have significant control over essential resources.
The RDAs would perhaps argue that although the research spend in their regions may in some cases be at the same level as that in Singapore, the difference is that they do not control it. In both cases more than half that spend comes from private industry and therefore it is not controlled by the region. However, the big difference is that government research spend is in the case of our RDAs virtually all controlled from outside the region and to a great extent without the needs of the region in mind. That makes an enormous difference. We know that there are very good reasons for some of the issues, but perhaps everything points in the same direction. If the RDAs are expected to stimulate economic growth in their areas, they must have the tools with which to do so. Those that they have at present are insufficient.
Lord Naseby: My Lords, as a former Member of Parliament for the east Midlands, and perhaps speaking for Nottinghamshire, Derbyshire and Northamptonshire, I am not sure that Rolls-Royce, a Derbyshire company, would feel entirely comfortable about the noble Lord's analysis. Indeed, the same might be true in Northamptonshire, where we do not have a company of a similar size to Rolls-Royce.
As vice-chairman of the All-Party Group on Singapore, I am not sure that the noble Lord's analysis stands up in the manner that he suggests. Surely the difference is that Singapore is a unitary state. It is very single-minded under the leadership of a family business, with Lee Kuan Yew, BG Lee and the present incumbent. That leadership is very single-minded on what Singapore is about. East Midlands as a whole does not wish the regional development agency to be particularly successful; the east Midlands is very successful on its own.
Lord Oxburgh: My Lords, I can reassure the noble Lord. I thought that I had made it clear that there was absolutely no reflection on the east Midlands area. Indeed, I endorse his comments about the businesses that he described. However, if he visited Singapore today—I do not know how recent his experience is—he would find it difficult to parallel the focused scientific energy that one finds there. I could not find it anywhere in this country. There is total commitment of the government and the people to get together and achieve something, and I simply say that our regions do not having anything like that. In a way, that was the point that he was making, but that does not mean that we cannot learn from Singapore.
4.16 p.m.
Baroness Sharp of Guildford: My Lords, I, too, thank the noble Lord, Lord Patel, and the whole Science and Technology Committee for bringing to the

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House this very timely and good report. When it did so, I was not a member of the committee and I did not benefit from the visits that were made but, in the course of my academic life, I have spent a certain amount of time looking at some of the issues covered by the report. From that standpoint, I would like to make a few comments on the debate and, in winding up on it from these Benches, talk a little about the Liberal Democrats' stance on some of the issues.
The Minister and I were both present yesterday afternoon at a session held by the Institute of Biology that looked at the development of science policy. One issue raised there was that of university/industry links, and there was a very good presentation by Professor Gareth Roberts that looked at how we could measure the issue in the context of the research assessment exercise. In that presentation, he produced the old chestnut from which we all start; namely, that Britain is good at science—by any measurement, we actually come close to the top of the league tables in the production of science—but bad at exploitation. Somewhere or other along the line, we produce the ideas but do not manage to carry them through into new products and processes.
I started to think about what I was going to say in this debate, and I was amused to go back to the Waldegrave report. In 1992, John Major put William Waldegrave—now the noble Lord, Lord Waldegrave—into the Cabinet as the Minister for Science, and it was the first time that we had a Minister for Science since 1963. He took that core question—can we explain why Britain is good at science but bad at exploiting it?—to wide consultation before he brought out his White Paper on science and technology in 1993. Out of the White Paper came the whole exercise of foresight.
If we look at what happened to research and development in the UK between 1992 and 2003, we see that the proportion spent by businesses on it fell from 1.39 per cent of GDP to 1.24 per cent. If we look at the course of that instead of only those two points, we see that the low point was 1997, when the figure was 1.16 per cent. The hope had been that, by involving industry in the foresight exercise—getting industrialists to sit down with scientists and government experts and have a look at different emerging areas—it would be inspired to look to the future, which would help to promote R&D. In spite of that hope, it did not work. Other factors, perhaps macro-economic, had overridden this. Thanks partly to the leadership provided by the Government, we have seen an improvement since 1997. I pay tribute to the work of the Minister in being the champion for science and technology. We have seen a turnaround in that area.
The noble Lord, Lord Patel, is correct in saying that there are new drivers in the system. In the 1990s, work was done on what was wrong with science and technology in this country and on what other countries were doing. There is a recognition that the agenda is moving on from wanting merely national leadership. Many countries are grabbing that leadership from below and moving it on.
In looking through the evidence, I saw a nice piece from our Embassy in the United States on a number of initiatives there and I want to quote the example of
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Georgia. The initiative in Georgia was taken because it was missing out on development into a high-tech economy. It was stated that in the 1990s,
"The State of Georgia … invested $242 million in the alliance … through research and development programmes at the six member universities, matched by $65 million in private funds. This investment has helped to attract over $600 million in additional sponsored research. At the heart of the programme has been the luring of 32 'eminent scholars' to chairs at Georgia universities. These scholars serve as a magnet for economic activity, as technology based companies seek to form alliances with the leading scientific talent, often resulting in the location of corporate R&D labs and operations".
That is precisely what we are hoping to achieve in Britain. Not only has Georgia been undertaking this work—it was being undertaken in terms of Silicon Valley, the research triangle in North Carolina, Route 122 at Harvard and, in this country, the Cambridge phenomenon.
The great hope is that we will capture a new dynamism which can drive things forward and the concept of that new dynamism is welcomed by these Benches. We Liberal Democrats believe in constitutional devolution, but we also believe that full devolution cannot be achieved unless there is also economic devolution. The two run side by side and it is important that regional and local authorities have far greater autonomy to make their own decisions.
I am delighted by the degree to which the RDAs are grasping that nettle and I pay tribute to the noble Lord, Lord Thomas of Macclesfield, for the work that the North-West Development Agency has done, for example. However, on autonomy, the development agencies are poor relations to the state of Georgia, to California and to the German Läander, for example, which are able to do their own thing.
Let us return to the age of entrepreneurship when cities such as Manchester and Birmingham were promoting their new tram and electricity systems and so forth. What did they do? They went out and borrowed that money to invest in assets which bore great fruit for many generations. Can the RDAs invest in such assets? The answer is: no; they have no such discretion.
I was very struck by the statement that came from the North-West Development Agency. One general conclusion that emerged from the discussion was:
"Whitehall tended to micro-manage the RDAs with over-concentration on short-term targets of questionable relevance. RDAs needed more freedom to pursue longer-term goals and might usefully assist Whitehall in devising more relevant measures for evaluating success".
I know that that point has been brought out to a large extent by the report as a whole, but one should consider the amount of time that officials working for the RDAs have to spend filling in performance indicator forms. I believe that that point came through strongly from the evidence. Is it not a waste of time? Why cannot we give people more time to get on with doing the job? That type of task pervades all public services, does it not? I feel very strongly that the issue raised by the noble Lord, Lord Freeman, of greater autonomy for organisations to get on with doing their own thing is of vital importance.

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The noble Lord, Lord Oxburgh, talked about Singapore. I frequently make the analogy with Ireland. Ireland's great advantage was that it did not have the Treasury. I know that Ireland had many advantages with an enormous amount of structural funds going into the country.
I was also struck by a point that arose from the evidence from Northern Ireland. Perhaps I may quote a paragraph from the report because it is quite telling. It indicates the advantage of setting a long-term target and pursuing that target over a given period of time with leverage. Again, Northern Ireland has the advantage of having structural funds available. I quote from the evidence given by the Centre for Urban and Regional Development Studies at the University of Newcastle. It said:
"We would draw the Committee's attention to the case of Northern Ireland, where the IRTU were able to mix a range of EU, national and local policies to revitalise their research base. A central focus of this activity was in improving the research performance of the University sector; ERDF [the European Regional Development Fund] for example providing support for recurrent costs, infrastructure costs and new research establishments which very quickly moved to win other funding, from EPSRC, Framework Programme and through the RAE, with the effect of raising their game.
"The main benefit came from focusing on strengthening the research base".
All those very important, long-term activities—mutually reinforcing activities—if pursued over a longer period of time really reap benefits.
The other point that I want to make relates to people. The noble Lord, Lord Mitchell, said that the RDAs are full of the great and the good. They have people such as Sir Tom McKillop of AstraZeneca. He is a fantastic person and I am delighted that he is leading the science council. However, they are dominated to some extent by the big investors—the multinational companies—and if we look at the miserable record of business R&D in Britain, the big problem does not lie with the big companies. We know that organisations such as the pharmaceutical companies, Rolls-Royce and British Aerospace are putting a great deal of money into research. The problem arises from the fact that our small and medium-sized businesses are not putting money into R&D. When they are pressed, they do not have the knowledge to go up-market. Instead, they go down-market, the competitive pressures are even greater and they go out of business. We know that small and medium-sized companies that have an R&D presence and can move up-market often succeed, whereas others fall by the wayside.
Therefore, one big question is: how can we get such small and medium-sized businesses to pick up and use the science base? They will not naturally go along to their local university and say, "Hi, I've got a problem", but it is vitally necessary that we pull them into the networks. The networks need to be wider than just our universities. We need to embrace our further education colleges, which have a lot of technical expertise. If we were in Germany they would be pulled in through the Chamber of Commerce. The small and medium-sized businesses would have access to this
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expertise because they would meet side by side at the Chamber of Commerce. It does not happen in quite the same way here.
We have a large number of measures to promote R&D. Starting from the university sector, there is Higher Education Reach-out to Business and the Community Fund (HEROBAC), which used to be called HEROIC, and there are other measures that encourage links. However, we also have tax credits which encourage companies to undertake R&D. The UUK study on university and industry links raised the possibility that perhaps too much investment was going into the kind of measures which encourage capital investment and not enough into those which encourage people.
The Germans had a very good scheme, which they introduced in the mid-1970s, when they were worried about R&D in small and medium-sized businesses, which subsidised the salaries of those engaged in R&D in those businesses. By the mid-1980s they withdrew it because they reckoned that the problem was solved. They reintroduced it with a new lender in the early 1990s and it ran throughout most of the 1990s.
I wonder whether that might be an idea that we could consider in terms of trying to pull in small and medium-sized businesses. Certainly, this whole issue is a central one. There is a need for the RDAs to be involved in the skills and training agenda in pulling together these networks of support for industry within the region.
As I have said, we welcome the report, which is very much along the right lines. I hope that the Minister takes note of its recommendation.
4.32 p.m.
Lord Glentoran: My Lords, it is almost with fear and trepidation that I attempt to follow the superb contribution of the noble Baroness, Lady Sharp. I am not a scientist or an academic, but her breadth of knowledge and enthusiasm has really added to the debate today.
I thank the Select Committee for this excellent report, which is informative, readable and commendably to the point. It is the second seriously punchy report to government that I have read in recent days. I highly commend the committee.
The report highlights the importance of innovation in many industries, including aerospace, pharmaceuticals, software, engineering, medical technologies, and so forth. I share the view that innovation is an important driver to economic growth. Accepting all of that, it is disappointing to read in the DTI's innovation report published in December last year that Britain still lags behind its competitors in R&D investment. Where the UK spends 1.25 per cent of GDP on research and development, the United States spends 2.06 per cent and Germany 1.75 per cent. If government expenditure on defence is excluded to identify only non-government business activity, the UK's investment level is even lower and is already less than the OECD average. That is not a good picture.

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Bearing those figures in mind, it is necessary to examine why this lag exists. To that end, this report makes some important observations. At the heart of the report is the reality that for innovation to occur and for this to translate into commercial products and services that are competitive in the global marketplace, UK firms need to be able to harness our expertise in science, engineering and technology. For too many years and generations we have been the inventors without being able to convert that into product and profit for the nation.
In paragraph 1.5 the report concludes that while there is a great deal of activity at all levels encouraging the exploitation of SET for economic gain, that has been complicated by the introduction of the nine regional development agencies.
I shall turn to a few references within the report because I am anxious that the Minister should respond and say what the Government are doing about the report and its negative comments. The report has been out for nine months, so they have had time to think about it and to get the matter together.
On page 8 we have the five Cs, so ably outlined by the noble Lord, Lord Patel, at the beginning of the debate. Where are we on that? On page 21, referring to RDAs and RDA targets, the EEDA and Universities UK comment:
"Tier 2 targets remain a stumbling block for delivery of complex and strategic activity at regional level".
That does not sound like a good omen. On page 22, paragraph 3.28 states:
"On the basis that what gets measured gets done, we recommend that the Government should work with the RDAs urgently to develop simplified performance measures that take better account of SET's [Science Engineering and Technology] importance in economic development, and accommodate both realistic timescales for results and the differing circumstances of individual regions".
The noble Baroness, Lady Sharp, made the point that timescales are very relevant and that much of the Government's policies are too short-term. They have to become longer-term and more far-sighted, with better commitment to capital funding of one sort or another.
On bureaucracy—the bane of any government's life, but this Government seem to be the worse yet for bureaucracy—the committee states in paragraph 3.30:
"However, we heard many concerns that the bureaucratic demands to meet this accountability were unnecessarily burdensome and sometimes contradictory".
That is followed through by a comment from SEEDA. It states:
"We have to conduct our business in accordance with numerous guidance documents totalling some 1400 pages [which] have been developed at different times, often in isolation from each other and inevitably embody contradictions and ambiguities as they come from several departmental sources".
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What hope have the universities, RDAs and others of getting together with this sort of environment and background?
The report continues on page 23 that the Better Regulation Task Force noted:
"When we looked at the delivery process from Whitehall to the ground level, we found too many initiatives, confused accountabilities and overly bureaucratic monitoring and reporting systems. We recommend that the centre delivers a programme of reviews focused on local delivery issues which cross departmental boundaries".
What position have the Government reached on that issue?
Paragraph 3.33 states:
"Regardless of developing the stronger bottom up approach to performance measurement … we recommend that the Government should reduce the bureaucratic load on RDAs and work with them to ensure that its guidance is reduced to the essential minimum and is, in any case, made consistent'.
On page 32, on support schemes, the committee states:
"There is no shortage of support schemes … Indeed, there are far too many schemes, leading to high transaction costs in applying for and administering them, and wasteful confusion and lost opportunities under complicated rules".
Then there are the comments of Dr Keaton of Campus Ventures on the Better Regulation Task Force. He said:
"When we looked at the delivery process from Whitehall to the ground level, we found too many initiatives, confused accountabilities and overly bureaucratic monitoring and delivery systems".
If one goes on through the report, as I and I am sure other noble Lords have done, certainly the early part is full of such criticisms. They are real and objective criticisms. I am sure that the committee made them as objective criticisms to be tackled by the Government and by the department.
I turn to the section on public sector procurement. Other noble Lords have talked about the funding gap. On page 34, paragraphs 4.52 and 4.55 state:
"The growth of any sector depends on businesses securing orders … We were concerned to learn from Mr Wren-Hilton that his Internet company was precluded from bidding for a project within its technical competence (and in which it had a good international track record) solely on grounds of turnover".
The day before yesterday, I was fortunate to have a meeting with a lady from the Ethnic Minority Business Group, and she told us that this was one of the major problems for ethnic minority business groups getting business. She told us that more than 50 per cent of ethnic minority entrepreneurs skipped round these barriers and took their business offshore using international agents. The cost of entry for innovative entrepreneurs is too high, and it is too high because of overregulation. The report makes that point abundantly clear.
However, all of the regional development agencies place an emphasis on SET in their economic strategies. Relationships are complex and widely varied. The report goes on to suggest that work is needed to rationalise activity to allow for better SET exploitation. It argues for coherent longer-term perspectives and reduced bureaucracy—the points that I hope I have been making to your Lordships. In paragraph 6.37, the report says that

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national leadership is required on exploitation of SET to provide the right drivers and processes for the exploitation of SET for economic gain. The report calls for the five Cs, to which we have already referred. Looking specifically at RDAs, the report recommends a revision of current accountability and targets to take into account the importance of SET in economic development strategies. An incoming Conservative government will work with RDAs, business interests in the regions and local authorities to reform RDAs to create effective, business-led, economic regeneration vehicles in those areas where regeneration is required, and to focus the RDAs on innovation, capacity building, entrepreneurship and the skills base in those regions where this agenda is more appropriate.
In all cases the RDAs, if they are to provide a valuable contribution in the future, need to be genuinely business-led, but also need to be accountable to the communities they serve. There is a delicate balance to be struck, and Conservatives will engage with business and local authorities to ensure that the balance is right, so that properly restructured, business-led RDAs can play their part in addressing local needs.
One other point that I have not made is the possible introduction of regional government. That will increase the confusion and the bureaucratic complications, but that is not a point that I should be making from this side of the House at this stage. It is not part of this report, but it is yet another possible difficulty on the skyline for our business ventures.
In summary, this is a very worthwhile and interesting report. I hope that the Government will study its recommendations carefully. The Government's primary role is to provide the strategic direction and framework, which is the five Cs that the noble Lord, Lord Patel, and his committee have laid down clearly. Their role is to ensure that the five Cs can be applied, and that SET can be harnessed for the economic benefit of local communities. If this is achieved, it will surely reap rich rewards for the United Kingdom.
Just to refer once more to what was said by the noble Baroness, Lady Sharp. noble Lords will know that I am a Northern Ireland man. I come from Northern Ireland, and I have experienced and seen at first hand the incredible growth of the Republic of Ireland. I have also seen what can really be done with a community of 1.3 million people, when the infrastructure is right and when the communications are right. There has been such growth, despite the terrorism and everything else that has taken place in the past few years in Northern Ireland, because it is a tightly-managed and tightly-knit community, with totally committed entrepreneurs, and close relationships with competent civil servants. I believe that it is an example. The Republic of Ireland has done the same, again for the same reasons. If the infrastructure can be got right, if the bureaucracy can be reduced to a sensible level, and if the directives can be held and contained to be positive and objective, we will have a great future in this field ahead of us. This report points out of all of this very clearly, and I congratulate the committee.
4.44 p.m.
Lord Sainsbury of Turville: My Lords, I am grateful to the noble Lord, Lord Patel, for his opening speech this afternoon and for drawing the attention of this House to the report on science and the RDAs, which was published last summer by this House's Science and Technology Committee. I also thank other noble Lords for their contribution and insights this afternoon. We have had a fascinating debate, bringing together two areas of key importance to the Government—the growth of the UK science base and increased prosperity for UK regions.
The Government welcomed the conclusions of the report when it was published last year. I should say to the noble Lord, Lord Glentoran, that we have already responded to the report and have taken action where we think that is appropriate.
I am very pleased that the committee has been converted to the value of RDAs and indeed converted to the view of the enormously important role they can play in innovation. That is a view that we have been pushing extremely hard in Government for the last four or five years, and I hope that the committee will go on communicating this message both to business and indeed to other political parties of which they are members, so that they too realise that the issues of RDAs and the RDAs' role in innovation are extremely important for the future of this country.
The noble Lord, Lord Mitchell, said that we had had a lot of reports. I do not make any apology for that long list of reports, because that is how we convince people of the importance of innovation and of the science and technology agenda, and indeed of the importance of that to the regions. We have had a whole series of reports, going back to 1998. We started with one on biotechnology clusters, we then had Excellence and Opportunity, which set out the science agenda and what we needed to do, but which also made the point that that was all about innovation. We also started some of the initiatives on innovation.
We had the White Paper, Opportunity for All in a World of Change, in which we first set out that approach. That report refers to the need to change regional policy away from merely trying to create jobs of any kind to a strong focus on innovation as the means of improving regional prosperity. We have now had Investing in Innovation, which again deals with the people issues and how we support our best young scientists. We had various ideas on fellowships and improving science in schools. Recently we have had the innovation report. I make no apology for those reports. That has been a major campaign to change people's views and I welcome the committee's report supporting this general approach enormously.
I shall reply to some of the points made on specific issues, but I will first set out our policy on the UK science base and the role of the RDAs. Investment in the UK science base is at the heart of the UK's national economic strategy. We believe that in an increasingly global economy, science and engineering skills—and a supply of new ideas—are crucial to the UK's ability to compete in high-technology, high value-added sectors. We need to do that because increasingly in this global

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world we have to compete with countries such as China where the wages are 5 per cent of what they are in this country. We will not be able to compete on the basis of low costs. We have to compete on the basis of innovation.
The UK already has an excellent science base and this Government have taken many steps since 1997 to ensure that we do not fall behind our competitors. When we came into government the science budget was £1.3 billion; today it is growing at 10 per cent per annum in real terms and will be £2.9 billion in 2005—06. So when the noble Lord, Lord Glentoran, complains about the level of science spending by government in this country, he should remember that we would be a lot worse if it was not for the action of this Government. The previous Conservative government presided over a disastrous fall, not only, interestingly, in government research—which as the noble Baroness said fell dramatically—but also in business R&D, which fell from something like 1.5 per cent to 1.16 per cent over the last period of Conservative government. So it was not only government spending which went down; business R&D went down because the view was not held that that was where the future of the country lay. That situation has now changed. The figure came down to 1.16 per cent but, as the noble Baroness, Lady Sharp, pointed out, in the year that I became a science Minister it turned round and business R&D started to move up and is now at 1.24 per cent. That is still not anywhere near where we need to be but there are many policies in the business innovation report for increasing it.
We have also made significant investments to improve the scientific infrastructure of the UK which, in many cases, was falling apart. Over the next two years we shall move up to spending about £500 million a year on the scientific infrastructure, £350 million of which will be for ongoing development and £150 million to catch up on the nearly £2 billion shortfall in the scientific infrastructure.
On the back of the growth in funding and the renewal of our science base we are now in a position to look forward to where we want UK science to be in the next decade. The Government will therefore be publishing alongside the forthcoming spending review their framework for science, technology and engineering research and innovation over the next decade. That, again, is a sign of the Government's commitment to spending on the science base.
In it we will set out the direction in which policy will need to continue to develop to make the most of our investment in the science base and to identify how this will contribute to economic growth and the Government's public service priorities. The framework will provide a clear lead to all those who invest, and want to continue to invest, in our science base, including universities, business and the RDAs.
We are extremely pleased at the way in which the RDAs in England and similar bodies in the devolved administrations have picked up the challenge of how we support science and innovation in the regions. In 2002—03, the RDAs committed themselves to invest £240 million in science and innovation-related activities, some 15 per cent of their total budgets. Most
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RDAs have identified science and innovation as high priorities in their economic strategies, recognising the benefits it will bring.
I agree with my noble friend Lord Mitchell that this is an early moment to look at science and innovation policy in the RDAs; it is very much a developing story. The original task of the RDAs flowed very much from the bodies they took over, which were concerned with property and regeneration. We then established the innovation fund, which was the beginning of their use of innovation in their strategies.
My noble friend Lord Mitchell told us of his lunch at AstraZeneca. I should say to him that the whole story of science and industry councils started in the north-west. It was originally put forward by businessmen and scientists in the north-west as a result of Diamond Synchrotron. One of the suggestions to come out of that was that a science and industry council should be established, and I was very happy to persuade Sir Torn McKillop to lead it.
It is absolutely essential to the success of science and industry councils that they are led by either distinguished businessmen or scientists. That is what gives them credibility; that is what encourages other businessmen and the universities to take them seriously. Sir Tom McKillop has done a fantastic job for the north-west in this respect, as Sir Ian Gibson has done in the north-east. They have led the way in how to use science and industry councils to make these changes. We have encouraged all the other RDAs to set up science and industry councils on the back of that good performance, and I am glad to say that they are now all committed to doing so.
Any idea that my own department, the Department of Trade and Industry, was against this development and somehow held it back is quite wrong. The DTI took the lead in sponsoring innovation in regional policy and in the establishment of science and industry councils, and it is greatly to its credit that it did so.
The RDAs' approach to supporting regional science and innovation has been diverse in scale and direction, but that is how it should be, reflecting the different starting points of each region and their individual challenges. Some have funded the physical infrastructure of clusters, others have co-funded university research and supported technology transfer. Many of the RDAs have now established Science and Industry Councils, and they are all going to do that.
Given the historical concentration of research funding in the Golden Triangle in the south-east of England, some have argued that we are allowing our goal of world-class science supporting UK-based innovation to override the Government's regional economic goals to increase prosperity and reduce the gap between regions. I do not think this is the case. We have to balance these two objectives. On the one hand there is the need for excellent world-class research universities; on the other, getting money into the regions and supporting regional growth. I think we have done that in the right way, which is to give substantially larger budgets to the RDAs in the regions that have traditionally performed less well, so that they can use that money as they wish.

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Rather than having science and technology budgets, we have now adopted the strategy of the "single pot", which is about saying to RDAs that they have a single pot of money to use as they wish, and if they wish to spend it on science and technology, we support that. I think that is the right way to go. What we do not want to do is micro-manage it. If one is to devolve authority, one has to give money to people and let them make the decisions. They can then tension spending on science and technology against their other regional objectives. What is key to this whole issue is that the proper connectivity is achieved at a regional level.
In its report, the committee succinctly concluded:
"The main message of our Report is the need for coherence, longer term perspectives and reduced bureaucracy … The primary need is for a clear sense of national direction and purpose to create the conditions in which all stakeholders can make their optimal contributions … The message can be summed up in the five Cs—coherence, connectivity, coordination, communication and co-operation. Applying these to the exploitation of SET will improve the growth of regional economies, with consequent benefits for the nation as a whole".
We very much accept that view.
I would, however, make one organisational point, one that comes from my experience in industry. If one has delegation or devolution, one has to stick with it. What always happens in these things is that people say "We will delegate to a particular division or region", which is immediately followed by people saying "Ah, but we have to have coherence. We have to co-ordinate everything." If one does that, one ends up with bureaucracy. So I do not think the committee can say that it wants devolution, delegation, coherence, co-ordination and no bureaucracy, because that is not the real world. Delegation means that some things will not be co-ordinated, as regions will do what they think is right for their region. We must have the courage to say that we believe in delegation, which will mean some things will not be co-ordinated, but people will have ownership and get the co-ordination and delivery right at a regional level. That is a more important objective.
The noble Lord, Lord Patel, asked about the Government's approach to RDAs and regional innovation. Our overall approach is set out very fully in the innovation report, Competing in the Global Economy—The Innovation Challenge. A whole section of that report is entirely about the regional innovation agenda, and in it we make a whole series of proposals that are directly about how we see science and innovation within regional policy, including a proposal about science and industry councils. It had important recommendations about regional selective assistance. Instead of simply concentrating on the number of jobs and using that as the only criterion for inward investment, innovation—that is, research and development—is now the measure. There is no point in having inward investment when it is a question of a
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number of low value jobs which will not have a great deal of long-term success. We want to import into the regions high value-added jobs which will contribute to their innovation and dynamism.
There were proposals about adding on to the manufacturing advisory service, which is delivered at regional level, services related to innovation and design. That is another way in which we can contribute to the regional agenda. The Lambert report contains many aspects which go in the same direction.
I think I have covered the points that the noble Lord, Lord Patel, raised about the integration of government policies. Let me say a word about the links with the research councils. We have a forum for the OST, RDAs and other key players to address the impact and synergy between national and regional SET investments. The steering group for the research councils and the regional development agencies was formed in 2003. It provides a high level of strategic advice to develop the relationship and to provide a communication channel between the RDAs and the research councils. To facilitate the development of outcomes from RCUK and the RDA meetings on RDA innovation, we have established a more operational level science and technology group, which includes representatives from the RDAs as well as from the OST and DTI.
The noble Lord, Lord Patel, also asked about government statistics about government R&D in different regions. The figures for 2000–01 show a proportionate increase for the north-east, north-west, Yorkshire and Humber, east Midlands and east of London. But there is a huge skewed distribution of government institutions across the country. This is an historical fact.
Very few new facilities are being built in this way. The whole move is towards putting the research much more into universities rather than stand-alone institutes. There are very good reasons why that is happening, although I shall not go into them now. So new research institutes are not being built. In addition, I do not think these are nearly as important to regional growth as what is happening in the universities. That is where we are seeing the most innovation and change which is relevant for regional growth.
While the RDAs are saying that we should put more research money into the north and the midlands, the South East England Development Agency is asking why they do not have a pot of money like they have so they can support knowledge transfer in the south-east.
The noble Lords, Lord Patel and Lord Mitchell, both raised the major question of whether we should follow the USA and have a small company set-aside scheme. There are, I am afraid, very clear international reasons why this is difficult to do in the EU. More importantly, however, is the fact that we change our procurement policies at all levels to make them support innovation rather than an old, traditional view of value for money. The innovation report shows the importance we attach to procurement being changed to support innovation in suppliers. This applies to all levels of business.

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The Secretary of State for Trade and Industry, Patricia Hewitt, is leading a cross-government team which is considering, as one of its main issues, how we change the £109 billion of government procurement so that it focuses more on innovation in suppliers. Of course, this is a major task because it is about changing around the whole way in which procurement is carried out to give value for money while also taking innovation into account. We have had the Small Business Research Initiative, which is again based on an American scheme, to bring money for research into small companies. That does not have nearly enough drive behind it, so we are changing it to achieve more.
The noble Lord, Lord Methuen, raised the question of transport. The Department for Transport regards the RDAs as customers rather than the people who will make transport decisions, but we all agree that transport is a key part of regional development and we must keep it under review.
I shall respond to a few other points that were made during the debate. My noble friend Lord Mitchell asked about regional venture capital. We have the regional venture capital funds, but I agree with him that the key area is business angels. They are still very unevenly spread across the country. We have a strong business angel community in some areas, but we need to extend it across the country.
In addition, the Enterprise Capital Funds are coming forward. I have a great personal interest in them, because I wrote a Fabian pamphlet in 1982, arguing that we should look at small business investment companies in America and see if we could copy them in this country. I was therefore delighted when the Chancellor said in the last Budget that he would look at them. It seemed that the Fabian Society motto—"the inevitability of gradualness"—was for once coming true. That move will give further support to that kind of small business.
I am delighted that the noble Lord, Lord Freeman, is writing a book on spin-offs. There is a very good story to be told of a dramatic change in British culture. Those stories relate in some sense to schemes such as science enterprise centres, to HEIF and to University Challenge, which, if nothing else, have changed the climate in universities.
The noble Baroness, Lady Finlay, and a number of other noble Lords drew attention to one of the most interesting aspects of the whole area of innovation across the world, which is the extraordinary performance of small countries with a typical population of 3 million to 5 million. That is true of Finland—which has enjoyed one of the most dramatic changes—Ireland, Israel and Singapore. That is the size of the average US state. The message seems to be that if one wants to co-ordinate matters and bring all the players together, one can do it more easily in a population of 5 million, whether it is a US state, an RDA or a small country. That demonstrates the importance of co-ordination at a regional level. It is why the RDAs are particularly successful.
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My noble friend Lord Thomas of Macclesfield spoke about strengthening capability of regions. I totally agree with him. We are looking at whether there is a way in which we could do that as part of our spending review.
The noble Lord, Lord Wade, happily reminded me of a body that I thought had gone out of my life, which is the US Cheese and Deli Association. I thought that I would never come across it again in my life, so it was nice to make contact with it again. I have already alluded to his point, that delegation is not a "yes or no" issue. It is always about what you delegate and what you do not delegate. We are still trying to work out that relationship properly with the RDAs. It is quite a subtle relationship. We want to delegate to them, but it would be an absurdity if every RDA were to begin producing its own forward look on the biotech industry. That should be done centrally. There is otherwise always a danger of their going to a consultancy, which produces the North West Strategy for Biotechnology, promptly followed by the consultancy selling the same document to the north, the south-west and the east of England and so on. The overall strategy needs to stay in the centre, but we should delegate much more of the operational side. We are working on that.
The noble Lord, Lord Oxburgh, raised the question of picking winners. The RDAs started off picking very much the same areas. That has changed. They are now much more selective and much more inclined to look at where they have areas of strength, be it in aerospace or the chemical industry, and to realise that it is more important to make certain that those clusters are working efficiently.
The noble Baroness, Lady Sharp of Guildford, raised the question of business R&D. Suffice to say that it is now going up. We see this as one of the most important objectives, and in terms of the framework for science and innovation, it is one of the targets we will pick up from the innovation report. We want that figure to be a leading figure in the major countries of Europe.
The noble Lord, Lord Glentoran, talked about the business support scheme. We inherited over 100 business support schemes when we came into government, and are now in the process of whittling that down to 10. That simplification is enormously valuable to industry.
Finally, the noble Baroness, Lady Sharp, raised the issue of the dynamism of our economy. That is already beginning to take place. The noble Lord, Lord Mitchell, pointed to what is happening in places such as Manchester. Some very interesting figures have been produced by Citicorp, showing that we in this country have a rather strong position in terms of high-tech manufacturing and knowledge-intensive services compared to the rest of Europe. We are beginning to see the value of the flexibility in the British economy in enabling growth areas to progress very fast, and that is helping our industrial performance. On the ground, one can see the importance of science and technology innovation to our future success.
We have had an opportunity to air some very important issues this afternoon, and I am grateful for the inputs of all noble Lords. As your Lordships have

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heard, the Government have already taken action to implement many of the report's recommendations, and will continue to refer to its findings in the future development of policy. The UK has many scientific assets of which it can be proud. It is now up to the Government, RDAs, universities and businesses to make the most of them, and to ensure that they are connected fully to the regional and national economies.
5.12 p.m.
Lord Patel: My Lords, I could not have wished for a better debate, and I thank all noble Lords who have participated.
It is traditional at this stage to pick up on some of the points, but I shall not do that because we have had a full debate. All the speakers paid tribute to me as chairman. Let me pay a tribute in return: it was a pleasure to chair the committee. All the committee members, as evidenced in their speeches, are colourful characters. That made it a pleasure. I might regret my next comment, but if I were asked to do so again with the same membership, it would be a pleasure.
I sincerely thank the Minister for answering all the questions fully. We all know that he is a champion of the need to promote science and technology, and his answers, given at length, typified that. We are
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fortunate to have a Science Minister who has a full understanding of the issues related to the promotion of science and innovation.
Several noble Lords, as did the Minister, made the point that the RDAs are developing, and have been in existence for a relatively short time. It would be appropriate to have another look at the problems of RDAs in three to four years' time, and I am sure the chairman of the Science and Technology Committee has noted that.
Lastly, a true entrepreneur never misses an opportunity, as demonstrated by the noble Lord, Lord Freeman, advertising his book—not only naming the authors, but linking the Minister in promoting the book.
On Question, Motion agreed to.

Planning and Compulsory Purchase Bill
Bill returned from the Commons with a Lords amendment disagreed to, with a reason for such disagreement, with another amendment disagreed to but with an amendment proposed in lieu thereof, and with the remaining amendment agreed to; the Commons reason and amendment were ordered to be printed.
House adjourned at fourteen minutes past five o'clock.