Lords Sitting of 9 February 2004

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

The Lord Chancellor: Leave of Absence
The Lord Chancellor (Lord Falconer of Thoroton): My Lords, before business begins, may I take the opportunity to inform the House that I will be attending a ministerial Cabinet Committee on Tuesday 10 February? Accordingly, I trust that the House will grant me leave of absence.

Genetically Modified Crops
2.37 p.m.
Lord Taverne Lord Taverne asked Her Majesty's Government:
When they expect to reply to the recommendations made by the Advisory Committee on Releases to the Environment (ACRE) on the planning of genetically modified crops.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Whitty): My Lords, the Advisory Committee on Releases to the Environment advised on the implications of the farm-scale evaluation results last month. We are now considering this advice in consultation with the devolved administrations and will set out our conclusions shortly.
Lord Taverne: My Lords, will the Government take into account not only the advice of the committee, but also the profound concern about the future of plant biology in this country which was expressed in a letter to the Prime Minister from 114 leading scientists and supported by 150 international scientists?
Will the Government also take note of the fact that the German Minister of Agriculture, the greenest of Greens, who originally wanted to cover the whole of Europe in organic farms, has announced that he is introducing a law to license GM crops and has declared that there is no health risk to consumers? if the German Greens have seen the light, surely the Government will not allow our own eco-fundamentalists to stand in their way.
Lord Whitty: My Lords, the noble Lord's evangelism on this topic is fairly well known. We take seriously into account the concerns of the scientists. We also have to take into account the concerns of others in this respect, which is partly what our consultation was about. It was partly what we expected the ACRE advice to take into account and indeed it has.
916
The Government's approach to the issue has always been a balanced one. The German Government are clearly following through the necessities of the European legislation on that front, as indeed are we.
Baroness Hayman: My Lords, does my noble friend agree that while consumers, farmers and retailers will base their own decisions about GM crops and foods on a variety of personal reasons, the Government, in their regulatory role, must ensure that they keep to an evidence-based and scientifically based approach if they are to fulfil their responsibilities? Does he further agree that whether or not we grow GM crops in this country is not a matter of life and death to British agriculture, but it could be exactly that in parts of the developing world?
Lord Whitty: My Lords, while the arguments on the latter point are still subject to some dispute, there appear to be situations where the development of GM crops would help in development matters. The British Government need to bear that in mind.
Our own policy is evidence based, which is why we conducted the farm-scale trials in the first place and why the results from those trials on each individual crop should be taken into account before announcing a decision. The Government's approach has always been a precautionary one, but based on the facts of the case and on the way in which we approach the overall development of science in agriculture and in the development of these crops in particular.
Lord Dixon-Smith: My Lords, if the reason for rejecting GM crops for general use is the damage that their cultivation appears to do to biodiversity, what advice do the Government have for farmers when everything a farmer does by way of food production deliberately reduces biodiversity?
Lord Whitty: My Lords, the relative effects on biodiversity are precisely what the farm-scale trials were designed to discover: whether there was a particular or more serious effect on biodiversity and other environmental impacts of cultivating these particular GM crops than there was in relation to conventional crops of equivalent species. Yes, all farming changes the environment in which it operates, but the question is how far any particular form of farming does it in a more damaging way or a less damaging one.
Lord Livsey of Talgarth: My Lords, will the Minister consider further trials before releasing GM crops into the environment? He will know that the trials conducted by his department had very mixed results indeed. Will his department respect the view of the National Assembly for Wales in relation to GM crops?
Lord Whitty: My Lords, we always respect the views of the National Assembly for Wales, but whether we agree with them or not will vary. The trials were on three specific crops for the particular reason that we wanted to draw general lessons from them. If further

917
trials are needed, we will engage in them. However, we have a fair amount of information on the three crops involved.
Baroness Whitaker: My Lords, my noble friend says that the jury is still out on the usefulness of GM crops in places where people do not have enough food to eat. Does he agree that in China and India rice crops have been enormously increased by GM techniques?
Lord Whitty: My Lords, yes, I believe that that is true, although some would argue that there are some downsides to that. I am not arguing that there is no benefit and I am seriously concerned that if we prevented GM crops being developed in Europe, there may be a serious development impact on third world countries. Nevertheless, one has to take into account the overall environmental and economic effects on growth in those countries as well as in the UK.
Lord Swinfen: My Lords, when considering this matter, will the Government take into account the distance that wind-borne pollen and insect-borne pollen can travel? How far do the Government estimate that pollen can be taken by the wind and insects?
Lord Whitty: My Lords, if we go ahead with growing GM crops, the Government clearly have to take into account the co-existence rules between GM and other crops. We must take into account the degree to which other, conventional crops may be vulnerable to contamination—without using that as a pejorative term—by GM seed. The distance will depend on the topography and the crops involved, so there is no general answer to the noble Lord's question.

Smoking in Public Places
2.44 p.m.
Lord Janner of Braunstone Lord Janner of Braunstone asked Her Majesty's Government:
Whether they will now introduce legislation to ban smoking in public places throughout the United Kingdom.
The Parliamentary Under-Secretary of State, Department of Health (Lord Warner): My Lords, the Government have consistently said that smoke-free public places are the ideal, but there are no plans to ban smoking in public places. It is important to listen to different views on any ban on smoking at work or in public places, including whether any such ban is a matter best left to local decision. We look forward to faster and more substantial progress on smoke-free places from employers and businesses, especially the hospitality industry.
Lord Janner of Braunstone: My Lords, how many people does my noble friend estimate die as a result of smoking in the UK every year; and what percentage of
918
such lives have been estimated as likely to be saved if smoking were banned in public places? Is he aware that in a recent poll in London, 78 per cent of respondents were in favour of banning smoking in public places indoors? Surely it would help enormously if such a ban were imposed to save lives, as has been done in Ireland, New York, Finland and elsewhere. Why are the Government waiting when they accept that the case for banning is without question vital and could save so many lives?
Lord Warner: My Lords, we know that many millions of people have died as a result of tobacco smoking. The number from second-hand smoking is somewhat smaller, although we know that second-hand smoking contributes substantially to lung cancer and heart disease in particular places.
The Government have engaged in a major public education exercise on second-hand smoking, which forms an important part of making people aware of its dangers. For example, we launched our "Smoking Kids" TV advert last summer for that public awareness purpose. We do not think it appropriate to engage in a national ban in public places although, as I said, we are interested to know how much progress is being made in that area locally.
Lord Clement-Jones: My Lords, the Secretary of State for Culture, Media and Sport displayed a touching faith in enlightened self-interest in the hospitality industry in a recent article in the Times. When will the Government wake up to the views of the Chief Medical Officer?
Lord Warner: My Lords, the Government always pay extremely close attention to the views expressed by the Chief Medical Officer. My right honourable friend the Secretary of State for Culture, Media and Sport and my honourable friend the Minister for Public Health met representatives from the hospitality sector on 5 February—last Thursday—and the sector representatives agreed to come back to the table with proposals for faster and more substantial progress in two months. It is worth bearing in mind that the Laurel Pub Company already has non-smoking pubs and is considering expanding the number of such outlets.
Baroness O'Cathain: My Lords, first, if the Government think that something is ideal—I am putting the Minister's words back to him—why do they not take some action on it? Secondly, the Government interfere—well, perhaps not interfere, but get involved—in other areas where lives can be saved; for example, ensuring that people who drive motorbikes wear helmets and that seat belts are fitted in motor cars. That is all done with the intention of saving lives. Why are they not prepared to do something in this area to save even more lives?
Lord Warner: My Lords, the Government's record in this area is strong. We have introduced a comprehensive ban on most forms of tobacco advertising. We have introduced quitters programmes

919
in the National Health Service. That is government action. The most notable quitter is my right honourable friend the Secretary of State for Health. I am sure that the House will want to congratulate him on that. As I said, we are developing public awareness through advertising campaigns and have seen good achievements through the voluntary process in the workplace: 86 per cent of workplaces have now banned smoking or have smoke-free areas.
Lord Walton of Detchant: My Lords, bearing in mind that, as the noble Lord, Lord Janner, said, the risks of active and passive smoking to human health are enormous, and that the definition of a public, place may cause difficulty in legislation, will the Government at least consider introducing legislation to ban smoking in all areas where food is served; and to make it incumbent on those who own bars, restaurants and similar places to ensure that there are smoke-free areas?
Lord Warner: My Lords, we will take into account the noble Lord's suggestions as part of the ongoing public debate. It is worth bearing in mind that we are working with around 30 cities, including Birmingham, Manchester and Brighton, so that they can become smoke-free. It is an important issue for many localities and best taken forward for the local area.
Lord Faulkner of Worcester: My Lords, can my noble friend expand a little on his answer to the noble Lord, Lord Clement-Jones, about the Government's dissatisfaction with the progress made by the hospitality industry in the implementation of the Public Places Charter? Is he saying that, effectively, it has two months to put its house in order and that at the end of that period we shall see firm government action to deal with the problem of smoking in the workplace and public places?
Lord Warner: My Lords, I do not want my noble friend to get too carried away, but I said that we expected more, and faster, progress in the hospitality industry. My right honourable friend made clear the Government's expectations. We shall wait to see what comes forward from the hospitality industry in two months' time.
Earl Howe: My Lords, in autumn 2000 the Health and Safety Executive drafted an approved code of practice on smoking in the workplace that would cover practically all enclosed places that the public might ever enter. Are the Government still considering whether to adopt that code? If so, why have they so far taken three and a half years to do so?
Lord Warner: My Lords, the Government are still considering the question of an approved code of practice. The Health and Safety Executive has been asked to look further at the costs as they affect small business in the hospitality sector. As I said earlier, over 50 per cent of people's workplaces are free of smoke, which is an increase of about 10 per cent from 1996. In
920
addition, some 36 per cent limit smoking to specific areas only. Effectively, that means that in 86 per cent of workplaces smoking is banned throughout or limited to smoking rooms or areas.
Baroness Trumpington: My Lords, the Government appear to be becoming increasingly lenient about cannabis. Do they envisage cannabis-smoking being allowed in public places in future when tobacco smoking is not?
Lord Warner: My Lords, I think that the noble Baroness is well aware of the Government's policy on cannabis. It has not been decriminalised.
Lord Hunt of Kings Heath: My Lords, given that 28 per cent of the population smoke, surely to follow the wording of the noble Lord's Question would mean criminalising a huge proportion of the population. I urge my noble friend to consider the point raised by the noble Lord, Lord Walton, to see whether it is possible to come up with a much clearer definition that would lead to smoke-free environments in food and other outlets but would not take us down the route of causing the police and other agencies to be involved in behaviour that until now has been legal. If the wording of the noble Lord's Question were followed, that would lead to about 12 million people becoming liable to criminalisation.
Lord Warner: My Lords, I thank my noble friend for his helpful suggestion. I intended to indicate that we would consider the suggestion made by the noble Lord, Lord Walton, as part of the public debate. The House will be aware that my right honourable friend the Secretary of State for Health announced that there would be a consultation exercise on public health more generally. I do not think that my right honourable friend the Home Secretary would welcome the criminalisation of another 12 million people.
Baroness Oppenheim-Barnes: My Lords, will the noble Lord, who has spoken of the costs of having to change the existing laws, not consider that it is relatively cheap to erect a notice that says. "No smoking on these premises"?
Lord Warner: My Lords, I tried to say to the House in an earlier answer that we know, for example, of one pub group that is creating "no smoking" areas in its pubs.

Heavy Goods Vehicles: Speed Limits
2.54 p.m.
Earl Attlee: My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In doing so, I declare an interest as president of the Heavy Transport Association.

921
The Question was as follows:
To ask Her Majesty's Government what steps they are taking to alleviate the problem of heavy goods vehicles travelling at 56 miles per hour in order to overtake other similar vehicles, thereby blocking two lanes of a motorway or dual carriageway.\
Lord Davies of Oldham: My Lords, there is no evidence to suggest that this is a significant problem. Speed limits for heavy goods vehicles are set at a limit that allows free movement of traffic at sensible speeds without compromising road safety. The only areas where problems may arise are on gradients or very busy stretches of motorway. In those areas crawler and additional lanes are generally present to alleviate potential problems caused by slow vehicles.
Earl Attlee: My Lords, I thank the Minister for his reply. Will not the situation be far worse by 2008, as EU Directive 2002/85 will require all goods vehicles over three and a half tonnes to be fitted with speed limiters? What will be the aggregate extra cost of doing that, and how many deaths or serious injuries will be prevented?
Lord Davies of Oldham: My Lords, the last two questions would involve extremely difficult calculations. Over the 10-year period in which speed limiters for heavy goods vehicles above those limits have been in force, the accident rate has dropped by one third. However, we recognise that other factors beyond limiters come into play. There is no doubt that this is an enhanced safety measure. It is being imposed throughout Europe.
Lord Berkeley: My Lords, does my noble friend agree that having lorries overtake at up to 56 miles per hour on a motorway slows cars also, and, in the absence of their having speed limiters, which I hope will be introduced one day, contributes to their keeping to the speed limit?
Lord Davies of Oldham: My Lords, speed limiters enforce compliance with speed limits by heavy goods vehicles. As my noble friend indicated, that can have consequential beneficial effects on the average speeds of motorcars. My noble friend will also recognise that, irrespective of the speed at which any one vehicle travels, if the differential between the two vehicles is limited, it still takes quite a long time for one vehicle to pass another.
Lord Bradshaw: My Lords, the noble Lord must travel on roads different from those that I use. Does he admit that many vehicles travel without their speed governors working and certainly exceed 56 miles per hour? I am often tailgated at 70 miles per hour by vehicles exceeding the speed limit. What steps are the enforcement authorities taking to check that limiters
922
are working and fitted, and what action, if any, is taken to enforce lorry speed limits on motorways and other roads?
Lord Davits of Oldham: My Lords, I emphasise that speed limiters govern only powered speeds; therefore, vehicles can sometimes travel faster. They are not governors; they are limiters. Vehicles can travel faster in favourable conditions; for example, if the engine were disengaged it would go faster downhill, and there are all sorts of dangerous ploys. That is why the noble Lord is right in saying that it is possible, even with limiters, for such vehicles to break the law. We are concerned to ensure through our inspection staff that limiters are properly fitted to all vehicles. As the noble Lord will recognise, there are increased measures to ensure that speed limits are complied with.
Lord Swinfen: My Lords, does the Minister agree that the practice of overtaking on the inside is far more dangerous than having to wait behind a slow vehicle? What are the Government doing to alleviate the problem?
Lord Davies of Oldham: My Lords, overtaking on the inside is against the law. Significant stretches of our motorways are under surveillance. The driver of a vehicle who deliberately comes up behind another vehicle in a middle or outside lane and then swerves inside to overtake could easily be charged with careless driving.
Lord Elton: My Lords, will the noble Lord kindly write to me—he will not have the information at his fingertips—to say when it was made illegal to overtake on the inside? Many of us have been saying that it should be made illegal but were told that it would not be done.
Lord Davies of Oldham: My Lords, the actual manoeuvre of one vehicle going past another in the inside lane because there might be a slow-down in the outside lane, and the inside lane is continuing to move, is not illegal. Deliberately setting out to pass a vehicle by moving from one lane to another to go inside it and to go past leaves open the possibility that such a manoeuvre appears to be careless driving, and it could be subject to such a charge.
The Earl of Erroll: My Lords, does the Minister agree that if vehicles travel within about 10 per cent of each other's speed, the roads are much safer? Therefore, by slowing lorries down, there are higher closing rates, which make roads less safe. It would be far safer to have lorries travelling at the same speed as the normal traffic on those roads.
Lord Davies of Oldham: My Lords, everyone in the House is aware of the crucial statistic, which is the braking distance of a lorry at a speed comparable to a car—it is many times greater. That is why heavy goods

923
vehicles need restrictions. They both take much longer to brake from the same speed, and they have far more devastating effects when they collide with others.
Baroness Byford: My Lords, do the Government record centrally the number of prosecutions that take place of those lorry drivers who exceed the speed limit on motorways; and if not, why not?
Lord Davies of Oldham: My Lords, the issue of breaking speed limits is coming under increasing scrutiny, but the noble Baroness will recognise that the main priority is the overall limit of speed on a motorway, which is scrutinised with great care. As I indicated in my earlier answer, limiters on vehicles are inspected, and they have the effect of ensuring that power cannot be applied beyond 56 miles per hour for heavy goods vehicles.

Sudan: Darfur Province
3.1 p.m.
Lord Avebury Lord Avebury asked Her Majesty's Government:
What steps they are taking, through the United Nations Security Council, to halt the conflict in Darfur, western Sudan.
The Minister of State, Foreign and Commonwealth Office (Baroness Symons of Vernham Dean): My Lords, the situation in Darfur has not been raised in the United Nations Security Council. However, we are working with others, including our European partners, to explore the possible ways in which we could help to end the conflict. We are in close touch with Sudanese Government Ministers, and the various Darfur movements. We are urging them to re-establish a ceasefire, preferably with international monitoring, to allow humanitarian access and to seek a solution through dialogue.
Lord Avebury: My Lords, would the Minister agree that with 650,000 people internally displaced, 115,000 refugees in Chad, and over 3,000 killed so far, this phenomenon is an overwhelming humanitarian disaster? Where is the integrated response by African states and the international community, to use the UN Secretary-General's phrase, to the machine-gunning and bombing of a civilian population?
Baroness Symons of Vernham Dean: My Lords, the figures are very much as the noble Lord has given them, and we have discussed this twice in the past couple of weeks: on 15 and 28 January. It is not always easy to persuade others to see the problem as we see it. The noble Lord will recall that we were very disappointed that despite our hard work, and that of our EU partners, the EU-sponsored resolution on the Sudan in the UN Commission on Human Rights was lost on 16 April last year. We, and others, continue to work hard through the Secretary-General's special representative for humanitarian affairs in Sudan,
924
Mr Tom Vraalsen, and the EU presidency, and we will continue to work hard to try to find a peaceful solution to this appalling conflict.
The Lord Bishop of Portsmouth: My Lords, would the Minister care to comment on the relationship between the conflict in Darfur and a peace settlement between north and south Sudan?
Baroness Symons of Vernham Dean: My Lords, I find it difficult to go into that detail at the moment. Clearly, we are looking for a number of different solutions. As the right reverend Prelate will know, the peace discussions on the full problem in the Sudan are due to resume on 17 February. The Darfur problem has always been a separate issue because it involves different groups who are in a state of rebellion against the Government of Sudan.
At the moment, we are concentrating on the resumption of those peace talks on 17 February. We recognise that the situation in Darfur is also very serious. That is why, in relation to the Department for International Development and Mr Alan Goulty of the Foreign and Commonwealth Office, special representatives are in discussions on an almost daily basis about how to take this issue forward. I am sorry that I cannot give the right reverend Prelate a direct read-across from one set of discussions to another. I assure him that we are very heavily engaged in trying to resolve this appalling conflict.
Baroness Cox: My Lords, is the Minister aware that since December, some 48,000 refugees have fled from Darfur into Chad, adding to those who were already there; and that last year, the UNHCR asked for 10.3 million dollars for 2004 to deal with this very serious situation, and has so far received nothing? Could the Minister raise this as a matter of acute urgency? As she knows, the suffering in Chad as a result of the fighting in Darfur is severe.
Baroness Symons of Vernham Dean: My Lords, I am aware that since we discussed this on 15 January in the debate proposed by the noble Baroness, the situation in Darfur has deteriorated very badly. As she said, there are currently thought to be about 600,000 people internally displaced, with a further 100,000 having lied to Chad. The problem, as we have discussed in this House, is that of trying to get a realistic picture of what is happening on the ground. The violence in Darfur is such that it is difficult to get access to, and therefore an understanding of, the full extent of the seriousness of the humanitarian crisis.
We are trying to assess all the requirements, and civilian protection is a major concern. The DflD's humanitarian adviser for Africa, Mr Simon Mansfield, was in the region a short while ago making such an assessment, and I understand that he is visiting the Chad region today to ensure that he gets a fully rounded picture.
Lord Judd: My Lords, while recognising that the Government are working immensely hard, together

925
with their European partners, in trying to find a way forward in this appalling situation, does my noble friend agree that it is terribly important to sponsor a sense of responsibility for an African issue within the African continent? Does she therefore agree that the wider forum of the United Nations has an important role to play in promoting a solution backed and supported by those nearer the crisis than we in Europe?
Baroness Symons of Vernham Dean: My Lords, I fully recognise that but, as I hope my answer to the supplementary question of the noble Lord, Lord Avebury, made clear, while we have tried to pursue this issue under the auspices of the United Nations with our European partners, as we did last year, we were not successful in doing so. One can go back over these issues, and one can perhaps readdress this issue in the United Nations in due course. I do not rule that out.
However, this is an urgent situation, as the noble Baroness, Lady Cox, has reminded us on a number of occasions. It simply is not good enough to say that we must rely on a mechanism that, sadly, transparently has not worked. We must look for some other solutions. We are doing that bilaterally, through what we are able to do from this country, and with our EU partners.
Lord Howell of Guildford: My Lords, does the Minister agree that while it is difficult to get accurate information from the region, the stories that are coming out are really quite horrific? There are stories of whole villages being massacred and of refugees fleeing into Chad being systematically bombed by the government forces. Has the Minister noticed that the often-vilified American Administration, led by Colin Powell, the Secretary of State, have taken enormous time and trouble—including personal intervention by Colin Powell—with the Sudanese authorities, both sides and all parties, in an attempt to halt this horrific massacre? Would she agree that in addition to whatever can be done by the UN or our partners in the EU, the support of our American allies and colleagues, who are doing so much in this area, should be one of our priorities in helping to get a better situation?
Baroness Symons of Vernham Dean: My Lords, I agree that there are many well intentioned partners in trying to find some resolution to this issue. The noble Lord has rightly paid tribute to the role played by our American friends. We are also working very hard—as I have indicated to your Lordships, although not with any great detail—on what we are trying to do through the European Union. The fact is that, to some extent, I am unable to go into the full details of all the different ongoing discussions. I am advised that that would not be particularly helpful given the current state of negotiations. I hope that the noble Lord will understand why I say that.
If there is any light to be shed on the situation, perhaps I may make just one point. On 7 February, the Sudanese Ministry of Humanitarian Affairs issued a
926
statement asserting that safe corridors for the delivery of humanitarian assistance in Darfur have been opened. I hope that the fact that those safe corridors will be respected is at least a little good news and that humanitarian access will be a real priority to all those involved in this terrible conflict.

Business of the House: Debates this Day
The Lord President of the Council (Baroness Amos): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That the debate on the Motion in the name of the Lord Newby set down for today shall be limited to two hours and that in the name of the Baroness Miller of Chilthorne Domer to two and a half hours.— (Baroness Amos.)
On Question, Motion agreed to.

Supreme Court
3.11 p.m.
The Secretary of State for Constitutional Affairs and Lord Chancellor (Lord Falconer of Thoroton): My Lords, with the leave of the House, I should like to make a Statement on the proposed new United Kingdom Supreme Court.
On 14 July, we published for consultation our proposals to establish a Supreme Court for the United Kingdom. We published last week a summary of responses. Today, I am setting out our plans—a key element of our comprehensive programme of constitutional modernisation and reform, aimed at enhancing the credibility and effectiveness of public institutions and increasing trust and accountability.
Just as our proposals on the judicial functions of the office of Lord Chancellor rest on the separation of powers between the judiciary and the executive, so too with our court system: we believe that the time has come to make a clear and transparent separation between the judiciary and the legislature. By creating a Supreme Court, we will separate fully the final court of appeal from Parliament.
Nothing in this proposal intends or implies any criticism of the way in which the current Appellate Committee or its members have discharged their functions. They are not in their places today. That is because they are at work hearing cases. But I have been asked to make it clear that no discourtesy is intended by their absence. Indeed, it is another manifestation of the singular consequences of situating our highest court within the legislature; although I see the noble and learned Lord, Lord Hoffmann, so I correct that in relation to him.
The Government's view is that, as part of our plans to sustain and enhance the vital independence of the judiciary, the present position is no longer sustainable. The time has come for the United Kingdom's highest court to move out from under the shadow of the legislature. I have been in close consultation with the

927
Law Lords since these proposals were announced. The Law Lords are aware of the detailed proposals that I am putting before the House today.
We will bring forward legislation to create a Supreme Court. Under our proposals the Supreme Court for the United Kingdom will replace the existing system whereby the Law Lords operate as a committee of this House. The Supreme Court will exercise the same appellate jurisdiction as the Appellate Committee presently exercises, in terms both of the courts from which appeals may lie and reviews by appellate petition. There will be no changes to the rules governing leave to appeal. The Supreme Court will also take over the jurisdiction of the Judicial Committee of the Privy Council in respect of devolution issues under the Scotland Act 1998, the Government of Wales Act 1998 and the Northern Ireland Act 1998.
The creation of a separate and free-standing Supreme Court does not in any way imply the creation of a new body of United Kingdom law. Being the ultimate court of appeal in the UK does not mean that the court hears "UK appeals". As is presently the case with hearings in the Appellate Committee, decisions made in an appeal from a court in one of the three jurisdictions within the United Kingdom will be of binding effect only within that jurisdiction, and of persuasive effect in the others. Only on devolution issues, as at present, will the decisions of the court be binding in all legal proceedings. The avenues of appeals from Scottish Courts will remain the same for the Supreme Court as they were for the House of Lords, so that only Scottish civil appeals will be heard by the Supreme Court. The final court of appeal for criminal cases in Scotland will continue to be the High Court of Justiciary.
As the key objective is to achieve a full and transparent separation between the judiciary and the legislature, it follows that Justices of the Supreme Court, other holders of full-time judicial office, or retired justices of the Supreme Court who continue to sit, will no longer be entitled to sit or to vote in the House of Lords or to participate in the work of Parliament for as long as they hold their judicial appointment. The same will apply to the Lord Chief Justice, the Lord President of the Court of Session and the Master of the Rolls. I pay tribute to the valuable contribution to the work of this House that they and the Law Lords have made.
Judges of the new Supreme Court will be known as "Justices of the Supreme Court". We propose that the first 12 justices will be those holding office as Lords of Appeal in Ordinary at the commencement of the new Supreme Court. Two of these are from Scotland and one from Northern Ireland, so their appointment would ensure an appropriate balance of expertise across the United Kingdom at the creation of the new court as well as providing continuity. Qualifications for appointments will be unchanged.
Appointments will be made on the recommendation of a new Supreme Court Appointments Commission to be convened when there is an actual or impending
928
vacancy. The composition of the commission, consisting of members of the Appointments Commission from across the United Kingdom—with Members of Parliament and the Government ineligible for membership—guarantees nominations free from political influence. The president of the Supreme Court will chair the Appointments Commission, and the deputy president will also be an ex officio member. That will ensure a proper balance of lay and judicial input to its deliberations. The commission will consider candidates eligible for appointment by reference to criteria that have been approved by Parliament, subject to the overriding principle of merit. It will have a duty each time it meets to survey the field of all eligible candidates across the three jurisdictions and to focus on the most meritorious.
The commission will recommend to the Secretary of State a minimum of two and a maximum of five candidates for each vacancy. On receipt of the nominations, the Secretary of State will be under a statutory duty to ensure that the court has among its members sufficient knowledge and experience of the law in each United Kingdom jurisdiction. In doing so he will be required to consult the senior judiciary in the three jurisdictions. The Secretary of State will then submit a name from the shortlist to the Prime Minister, who will make a recommendation to Her Majesty accordingly. There will also be an obligation to canvass the views of the First Minister of Scotland, the First Minister of Wales, and the First Minister and Deputy First Minister of Northern Ireland if responsibility for criminal justice matters has been devolved to the Northern Ireland Assembly.
The requirement for a longer shortlist than is presented to the Secretary of State for vacancies for judicial offices in England and Wales derives from the UK-wide jurisdiction of the Supreme Court. Justices of the Supreme Court must be the best available in the United Kingdom as a whole, but the court must always contain the necessary breadth of experience of each constituent jurisdiction. In order to balance those requirements it will be necessary for the Secretary of State to consult on a wider range of candidates. It is envisaged that there would never be fewer than two Scottish justices, and that there would normally be one justice from Northern Ireland.
The Supreme Court will be administered as a distinct constitutional entity. Special arrangements will apply to its budgetary and financial arrangements in order to reflect its unique status. It will present annual reports which will be made available not only to the Westminster Parliament, but also to the Scottish Parliament, the Northern Ireland Assembly and the National Assembly for Wales. The chief executive, who will be appointed through a fair and open competition, will be responsible for accounting for the court's finances and will report on a day-to-day basis directly to the justices of the court. The court will have a staff of its own working to the chief executive.
The Supreme Court will stand at the apex of the judicial systems of England and Wales, Scotland and Northern Ireland. As such, it is appropriate that it

929
should be based in London as the capital city of the United Kingdom. It may, however, on occasion be appropriate to hear cases in other parts of the United Kingdom, such as devolution cases, or cases raising issues specific to Scottish or Northern Ireland law. It would, however, be for the President of the Supreme Court to decide when it would be appropriate for it to sit elsewhere.
It is clearly important that the new Supreme Court should be housed in an appropriate building. I have therefore commissioned an extensive property search to identify suitable locations. The search has been based on a statement of requirements which has been discussed and agreed with the Law Lords and has considered a wide range of options, both commercial sites and those already on the government estate. An evaluation is currently being conducted to identify the preferred location. I will be seeking the views of the Law Lords, the First Ministers of the devolved administrations and the Lord President of the Council before any final decision is made. Until that process has been completed, it could be prejudicial to our commercial position to disclose details. I will, however, undertake to inform both Houses of the preferred option at an appropriate time.
There will be plenty of opportunity for debate on and scrutiny of the proposals I lay before the House today. I also look forward to receiving the report of the Constitutional Affairs Select Committee which will comment not only on the Supreme Court but also on the Judicial Appointments Commission for England and Wales. I believe that these proposals will result in a Supreme Court that will be, in the words of the noble and learned Lord, Lord Steyn,
"a badge of independence and neutrality … a potent symbol of the allegiance of our country to the rule of law".
My Lords, that concludes the Statement.
3.20 p.m.
Lord Kingsland: My Lords, I thank the noble and learned Lord the Lord Chancellor for letting me see an advance copy of his Statement. I believe that the noble and learned Lord extended the same courtesy to the noble Lord. Lord Goodhart.
As the noble and learned Lord is well aware, the Opposition believe that the real motive behind the Government's proposed Bill, of which today's Statement will form a part, is to weaken the judicial arm of the constitution.
The declared motive of the Government is that they seek to align our constitutional arrangements more intimately with the doctrine of the separation of powers. This motive has been frequently asserted but, in my submission, never properly argued. Moreover, there is no sign of compensating arrangements to be put in place to bolster the rule of law against the depredations of populist Ministers in the light of the imminent departure from the Cabinet of the Lord Chancellor and of the Lord Chief Justice from your Lordships' House.
I note from the Statement that the Law Lords are,
930
"aware of the detailed proposals I am putting before you".
I am sure that they are, but do all or at least a majority of them agree that these arrangements will deliver a higher degree of judicial independence than that enjoyed at the moment by the Judicial Committee of your Lordships' House?
On 4 February the Times published an account of the Prime Minister's speech to the Commons Liaison Committee. In the course of that speech and in answering questions, the Times reported the Prime Minister to say:
"In retrospect, it would have been better probably had we published a paper, had we taken a step back and separated the reshuffle very clearly from departmental changes".
In my response to the Statement made the other day by the noble and learned Lord the Lord Chancellor on the subject of judicial independence, I invited him to institute in your Lordships' House a pre-legislative review of the government Bill. That would give your Lordships an opportunity, on the basis of evidence, to compare these proposals with the existing situation. I asked, rhetorically, why that had not happened. Perhaps I may now answer that question by saying that I suspect it is because the Government fear that these proposals will not show up nearly as well as the effectiveness of our existing arrangements.
Before the Government embark on the enterprise of a separate Supreme Court, it is absolutely crucial that both they and we are clear that it will be of real benefit to the nation. I say that because it is going to cost an awful lot. If not only your Lordships but, even more importantly, the nation perceives that the cost is not worth it, what will be undermined will be the institution itself. We have a very good example of a similar process which has taken place to the north of here, in Edinburgh. So it is crucial that we know what we are to have for what we are to pay.
What are we to have? In his Statement, the noble and learned Lord the Lord Chancellor said that he had based his search for appropriate premises on a statement of requirements which has been discussed and agreed with the Law Lords—on the assumption, I suppose, that the Government will get their Bill. Is this another deal like the one struck in secret over judicial independence? If so, at least your Lordships had the benefit the other day of two very full papers from the noble and learned Lord the Lord Chancellor and detailed comment in reply from the noble and learned Lord the Lord Chief Justice.
I should like to ask the noble and learned Lord this: what are the details of the bargain struck with the Lords of Appeal in Ordinary? What accommodation has been agreed? Is it to form part of a plan for a new building? Or has a building for purchase been identified? Or is the noble and learned Lord minded to rent an appropriate building? What of the question of the scale, which must be intimately related to the assessment made by the Lord Chancellor and the Lords of Appeal in Ordinary about their accommodation needs—the administrative staff required, IT arrangements, additional legal staff and library facilities? All these ingredients will have been fed in to determine what will be the cost of the

931
accommodation. Since the noble and learned Lord the Lord Chancellor has already reached an agreement with the Lords of Appeal in Ordinary, the noble and learned Lord must be in a position to tell us about the scale and the cost of the accommodation.
Finally, I turn to the proposals for a Supreme Court Law Commission to select new justices of the Supreme Court. The noble and learned Lord has said that the appropriate standard will be based wholly and solely on merit, which I welcome very much indeed. He has said that, invariably, a recommendation will be made to the Secretary of State for Constitutional Affairs of between two and five members. The noble and learned Lord has also informed us that the Secretary of State for Constitutional Affairs will select the final name to propose to the Prime Minister only after the senior judges in all the jurisdictions of the United Kingdom and the First Ministers of Scotland, Wales and Northern Ireland have been consulted.
While that is all well and good, what is to happen if, as a result of these conversations, irreconcilable differences emerge about who should be the proposed candidate? Although the noble and learned Lord did not say so, I assume that the Secretary of State for Constitutional Affairs must also make the final selection on merit, as must the Supreme Court Law Commission. I also understand that, in future, the Secretary of State for Constitutional Affairs is likely to be an elected politician, usually a non-lawyer, in another place. However, if the Secretary of State for Constitutional Affairs is under an obligation to select on merit one of the proposed five, what qualifications does he have to do so? Does this not mean that, in effect, the Secretary of State for Constitutional Affairs will have to be someone like the Lord Chancellor?
3.28 p.m.
Lord Goodhart: My Lords, Members on these Benches support the creation of a Supreme Court separate from your Lordships' House and, indeed, we advocated that proposal long before the Government became converted to it. We disagree strongly with the view put forward by the noble Lord, Lord Kingsland, that the Government's aim is to weaken the role of the judiciary and the constitution. On the contrary, taken as a whole, the Government's reforms will substantially strengthen the role of the judiciary and therefore we welcome much of the Statement.
However, we have a number of questions and one issue that is causing serious concern. I shall start with the questions. Can the noble and learned Lord the Lord Chancellor confirm that retired Law Lords and retiring Supreme Court justices will be eligible to be called on to serve, if they wish to do so, as part-time members of the Supreme Court up to the age of 75, and will anyone else be able to sit as a part-time member?
We agree that serving members of the judiciary should not be Members of your Lordships' House. We recognise the valuable contributions made by many of them over the years, and notably in the past few weeks by the noble and learned Lord the Lord Chief Justice, Lord Woolf. I notice that at least one serving Law Lord intends to speak in the debate on Thursday.
932
Continued membership of the legislature is not appropriate. We recognise that the corollary is the need to create new channels of communication between the judiciary and the legislature. We already have the Select Committee on Constitutional Affairs in the House of Commons, but this is a time for some novel thinking. Should there be a Joint Committee of both Houses to deal specifically with the relationship between the judiciary and the legislature? Might one even consider going beyond membership of the two Houses and inviting senior members of the judiciary to become members of that same committee, so that they have full rights to speak?
We assume that Law Lords who were appointed before the Supreme Court came into existence will receive peerages and will be entitled to sit and vote in your Lordships' House on retirement, as will, of course, existing Law Lords when they retire. We believe that it is intended that Supreme Court justices, appointed after the Supreme Court comes into existence, will not have an automatic right to membership of your Lordships' House on retirement. if so, that is a matter on which we can agree. Will the noble and learned Lord say whether that is so? There is no reason why retired Supreme Court justices should not be eligible for appointment, as long as non-political appointments continue to be made to your Lordships' House.
We understand the reasons for not informing us of the progress in finding a home for the Supreme Court, but will the noble and learned Lord tell us what guarantees, if any, have been given by the Treasury for providing the funding? I am referring not just to one-off funding to buy premises, but to continuing funding for the running costs of staff, library, IT systems, and so on.
I turn now to an issue of concern with which, on this occasion, I very much agree with the noble Lord, Lord Kingsland. I refer to the method of appointment of Supreme Court justices. We agree that there should be a Supreme Court appointments commission consisting of members of the Judicial Appointments Commission for England, Scotland and Northern Ireland. Will the noble and learned Lord confirm that some appointees will be lay members?
It is proposed that the appointments commission should make recommendations to the Secretary of State for Constitutional Affairs, who will then make recommendations to the Prime Minister. We believe that that would be wrong. The Department for Constitutional Affairs is basically a department for the legal system of England and Wales. It has a few wider functions tagged on, but they do not really belong there. We believe that recommendations should go straight from the appointments commission to the Prime Minister.
The Statement suggests that the appointments commission will recommend a minimum of two and a maximum of five candidates per vacancy. The idea of a list of five candidates is absurd. We believe that the system should follow the system already recommended for the appointment of judges in

933
England and Wales, which is that one name should be recommended by the appointments commission. The Prime Minister should have power to reject the nominee, or to ask for reconsideration, but only for reasons. If two names have to be submitted, it could lead to a situation in which, although the appointments commission believes that there is an outstanding candidate, that candidate may have made himself or herself unpopular with the Government. If another name has to be submitted as well, the Prime Minister can appoint the second name without giving reasons for rejecting the first. The reasons given in the Statement for requiring two names are unconvincing. The Statement says that,
"it will be necessary for the Secretary of State to consult on a wider range of candidates"—
because—
"the Court must always contain the necessary breadth of experience of each constituent jurisdiction".
That is surely what the appointments commission is for. Why should the Secretary of State need to carry out further consultations? Unless there are real grounds for rejecting a nominee, we believe that the Prime Minster should be required to accept the nominations from the appointments commission.
The Statement leaves a lot of detail to be filled in. It is much less full than the Statement we had two weeks ago on the appointment of judges in England and Wales. We have serious concerns about the appointments system for the justices, and a number of details need to be filled in. We shall reserve judgment on the Supreme Court until we see the Bill.
3.35 p.m.
Lord Falconer of Thoroton: My Lords, I am grateful to the noble Lord, Lord Goodhart, for his welcome in principle to the Statement. I fully accept that there are details to be filled in, but I shall deal first with the points raised by the noble Lord, Lord Kingsland.
He said that it was a scheme intended to undermine the independence of the judiciary. He is the only one who has made such a suggestion, and it is completely wrong. The proposal to create the Supreme Court is a view shared by the current senior Law Lord and a number of other Law Lords. The senior Law Lord said that it was the mark of an independent, liberal democracy to have a Supreme Court separate from Parliament. That shows that it is a sensible proposal.
Lord Kingsland: My Lords, I want to make it clear that I did not say that the scheme undermines the independence of the judiciary, but that it undermines the strength of the judiciary as an arm of the constitution in this country. That is a quite different point from the point about independence.
Lord Falconer of Thoroton: My Lords, the noble Lord makes a slightly subtle point. Putting the final court of appeal into a separate organisation in which it has control over its own budget could not possibly
934
undermine the judiciary as an independent arm of the state. With the greatest respect to the noble Lord, I do not think that there is much in that point.
With regard to the agreement of the Law Lords, it is well known that Law Lords have different views about the right course to take, which is exactly what one would expect from an independent group of people.
On the issue of accommodation, there is certainly no deal or arrangement with the Law Lords. They have made clear the sort of accommodation they are looking for, and we are seeking accommodation on that basis. To deal with the point made by the noble Lord, Lord Kingsland, the right course will be to publish an outline of the accommodation required, rather than for me to go through it today.
The noble Lord, Lord Goodhart, asked about retirement ages. The normal retirement age for future justices will be 70, but they can continue up until 75. On the question of who else can sit in the Supreme Court, there will be those who are retired, but who are still under 75 and wish to do so. In exceptional circumstances, particularly in relation to devolution issues, the president can invite members of the Courts of Appeal of the three jurisdictions to sit. But that would be in exceptional circumstances on issues particularly focused on devolution. Such justices would not be full members of the Supreme Court.
The noble Lord raised the question of new channels of communication between Parliament and the Supreme Court. Again, that is very much a matter for Parliament to develop. We would not wish to stand in the way, but it is for both Houses to discuss those issues. On the matter of guarantees from the Treasury, I should be glad if the noble Lord could introduce me to any Minister who has a guarantee of funding from the Treasury in perpetuity. I cannot give the noble Lord such an assurance on guarantees.
On the method of appointments, the noble Lord, Lord Kingsland, raised the question of someone who is not a lawyer making the choice. Until now that problem has been wrestled with by Prime Ministers of the day. The noble Lord knows that Prime Ministers make recommendations to Her Majesty, albeit on the advice of the Lord Chancellor. Although the current Prime Minister is a lawyer, the noble Lord may find it hard to believe that there have been previous Prime Ministers who were not lawyers.
The noble Lord, Lord Goodhart, referred to merit. Plainly such issues exist, but there are also issues about geographical balance that must be addressed in appointing members of the Supreme Court. I said that we would expect there to be two Scots and one person from Northern Ireland. It is a matter, rightly, for the Secretary of State for Constitutional Affairs, whose responsibilities are not just for England and Wales but cover the whole country. Our proposal reflects the need for merit to be the underlying purpose, but allows for a judgment to be made about the balance throughout the kingdom.
3.40 p.m.
Lord Bridges: My Lords, it is apparent from the noble and learned Lord's Statement that he bases much of his approach on the principle of the separation of powers between the judiciary, the legislature and the executive. That theory, it will be found from study, derives from the works of the French jurist, Montesquieu, who in the 18th century wrote a classic work, De lesprit des lois, which was based to a large extent on a study of the workings of the British constitution. He thought that in the workings of our 18th-century constitution, which he much admired, he perceived that separation of powers. However, students since that time have tended to doubt the theory. Rather, they believe that our constitution has worked at its best—it did not always work very well in the 18th century—because of the respect shown by one power to the other. As an undergraduate at Oxford 50 years ago, I remember reading a study to that effect in the classic work by HAL Fisher, A History of Europe, in which that very thought is expressed.
I further suggest that that other great democracy, the United States, does not adopt that approach either. The President of the United States appoints the Chief Justice of the Supreme Court, or at least suggests his name. I therefore believe that the historical basis for the separation of powers deserves a little more examination before we accept it at its face value.
Lord Falconer of Thoroton: My Lords, the approach that we are taking is based in large measure on the separation of powers, but it is also a practical approach. As time has gone on, it has seemed wrong that in order to be appointed to the final Court of Appeal in this country one has to be appointed as a Member of the second Chamber. That there have been increasing difficulties in that respect can be seen from the approach of the Law Lords themselves, who a few years ago, through their senior Law Lord, issued a statement with regard to when they would think it appropriate to participate in the proceedings of the legislative House. That was a recognition on their part that what had gone before needed modification. I believe that a clear separation between the role of the final Court of Appeal and the second Chamber of legislature would be a further sensible step down that road. It would make it much clearer and much easier for those who will sit in that final Court of Appeal.
Lord Borrie: My Lords, my noble and learned friend the Lord Chancellor said—I hope I quote him correctly— that it is important that the final Court of Appeal in this country should move out from under the shadow of the legislature. That phrase also appeared in the consultation document last July. I am surprised that it should be repeated orally today. I have never thought that the Law Lords, acting in their judicial capacity, operate under the shadow of the legislature or indeed under the shadow of anyone. They have maintained their independence, which has been recognised by others, including the House of Lords sitting in its legislative capacity. Therefore, the
936
phrase is quite inappropriate. We know that the Supreme Court will be independent. There seems to be—I agree with the noble Lord, Lord Bridges—a much greater theoretical than a pragmatic basis for Her Majesty's Government's proposals. One practical consequence of that is that we shall lose out as a legislature if and when the sitting Law Lords are no longer allowed to sit. It will mean that representations by, say, the Lord Chief Justice on a criminal justice Bill, or speeches by others in debate, will be lost to us.
In reply to the noble Lord, Lord Bridges, the noble and learned Lord the Lord Chancellor referred to the statement in 2000 by the noble and learned Lord, Lord Bingham of Cornhill, to the effect that, as a self-denying ordinance, the judges would not speak on politically controversial matters or matters in which they may be involved in judicial proceedings. Is the noble and learned Lord saying that he is dissatisfied with that statement and its results? The statement seems to me to solve the problem, if there is any practical problem, of a number of judges who sit in the House of Lords in its legislative capacity choosing to speak and others choosing not to speak while they are still sitting as judges.
Lord Falconer of Thoroton: My Lords, first, I thoroughly agree with the noble Lord's remarks about the shadow of the legislature. I hope that nothing that I have said could remotely be taken as indicating that I think the Law Lords are not completely independent and do not deliver a quality of judgment that is second to none throughout the world. I hope that I did not imply anything to that effect. I entirely agree with the noble Lord that they are completely independent. However, the phrase is intended to convey the sense that the final Court of Appeal should be identifiably separate from the legislature, so that what it does can be clearly seen to be separate from what the legislature does.
Secondly, with regard to the question of whether I am dissatisfied with the consequences of the statement of the noble and learned Lord, Lord Bingham, in relation to the circumstances in which the Law Lords would speak, I am not dissatisfied at all. However, it is surely an indication that as time goes by there needs to be a separation. The noble and learned Lord, Lord Bingham, tells the story of his making a statement in the House of Lords about a particular criminal justice Bill, which he broadly welcomed, and making a number of remarks indicating that he had some reservations about it, after which he was unable to hear a number of cases because of his comments.
There needs to be greater clarity. The statement that the noble and learned Lord made in February recognised that further steps need to be taken, and that is what we are doing.
The Lord Bishop of Worcester: My Lords, is it perhaps not the case that the form of the answer has been somewhat determined by the form of the question that the noble and learned Lord the Lord Chancellor has addressed? If the question is how we can visibly secure the independence of the judiciary, then an

937
answer similar to his seems to follow. If the question is how all the parts of our society and our authority structure work together for the securing of justice for all our people, a different set of problems may arise, therefore resulting in different answers.
The traditions that I have observed since coming to the House have come to mean rather more to me than when I perhaps did not understand them as well. The constitutional arrangements of this country bear witness to the notion that the word "supreme" is properly applied to a judge who stands judge over all things; that also is witness to how we begin our proceedings in the House when it sits judicially. It may be judged that we live in a secular society in which those signs of the coherence of our society are no longer relevant and that we need others. However, I have some reservations about the wholesale importing of the kind of post-enlightenment reasoning that led to the American constitution—a constitution that I greatly admire, but which, of course, means that the United States Supreme Court is never really supreme.
In a country that does not have that, a country that is surrendering the religious dimension of the way in which it expresses its coherence, I wonder whether we are going down a track without fully understanding where we are heading. Therefore, although I greatly respect the noble and learned Lord's answer to his question, I want to express to him that for some of us there may be questions of a rather fundamental kind about the coherence of our society, which his proposals do not answer.
Lord Falconer of Thoroton: My Lords, we would put the question in the second way: we will look at the whole of our institutions and formulate the best way forward. I am grateful to the right reverend Prelate for formulating it in that way because only then can we arrive at an answer that will benefit the whole of the nation rather than only one part of it.
Looking at the matter simply from the point of view of this Chamber, one might come up with a different answer than by looking at it right across the board—for example, by looking at the way in which the justice system operates and the way in which litigants perceive the system to work. How do they feel when they come to the legislature and hear, for example, a point being made about the fact that you cannot look at debates in the House of Lords, and then see that two or three members of the Appellate Committee have participated in a debate in which they are not allowed to play any part? How do they see the distinction between the two being drawn?
So I fully accept the second formulation, not the first. I suggest, with diffidence, that that is the way in which we have looked at the matter.
As to the American model, we are most strenuously not going down that route. The final court of appeal, which will sit separately from the legislature, will not be a supreme court of appeal such as the one in the United States of America, which has the power to strike down legislation because there is a written
938
constitution that is superior to it. We are not going down that route. We are allowing a system to be developed where the way in which the courts operate and the way in which the legislature operates will be much clearer to the public.
Lord Elton: My Lords, your Lordships have concentrated mostly on the effect that the proposed change will have on the strength of the judiciary. I hope noble Lords will not lose sight of the effect that it will have on this House. First, one of only two voices that we can count on in Cabinet as ours will be lost when the post of Lord Chancellor is abolished; and, secondly, the assured stream of incoming judicial wisdom that we have always had will dry up.
As a Home Office Minister I remember clearly the effective contributions made during the discussions on the Police and Criminal Evidence Bill 1984 by the noble and learned Lord, Lord Scarman, and the powerful interventions made on many occasions through my tenure of office by the late lamented Lord Denning. Your Lordships have placed great weight on contributions made by such noble and learned Lords as the noble and learned Lord, Lord Woolf, in his report on the Prison Service. From whence will this wisdom and experience be replaced? Is it not odd for a legislative body, in effect, to silence all contributions of people who will have to implement the legislation it makes?
Lord Falconer of Thoroton: My Lords, as to the noble Lord's first point, of course we must look at the matter, as the right reverend Prelate said, not by reference only to the justice system but right across the board in relation to how all our institutions operate. With respect, we believe that that is how we have looked at it.
What will strengthen the independence of the judiciary most is the acknowledgement that the Lord Chief Justice is, in truth, the head of the judiciary—which will be the effect of the abolition of the post of Lord Chancellor—rather than leaving the Lord Chancellor as the effective head of the judiciary sitting at the Cabinet table. We believe that a clear acknowledgement that the head of the judiciary is a sitting serving judge, who has worked in the judiciary over a long period of time, will be a much greater protection than simply having a politician appointed as head of the judiciary.
As to the noble Lord's second point, as has been made clear, once judges have ceased to sit as a justice of the Supreme Court they will be eligible to come into the House. They will not be eligible while sitting as a current member of the Supreme Court.
Lord Elton: My Lords, in that case, can the noble and learned Lord elaborate on his reply to the noble Lord—
Noble Lords: No.
Lord Lea of Crondall: My Lords, can the noble and learned Lord comment further on the point made by the noble Lord, Lord Bridges—clearly I speak as a non-lawyer—and the point made by the right reverend Prelate about the United States? Is it not very important that the separation of powers is not seen as a shibboleth because people might then say that, on the Florida chads issue in the United States, the Supreme Court voted more or less five Republicans to four Democrats, or whatever the ratio may have been? Is it not important to show that the separation of powers is not going down that road precisely because there are great strengths in the current system and we do not need to have anything like the American model?
Lord Falconer of Thoroton: My Lords, I repeat what I said in answer to both the noble Lord, Lord Bridges, and the right reverend Prelate: no one envisages or suggests that the Supreme Court which will emerge out of these proposals will be anything other than a court completely independent of politicians. It will be a court that is completely independent of the legislature. Without any real doubt about its independence, it will be able to determine important issues of law and any important devolution issues that need to be resolved.
Lord Carlile of Berriew: My Lords, given the great value in times of national emergency that the presence, for the time being, of the Lord Chancellor in the Cabinet has had, and given the value at similar times of the ability of this House to hear speeches from Lords of Appeal in Ordinary, but at the same time given the importance which the noble and learned Lord the Lord Chancellor has emphasised of the true separation of powers, does he envisage including in any Bill arrangements whereby the Government and/or Parliament may be able to seek the advice of the Supreme Court rather than awaiting an adversarial hearing brought by a party? A capacity to seek the advice of the Supreme Court would be of great value to this House, at any rate, at times of great national need.
Lord Falconer of Thoroton: My Lords, the noble Lord referred to the role of the Lord Chancellor in times of great emergency. He will know that, during the Second World War, Winston Churchill removed the Lord Chancellor from the Cabinet—who then, for the first time, sat outside the Cabinet. I mention that in parentheses.
As to whether we envisage the Supreme Court having the power to give advisory opinions, no, we do not. Our legal system has never operated on the basis that hypothetical questions are put to courts. We should not see the courts as having an advisory function; they are bodies which resolve disputes between people. When the Law Lords have spoken here—whether they are retired or sitting as Law Lords—they have expressed individual opinions but they have not been authoritative. Nor do I believe it would be a particularly good idea for the Government to be able to refer issues to the courts for advisory opinions.
Lord Craig of Radley: My Lords, I thank the noble and learned Lord the Lord Chancellor for the Statement. Does he recognise the following quotation:
"The British judiciary have been independent for centuries, and never more so than today. The United Kingdom is in full compliance with the Committee of Ministers' Recommendation of 1994 to Member States on the Independence, Efficiency and Role of Judges"?
Let me help him. That is a quotation from a note by the Lord Chancellor's Department dated November 2002. Perhaps the noble and learned Lord can explain what has changed so abruptly that we must now go down this path.
Lord Falconer of Thoroton: My Lords, I do not believe that anyone has at any stage suggested that under the current system our judges are not fully independent. I do not believe that anyone has convincingly suggested that we are in breach of any convention that requires change. We have not sought to justify the changes we have made on the basis that the judges are not independent at the moment, nor that we are or might be in breach of any international obligation.
We have sought to justify the changes on the basis that they make for more sustainable long-term independence. And also, looking at the right reverend Prelate's proposals, they make for the whole constitution to work better.
Lord Fraser of Carmyllie: My Lords, as I understand it, when the Scotland Act passed through the House the decision that devolution matters should go to the Judicial Committee of the Privy Council was quite deliberate because it would allow, on occasion, for distinguished New Zealand and Australian judges, or others who are Privy Counsellors, to join in the deliberations on such matters. If I understand correctly what is outlined in the Statement, we shall be deprived of that opportunity to take advantage of their legal skills.
Having served for some years, I have recently been removed from Sub-Committee E of the European Union Select Committee, on which the noble Lord, Lord Borrie, served. That Sub-Committee has been successively chaired by Law Lords—in my time by the noble and learned Lords, Lord Hope and Lord Scott, both of whom are extremely distinguished judges. In the context of Europe, the authority of having a Law Lord presiding over that committee gave us a standing in Europe that I honestly believe was not shared by any other country in the European Union. I urge the noble and learned Lord to understand the authority that that gave not only that committee but this House as a whole.
Lord Falconer of Thoroton: My Lords, in relation to the noble and learned Lord's first point, devolution issues were given to the Privy Council partly because people other than serving Law Lords could sit on it, especially those from Scotland or Northern Ireland— although New Zealand and other countries could also have been included. Also, perhaps more decisively, it

941
was thought to be inappropriate for the Westminster Parliament to have a committee of its own to decide issues that might well be between the Westminster Parliament and one of the devolved bodies. Plainly, once the Supreme Court is set up, there will no longer be a Westminster Parliament committee resolving disputes between the Westminster Parliament and the devolved bodies.
I could not agree more with the noble and learned Lord's second point about the distinguished chairmanship by existing Law Lords of Sub-Committee E. Everyone speaks extraordinarily highly of the way in which it is chaired. However, I do not believe that, with all the talent in this House, one could not find people to chair the committee very effectively. The noble and learned Lord will know that until some time in the 19th century, the House of Commons always asked High Court judges to chair their Select Committees. I do not believe that that was a justification for having High Court judges in the House of Commons.

Local Income Tax
4.1 p.m.
Lord Newby Lord Newby rose to call attention to the case for replacing council tax with local income tax; and to move for Papers.
The noble Lord said: My Lords, this afternoon we are raising the case for local income tax, because of the importance and urgency of the need to reform local government finance, and, in particular, of the need to replace the failing council tax.
We start from the premise that decisions by government should be made as close to the people as possible. We believe that local decisions are most likely to reflect local circumstances and that decisions taken that are removed from those who are affected by them or have to be implemented by them are, in many cases, likely to be ineffective or inefficient.
This approach has been vindicated by the failure of many of the Government's centrally set targets—ailure now opena fly accepted both by the Cabinet Secretary and in the Prime Minister's new found enthusiasm for localism. However, if more decisions are to be made at local level, it is both logical and necessary that the funding to implement them should also be raised to the maximum possible extent at local level. That used to happen, but it is certainly not the case today. At present, about 75 percent of the revenue of local councils comes from national government. A mere 25 per cent is raised and set locally. To make matters worse, the sole significant source of locally raised revenue is generated by the council tax; a tax introduced in panic by a Conservative government to rescue themselves from the greatest failure in taxation in our lifetimes—the poll tax. Council tax itself is now failing.
Council tax is failing partly because it is expected to bear too great a burden, but also because it is a thoroughly unfair tax. Paradoxically, it has to bear too
942
great a burden because it represents such a small proportion of total council spending—for every 1 per cent of expenditure increase by a local council, council tax has to rise by 4 per cent—and, because it is a stagnant rather than a buoyant tax, it has to be changed annually to secure additional council income. That inevitably means that, for some councils in some years, council tax has to rise by a very large percentage to deal with a relatively low percentage increase in local spending. In years such as this one, most local councils budget for increases several times that of inflation to meet modest additional expenditure needs. Indeed, for 2003–04, the average increase has been 13 per cent throughout the country and, on average, in double figures, irrespective of which party controls the council. Indeed, at 16 per cent, Conservative councils have had the highest average rise compared with Labour councils at just under 11 per cent and Liberal Democrat councils at just over 10 per cent. In total, since Labour came to power in 1997, council tax bills have gone up 70 per cent.
for the forthcoming year, a survey published last week by the Local Government Chronicle, suggests that three quarters of unitary authorities and 70 per cent of county councils plan to increase council tax by more than 5 per cent. The response of the Government, like their Conservative predecessors, is one of outrage: "How dare these insolent councils propose increases which go beyond the arbitrary 5 per cent ceiling on tax increases that the Government have set?".
Also like their Conservative predecessors, their response is to threaten to cap such increases. Nick Raynsford sent out 56 letters to local councils last week saying that they must moderate their council tax increases or they would be capped. In some cases—Islington, for example—those letters went to councils that were planning to increase council tax by less than 7 per cent, which represents an expenditure increase of less than 2 per cent, which is hardly profligacy.
This year, the situation is exacerbated for many councils in the midlands and the south because the funding formula has changed. They do less well than before, but they are still expected to meet the same nationally set standards in social services and education, for example. That has led to many proposed double-digit council tax rises, and the threat of legal action against the Government. The council in south Gloucester, for example, proposes to initiate a judicial review of any capping decision against it on the basis that it is having to propose a high council tax increase only because of changes in the funding formula, not because of major changes in overall expenditure levels.
Council tax is creaking at the seams to generate the income that local councils need. However, it is fatally wounded because its unfairnesses have led to a collapse in its credibility amongst taxpayers the length and breadth of the country. Council tax is unfair because it is completely unrelated to income. It operates under a banding system that puts a ceiling on what the richest pay and a floor under what the

943
poorest pay. As a result, the poorest 10 per cent pay over four times more of their income in council tax than the richest 10 per cent.
The poorest 20 per cent of pensioners pay nearly six times more as a proportion of their income than the richest 20 per cent of non-pensioners. In a year when state pensions rose by 2.6 per cent and council tax by 13 per cent, it is hardly surprising that pensioners have become the most vociferous opponents of council tax.
In order to mitigate the unfairness of the tax, we have a system of council tax credits for poorer households. However, some 2 million eligible households do not claim it, so many of the poorest end up still paying the tax. Liberal Democrats would scrap council tax and reinvigorate local government by introducing a local income tax as the principal means by which local people pay for local services. We would do so for several reasons. A local income tax is fair. It is quite simply related to ability to pay. It is also cheaper to administer and needs no special bureaucracy or benefits system. The council tax in the current year will cost some £569 million to administer. In comparison, a local income tax would save at least £300 million of that.
Local income tax is buoyant. Unlike council tax, revenue would rise automatically as the local economy grew. Local income tax helps decentralisation. Over time, it would allow national income tax to be cut, with tax power pushed down to local council level. Local income tax is also more accountable. As a general principle, raising tax close to people makes it easier for them to see how their taxes are spent. More people would pay local income tax than council tax, so more people would be aware of the cost of their councils. Finally, local income tax is tried and tested. It successfully operates across the developed world from America to Sweden to Japan.
How would our plans for local income tax work? That tax would work very much like national income tax. Local councils would set a rate for local income tax and that would be added to the national income tax rate. At the same time, council tax would be abolished, so the total tax burden across the population as a whole would be unaffected. It would be administered through the existing Inland Revenue PAYE system, so people need not fear that officials in their local town hall would know their earnings.
People would have the same tax-free allowances as they do for national income tax. They would then all pay the local income tax rate on all their incomes up to a limit of £100,000. We have set a cap of £100,000 on local income tax for two reasons. First, because we would also introduce a new 50 per cent tax rate on incomes above £100,000 and we wish to guarantee to high income earners that 50 per cent would be the maximum combined tax rate that they face. We also believe that without such a cap there could be too great an incentive for the highest earners to move from high tax authorities to low ones. That is a distortion we are keen to minimise.
Our system would produce a national average rate of local income tax of 3.75 per cent. We have calculated this using CIPFA figures and by assigning
944
to local government some £1.7 billion from the tax take for those who pay 50 per cent on their earnings over £100,000. I would be delighted to send any noble Lord who is interested in the details a full breakdown of our costing.
The tax could be administered by the Revenue in broadly two ways, both of which would use the PAYE system. In the first, one would link different local income tax rates to tax codes; in the other, one would abolish the existing codes in favour of an end-of-year reconciliation process. Both are technically capable of producing the right answer, and we would consult taxpayers, employers and other stakeholders before deciding which of the two options to adopt.
It is inevitable that the scrapping of one tax and its replacement by another will lead to gainers and losers. How does local income tax fare? We estimate that approximately 70 per cent of households would be better off or unaffected by the switch to local income tax. Those who will be better off will be the less well-off households now. For example, for a household on median income, and currently living in an average band D council-tax property, local income tax would save them some £460 per year. An equivalent pensioner couple on an income of just over £14,000 would save £1,080. Losers would be high income earners and some dual or multiple income earning households, but this is inevitable if one replaces an unfair, regressive tax with a fairer, progressive one.
The Government have belatedly accepted that local government finance is in a mess and last summer established the Balance of Funding Review to examine the problem. The only suggestion that appears to be receiving much support is some form of fairer" council tax, whatever that might mean. Indeed, in answer to a question from me last week, the noble Lord, Lord Rooker, was unusually Delphic in saying whether the Government were considering local income tax as one of their options under the Balance of Funding Review. Weekend press reports said that the Government have ruled out both local income tax and relocalisation of the business rates—another change incidentally which is long overdue from the review. I would be grateful if the Minister could lift the veil a little on government thinking in this area.
As for the Conservatives, Oliver Letwin, in an interview with the Independent on 10 December last year, indicated that he wanted to raise the share of council budgets raised locally from 25 to 50 per cent— a laudable aim—but he wanted to retain the council tax. The implication of this was that council taxes might have to double. This seems such an implausible proposal that I cannot really believe that it represents Conservative Party thinking. Perhaps the noble Lord the Conservative spokesman could be a bit more explicit today.
Given the problems facing council tax, it is hardly surprising that, outside Parliament, the interest in and support for local income tax is growing. For example, in its response to the Balance of Funding Review, the Local Government Association argued that moving towards local income tax should be considered as a

945
major new contributor to local government income. Opinion in the country is also showing a strong and increasing level of support for local income tax.
Local government funding is in a crisis. Council tax simply cannot bear the demands being placed on it. A local income tax would be fairer, easier to collect and more transparent than council tax. It is a buoyant source of funds. For these reasons it is commonly applied across the world. It is time that it was introduced here.
Lord Barnett: My Lords, before the noble Lord sits down, I appreciate that the case is made and the Motion is in favour of a local income tax rather than a case against, but he rushed rather briefly over the case against. Would he not accept that the issue is rather more complex; that by transferring it all to pay-as-you-earn it will be seen in due course more as a central government tax than a local tax?
Lord Newby: My Lords, I would have been delighted to have spoken for half an hour on the subject and would have happily dealt with the noble Lord's question at some greater length. My noble friend will deal with that in her summing up.
Lord Marlesford: My Lords, I, too, have a short point before the noble Lord sits down. He indicated that the tax would be capped at £100,000. He expected the average rate to be 3.75 per cent, but he indicated that there would be variable rates. Does he have a proposal for limits to either the bands or the rates that local authorities will be allowed to charge?
Lord Newby: My Lords, I think the whole question of the detailed administration of the tax is one that we would need to put out to consultation. There are a number of options for limiting bands, but the principle under which we are operating is to give greater control to local councils and local communities to set rates of taxation which meet local need. We want to get away from prescriptive, central government controls on locally raised taxes as far as we can. I beg to move for Papers.
Baroness Farrington of Ribbleton: My Lords, I remind noble Lords that this is a timed debate and that we are now into the 17th minute of the 15 minutes that were allowed for the noble Lord, Lord Newby. In drawing the House's attention to that I cast no blame on the noble Lord, Lord Newby, for what has happened.
4.18 p.m.
Lord Desai: My Lords, we are all grateful to the noble Lord, Lord Newby, for raising this very interesting topic. Indeed, the interventions of the noble Lords, Lord Barnett and Lord Marlesford, reinforce the point that I want to make, which is that the topic of local income tax will arouse interest and controversy. I am grateful to the noble Lord, Lord Newby, because he makes me feel young again. In the 1960s and 1970s
946
we were endlessly discussing local income tax; it is a topic that needs serious non-partisan consideration, which is what I shall give it.
I want to emphasise several general problems. The successive property taxes that we have had in this country—rate support grant and council tax—failed because they were very badly implemented. If there were a continuous if not a quinquennial upgrading of property values and if the tax were to fall on property values, then it would be a much fairer system to tax wealth than tax income. Notions of progressivity which rely only on income—and on earned income at that—have a problem; earned income does not represent spending power and we would get lots of anomalies, as we did on the poll tax.
I remember taking part in a debate in 1975 on the rate support grant. I am always astonished that the British middle classes celebrate increasing property prices. Newspapers tell us daily how high house prices are rising. But people complain bitterly as soon as there is the slightest suggestion of increasing taxes. People say, "How can you tax our wealth? Our wealth is illiquid". The fact that their wealth is illiquid is not a sufficient reason for leaving it untaxed. My first priority would be to have a much better and much more efficient system of revaluing property so that the property taxation rate did not increase steeply but the valuation of property kept in line with trends of property supply and demand. As property is the most local of assets, fairly taxing local property values would provide a better outcome than would taxing income. I shall discuss income tax in a moment.
The Conservative Party's panic in the 1980s about rate support grant was due partly to a total failure to understand what the rate support grant was about. I was on the Opposition Benches at the time and was trying to give a little lecture to Ministers on how the rateable value was the notional income that a property owner could earn from his property. Ministers looked at me like they had never in their lives even heard of the idea. They thought that the rates had been pulled from thin air. At that time, first in Scotland and then in England, the Conservative Party failed to grasp the nettle of revaluing properties. After a very substantial increase in property values, they lost their nerve. For political reasons, they grasped at the strange idea of the poll tax—the community charge, if anyone remembers it.
Tony Travers, Andrew Adonis and a third author whose name I forget wrote an excellent book on the poll tax. The poll tax was astonishing because although the policy had been devised by the finest minds in the Conservative think tanks and the Civil Service and backed by the then Cabinet with the exception of the Chancellor, they got it completely wrong. So forethought does not always guarantee good policy.
If we cannot continuously revalue property on the basis of inflation, as the Bank of England has done—and we have the tools to do it—and if we cannot find a better system of wealth taxation, then local income tax may be the second best option. I am leaving aside issues such as the taxation of business income.

947
In the British constitution there is a great problem of diversity and local control. We want very much to have diversity in everything except expenditure standards. We impose national standards. We are obsessed with uniformity. As I have said before in other contexts, we believe that uniformity is equality. That fallacy haunts British politics, in top-up fees and elsewhere. I do not know why we cannot allow diversity of provision. Why cannot we allow local authorities to decide not to spend more money on secondary schools but on something else? By not allowing diversity in expenditure, we impose certain rigidities on local authorities in terms of how much they are obliged to spend. Whatever means of local taxation are allowed, when there is a contribution from the central authorities, there will be the problem of leverage outlined by the noble Lord, Lord Newby. As long as local income tax is a small proportion of total revenue, there will be leverage whereby 1 percent extra spending will entail a multiple percentage point increase in the local tax.
The noble Lord's party serves a very useful function by never coming to power but having good ideas. However, I think that it should think further about this idea. It should consider the problem of how to allow for diversity in expenditure without harming minimal standards.
I worry that the notion of income implicit in proposals for a local income tax attaches not to where income is produced or earned but where it is spent—that is, the local authority in which the income earner resides. One problem in this respect is that commuter towns will always do better than areas distant from the more prosperous commercial areas. Another problem which has always haunted British local finance is the inequality of revenue between local authorities. While it is true that equity between high earners and low earners across the country would be better served by replacing council tax with local income tax, we would still be left with the problem of the existence of poor local authorities and rich local authorities. Therefore, it would still be necessary for central government to intervene and contribute a large part of the total revenue of poor local authorities.
I do not say that as a criticism. We live in an unequal world and inequalities are bound to exist. The problem is how we overcome these inequalities and compensate poorer communities. It may sound heartless, but I think that we can do that in two ways. First, we can maintain the current central government dispensation. However, I think that that has grown beyond belief; it is much too large a proportion of local revenue. Secondly, I return to the idea that we allow for diversity of provision. In a very cruel way, that means that poor local authorities get poor services. Services will not be as poor as their income levels are low, but they will have to make decisions.
Ultimately, people can move. I do not believe that people have to stay where they are born. Our principles of local finance are based on the superstition that those who are born in a region should stay there. I think that we ought to encourage mobility. We ought to say, "If you choose to live in an area—perhaps a rural area or
948
a poor area—tough luck. If you do not like it, move. Or live there. If you are rooted to the soil and enjoy the local rainfall or football team, you have to pay the price. You are grown up people, you pay the price". Uniformity and the idea that no one should have to move and that people should be compensated for not moving are not a good basis for local finance.
I think that we need tough love. Tough love says, "Yes, there will be diversity in expenditure". To the extent that wealth taxation is not feasible because the great British middle classes will not tolerate it and no political party has the guts to impose it, it appears that we will have to resort to local income tax. The noble Lord's proposal has one merit—with which there is also a problem, as my noble friend pointed out-which is that it will have to be centrally administered. As it will be centrally administered, it will be thought to be a central tax. That can be avoided only by allowing such wide variation in the local tax that it is seen as local.
I would therefore urge one proposal. As the Liberal Democrats will never come to power anyway they may as well try this out. I would allow a much wider range than 10 per cent in the local income tax and then wait to see what happened. If people want to live in areas liable to high local taxation that is their problem. If they do not like it they can move out. I believe that the way to make local income tax work would be by allowing much greater variability so that it stands out as a local income tax and is not subsumed under national taxation. I do not like the kindness shown to people who make more than 100,000. I do not see why one should be kind to them, or why we are so delicate about the rich. If people earn more than £100,000 they should pay whatever surcharge the party of the noble Lord, Lord Newby, wishes to impose on them when it comes to power, as well as local income tax. I thank the noble Lord for his thoughtful comments and for the fine way in which he initiated the debate.
4.30 p.m.
Lord Lucas: My Lords, I find this a rather depressing subject for a debate and a little dishonest too. It does not address the problem at all, but puts up the glittering prize of local income tax—which I agree has plenty of superficial appeal—with the dishonesty of never going into the detail of the effects it would have locally.
For instance, the noble Lord, Lord Newby, said that it would be 3 per cent on average. Yes; but down in the south-west it would be 7 per cent because it is an income-poor area with high property prices. If we replaced the current system with a local income tax it would therefore bear heavily on counties in the south-west.
There are many details that would make the idea of a local income tax extremely difficult to put into practice. The noble Lord, Lord Desai, mentioned several; including the fact that so many of us travel to work. Where does this income tax belong: to the city centre, where so many of us go to work and where many of the problems and needs are; or to the leafy

949
suburbs where we all go home to sleep? Does it belong to Wandsworth where I lay my head, Westminster where I do my work, or Hampshire, which is my main residence?
As soon as we begin to go into the questions of what it would look like in practice, how it would work and what the flows of taxation, benefit and disbenefit would be, we find ourselves defeated. All sorts of governments over the past 30 or more years have considered local income tax. They have done their best to go down that road, because all of them have seen difficulties with the system we have, but all of them have universally rejected local income tax.
I am absolutely certain in my heart that should there ever be a Liberal Democrat government they would reject it too, because they are not daft people; they just feel free to have a complete dissonance between what they say and what they really believe. The noble Lord, Lord Newby, opened his speech by saying that decisions by government should be made as close to the people as possible; that is fascinating considering that the other day the Liberal Democrats proposed, through an amendment by the noble Baroness, Lady Hamwee, that any significant planning decision should effectively be appealed automatically to the Secretary of State, taking all significant planning powers away from local authorities.
There is no consistency there and none of the hard-headed realism with which those parties who find themselves in government have to contend, leaving imagination to their Back Benches. The Front Benches have to be serious and sensible, which makes for a core of sensible decisions and policies.
Apart from that issue, I found myself agreeing a great deal with the analysis presented by the noble Lord, Lord Newby. We are in an untenable position. We have seen in the course of this Government's period of office council tax being used as another of Gordon Brown's stealth taxes. It has increased, as the noble Lord said, by 70 per cent at a time when income tax by and large has not. It has been pushed to the point where it is causing pain in some wholly inappropriate corners of the economy. As he also said, letters have gone out to all sorts of councils saying that they cannot raise their council tax by more than 5 per cent. Two days later, a message comes that says, "Oh, by the way, it's all right; we're finding a way of fudging the figures so that you can raise it by 7 per cent". It is not real. Departments are not realising what is happening when we get down to the details of a single local authority's finance.
The Department for Education and Skills has passported its increase in education expenditure on all councils, which means that some councils are finding that 100 per cent of their increase in income this year has to go to schools. Where is the money to come from for all the new things that are supposed to happen? Other government departments have let that happen, because they think centrally and they do not realise how it spins out to the individual local authorities.
950
Looking back over our years in power, it is one of my sadnesses that we did so badly by local government. We did not respect, promote or protect it. We did some daft things, such as the poll tax. I do not look back on that with any pride. The current Government have not faced up to any of the problems and they have made matters much worse by using council tax as a central government tax and by the changes in the support grant regime, which have been deliberately designed to move money from rural to urban authorities and from the south to the north. That has caused extreme difficulties for pensioners in the south, as is well known.
It is not an open system; we cannot penetrate the mathematics by which things are done. The end result is there, but we cannot see the process. Central decisions are taken in a dark and smoky way and the results and the pain are felt locally. I am in the happy position of not knowing what our policy is; it is of course possible that we do not have a policy, but I shall be enlightened later on. I am therefore in a position to speculate. I would like to see us make an honest appraisal of all that has happened over the past 25 years. As the noble Lord, Lord Desai, said, we have become very dirigiste in what we demand of the way in which money is spent locally.
Let us be honest and say that that is now central government expenditure. Let us set a national funding formula for schools centrally and let that money be provided centrally. Let us accept that a plethora of social services have become part of the National Health Service. Let us get rid of the artificial distinction that we spent so much time debating during the previous Session on the strange Bill that allows the health service to fine local authorities for not removing people from hospitals. Let us recognise that the health service now extends into the community and that all those services are really part of the National Health Service and should be administered as such.
Let us remove from local authorities all the expenditure and functions that are essentially mandated centrally, and let us give local authorities—as is beginning to happen in a small way in the National Health Service—a function of scrutiny where they take the part of the local community in assessing how national quangos or structures are doing in providing services locally. Then we will have a local authority that is facing towards its customers. It will be possible to have a child with special educational needs and go to the local authority and expect to be welcomed and helped, rather than meeting the reaction, "Oh goodness, here comes another bill; hide under the table and go away for two years".
We would have local authorities that were interested in being responsive to their citizens because that is what they would be responsible for doing. At the same time, we would reduce the mass of financial requirements on local authorities. We would get down to local people being asked to pay for services that were local in subject. I imagine that we would leave them refuse disposal, planning and a number of other functions for servicing the local community, as well as

951
a big scrutiny function. That could be done with much less money than we require local authorities to spend at the moment.
We would also take another look at the business of unitary authorities and say that, if we were removing the responsibilities from local government, it would be daft not to get down to a sensible pattern of unitary authorities across the country. There has to be a national figure to provide the balancing between rich and poor authorities and some element of fairness across the country. However, we would find that we were providing at least half of local authority finance with a much lower council tax. In council tax bills, even a pensioner pays £100 or £150 towards their district authority. I reckon that that pensioner thinks that he is getting value and that that is not too much.
If that pensioner paid £300 for everything, that level of taxation could survive the inefficiencies and inequalities that come with a property tax. As the noble Lord, Lord Desai, said, in the mix of taxes that people pay, it is not a bad idea to have some that are asset-facing rather than income-facing, and to have a tax that is so clearly and obviously local, because an individual property is identified at the end of it.
We ought to start at a different point. We should not say that we have to find another way to raise money for what local authorities do now. Instead, we should ask, "What should local authorities do? Where are we?". Having decided that, we should then find a way to finance it. We would find that the council tax was a perfectly acceptable way of doing so. It is imperfect, but all taxes are. However, it would be a perfectly reasonable part of the pattern of taxation, nationally and locally.
Something needs to be done. We are clearly in a position where things are going wrong and it is not easy to find a way out. However, it is not right for us to look at what the Motion proposes as a way of raising additional money in ever-more complicated and difficult ways, for a result that is ever-more obscure. Let us try to get back to a situation where we can have local government being as free as possible to spend what it needs to spend, to do what it needs to do, because we have truly focused ourselves on what those local needs are.
As a last thought, for goodness' sake do not let us go back to the days of Derek Hatton and his bite on the business rate. He ran an extraordinary scam in Liverpool, and was impoverishing the local population so that it had to be supported by central government and became financially dependent on him. The whole problem spiralled in an extremely unpleasant and unhappy way for Liverpool, and Liverpool is in many ways still living with that. We really should not be so irresponsible as to let such a situation happen again. If we are to have taxation, let it be local taxation—let it to be something that applies directly to local voters.
4.43 p.m.
Lord Laming: My Lords, I congratulate the noble Lord, Lord Newby, on initiating what I regard as a
952
very important debate. I think it important not only for the future financing of local government in this country, but for the much larger issue of the value that we place on local democracy. I am conscious that many noble Lords who have taken part in the debate have held senior positions in local authorities, and I hope that they will share my real concern about the health of local government in our country.
When I became a chief officer in a large local authority in 1975, I detected a trend that was already well established and has persisted since. It is simply this: that successive governments have produced a stream of new legislation that has imposed new rights and duties on local authorities, while devising new ways to control their expenditure and limit (heir freedom to act. Although the noble Lord. Lord Newby, said that the Government bore about 75 per cent of what local authorities spent, if we add specific grants to that—one was announced only a few weeks ago—I suspect that in many parts of the country, nearly 80 per cent of finance to local authorities is likely to come directly from central government. As he indicated, the remaining 20 per cent has to bear a wholly disproportionate burden of employer and other costs. The system is no longer sustainable.
I well understand that when a Secretary of State responsible for a service does battle with the Chancellor of the Exchequer and wins some money that is much fought-over, he or she wants to guarantee that it will go to the service for which he or she is responsible rather than it being reallocated through some general fund. Although that may be understandable, there are serious implications of pressurising local authorities in that way.
I should like to give two examples from evidence to the Victoria Climbie inquiry. The first is of the pressure placed on local authorities to conform to a national agenda. It was so great that local authorities that gave evidence to the inquiry implied that they were little more than agents of central government. Requiring local government to dance to the centrally composed tune is certainly not new, but I suspect that it is therefore becoming increasingly difficult to attract good people to put themselves forward for election to councils or, indeed, to become senior officers in situations in which they recognise all too clearly that conformity is prized over innovative leadership.
There are even more grave dangers. In a modern, open democracy, there must be checks and balances in the distribution of power. Those checks and balances need to be respected and, if necessary, defended. However, that will happen only if the majority of citizens feel engaged with their local communities and confident that their participation actually matters. The right to vote was hard-won. It is both a privilege and a responsibility. It should be cherished. Not far from your Lordships' House is a plaque to commemorate the great effort made by women to get the vote. In many countries the franchise has yet to be achieved.
But what happens in this country? In the area in which I live we have a parish council, a district council, a county council, and, if things go wrong, we may even

953
get a regional council. In addition, we have voting for parliamentary and European elections. On the face of it, that would give the impression that local residents felt empowered and very much involved in their local democratic processes. Sadly, the reverse is true. Few of my neighbours know the names of their elected representatives, and in some of the elections the turnout is less than 40 per cent. The stark reality is that the majority of the electorate just do not think it worth their while to get to the nearby polling station.
We need to take seriously the reason for the apathy developing in relation to such matters. Some of it is due to the fact that, over the years, a pattern has developed, particularly in local government, in which central government make claims annually about the generosity of the annual settlement for local authorities, only for the local authorities to announce large increases in council tax or cuts in services. There then follows a period of attrition between central and local government—a period of mutual recrimination—with the voter ending up believing neither. That is no credit to the democratic processes in our society.
The reality is that few people, if any, can now agree the basis of funding of local government in our society. My second illustration from the Victoria Climbie inquiry is that the evidence from the authorities that spent up to, or slightly above, the government allocation on a service displayed both a sense of virtue and a feeling that, if anything went wrong, the fault would lie with the Government as the Government had assessed the needs in the area and allocated funds to meet them. I totally reject the notion that anywhere in Whitehall has the machinery to assess the needs of a group of service users, be they in Torbay, Birmingham, Scunthorpe or anywhere else. To think that Whitehall can determine the needs of local users across the country does not make sense.
But where a local authority was spending well below the Government's allocation for a particular service, it was claimed that the grant allocation system was simply a crude distribution formula. It was claimed to be nothing more than a way of dividing the cake and certainly did not attempt to be an indication of the needs of the area. I might have been better persuaded of that if some alternative method of assessing needs of local people had been proposed. But, I suppose, the reality is that in many parts of the country, if there is no way of meeting local need, it has been decided that there is no point in assessing it.
I know that the Government have such matters in mind, but I urge them to accept that the current situation requires a far-sighted review of what we expect of local government. Here I recognise many of the points made by the noble Lord, Lord Lucas. When we have decided the precise job and function of local authorities, we should then decide how we should finance them. It is important that we do so recognising that the current system of local government finance is a mess and is doing great harm to the democratic processes in our society. Furthermore, the current
954
arrangements cannot be sustained for much longer. What is needed now is a thorough review of local government and its financing.
So I am speaking neither in favour or against local income tax. It is worthy of serious consideration as one possible way of funding local government. But there are other ways that equally ought to be considered. I urge the Government to take the issues seriously and urgently to see what proposals may be brought forward to improve the transparency of both the functions and financing of local authorities. In this day and age we must find new ways of relating to the electorate. We must create new ways of engaging with local people and find better ways of securing their involvement. Our society will be helped only by greater transparency in the funding of local authorities.
However, perhaps above all, we need to find new ways of establishing clear links between raising finance and spending on services. At the moment people do not understand the connection between raising money and spending on particular services. If we ignore this opportunity to look seriously at what our society expects of local government and how it should be financed, we will continue to harm the democratic processes which we should cherish, defend and promote. In a modern, open and inclusive society local government is an important component and I hope that the Minister, who has great experience in such matters, will assure us that the Government are taking them forward both robustly and seriously.
4.53 p.m.
Lord Bradshaw: My Lords, I begin by declaring an interest as an Oxfordshire county councillor. I also much welcome the noble Lord, Lord Bassam, who is to reply today, because he has, as the noble Lord, Lord Laming, has said, enormous experience of local government and has no doubt wrestled with some of the problems we are debating. I take the point made by the noble Lord, Lord Desai—I am not arguing from a particular political point of view, but perhaps more from having dealt with such problems in local government.
Our tax system should follow a few principles. A tax should be easy to collect, cheap to administer and difficult to avoid. It should be progressive, so that it falls most heavily on those best able to pay; and it should be fair, so that everyone should pay and, ideally, the benefits and social security system should take care of the disadvantaged, probably by direct rather than indirect payments to them. An example of a fair tax is the petrol tax, because it is extremely difficult to avoid, everyone pays it and if one has a big car one pays more. On the other hand, vehicle excise duty is an example of an unfair tax because many people do not pay and those who do pay the same amount. That does not fit well.
The council tax and its predecessor, the poll tax, do not have most of the qualities that I have described. But, because it is property-based, it does have certain attractions, because property is a fixed asset that cannot move. But property values are extremely crude.

955
The noble Lord. Lord Desai, pointed out that they need updating regularly to be effective. Both the council tax and the old rates system were updated irregularly and, partly as a result, fell into disrepute. The council tax also bears heavily on retired people and is difficult to collect in areas with highly mobile populations. That disadvantage also afflicted the poll tax.
Regarding the expenditure side of the equation, the authority of which I am a member is about to set a budget—I hope tomorrow—which represents a 6.25 per cent increase in council tax. If the authority's charges that have to be made for providing services are taken away, 32 per cent of that money will come from the rate support grant, 29 per cent from the business rate and 40 per cent through council tax. Council taxes are very high in Oxfordshire. This year the increase from government grant is 18.1 per cent—and I gratefully acknowledge that the Government have given us a grant that is way above inflation. But there is a 2.1 per cent reduction in the business rate. I do not understand the reason for that, but I do know that currently there is a revaluation and the matter needs to be attended to. The council tax increase should be 8.2 per cent, but because Oxfordshire's district councils, which are controlled by a variety of all three parties, are to take away tax relief on second homes and cause people to pay for empty houses, the increase will really be 6.2 per cent. The point made by the noble Lord, Lord Lucas, about laying his head in Wandsworth, doing his work in Westminster and having his home in Hampshire, can be accommodated if there is a system that takes account of second homes and empty properties—and includes business rates. If the business rate had remained constant, our increase would have been about 5 per cent.
It is clearly impossible to defend a system of financing local government which depends on national government and the rate support grant. The system is hideously complicated and it is very difficult to understand, as. other noble Lords have said. My attention was initially directed to the short-term measures that can be taken to correct the anomalous council tax situation without raising aggregate public expenditure and could release local government from some of the pressure it is under on, for example, highway maintenance.
My short-term suggestion relates to the number of lines of public expenditure, to which the noble Lord, Lord Lucas, and others have referred. They are passported directly from central government through local government to the schools. The pension money for the police and fire services, which do not have centrally funded schemes, has to go through local government. The money should go straight to the services. Local government can do nothing about it—it has no option but to pay—so why does the money have to pass through its books?
Council tax would be reduced by a corresponding amount and I suggest that it is a lot of money. Council tax will fall from its present height, which is causing a great deal of public protest, to a figure which people are prepared to pay. But the Government, the
956
Daily Mail, the Daily Express and the Sun would have to give up the business about post-code lotteries. It is argued that it is the very antithesis that people should have different services in different places. I will support that provided there is a safety net through which people or poor areas do not drop.
Once that overall reduction has been made, council tax will fall. However, I plead with the Minister to allow councils to have a little extra money to deal with the terrible state of repair in which our buildings, schools and roads now stand. We do not have the money to keep them in good repair, which has been the case year after year. We are presiding over a multitude of crumbling wrecks and highways with potholes.
I then suggest that for about four years we should have an index related to the cost of locally provided council services. It would last for only four years because nothing lasts longer than that. It would give the opportunity of phasing in the income-tax based system, described by my noble friend Lord Newby. However, I accept that it needs a great deal of work. We cannot roll it out tomorrow, next year or the year after that.
I repeat that the benefit system must take care of welfare benefits. I am not in favour of having winter fuel payments, council tax benefit and so forth. I am in favour of paying a decent old-age pension, a disability pension or whatever, and let the person decide what he or she wants to spend the money on. It is no business of government whether they give someone £200-worth of fuel, a free bus pass or whatever unless revenue is generated—there may be an argument for that—because people should be allowed to spend their own money.
There remains the position of the business rate. I assume that business property is being revalued and it could be made subject to the same index to which I have referred so that the business rate payer would be protected against the Derek Hattons, to whom the noble Lord, Lord Lucas, referred. The business rate could rise only as fast as the basket of council services rose in value. I would be prepared to see some top slicing of that to cater for the areas of the country in which there are bad pockets of disadvantage and there is a case for equalisation across the country. It should not be too big. Furthermore, it should be an index system so that it cannot be manipulated by one political party or another in favour of people who are more or less inclined to support them at the polls.
I accept that local income tax cannot be phased in immediately. I have offered an interim solution and I hope that the Government will give it some serious thought. The suggestions I have made would bring council tax under control—and I emphasise that it needs urgently to be brought under control. We have to bring council tax under control while we move to a more equitable system, whatever that is, and I am prepared to put my weight into examining income tax. if the Government have better ideas, no doubt the Minister will tell us.
We must tackle the immediate problems of the unfunded pension funds of the police and fire services, which are threatening to cripple certain local

957
authorities. For example, in Merseyside the unfunded pensions of policemen is a huge burden on the ratepayers, and that is unfair. We must give local authority non-statutory services, such as the roads and buildings, some much-needed relief. We have to control the business rate by an index based on the cost of providing council services and, taking the point made by the noble Lord, Lord Laming, offer a way of restoring the position of most council-provided services so that they are funded locally. That in turn will give people an incentive to vote in the elections. Turnouts of 40 per cent have been mentioned but I can assure the noble Lord that turnouts are as low as 15 per cent. That should alarm us all because if they are that bad we are in a parlous situation.
I hope that the Minister will listen to what we say. I am not grinding a political axe and I await his reply.
5.6 p.m.
Baroness Hamwee: My Lords, after six sessions on the Planning and Compulsory Purchase Bill, which I am sure the noble Lord, Lord Bassam, will agree is rather full of acronyms, I have been trying to think of some acronyms on this subject. Yesterday I was prompted by two which took my fancy and which are particularly relevant to my age group. KIPPERS is "Kids in Parental Property Eroding Retirement Savings". However, that can be countered by going SKI-ing—"Spending Kids Inheritance". I could argue that they have some relevance to a property-based tax, but I shall not try to.
I wondered about PALS—a "Proven, Accountable, Local Scheme". The policy has LEGs—"Local, Efficient, Greater Accountability". I wanted somehow to get fairness and transparency in, but "Fair, Accountable and Transparent", FAT, did not seem to have quite the right ring. So I thought why not just FAIR because it is "Fair, Accountable, In-use and Right"?
I welcome the balance of funding review, which the Government are now undertaking. Perhaps I should qualify that a little by saying that I welcome the fact that it is happening. I detect, as does the noble Lord, Lord Bradshaw, a Punch and Judy element to suggestions, including as recently as last week in Questions in another place, which come from anyone other than the Government. That is just what the public hates. I hope that today the Minister can assure us that Ministers do not believe that local income tax, or other proposals, should be rejected just because they are not invented here.
After all, it is generally acknowledged that a review of local taxation is required to address fundamental flaws. That term was recently used by the Audit Commission, which was even-handed in its analysis of where government and local authorities need to look to change their ways and the issues they need to look to. Government need to look at transparency; reducing direct control over councils through targets; reducing ring fencing; and recognising the importance of public engagement. The noble Lord, Lord Laming, spoke so effectively about that.
958
Engagement needs transparency—that has been an issue for a long time. I am sure that noble Lords who have local experience will have found how difficult it is to consult local communities on what should be the level of tax and the spending that will be enabled by that tax—again, taking a point made by the noble Lord, Lord Laming—because of the gearing effect. There is no faith in the system.
Early in my local government career, I realised what a problem that was in my ward in Richmond-upon-Thames, which neighboured the London Borough of Wandsworth. People living in Richmond in local authority housing, as it then was, were paying far more than people literally on the other side of the road in bigger houses in Wandsworth. That was all to do with government grant—how much came from the centre.
We are currently witnessing the importance of investing in one's locality—to take one current, interesting example, now that the constraint on the level of council tax on second homes has been lifted, I have read reports of local authorities saying that they will not collect at a higher rate for second homes unless they can spend what they collect in their areas. We know that the Government focus on new localism; we need true localism.
As I said, engagement is important, because the real debate should be about the use, benefit and value of local services. The harder a tax is to pay, the less people are willing to consider paying for services from which they do not feel that they benefit directly. Education and social services—especially the latter—seem to have few advocates.
The noble Lord, Lord Desai, discussed diversity of standards. Perhaps he meant diversity of provision rather than of standards, although the two go hand in hand. Recent experience has been of a practical limit rather than any legal constraint. Many local authorities spend in excess—although that is an odd term to apply—on education because they want to spend more than central government say that they should or need to on education. That is not always easy to cope with; that forms part of the dialogue with local people. Reference has been made, especially with respect to education, to the issue of passporting.
Lack of engagement means a detachment—almost a divorce—from the whole political process. I need only run through a list of terms: capping, which brings the process into disrepute; ring-fencing of government grant; and centralising. On the point raised by the noble Lord, Lord Lucas, I would say that to argue for more centralisation of services is a dodgy path down which to go.
To take local education authorities as an example, to argue for more centralisation of services is a very dodgy path down which to go. Their services are joined up with leisure and social services, to take only two examples. The noble Lord said that social services are now part of the health service. I agree with the first part of what he said, but go on to say that what we need is localisation of the health service, not centralisation of social services.

959
Your Lordships may be grateful that there is not time today for me to discuss targets set by central government. My noble friend Lord Newby rightly discussed ability to pay. Under the current system, there are problems not only with council tax itself but with the council tax benefit scheme, which is complex, so often benefit is unclaimed.
Council tax costs a fortune to collect. I understand that the collection rate in London is down this year. Interestingly, the tax base is up—no doubt because of second homes council tax payments, which we shall discuss in relation to the London precept. Should local tax be based on property? I understand that revaluation or rebuilding, which is in the programme, is likely to cost about £250 million—not an easy solution.
Local income tax has been rubbished—although not this afternoon—on the basis that it is easily avoided or evaded. I assumed that that is what is meant by comments such as, "Fat cats do not pay income tax"', which I have heard from members of the Government. That itself is a rubbishy statement. If anything, it is an indictment of the income tax system generally, because local income tax will be small in the scheme of things. If fat cats are avoiding paying their fair share, that must be tackled; it is not a reason to say that local income tax would be a bad tax.
I cannot remember who raised this point, but I make it clear that our proposals extend not only to earned income but to all income. I do not know if the "not invented here" syndrome extends to rejecting any type of tax employed outside the United Kingdom. As my noble friend said, local income tax is in use from conservative-minded states in the United States and in Switzerland to more progressive Scandinavia. As I said in my opening remarks, it is in use. Mind you, so was the poll tax, was it not, in Papua New Guinea? So local income tax is fair, accountable, in use and right.
The noble Lord, Lord Desai, proposed a quinquennial upgrading of property values to reinvigorate the rating system. I hate to think what might be the cost of that, or what scope it might provide for gerrymandering. He said that assets are part of wealth. There are many issues surrounding people staying in large homes with earned incomes that are not immediately comparable with the size of the home. I am not sure that dealing with that is the role of local taxation.
The noble Lords, Lord Desai and Lord Lucas, talked about local income tax not being spent where it is earned. Again, that is part of a bigger issue concerning business rates. London now exports about £20 billion to the rest of the country. I do not say that it should export nothing, but that is an issue for Londoners. There would need to be some sort of equalisation scheme. That is not to say that we throw up our hands and do not have faith in the system, but there would need to be such a scheme.
The noble Lord, Lord Lucas, said that when we consider the problems, we find ourselves defeated. That might be true for those who were involved in the introduction of the poll tax and then the council tax
960
May I dispose of one point: the suggestion that when one is on the Front Bench, one adopts an entirely different point of view. Many of us on the Front Benches—this applies in spades to the noble Lord, Lord Hanningfield, know what it is like to be in government, because local government is real government and gives a real sense of responsibility. His particular accusation concerned planning appeals. As he well knows, we were dealing with a limited right to deal with a specific problem.
However, when the noble Lord, Lord Lucas, had finished knocking us, he admitted that there are problems. As I said, he mentioned centralisation. I detect no confidence that central government are more efficient than local authorities at providing services in a cost-effective manner.
In preparation for today's debate, I consulted the ODPM website to read the papers on the Balance of Funding Review. I was looking at a PowerPoint preparation labelled "Nick"—I think that it was Mr Raynsford's presentation of the problems of the council tax—when my screen froze. Up came the message, "Error: cannot be corrected. Save presentation and quit". The Government should take that advice.
5.20 p.m.
Lord Hanningfield: My Lords, I, too, thank the noble Lord, Lord Newby, for initiating the debate. There have been some very valuable contributions, on which I shall attempt to comment. I am still very much part of local government as leader of Essex County Council. We shall present our budget next Tuesday, with a council tax increase of 4.7 per cent, one of our lower increases, which we have worked very hard to achieve.
We have discussed this subject previously. I am very pleased to be joined on the Front Bench by my noble friend Lord Dixon-Smith. He and I went through a lot together over many years in Essex County Council, which he knows as well as I do. In my early days in local government, in 1976, the Layfield committee said:
"Whoever is responsible for spending money should also be responsible for raising it so that the amount of expenditure is subject to democratic control".
At that time, rates were becoming extremely unpopular. Many householders were paying considerably more in actual terms than they pay now in council tax. Under that system, in real terms, rates would have been very expensive now. I attended a very large local government meeting, attended by around 1,000 people, at which the then leader of the Conservative Party, the noble Baroness, Lady Thatcher, said that she would abolish rates as they were so unpopular. That is why the community charge/poll tax was introduced. It was unpopular and was replaced with council tax, which is now becoming as unpopular as the previous two systems.
The major reason for the unpopularity of each system is that governments do not contribute enough money to them. They did not put enough money into

961
rates. If the then Secretary of State had put much more money into poll tax when it was introduced, as the later Secretary of State for the Environment Chris Patten did, it would probably still exist. Governments try to do it on the cheap: each year, when the Chancellor works out his Budget, he wants to keep down expenditure, and thinks that we can keep grants to local authorities down, which increases the taxes that they must raise. That has happened very much during the period of this Government, particularly in education, as I have experienced.
Last year we had to raise council tax by 16.7 per cent, mainly to fund schools. We have since been vindicated by the Audit Commission. Just proving how money can alter tax levels, after the Audit Commission's report last year, the Government announced an extra £340 million for local authorities, which has fundamentally changed our level of council tax, as it has done for quite a lot of other local authorities. If governments put more money into the system, they can keep down the level of council tax. That is why the noble Lord, Lord Laming, was so right in saying that the local government crisis has happened because often people blame it for council tax levels that are not its doing.
In the UK we raise less revenue locally than in any other European country, except the Netherlands, and considerably less than in the USA, Canada, Japan, Australia, New Zealand and other countries. The amount of money that we raise locally is very low.
To start with, the Conservative Party is not in favour of local income tax. For the moment, we believe that we should retain council tax. My right honourable friend the shadow Secretary of State David Curry is carrying out a long-term review of how that might happen. Consequently, the shadow Chancellor, Oliver Letwin, when he said that 50 per cent of money should come from locally generated income, did not mean that council tax would double, as suggested earlier, but was asking how more money would be raised locally. I shall return to that matter later.
I wish to respond to some of the comments made during this extremely good debate. All the contributions were very valuable and pro-local government, which I was very keen to hear. I hope that the Minister will be pro-local government in his response. As has been said several times, he, too, has a local government background.
The noble Lord, Lord Desai, made a very valuable comment, to which I attach tremendous importance, on diversity of provision. That is what local government and local democracy are about; we do not need to have exactly the same provision everywhere. The noble Lord, Lord Laming, commented on that also. That is a fundamental point that we should all consider. Other countries do not insist that exactly the same benchmarks apply everywhere. As a country we need to move towards that approach. I am pleased that James Strachan, the chairman of the Audit Commission, has said several times that he believes in, "Deregulation, deregulation, deregulation" and more autonomy for local government to take its own
962
decisions. If we could do that, we would not have some of the problems that we have on the raising of council tax.
My noble friend Lord Lucas commented on the complications of collecting tax. We are very much against local income tax and the problems associated with it. However, I am afraid that I cannot agree, and I hope that my colleagues on the Front Bench do not agree, that we should remove services from local government to reduce the level of council tax. Centralising services entirely would result in either a communist or fascist state. We believe in local autonomy; centralising all services is not the answer. We must find a way through the problems. There may be some ways of funding services differently. I shall return to that point later.
The contribution of the noble Lord, Lord Laming, was valuable, as it highlighted the crisis in local government. According to opinion research and MORI findings, local government has become much more unpopular in the past year. Local government services are not unpopular. Libraries, education, environmental protection and other such services are popular, but people are not very keen on local government, mainly because of the level of council tax. The level of council tax depends very much on how much money the Government provide.
Neither most of my Front-Bench colleagues nor I would defend the previous Conservative government in that respect, as they did exactly the same thing. A future Conservative government will not do the same things as previous ones, in the same way as the current Labour Government are not doing the same things as the previous one did. Different governments can have different policies. We need to convey to people that, unless governments provide sufficient funding, they cannot expect services to be delivered locally to targets that they have set. The noble Lord, Lord Laming, made that very valuable point.
The noble Lord, Lord Bradshaw, made a very thoughtful contribution. I did not notice him speak much in favour of local income tax. He suggested a way forward now and gave the Government assistance on how we might reduce council tax bills. He proposed the idea, which I like, of funding the police nationally. That would instantly reduce the council tax bill by about 12 per cent. As there is not much local accountability in police funding nowadays, it could contribute towards a stabilisation of council tax at present.
We need perhaps to find some means of funding some education expenditure from the national purse. I would be reluctant to say that it should all go. Local schools are popular. The education service is a fairly popular service. It is more popular than the health service, which is a national service, although the Government are now trying to deliver it locally. It would not help anyone to turn the education service into the health service. It would not help the Government; it would not help the education service. There is a lot to be said for keeping elements of the education service locally. Schools are by nature local.

963
I hope that any system that any of us work out will not centralise the education service. That would be a mistake and we would live to regret it—
Lord Bradshaw: My Lords, does the noble Lord accept that I meant that those parts of the education system that are funded nationally—that is basically teachers' pay—should be passported straight through and not touch local government? All the specialist services—inspection, or special needs, or the part that local government does add—would be funded locally.
Lord Hanningfield: My Lords, I accept that point from the noble Lord, Lord Bradshaw. I said that we ought to find some way of some of the education funding, perhaps for the moment to keep council tax bills down, being looked at nationally. They were all very valid contributions.
Although I was attracted to local income tax when I saw it operating in Sweden, one reason why I and my colleagues are against it is that people do not want another tax. I have realised that people dislike new taxes. It would do a lot of harm to local government if it were to be funded through another tax that people did not like. It is far better to keep the tax system that we have but find ways of doing it better. We do not want to increase total national expenditure. Therefore we need to find ways in which money that goes into national government now can be raised in a local way. One could raise local business rates, subject to some constraints, so they could not go too high to upset business. One could use vehicle excise duty. One could use more income generation from businesses locally. New local government legislation helps us in that respect.
We need to find many ways—although we do not want to raise the total pot of money—of using locally money that comes into the National Exchequer and to have some local discretion in ways that we can do it. That is the way that we need to go forward over these next few years; not to have a new tax and disturb everyone and further upset the relationship between local government and central government, but to find ways of redistributing the pot so that there can be more democratic control locally. I would not agree with local income tax. This has been a valuable debate, and I thank the noble Lord, Lord Newby, for introducing it.
5.32 p.m.
Lord Bassam of Brighton: My Lords, I have greatly enjoyed the debate this afternoon, I suppose because it brings a sense of dejd vu. I do not know about other noble Lords, but we have been debating and discussing how to raise money for local services and locally-administered services for much of my political life, certainly in great earnest since the mid-1970s.
I have enjoyed the range of contributions and the important points that have been made. I congratulate the noble Lord, Lord Newby, on introducing a timely debate on the complex and important subject of local government finance. As the noble Lord, Lord Hanningfield, said, it has certainly been wide-ranging.
964
We have had the noble Lord, Lord Lucas, wanting to take education out of the local funding arrangements; we have had the noble Lord, Lord Bradshaw, wanting to take the police out; we have had the noble Lord, Lord Hanningfield, saying that we should take some of education out of it and perhaps think about taking the police out. We have had the noble Lord. Lord Bradshaw, suggesting that he would put his ful I weight behind local income tax, but that he would not have it introduced immediately, perhaps phasing it in after four years. We were not sure in the end whether the noble Lord, Lord Bradshaw, was in favour of local income tax.
A range of different views have been expressed. The noble Lord, Lord Desai, made the point that there is not a lot wrong with property-based taxes, but they seem to have fouled up in the past largely because of bad implementation. The noble Lord, Lord Lucas, concluded that although council tax was perhaps imperfect, it could be made more tolerable. We had a telling contribution from the noble Lord, Lord Laming, who expressed his continued support and affection for local democracy, given all of his experience in local government, but pointing us towards something of a funding crisis. He reminded us of the important point of needing checks and balances in the balance of power between local and central government.
If that gives us a flavour of where we have gone in the debate, I hope that it is a useful starting point. Perhaps I should begin the Government's response by giving some background to how we see things. This year's local government grant settlement was very generous, despite what many noble Lords have said about local government's funding from central government. Over recent years, there has been a generous level of support for local authorities in England. That is the essential context of the issues that face the local government finance system. Il is the reality of what is happening now.
Last Thursday, the Minister responsible for local government put proposals before the other place confirming that the total of formula grant would be £46.1 billion in 2004–05, an increase of 5.5 per cent compared with 2003–04. On top of that, specific: grants take the overall increase to 7.3 per cent. I do not know about other noble Lords, but some 15 of 16 years ago towards the end of Mrs Thatcher's regime, I would have seen that as very generous largesse indeed.
This is not in itself a one-off increase. It is part of a programme of sustained growth and investment in vital public services delivered by local government. Overall, government funding to English local authorities is up 30 per cent in real terms over the past seven years. This is in stark contrast to the previous four years of the last Conservative government, when year on year cuts were the norm. A real terms 7 per cent funding cut occurred over that period.
Some noble Lords, such as the noble Lords, Lord Hanningfield and Lord Lucas, have recanted on the Tory record. Those noble Lords should not be let off their responsibility for what life was like when we had a

965
Conservative administration nationally, and much of local government was run by Labour and the Liberal Democrats, with a small percentage of it run by Conservatives. We had to live with cuts, and they damaged services greatly. Over the past few years, we have done a lot to put that right and to take us forward to a new and more modernised level of local government services—
Lord Lucas: My Lords, perhaps I may pick the Minister up on that point. I agree with what he said, but he is talking about average figures. One can take the example of some of the south-western counties, where the entire increase this year is below average, and the entire increase has been passported through to education. Some counties are having to raise their council tax by 7 per cent in order to cut the budget for other services by about 5 per cent.
When there is such variation across the country, you cannot deal with these things on averages. The difficulty is not that the average is wrong. The difficulty is that the variation is so wide that there are some real losers. The Minster is putting counties in exactly the same position that he objected to my government putting them in. If it is medicine that I should take, it is medicine that the Minister should take too.
Lord Bassam of Brighton: My Lords, I was about to say that it is a fair point, but I am not so sure that it is. During the life of the Conservative administration, we had to live year on year with budget reductions. The noble Lord will say that there were winners and losers in that scheme, and I bet that he could probably find some big winners too. Year on year, we have had real, genuine increases. Over the period of time that I have been talking about, I described a 30 per cent growth in real terms. If the noble Lord could match that with the Conservative record, I would be very impressed indeed.
I am also happy to say that in recent grant settlements, we have removed ring-fencing from £750 million of specific grant. I thought that the noble Lord, Lord Laming, was concerned about specific grant. Again, this year, we have reduced specific grant from 13.3 per cent to 11 per cent of the total grant. That is part of our general commitment. In the past, I have referred to reversing the trend of ring-fencing of grants to local authorities so that there can be more localised control and adjustment of the way in which funds are used.
The noble Lord, Lord Hanningfield, referred to new local government legislation. The Local Government Act 2003 provides councils with more independence and flexibility, including financially, and it paves the way for even greater freedoms for councils to improve their services. Councils now have more powers to trade and to charge for discretionary services and retain income from some fines and penalties. They will also have incentives to work with local businesses through the business improvement districts and growth
966
incentives schemes. The Act also provides for authorities, rather than the Government, to decide how much they need to borrow.
Another important new freedom for councils introduced by the 2003 Act is that councils can now, if they wish, reduce the discounts on council tax for second homes, to which the noble Baroness, Lady Hamwee, referred. That will generate extra local revenue and will enable those local authorities that can benefit from it to spend the revenue on local services.
Having set out our generous stall, it is worth saying that we expect local authorities to deliver services in a cost-effective way. It is clear that the public are unhappy about the unreasonably large council tax increases in recent years. We, too, are concerned. We were disappointed that the average council tax increase in the past financial year was 12.9 per cent. In our view, that is an unsustainable trend. We have made clear that continued year-on-year increases in council tax on the scale that we have seen in the past year will not be acceptable to voters or to the Government. Electors will make their views clear through the ballot box. If necessary, the Government will use their capping powers. We do not make that threat lightly. We would prefer that councils answer directly to their electorates for their decisions. But we cannot stand aside if councils continue to impose unreasonable increases.
Given the generous grant settlement for 2004–05 and the scope for efficiency improvements, our view is that local authorities can and should deliver council tax increases in low single figures in 2004–05; so we are now looking at proposed council tax rises very closely. I congratulate the noble Lord, Lord Hanningfield, on his low single figure increase in Essex.
We are pleased that initial indications suggest that many authorities have listened and are planning increases in low single figures. But despite the significant extra investment, some local authorities have not listened and have indicated that they will impose large increases. Under those circumstances, it appears inevitable that the Government will have to use their capping powers this year. As of today, the Minister for local government and the regions has written to 65 local authorities where we have seen reports of council tax increases not in line with single figures.
I now turn to the Balance of Funding Review. For the benefit of noble Lords who are not familiar with its work, I would like to give some background. In the 2001 White Paper, the Government proposed to set up a high-level working group to address an issue repeatedly raised by local authorities and the Local Government Association. Local government argued that the fact that local authorities raised only one quarter of their own funding on average, and relied on central government for the rest, was bad for local democracy. They also argued that it caused the problem of gearing, about which we have heard much today.
The review steering group has met several times under the chairmanship of Nick Raynsford, the Minister. It has discussed the principles of a successful

967
local government finance system and commissioned independent research. That is all available on the Office of the Deputy Prime Minister's website, about which we have also heard today. It is transparent and available for everyone who can get past the frozen screen to become engaged with. We have also held public consultations. The review is discussing possible local options. Perhaps I might emphasise two of its findings so far.
First, the research shows that much of the public are not clear where accountability for local government services lies or where the money comes from. What matters to them is not where local authorities get their money, but that services are efficiently delivered. There seems to be no sign of a direct link between the balance of funding and local election turnout. Probably, that was a surprise to many of us.
Secondly, our consultation shows that there are many concerns about aspects of the local government finance system, particularly gearing and the impact of council tax rises on taxpayers with fixed incomes. However, there was no clear or simple view of what needs to be done. There are no easy fixes or quick wins and we do not want knee-jerk conclusions.
There are options for reform: the review is looking at four. The noble Lord, Lord Newby, will be glad to learn that one of them is local income tax. The others are a reform of council tax, which seems to be favoured on the Benches opposite; relocalisation of the business rates, which seems to be partly favoured on the Benches opposite; and a mixed option of smaller taxes or charges. Here, I should emphasise that the fact that the review is hearing evidence on different options is not an indication that the Government accept that the balance of funding must be changed or that they favour any of the reform options themselves.
Many responses to the review consultation said that there were serious problems with council tax. But most of them suggested that council tax could be reformed rather than abolished. It is a tax that has done a good job for a decade and has been widely accepted until recently. It has advantages: for example, it is relatively easy to understand—the noble Lord, Lord Bradshaw, mentioned a test—and to collect. Overall, in 2002–03, local authorities in England collected more than 96 per cent of the council tax due in that financial year. That compares favourably with collection levels in the latter years of the old ratings system, which, again, was an easy tax to collect.
What kind of reforms might we be talking about? There are changes such as the revaluation of domestic property, to which we are already committed, and which is currently planned for 2007. That will ensure that a council tax bill is based on the up-to-date value of the house rather than its value in 1991. By the way, revaluation is not an exercise designed to raise more tax overall. Our 2001 local government White Paper made clear that its overall impact would be neutral. But it is necessary to avoid the valuation base losing touch with reality, a point made by many noble Lords, and is a real problem. People would not think it right for income tax to be based on 1991 income, though
968
some might see some benefits. Similarly, we cannot continue to assess council tax on 1991 property values. At the same time as the revaluation we will consider the case for change to the existing bands.
A point that came through strongly in the consultation was that people thought that council tax should reflect more closely people's ability to pay and should more accurately reflect variations in property values. Ways of doing that mentioned during the review included, for example, introducing new bands or a system of "regional banding". However, I should make it clear that we are not committed to any particular changes to the banding system. Before changing the banding system for council tax, we would need to examine very carefully the impact on those groups, such as pensioners, on low or fixed incomes living in high-value properties.
The review has identified that a key issue is resolving the problems of council tax benefit, to which the noble Lord, Lord Newby, referred in terms of take up. This is an in-built way to achieve what the Liberal Democrats say they want; that is, to introduce more "progressivity" into local taxation. Council tax benefit helps people on low incomes, including many pensioners, with their council tax payments. The problem is that some are not aware of their right to this money. Some of those who are aware are put off by the perceived stigma of claiming a benefit and are therefore reluctant to claim other than the slate pension. Central and local government together will do all that they can to ensure higher take up. We are already abolishing the restriction that limits the maximum council tax benefit for people in council tax bands F, G and H from 1 April. We are also considering whether any other improvements can be made to the system.
I now turn to the idea of local income tax, the second option being looked at by the review. Of course, it is the solution put forward by the noble Lord today. The Balance of Funding Review consultation showed support in some quarters for replacing or supplementing council tax with a local income tax, or at least considering the case for one. Perhaps it is worth pointing out that the Prime Minister has made it clear that the Government do not favour replacing council tax with local income tax. However, we are certainly prepared in the review to listen to reasoned argument. This is one of four issues on which we are asking expert organisations—in this case, the Chartered Institute of Public Finance and Accountancy—to provide further evidence on the pros and cons. It will give its presentation at the next meeting of the Balance of Funding Review Steering Group in March.
I turn to the specifics of the proposal for local income tax put forward by the Liberal Democrats and advocated by the noble Lord. I fear that these particular proposals could involve us in making disruptive and complicated changes to the tax system, a matter to which the noble Lord, Lord Hanningfield, drew attention. Moreover, the noble Lord, Lord Bradshaw, said that we should not do this for at least four years, and then only after careful phasing.

969
First, the proposals would do little to improve the flexibility of local authorities. The Liberal Democrats would increase the proportion of local funding coming from central government by using £1.7 billion of their proposed higher rate tax increase to increase grant and keep bills down. Since authorities in poor and deprived areas would be able to collect less income tax than the richest areas, the noble Lord's proposals would mean that the poorer authorities would become more heavily dependent on grant. As a consequence, there would be less flexibility and a worse gearing effect for those authorities than at present.
Secondly, the proposals would involve substantial costs which are not mentioned in the Liberal Democrats' proposals. They would combine their local income tax proposal with an increase in the level of the personal allowance to £5,000, but this would cost an extra £2.4 billion.
Finally, the proposals have weaknesses which the Liberal Democrats have not considered. They have two ideas for how the tax would be collected—the first being to collect it during the year through tax codes, and the second to collect it at a standard rate across the country, then settling up at the end of the year with individual taxpayers by means of adjustment processes what they should have paid. The first proposal would impose additional burdens on employers—have they been costed?—who would need to deal with local income tax rates for every local authority in which their employees lived, and to account separately for the different amounts of local income tax they were subtracting from their employees' wages.
The noble Lord, Lord Newby, said that this would reinvigorate local democracy. However, the second proposition for local tax collection seems a rather odd compromise, satisfying no one. It would be a local income tax in which, most of the time, the bill you paid had nothing to do with the rate set by your local authority. How would such a system promote local accountability and flexibility, and how would it aid the taxpayer in understanding how much money their council was asking from them to spend on local services? In addition, given that the mechanics of the tax system mean that under or over-payments would not be fully settled for months or years to come, this approach would be doubly complex and unpredictable for individual taxpayers, local authorities and the Inland Revenue. I am not sure whether this proposal would make local income tax more accountable because it would be a local tax administered nationally.
The third issue highlighted by the Balance of Funding Review consultation was the relocalisation of non-domestic or business rates. We have been told by the noble Lord, Lord Lucas, that we should not look at that, but nevertheless we are considering it. For the past 10 years local authorities have collected business rates although they have not set the level of rates or kept the proceeds. Central government now set a national business rate and redistribute the money to areas on a per capita basis. Relocalisation, a return to
970
the pre-1990 system, is not something the Government have favoured in the past, although I understand the strong demands being made for it locally.
Most consultation responses from councils have argued that relocalisation would resolve the balance of funding problem and encourage better partnerships with local businesses. But many in the business community would be strongly opposed to any change in the current level playing field for business. The Balance of Funding Review is continuing to look at this issue.
I shall conclude my remarks by saying how much I have welcomed this debate. It has provided us with a valuable opportunity to air some important issues, even if they have given me a sense of dejci vu and the noble Lord, Lord Lucas, something of a depression. It is particularly useful that this debate has taken place during the Balance of Funding Review and I shall invite all those within the Government working directly on the review issues to take careful note of all the valuable points that have been raised in your Lordships' House. I have enjoyed the debate and I look forward to more of them; they are of great value. I look forward in particular to hearing more from the noble Lord, Lord Newby.
5.54 p.m.
Lord Newby: My Lords, noble Lords will be relieved to learn that they will not hear much more from me today on this issue. I thank all noble Lords who have taken part in the debate. All the contributions have demonstrated, first, the importance of the issue and, secondly, that the problem of finding a system of funding local government is neither new nor easy to resolve. Members on these Benches look forward with eager anticipation to hearing the outcome of the Balance of Funding Review and the Conservative review looking at alternatives to the current system. I am sure that we shall return to these matters in due course. In the mean time, I beg leave to withdraw my Motion for Papers.
Motion for Papers, by leave, withdrawn.

Climate Change
5.55 p.m.
Baroness Miller of Chilthorne Domer Baroness Miller of Chilthorne Domer rose to call attention to the case for action at national and international level on climate change in the light of the recent statement by the Government's Chief Scientific Adviser on the threat which climate change poses to the world; and to move for Papers.
The noble Baroness said: My Lords,
"In my view, climate change is the most severe problem that we are facing today, more serious even than the threat of terrorism".
Those are not my words, but those of Sir David King, the Chief Scientific Adviser. Here in the United Kingdom, we certainly believe that he is right. According to Sir David, the UK is trying to show leadership by cutting energy consumption and increasing the use of renewable resources.

971
However, as I review where we are with climate change, although the United Kingdom Government have set a lead in this area, they have failed to get to grips with how domestic users can become individually energy efficient because they have not given the right incentives. In the case of business, the Government have failed because they have devised such a complicated set of hurdles and mechanisms that the opportunity for innovation and investment has been turned into a bureaucratic jungle and thus has, I believe, lost ground. I shall return to that point at the conclusion of my speech.
But at least the United Kingdom is part of the group of countries which signed up to the Kyoto Protocol. We are committed to cutting our CO2 emissions. There are countries which believe that climate change is a threat, but are afraid to sign up to a low carbon emission policy because they fear that it will weaken their push towards a stronger economy. In that group I would include Russia which, having seen the United States fail to ratify the Kyoto Protocol, had second thoughts because it sees the opportunity for emissions trading diminishing as a result. Then there is the group of countries, including India and China, which are moving fast towards industrialisation. They understand the principles behind Kyoto, but need to make the radical shift on to a different basis from that of fossil fuels.
Finally, there is a group of one, which is made up of the President of the United States, George Bush. As the world's only remaining super-power, the United States is accustomed to leading internationally co-ordinated action. It is willing to act decisively and unilaterally. It is even willing to help other countries in the international community address climate change issues through its technical co-operation programmes. But back at home, due I believe to the President, the political agenda remains firmly rooted in the freedom to drive ever bigger cars and consume ever greater amounts of energy in heating, cooling and transport. I do not believe that the Democrats, in their hustings speeches, have so far made the play they should on environmental issues. They know that these matters are fundamentally important and I wait to hear their candidates say so.
What does the international community say? Klaus Toepfer, executive director of the United Nations Environment Programme, said:
"The United States is the world's leading emitter of greenhouse gases, largely because it is the world's most successful economy. The US produced more than 20% of the world's carbon emissions while having only 4% of the world's population".
I do not usually like to use statistics in speeches because they can be dull, but those figures are so stunning that they have to repeated again and again: 4 per cent of the world's population producing 20 per cent of the carbon emissions.
Mr Kofi Annan, Secretary-General of the United Nations, talking of the reasons given by Mr Bush for rejecting Kyoto, dismissed the idea that implementing it would be economically damaging. Mr Annan said:
"The opposite is true … Unless we protect resources and the Earth's natural capital, we shall not be able to sustain economic growth".
972
Like Kofi Annan I believe that the words "climate change" are a sort of shorthand way of describing the threat posed by profligate and greedy use of the world's resources—especially non-renewables. We can lose out twice. When we cut down and burn forests, not only do they emit vast amounts of CO2, they cannot act as carbon sinks to absorb CO2.
The world is depleting fossil fuels by using them as forms of energy when other forms are within our technical grasp. Unless the world grapples with this issue and solves it, we have been told by scientists that it will lead to human misery through flood or desertification and ecological disaster from the extinction of thousands, possibly millions of species.
This debate is particularly timely tonight because we shall have graphic illustrations from my noble friend Lady Walmsley and the chairman of the Science and Technology Committee, the noble Lord, Lord Oxburgh, who have just come back from the Antarctic and can give us a first-hand explanation of what is happening there. I am especially looking forward to the maiden speech of the right reverend Prelate the Bishop of Leicester.
The scientific community in the United States, in contrast to the President, has plenty of evidence of the gravity of the situation but apparently is not allowed to use it. On June 2003 the Associated Press stated:
"The Environmental Protection Agency scrapped a detailed assessment of climate change from an upcoming report on the state of the environment after the White House directed major changes and deletions".
The changes prompted an EPA staff memorandum saying that revisions demanded by the White House were so extensive that they would embarrass the agency because the section,
"no longer accurately represents scientific consensus on climate change".
I highlight that because it underlines the importance of the statement made by Sir David King. It was terrific and brave of him to go to the United States and to make the statement that he did. It was very much needed.
In the recent All-Party Group on Earth Sciences meeting on climate change, Dr Bryan Lovell of the University of Cambridge—another very distinguished scientist—made the point about engaging with the developing world. We need to highlight that issue, and to be clear about our own national reaction to climate change, whether we are debating increased use of renewable energy or energy conservation. A matter very close to my heart is the need to lessen food miles, but I am trying not to go into that in detail. We can become absorbed in thinking about domestic detail. In doing so, we do not engage with the critical role of the rest of the developing and industrialised world, so I shall say a little on that issue.
The Kyoto Protocol will come into force after ratification by at least 55 countries, representing at least 55 per cent of total greenhouse gas emissions. That is a critical point because many people think that the Kyoto Protocol is already in force. It is not. As I said at length, the world's largest polluter, the United

973
States, refuses to ratify. The pressure is now on Russia which, with 17 per cent of global greenhouse gas emissions, would tip the balance to enable the Kyoto Protocol to come into force. I do not believe that Russia has decided whether to ratify. Given that, according to the most recent figures, Russia's greenhouse gas emissions are still rising at 6 per cent a year, will the Minister tell us what the UK Government are doing to encourage Russia to ratify the Kyoto Protocol?
Equally worrying but largely ignored is the situation in those countries with large populations that are undergoing rapid industrialisation, such as China and India. Both are signatories to the United Nations Framework Convention on Climate Change, but only China is a signatory to the Kyoto Protocol. Those are positive first steps and both countries are beginning to take action towards reducing greenhouse gas emissions.
Next to the US, China is the largest source of greenhouse gas emissions and its economic growth continues to be among the fastest in the world, with an average of 8.2 per cent per year. At that rate it will outstrip the United States in energy consumption by 2025. Twenty-five years ago private car use in China was unknown. It was very limited, yet by the end of next year the figure will already reach 24 million cars.
Energy consumption is therefore increasing very rapidly. I am not suggesting that the economic development of India or China is a bad thing. On the contrary, it will raise living standards, but the use of new and clean technology is absolutely critical to the development. When the World Wildlife Fund, China branch, said that one of the major barriers to the promotion of renewable energy development in China was the lack of information and international contacts, that worried me. What technical assistance programmes are available to those countries, and what effort are we making to share our knowledge with them?
Climate change is a global problem, and all countries share the responsibility and outcomes. For those countries and the rest of the developing world we must recognise that economic improvement can drive environmental improvement, and that environmental improvement can come about through economic drive as long as the policies and technologies are in place.
It calls for a new attitude, but climate change will be good for economic growth—not the reverse. For too long the message has been that tackling climate change will damage the economy. We need economists to say that that need not be the case. The United Kingdom and indeed the European Union until now have spent far too much time and energy in determining how to target, monitor and measure low carbon outcomes.
We Liberal Democrats have promoted replacing the complicated and unfair climate change levy with a straightforward carbon tax, which would be a great improvement. It would be simple to understand and would go to the heart of what we are trying to cut—carbon emissions.
974
The programme of measures in place are all about penalising energy use. I hope that the Defra review in 2004 will take the opportunity to deliver a programme of measures that more accurately target the problem. for noble Lords who would like to read more on this issue, the Parliamentary Office of Science and Technology has produced a timely note for this debate—note 213 on climate change and business, for which I am very grateful.
In thinking about the issues, I concluded that climate change poses the threat of environmental havoc, about which I know many noble Lords will speak, but the most threatening aspect of globalisation that climate change challenges is our concept of democracy. The fate of peoples throughout the world is held in the hands of others who may live far away. They are not so much held in the hands as under the accelerator pedal. Our own actions and those of our nation are not isolated domestic agendas, but affect those who have no power to vote for change. What we do has a critical effect on others, yet they have no say in our democratic process. I hope that the globalisation process will recognise that fact and develop a much more robust way of dealing with the issue of climate change. The World Trade Organisation and the World Bank continue as though it were not the most serious threat to the future of our planet.
Finally, I must return to the issue of international leadership. At yesterday's pre-election press conference, Mr Bush concluded that his most solemn responsibility as US President was to keep the country secure from terrorism. Clearly he has not been listening to his own Environmental Protection Agency, fettered though it may be, or Sir David King. I accept that changing other nations' regimes or painting them as a threat is a much easier target than changing domestic habits, but less critical to the United States' future, our nation's future or the future of the world. It looks as though the US is in danger of setting off on a new diversion. A billion dollar programme to put men on Mars is not only irresponsible but immoral at a time when, according to the best science, the future of our country, that of all countries, and the future of our own planet as a life-sustaining place is so much under threat. I beg to move for Papers.
6.10 p.m.
Lord Hunt of Chesterton: My Lords, we are grateful to the noble Baroness, Lady Miller of Chilthorne Domer, for introducing this debate and for her good overview of the political aspects of climate change.
Climate change is forcing decisions on governments, local communities, businesses and individuals about future policy and immediate action. If such decisions are to be taken correctly, especially in the United States, perhaps the growing dangers of ideologically-inspired terrorism and, as I shall explain, nuclear terrorism, may diminish. I shall comment on those decisions and hopefully make some suggestions that will be of interest to the Minister and those who are campaigning for sustainable development in the UK and world-wide.

975
As a professor of climate modelling at University College, the chairman of a non-governmental body, ACOPS, and of a consulting company that works in this area, I declare an interest. I was formerly head of the Met Office, where the Hadley Centre is based.
First, the work of the Hadley Centre and other research institutions around the world continues to confirm the hypotheses about climate change that began in the 19th century with the work of John Tyndall here in the UK and Sven Arrhenius. I was rather pleased to read last week that my great grandfather, William Garnett, a physicist, attended Tyndall's lectures at Imperial College in the 1860s, so there is a direct connection.
Those great scientists predicted that carbon dioxide and, as we now know, other gases can lead to the trapping of long-wave radiation leaving the Earth's surface. As in a greenhouse, where the glass traps the radiation, it causes the temperature to rise in the lower atmosphere up to a height comparable to where aircraft fly and to decrease the temperature in the stratosphere above that. Although more clouds are formed, which reduces the sunlight on the surface, the additional water vapour in the atmosphere leads to a warmer climate and has the net effect of trapping radiation and increasing the temperature. In the early days of climate change research in the past 20 years, that was a major controversy. However, it has now been settled. Satellite measurements also confirm that story, showing reduced long-wave radiation and a cooler stratosphere. In fact, some of the work of the UK's satellites has made an important contribution.
The physical and natural consequences of these changes in climate are considerable and quite variable in their effects around the world. In the UK and in north-west Europe we shall have more storms, rainfall will increase, and there will be a likelihood of higher temperatures; and that, of course, will also happen in many other parts of the world. This summer we saw 15,000 people die in France. In temperatures higher than 35 degrees Celsius, we shall certainly see very many more casualties among the sick and elderly. The largest effect on climate change is in the polar regions, with arctic ice likely to disappear in the summer months in the middle of this century. The permafrost is melting and retreating at about 10 kilometres per year, which may have the further knock-on effect of releasing methane and major greenhouse gases.
There is also the possibility, emphasised in a recent television programme, of the Gulf Stream and the polar ocean circulation changing suddenly. Computer models show that that is likely to happen only with a very large change in carbon dioxide—perhaps a factor of four—and that it may not occur for at least 200 years and only if no measures are taken to reduce emissions. One should realise that here we are talking about a variation in the world climate that has not happened previously. There have never been such high levels of carbon dioxide or even temperature. We should also remember that the ocean atmosphere system is in a sensitive equilibrium. In the past it has undergone sudden changes, which often have been quite local. Even with the world's largest Earth
976
simulator in Japan, certain processes cannot be reproduced precisely. Nevertheless, the UK can be very proud of the contribution made by its researchers, its monitoring systems and its prediction work, which has been supported by the present and previous governments and places us in a leading position to give world advice.
As a sometime engineer, and I hope a practical politician, I am also very interested in what can and should be done to mitigate climate change and to help communities adapt to its consequences. Here I believe there are several ways in which the Government could do better, especially in supporting more effectively those communities, industries and researchers who are pioneering new approaches. As one would expect of any British government, all of which are essentially run by the Treasury, the Government are seeking solutions with various market mechanisms. Naturally, with the strength of the City of London, the UK is doing pioneering work in this field. However, it is not yet clear whether the financial carrot approach is really producing substantial improvements in the efficiency of energy use, either in buildings or in transport.
We know that the UK is aiming to meet its Kyoto commitment to reduce carbon dioxide emissions by an increased use of gas, which, of course, has lower emissions than oil or coal. I understand that the White Paper was vigorously contested in Whitehall, but it led in the end to the remarkable conclusion that there should be no firm commitment to any UK energy source, but more or less complete reliance on Russian gas, for the next 50 years. Wind energy will clearly contribute, but our reliance on Russian gas will be massive.
As I discovered last week, the Government have many different definitions of "sustainable development". However, in none could I find a prime commitment to security. A major storm, a flood, an industrial disaster or a geo-political threat can destabilise a country. In a parliamentary reply last week, my noble friend Lord Whitty defined nuclear energy as unsustainable. That is only one definition and it might perhaps be contested by the MoD, or by the country at large, if energy systems were threatened. I again ask my noble friend Lord Whitty whether there can be a stronger commitment to the universities and industry that believe there is a strategic need for the UK to have a strong nuclear capability.
The Government Chief Scientist has emphasised the UK's commitment to the international fusion programme that would produce clean energy. As envisaged, that is far into the future. However, in the United States and Russia there are now active programmes for examining combined fission and fusion systems, including the exciting idea of feeding nuclear material from weapons into fusion reactors. In the short term, that will certainly lead to practical power stations and an effective way of eliminating waste stockpiles. Perhaps we could even think of stopping climate change and terrorism in one system. At present that kind of thinking is officially verboten in the UK, but not in other countries, and I do not see why it should be.

977
In the Guardian of Monday, 12 January, there was a story of how the energy used by the Borough of Woking has been reduced by 40 per cent, compared with 10 years ago, using a combination of combined heat and power, photovoltaics and energy saving, and most significantly by moving off the grid. If you receive one and a half pence per unit for electricity when you put it into the grid and are charged five and a half pence per unit when you take it from the grid, it is no wonder that some people question whether the centralised grid approach is appropriate and compatible with local energy systems.
The reduction of electricity prices by one penny per unit in Woking emphasises the point made by the leader of this debate—that mitigation can really benefit people. Perhaps the DTI needs to revise its policy radically in this area and perhaps also advertise to a greater extent the remarkable achievements of that borough, which I believe need to be taught around the UK, rather than, as at present, regarding it as too clever by half and too successful, which, as we all know, is the worst possible crime in Britain. There have also been complaints about the grid from wind supply companies, and that is clearly a critical area for the UK to get right.
There are other important developments, which I am sure will be mentioned by others in this debate and also by the EU committee looking into climate change. I believe that that committee will report on the need for a more effective national energy centre to highlight and inform about innovation, such as exists in the Netherlands, though not here. We need improved monitoring of greenhouse gas emissions all over the country and we need better information for consumers about the market for improving energy efficiency.
Finally, I should like to make the point, also made by the leader of this debate, about how the world will look as the climate changes, as the temperature and the sea levels rise, and, as the World Bank predicted a year ago, most of the world's population will be living in huge coastal mega-cities. There, because of the lack of escape, rising sea levels and big storms, security issues will be critical. The Chinese Government, in particular, are very fearful of some of the consequences. We have to deal with climate change here in the UK but in future policies we should recognise its far greater impact around the world. This point has been made urgently in the debate and should be very much borne in mind by the Government.
6.20 p.m.
Baroness Byford: My Lords, I thank the noble Baroness, Lady Miller of Chilthorne Domer, for introducing this important debate today. Her timing is impeccable as tomorrow we shall continue to debate the renewable energy section of the Energy Bill. Both of us are disappointed that the Energy Bill deals mainly with the decommissioning of nuclear plants and the establishment of the NDA. It brings forward only offshore wind farms in the renewables section; other forms of renewable energy are not included. I believe it to be a wasted opportunity.
978
It will give me great pleasure to listen to the maiden speech of the right reverend Prelate the Bishop of Leicester, to whose contribution we look forward. I am sure that it will be both informative and thought provoking. As a Leicester girl, I am particularly delighted to add my personal welcome to him on the day of his maiden speech. We look forward to hearing from him often, while well appreciating the many demands made upon his time outside the House.
Under the Kyoto Protocol Britain has committed itself to reducing its greenhouse gas emissions to 12.5 per cent below the levels of 1990. In addition, the UK Government have gone further and wish to cut the 1990 carbon dioxide levels by 20 per cent by 2010. The Sustainable Development Commission has expressed concern that unless further action is taken, the Government's reduction goal of 20 per cent will not be met.
British industry has urged the Government to review their 20 per cent target, warning that it could be suicidal for UK manufacturing competitiveness. Digby Jones, the CBI director-general, claimed that the 20 per cent target could damage industry and that at the very minimum the Government should guarantee that other EU states will be equally as stringent in their targets. If not, it will make us less competitive.
The debate calls for action both nationally and internationally, but two questions need to be answered. First, will the higher targets set by the UK Government result in the loss of yet more manufacturing jobs? As Jeremy Nicholson, head of the Energy Intensive Users Group, said, the plans would force industry offshore where production costs and environmental controls were lower. Secondly, does the Minister accept that if this were to happen, it would be disastrous for the UK economy and would perversely act to increase global emissions?
Others have expressed concerns that the targets are too low and too slow. A recent report published in the journal Nature revealed the threat posed by climate change to the world's biodiversity. It estimates that unless action is taken now, between 15 to 37 per cent of all land-based animals could become extinct by 2050.
Defra's own website showed in April 2002 that annual temperatures across the UK may rise between 2 and 3.5 degrees centigrade by 2080, with the degree of warming dependent on future levels of greenhouse gas emissions. It forecasts that higher summer temperatures will become more frequent and cold winters increasingly rare.
We are aware and disappointed that both Australia and the United States have stated that they will not sign up to the Kyoto Protocol and that Russia has not yet decided, a point to which the noble Baroness referred in her opening speech. The US is predicted to increase its emissions by more than 30 per cent but I believe that we should not be deterred from making progress wherever possible.
In August 2003, Defra's website gave a break-down of our emissions. Industry was responsible for 38 per cent of carbon dioxide emissions; road transport for

979
25 per cent; domestic users for 27 per cent; and others—I am never quite sure what is meant by "others"—for 10 per cent.
Emissions from transport have doubled between 1970 and 2001 and we look to industry to continue to improve its technology and lower the emission rates. As was said earlier, we must acknowledge the part that biofuels could play in a reduction of the overall carbon dioxide emissions. In July 2002 the biofuel industry requested a reduction in fuel duty. The Government reduced the duty on biofuel by 20 pence per litre and, in the Budget of 2003, said that they would do the same for bio-ethanol from January 2005. That is welcome. Although the NFU criticised the cuts in the duty as "insufficient", it was not that it was not pleased to have the cuts; it felt that they were not enough to initiate proper growth in the industry. Will the Government change their thinking in this regard?
The Government welcomed the Defra Select Committee's report of 21 January this year and its warning that simply increasing the duty incentive may not be enough to encourage the development of a biofuel industry in the UK. On the contrary, it may only result in increased imports. Does the Minister still agree with that view? If so, what measures does he propose to strengthen home production?
At international level we have a duty to help developing countries to restrict growth in carbon dioxide emissions. We must assist them, for instance, to retain the remaining forests in the face of developmental pressures and to diversify without enduring the vast increases in pollution levels experienced in the West from the period of the Industrial Revolution onwards. We need the equivalent of a CFC ban to reduce the output of carbon dioxide and of the "Whale Watch" programme to protect the forests. Both have made significant improvements to our environment and we should have the imagination and the courage to duplicate them in many areas.
Speaking of courage, we must also tackle the problem of pollution and carbon dioxide emissions from air transport. Over the past 30 years, emissions from road transport have increased by more than 20 per cent in the EU as a whole and by 25 per cent in the UK. The outlook for air transport is a quadrupling of emissions over the next 30 years. Figures vary from source to source and expert to expert, but there seems to be general agreement that the increases from air traffic could completely neutralise the savings planned under Kyoto.
Barbara Young, the chief executive of the Environment Agency, predicted recently that the growth in air traffic could jeopardise all achievements made in cutting emissions. She said:
"The government needs to work with the EU, international bodies, its environmental advisors and industry, to reduce aviation's greenhouse gas emissions and to develop appropriate economic instruments that meet the environmental costs of aviation".
I know that recently there was a debate on a statutory instrument in which the issue of emissions from aircraft was discussed. Vast improvements in
980
engine design have been quoted in many debates. Those in favour of expansion cited hugely the reduced levels of noise and pollution. Could it be that setting stringent standards for all aircraft flying to and from our shores would ensure that at least total emissions would be contained and not rise above, say, 2004 levels?
I know that the question of the control of air traffic pollution is very difficult. It obviously affects us internationally. I believe that the one thing for which the industry would plead is that we do not set it too high standards and put at risk again our whole aircraft industry. Therefore, will the Minister tell us whether the Government are exploring the possibility of restricting air travel and air freight to machines that meet increasingly tough emissions and noise standards? I do not know whether the Government have considered and talked about that matter or whether it has been discussed at international level.
I now turn to what we as individuals can do. The noble Baroness, Lady Miller of Chilthorne Domer, and I recently worked on two Bills—the Water Bill and the Energy Bill. Working on Bills makes one very conscious of the need to conserve and preserve After the Water Bill went through, we were switching taps off very quickly to try to conserve water. In the same way, when we left this building at night, we switched off lights to try to conserve electricity, so there are things that we can do as individuals. There are also things that the Government are doing. I have posed serious questions to the Minister to which I hope he will respond tonight. I conclude by thanking the noble Baroness again for giving us the chance to talk about this important issue which brings challenges to us as individuals, to our nation and to the whole world.
6.31 p.m.
The Lord Bishop of Leicester: My Lords, may I take this opportunity to express my gratitude to the Members of this House and to its officers and staff for the way in which I have been welcomed and guided both at my introduction and subsequently? It was particularly gratifying tonight to follow the noble Baroness, Lady Byford. I thank her for her kind and welcoming remarks.
As the noble Baroness, Lady Miller, pointed out, the Chief Scientific Adviser has drawn our attention to the overwhelming significance of the issues before us today. As he put it, they are,
"more serious even than the threat of terrorism".
It is therefore difficult to imagine a more significant moral as well as scientific and political issue facing the human race. In the United Kingdom, we have not yet really felt the pain of global warming, so our response to the challenge can at times seem worryingly lackadaisical. The danger is that, when we do feel the full impact, it may be much too late.
The European heatwave of 2003, record temperature rises since 1991 and a 40 per cent thinning of the Arctic ice cap leading to rising sea levels, are evidence of this phenomenon. Our natural environment is being asked to cope with humanity's

981
pollutants to an extent that simply cannot be sustained. We may say things and repeat them often, but the words become so familiar that they stop having an impact. Today's debate with its call for action rather than words is entirely apposite.
It is good to report, therefore, that the Churches and other faith communities are waking up to the need to respond to this global challenge. We have two great advantages in coming to address the issue. First, we deal in matters of the spirit, of the heart and the emotions. Global climate change is of course a scientific matter, but it is also something that needs to touch us deeply and personally. To respond, we have to feel part of a global community not just of humans, but of all God's creatures and the planet itself. We have to feel responsible for all that is, and respond even though the real pain of global warming may not be experienced in our own backyards. The faiths are used to this kind of language, and we can and will use it to protect God's creation.
Secondly, our organisations are both global and local. Perhaps in recognition of these qualities, Defra has funded the Conservation Foundation to run workshops throughout the country for concerned Church people and others to learn what their faith teaches—spiritually and practically—about reducing humanity's ecological footprint. In my own diocese of Leicester, we will be organising such a workshop as an inter-faith event, because the issue brings the religions together like nothing else. Churches are taking up the Eco-congregation challenge. Dioceses are undertaking environmental audits and adopting environmental policies. The former Bishop of Hereford, who recently retired and is much missed already, has championed contraction and convergence at every opportunity. He has persuaded the Anglican communion and, most recently, called on the leaders of Churches Together in Britain and Ireland to support the campaign.
Those are some examples of attempts that the Churches and other religions are making to encourage action to reduce greenhouse gas emissions. There are many other examples of action by local agencies to address climate change, including in my county of Leicestershire and in the east Midlands. As an environment city, and in partnership with the organisation Environ, Leicester has initiated the "Keep Leicester Cool" campaign, promoting 10 steps that local people can take to protect the environment as well as providing advice to the business and education sectors. The east Midlands Community Renewables Initiative is also working with local communities such as former mining areas and local housing estates to integrate environmental technologies, using energy from biomass sources.
As the Chief Scientific Adviser pointed out, the Kyoto Protocol, although important, is not enough. We are now obliged to think carefully and urgently about what our post-Kyoto strategy will be. Sir David King has invited alternative ideas for future agreements about emissions control. Contraction and
982
convergence is one such idea—a simple yet far-reaching proposal to deal with greenhouse gas emissions effectively and justly.
Your Lordships will be aware of the solution to global warming devised by Aubrey Meyer of the Global Commons Institute. Contraction refers to the movement towards a formal stabilisation target of emissions that is sustainable: a 60 per cent reduction by 2050 is the often-repeated suggestion. Convergence is the sharing out of permission to pollute among all the people of the Earth. On a per capita basis, countries would be allocated their share of permits to pollute. As we well know, post-industrialised countries emit far more greenhouse gases then those in the developing world, yet have smaller populations. The richer countries can buy permits to pollute from the poorer countries and offer much needed development aid thereby. Contraction and convergence, therefore, is a simple yet radical solution, and one that I suggest we should be brave enough to support.
Next year, the UK enjoys simultaneously the presidency of the EU and G8. An opportunity that will not be repeated for decades is before us. The Prime Minister has said that he wishes to do something about climate change and about Africa, which is off-track for every one of the millennium development goals. Contraction and convergence is a solution that offers hope to both desperate situations. Climate change and sustainable energy use cannot be more pressing for the UK and the planet. It is in everybody's interest that these issues are debated and action initiated at all levels for the sake of our common future.
6.38 p.m.
Baroness Walmsley: My Lords, first, I offer my compliments to the right reverend Prelate the Bishop of Leicester on his excellent maiden speech. I am sure that the House very much enjoyed the wide spectrum of his remarks. Personally, I found his explanation of the very practical measures being taken by the Church, and the spiritual and philosophical basis behind that programme, to be particularly interesting and inspiring.
The right reverend Prelate comes to us with a wide range of previous experience that he will bring to bear on our deliberations. His experience in business and in the Civil Service before he joined the Church and the very wide range of his ministry will give him the knowledge to help us as we legislate in your Lordships' House. I particularly look forward to his input on issues relating to children from his position as president of the council of the Children's Society and I hope he will join me in the all-party parliamentary group for children that does such good work on all legislation in your Lordships' House.
Secondly, I would like to thank my noble friend Lady Miller of Chilthorne Domer for giving us the opportunity of debating this important subject this evening. It relates to an issue which, if not tackled quickly and effectively, could threaten the world and—as the right reverend Prelate referred to it—all God's creatures upon it.

983
I am particularly pleased with this debate this evening because it gives me the chance to talk about a very interesting and exciting visit that I made last month with other Members of the House of Lords' Science and Technology Committee to the British Antarctic Survey base at Rothera. I would like to take this opportunity to thank BAS for its hospitality and for giving us the unique opportunity of exploring issues relating to our current inquiry into international scientific treaties and other matters. It was the trip of a lifetime and a great privilege. Neither the noble Lords, Lord Oxburgh and Lord Mitchell, nor our Clerk, Rebecca Neal, will ever forget it.
We were impressed by the grandeur and pristine beauty of the Antarctic, by the way the wildlife is so well adapted to the extreme conditions and by the quality of the operation run by BAS on behalf of our country, as well as, of course, by the quality of the scientists, all of whom were incredibly kind and patient with us and our many questions.
We were able to find out a good deal about why the Antarctic is so important for the study of climate change, increase our understanding of the atmosphere and the world's weather systems and our understanding of biological adaptation, colonisation and survival in extreme situations. Since my own background is biology, it is the biological side of what I learned on which I would like to concentrate tonight.
I would like to begin by saying something about the hole in the ozone layer, a matter that was of particular concern to us on our trip as we slapped factor 30 sun protection on to our faces every time we ventured outside. Although global warming and the ozone hole are two separate matters, there is a link, and I will come to that in a minute.
It was in the Antarctic that the scientists from the British Antarctic Survey discovered the hole in the ozone layer back in 1985. They had been measuring ozone levels above the Antarctic continent since 1957. It was initially studied because of its influence on the temperature structure of the atmosphere and as a tracer for the circulation of stratospheric air. In the 1970s ozone became the focus of attention because scientists realised it might be affected by the increasing amount of chlorofluorocarbons in the atmosphere coming from aerosols, refrigeration and air-conditioning systems and the like. The evidence for the destruction of the protective layer of ozone by these substances became clear in 1985.
The link with global warming can be easily understood when you know how ozone is destroyed in a seasonal way by CFCs. During the Antarctic winter a strong westerly wind around the continent, known as the circumpolar vortex, builds up in the stratosphere. This cuts off the interior and allows it to cool to minus 80 degrees. Thin clouds form which allow reactions with gases containing chlorine to take place. When the sun returns in the spring, the chlorine is able to break the ozone down into normal oxygen and, hey presto, you have a hole. As the stratosphere warms up again, these reactions stop, the vortex stops whirling around, and warmer air containing ozone flows in and closes up the hole; this happens every year.
984
Unlike Antarctica, which is a continent surrounded by ocean, the Arctic is an ocean surrounded by mountainous continents, which is why the vortex there is more irregular and it does not get so cold. That is why there is no deep ozone hole over the Arctic. However, it is predicted that there will be one within the next 20 years, despite the successful decrease in CFC emissions achieved by the Montreal Protocol.
The link with global warming is this: warming at the Earth's surface is caused by increased carbon dioxide emissions which can trap energy from the sun, blocking the emission of infrared energy from the surface and so warming up the Earth. However, this allows the higher atmosphere, where the ozone is present, to cool, and, as we have heard, it is these very cold conditions that allow the ozone-destroying reactions to take place. So, global warming not only presents us with the danger of flooding and desertification, it threatens the success of other measures to stop the destruction of ozone in the atmosphere.
Why is lack of the ozone layer a problem for living things? Anyone who has gone out without sun protection can see the result. Ozone provides a protective coat around the earth. It prevents harmful ultraviolet rays from the sun from entering the lower atmosphere and thereby protects us and all other living things from their effects. High energy UV-B radiation is easily absorbed by the DNA which we have in all our cells, and the cell can then not read the code properly. In extreme situations this can lead to the death of the cell and the organism. In our case it can burn our skin and cause skin cancer. The chlorophyll in green plants is also destroyed by this UV-B energy, and plants become bleached and non-functional. You can imagine how that might affect woods and forests, and the food crops on which mankind depends.
Just as we produce melanin in our skin which gives us a tan and protects us from UV light to some extent, so many Antarctic organisms such as lichens and mosses produce a pigment that protects them from UV damage. That is why you see bright orange, brown and black lichens encrusting the rock where the snow has melted. A study of these may be very useful in understanding how we can protect ourselves. However, there is a limit to how much of this natural protection we and all other living things can produce, certainly not enough to substitute for the ozone layer. That is why it is so important.
The living organisms in the Antarctic are remarkable in many ways, especially in the way they are adapted to extreme environments. Scientists are rapidly discovering ways in which a study of Antarctic creatures and plants can be applied to benefit man. It is becoming clear that the organisms that live at the bottom of the world are a priceless resource for good for mankind.
However, as pointed out recently in a report by Sam Johnston and Hamid Zakri for the United Nations University in Tokyo, there is a real danger that commercial biological prospecting in the Antarctic, if not regulated very soon, will get out of hand and could

985
damage the environment and limit the exchange of important scientific information through commercial confidentiality. If not actually banned by the Antarctic Treaty, this is certainly against the spirit of the treaty, which preserves the continent for peace and science for all mankind.
That is why the Antarctic Treaty group's advisory body, the Scientific Committee on Antarctic Research, known as SCAR, and chaired by Professor David Walton from the BAS, raised concerns about biological prospecting in a recent report. It stated:
"While no current instance of harvesting for biotechnology is known, there are obvious environmental ramifications of the taking of animals and plants as a commercial venture".
They recommended that the situation be watched very carefully.
We heard during our trip that the valuable work done by SCAR is badly under-resourced and much of the work is done by scientists with other jobs in their own free time. This is something that cannot be allowed go on and I wonder if the Minister could say whether the UK Government have any plans to take a lead in addressing this matter.
The sort of useful things we heard about are fish that produce their own antifreeze, and novel antibiotics that could be developed to serve medical and veterinary science. We heard how the Antarctic cod can reduce its heart rate to five times per minute at very low temperatures. Imagine how an understanding of the physiology of this could assist with anaesthesia. However, we also learned about the threat to these creatures of global warming. Experiments are being done in the aquarium in the Rothera laboratories on the effects of raising the temperature of the water surrounding some of the marine creatures found in the Southern Ocean. The temperature of the sea there is low but stable and it has been found that many creatures lose vital functions such as moving, feeding and burying themselves in the sand if the temperature is raised by only one degree. Two degrees can kill some of them; five degrees would kill most of them. Yet it is predicted that there could be a rise in temperature of up to two degrees in the next hundred years unless something is done to stop it. What a tragedy it would be if global warming were to destroy this wonderful and potentially valuable ecosystem. As Sam Johnston said in his paper:
"The Antarctic is a pristine global park and it needs to be preserved".
I believe that too much tourism, too much bio-prospecting and the possibility of commercial mineral exploitation are not the only threats to the Antarctic. global warming could destroy it even more tragically. I recommend that the Minister, if he needs any further convincing, should retrace the steps of the Science and Technology Committee last month and go and see for himself.
6.50 p.m.
Lord Tanlaw: My Lords, like the noble Baroness, I appreciate very much the maiden speech of the right reverend Prelate. I share with him and with the poet Pope the thought that we are all,
"but parts of one stupendous whole,
"whose body Nature is, and God the soul".
I wonder whether noble Lords will allow me, in response to the noble Baroness's timely debate on energy and climatic change, to go back 31 years to the 1970s. On 28 February 1973 I stood precisely where the noble Baroness was standing this evening when I opened the first energy debate in this House. At that time there was no government Minister for energy, no government department of the environment and indeed no discernible government energy policy. Twenty-six years ago, I asked from the same place an Unstarred Question:
"whether there is cause for concern in the current increase in atmospheric carbon dioxide and apparent change in global weather patterns".—[Official Report, 30/11/78; col. 628.]
The Question was based on the advice of Sir John Mason to me when he showed me the original paper that he presented to the Royal Society at about that time. I had hoped that the government of the day would take note of the moral contained in the parable that I quoted about the wise and foolish virgins and create a permanent energy commission made up from businessmen, scientists and politicians. The terms of reference would have been to create and implement a flexible energy policy for the future, one which would wisely protect the nation's fuel supply and the environment at the same time by maintaining a large nuclear generating element to keep the lamps burning regardless of the political persuasion of the government of the day.
Unfortunately, I do not recall in the intervening years the formation of such a body or a proper debate about a coherent and continuing policy from any of the political parties with regard to nuclear power generation or even talk of the possibility of a hydrogen-based economy, based on electricity produced by nuclear power. All that has emerged so far are the good intentions of the Kyoto Protocol—which as far as the United States is concerned are apparently optional, while the rest of the world will try no doubt to conform to it.
In my view—perhaps the Minister will persuade me otherwise—Kyoto will do little at this stage to reduce global carbon emissions. What it may succeed in doing is to create out of every extra tonne of carbon generated into the atmosphere just one more tax collector, businessman or lawyer to make capital out of it at ground level. I think that this rule could be applied equally to countries such as the United Kingdom which accept the protocol and those such as the United States which do not. In this connection, it might be educational if the Minister could divulge to us how many of his departmental staff are employed in what might be deemed carbon-related jobs and what proportion of the whole they make up.

987
I wonder whether the Minister can tell us why we have to ask the very same questions in our debate today on climate change that were asked 30 years ago. Perhaps my noble friend Lady Greenfield may have given us part of the answer in the opening speech of her recent seminal debate on communications between scientists and politicians when she said:
"Politicians … with their limited tenure of office, need answers quickly and have a time scale of three years or usually much less".—[Official Report, 9/12/03; col. 652.]
For example, can the Minister say today what will be the Government's position on nuclear power generation three years hence? I doubt it, unless he can predict with absolute certainty that he will continue to be at the Dispatch Box after the next general election. Of course we all hope that he is there. However, is that not always the problem when it comes to laying down a responsible long-term energy policy?
I spent three of what I look upon as the intervening years as chairman of the Parliamentary Group for Alternative Energy Strategies, in pursuit of an answer to this problem. PARLIGAES, as it was known, became a forum where civil servants, businessmen, students, scientists and politicians from all parties could freely discuss and debate how alternativesources of power generation might be able to meet the problem of global warming. Looking back on those days, I like to think that PARLIGAES made some valuable contributions to the foundations of the commendable alternative energy strategies that the present Government are attempting to pursue today.
However—and it a very big "however"—it was always assumed then, and it must be assumed now, that nuclear power would be a major contributor in reducing carbon emissions in the atmosphere. Alternative energy supplies would always remain an added bonus to the equation in any responsible long-term energy policy. Was that fact not confirmed when BNFL stated recently that in 2002–03 it supplied 17.4 TWh (terawatt) hours to the National Grid, thus saving 7.5 million tonnes of CO2 emissions?
How is the department's climate change programme intended to reduce emissions by 20 per cent without relying on a meaningful nuclear generating element and without stifling business through having to ration electricity if the economy continues to grow at its present rate? Can the Minister also say how many terawatt hours of electricity his department estimates will be supplied 24/7 from clean non-nuclear alternative energy sources in 2010? I do not count gas as an alternative energy. According to the Government's own paper on energy, all existing Magnox nuclear reactors will have been shut down by 2010, and so will some of the remaining advanced cooled reactors. Therefore, will the Minister not agree that approximately 20 per cent of current electricity demand will have to be replaced by 2010 from clean non-nuclear alternative energy sources? How on earth will that be possible?
To make matters worse—that is, if I understand the present situation correctly—all three main political parties do not have the political will to beget a renewed nuclear generation programme. Therefore, unless
988
there is a radical change of heart, there will be no nuclear industry—apart from waste management—in this country by 2020.
After talking to astronomers, astrophysicists and other scixentists whose work is in the near-space environment, I have been convinced as a non-scientist that global warming is not due entirely to industrial expansion over the past century. It seems that there is increasing evidence that the sun is a major part—60 per cent—of the reason for the increased temperatures on the Earth's surface and in its atmosphere and oceans.
As a result of wanting to learn more and to hear the latest on what scientists have to say to us politicians, I set up the All Party Group on the Astronomy and Near Space Environment Group, known as APASEG, about four years ago, of which I am the chairman. Scientists approach things differently from those of us in the political spectrum, and much more cautiously. However, they are saying that the sun has a variable output and can suddenly at any time increase its heat, or—as it did in the Maunder minimum, when there were no sunspots—seriously reduce its heat, with major effects on the surface of the Earth.
I think that energy policy, whatever it may be, has to make allowances for that. Therefore we should have a very large back-up. The Government's chief adviser says that this is the hottest that the Earth has been for the past 420,000 years. The mild winters and the prospect of more to come with global warming is not entirely unattractive to many people. Provided that the coastal defences are in place and flood waters kept in check, most people do not seem to have many worries for the future of northern Europe.
According to the press today, the swallows have started to arrive already in south-east England However, the scientists are saying something different, and they are saying it with caution because they do not know what is going to happen. They are saying that all this may not necessarily be good news, particularly for those of us who live in Scotland or any other of the northern latitudes of Europe. For if the ocean temperatures change due to the melting icecaps and the sun increases its intensity and pushes the Gulf Stream away from our shores, the temperatures, instead of rising, will drop to those of northern Labrador at the same latitude. Therefore, must not any medium or long-term energy policy at the end of the day, at the end of an integrational period—in which we are now living—require complete flexibility to cope not only with hot summers but with very cold winters?
We can say that that may not happen for another 200 years, but on the other hand the noble Baroness, Lady Walmsley, has just been to the Antarctic with the British Antarctic Survey—the core samples taken from Greenland and parts of the Antarctic clearly show that there is often a sudden change from a very hot to a very cold Earth. No one quite yet knows the powers that create these things.
I have suggested that only a new nuclear energy programme can achieve that in this country. Many people are against nuclear power because they may

989
believe that it somehow goes against nature, in spite of the fact that our sun is a major source of radioactivity throughout interplanetary space. However, there can be no argument that nature is benign; it is not. It has been an unforgiving, indiscriminate and indifferent killer of humankind in large numbers throughout the ages. The recent earthquake in Iran, which took more than 30,000 lives in a matter of minutes, is surely proof of that. Nevertheless, in present form it would seem that it will be not nature but short-term politics that will eventually put out the lights on this planet.
7.1 p.m.
Lord Methuen: My Lords, it gives me great pleasure to thank my noble friend Lady Miller of Chilthorne Domer for giving us the opportunity to debate this important subject. Last week, with some other members of the Science and Technology Committee, including our chairman the noble Lord, Lord Oxburgh, who will be speaking later in the debate, I was able to visit the new Meteorological Office centre in Exeter, both as a general informative visit for the committee's benefit and in connection with Sub-Committee II's inquiry into the practicalities of renewable energy.
Our Meteorological Office is a world leader in its activities in developing weather forecasting and climate change research. We were given a series of presentations covering many aspects of its work. Its climate change work is of obvious relevance to this debate and I have drawn on its presentations extensively in my speech.
The Hadley Centre for Climate Prediction and Research has been mentioned. It was opened by the noble Baroness, Lady Thatcher, in 1990, and is the UK research centre into climate change. Its main funding comes from Defra, backed up by funds from other government departments and the EU. The Meteorological Office is dependent on its commercial activities for the benefit of various organisations.
The Hadley Centre's mission is to understand the climate system and to represent it in mathematical models to monitor both global and national climate change to predict future change. To do that it needs to understand the causes and thus provide advice to the Government. Its research covers many areas looking at long-term changes in global temperature since the 1860s and carbon dioxide and methane levels more recently. It has noted the effects causing global cooling such as the eruptions of Krakatoa in the 1880s and more recently that of Mount Pinatubo. It has developed models which show the temperature changes which might occur with and without human intervention in our eco-system. Its research shows, in spite of what the noble Lord, Lord Tanlaw, said, that human activity is undoubtedly a major influence.
The aim of the Meteorological Office is to improve the quality of its climate change models by quantifying and reducing the uncertainty in the predictions. This uncertainty covers such things as the natural variability of global climate systems—including solar
990
radiation—the emission levels of the various greenhouse gases, the forcing of climatic conditions due to volcanic eruptions and the lack of knowledge as to how global climatic systems respond to these changes.
Various scenarios can be developed which produce widely differing results over the next hundred years due to the uncertainty factors in the models. This indicates the need for better climatic models—higher resolution within the model and increased complexity due to a better understanding of climate change factors, leading to increased credibility in the model. It is then possible to explore how the model responds to various parameter sensitivities, leading to less uncertainty and further confidence in the results. All this requires greatly increased computer resources, which the Meteorological Office currently is in the process of installing. Such an office can always use as much computer resource as can be made available by current technology.
Looking at the evidence, UK climate variability change now occurs against a background of global warming. On a 10 to 20-year time-scale, central England summer temperatures are at a record level. Winters have tended to become more stormy and noticeably milder. Patterns of ocean surface water temperature are implicated in both summer and winter seasonal changes.
What about sea level change? Predictions for 2100 indicate a rise of 10 to 90 centimetres between the least and most extreme climate models, and assume that the Antarctic ice sheet remains substantially intact. Such sea level rises will have a disastrous result if we have a repeat of the North Sea surge of 1953 when large areas of East Anglia, Canvey Island and Holland suffered disastrous inundations and many lives were lost. The Thames barrier should protect London, but if that failed we would lose most of the Underground system with catastrophic economic effects.
If the Antarctic ice sheet melted, there could be sea level rises of some six metres. A mass movement of population away from the affected areas in places such as Bangladesh would lead to enormous international problems in what are likely to be already overcrowded areas; one can imagine the effects.
Whatever we do now, it will take years to compensate for our past extravagances due to the inbuilt delays of our global climate system. Therefore I encourage the Government to take all necessary steps to get the developing countries and the USA and Russia to ratify the Kyoto protocols.
7.7 p.m.
Lord Beaumont of Whitley: My Lords, this has been a very good debate and I am extremely grateful to the noble Baroness, Lady Miller, for having introduced it. We live on a remarkably tolerant planet. Whether or not you accept the Gaia hypothesis—and I see no reason not to do so—Earth needs to operate between fairly close physical limits to support the life on it and so far, it appears to have done so.

991
But there can be no doubt that we as species are running the planet and ourselves into serious trouble. When I say serious trouble I do not just mean events such as the Hundred Years War or the slaughter of the Great War—and the equally homicidal flu epidemic that followed it—or the mass murders of the atom bomb 50 years ago, or even the global threat of Aids. We are talking about events which will threaten the very existence of life on the planet.
Climate change is happening and although it has happened before, it seems now to be on a totally different scale and to be caused by the actions of mankind—by you and me, my Lords. Although most of us in this Chamber will not live long enough to go down with the ship, as it were, we can not be at all sure that our grandchildren will not.
We are asked in this debate to consider the challenges of climate change. It is a completely different order of threat from the other matters that occupy us these days such as the fight against terrorism. However, there is one area where they overlap and that is in the nuclear field. Most of the manifestations of terrorism that we have seen or can imagine are not planet-threatening. But nuclear terrorism might be, and that is why, if the President of the United Stales should, as is widely suspected, be tempted to take really violent steps to bring so-called "rogue states" under control, one can see the logic, even the morality of his reasoning. One need not necessarily agree with or approve of it—I do not—but the United States of America and its president cannot be said to be totally unaware of what is happening, merely because they are not helping as much as they should do on climate change.
Apart from nuclear and conceivable biological threats, the actions of terrorist organisations, however widespread, are likely to be mere blips on the history of mankind. But climate change may well be of a different order altogether. We in this Chamber may share with the powers-that-be in the other countries of the world a responsibility vaster than any previous generation has had to shoulder. It was for that reason that I was one of the founder members of the Green Liberals and an enthusiastic member of the Green Liberal Democrats—I salute their initiative in bringing the subject before us today —and eventually joined the Green Party, which alone in my view of politicians takes the problem seriously enough.
In passing, I should like to pay tribute to our Green MEPs, who are tirelessly involved in the area, especially Caroline Lucas. I draw noble Lords' attention, if it has not been drawn to it already, to the Bill that I have placed before the House at the moment on the subject of air traffic emissions and airports. The noble Baroness, Lady Byford, referred to those issues as a major problem.
Tireless we too must be if we are to shoulder the burden. In the history of the planet, I believe terrorism to be a disease that needs urgent measures. But climate change may be mortal and, in fighting it, We have promises to keep and miles to go before we sleep'.
7.12 p.m.
Lord Oxburgh: My Lords, I add my thanks to the noble Baroness, Lady Miller of Chilthorne Domer. for introducing this very opportune debate. I, too, wish to congratulate the right reverend Prelate on his most successful maiden speech.
The atmosphere and the oceans work together to give the Earth an integrated central heating and air-conditioning system. All life depends on it. If we change the properties of the atmosphere so that the earth retains more of the heat reaching us from the sun, it is much the same as turning up the Earth's thermostat a notch or two. For more than 150 years, we have done exactly that by burning coal and oil and releasing into the atmosphere carbon that has been stored in the Earth's crust for many millions of years. There are those who dispute statements of that kind. I think that they are wrong. They are certainly swimming against the near consensus of international scientific opinion, including—it is worth recording this—that of the US National Academy of Sciences.
This is not the occasion for detailed analysis of the arguments. Suffice it to say, as has already been pointed out, that the composition of the atmosphere can change naturally, and we now have a pretty good idea of how its composition has varied in the past. That comes from analysing the bubbles of atmospheric air trapped by successive layers of snow over hundreds of thousands of years in polar glaciers. We can therefore compare recent changes with those of the past. The increases in atmospheric CO2 and global temperature observed over the past century are faster and more extreme than have ever been recorded in the geological past, and correlate precisely in time with the widespread burning of fossil fuels. That and a host of other more complex arguments build what I believe is a virtually unassailable circumstantial case that it is we who, by our actions, are bringing about a rise in global temperature and associated climate change.
So what do we mean by climate change and global warming, and would it not be a good thing, as has been suggested, if the average temperature of the Earth increased by a few degrees by the end of the century? It is important to recognise that global warming does not mean that the whole earth becomes uniformly a little warmer. The climate at any one place depends on the dynamics of the winds and the ocean currents, and on their interaction. Even small changes in average temperature are enough to change the patterns of global circulation with the result that some places may become very much warmer and others very much cooler, or drier, wetter, stormier or more calm. It is simply very difficult to say.
Even so, is that important? Why cannot civilisation simply adapt to climate change? Up to a point we probably can, provided that at any one place the change is steady and progressive. Urban life will change, and technology will make the new conditions bearable. However, for agriculture and the world's food production, there will be very clear winners and losers—and the losers will inevitably become the next

993
wave of economic migrants. For the very poorest peoples whose climate has deteriorated, we are likely to see more and larger devastating famines.
Unfortunately, not all changes in climate are slow and progressive over decades. Although they are much less fickle than the winds and may remain steady for millions of years, ocean currents can, like the wind, suddenly change if the delicate balance of driving forces is altered. One of those forces depends on temperature. From our point of view, the greatest concern is the Gulf Stream, which underpins the temperate climate of the British Isles. It allows palm trees to grow in the Isles of Scilly while Nova Scotia freezes. Nova Scotia and the Isles of Scilly are at the same latitude but on opposite sides of the Atlantic. If the Gulf Stream switched off, we should feel the consequences in a year or two, not over decades. The implications for agriculture, wildlife, energy and shipping would be devastating.
The problem is that, pace the noble Lord, Lord Hunt, it is very difficult to predict how much warming there can be without triggering such major change in ocean circulation. Although we cannot avoid some of the effects of global warming that are already with us, the consequences of a drastic circulation change are likely to be so rapid and devastating that they are worth avoiding if we can.
So what can be done? It has been suggested that the problem can be managed through planting more trees; that can help a little, but it is very little and not a solution. Ideally, we would stop burning fossil fuels and releasing CO2 into the atmosphere, but that cannot happen overnight. Both the EU and the UK Government are already taking the matter seriously, and are making commendable efforts to promote other sources of energy and to limit emissions to satisfy the Kyoto proposals. They are working to persuade other countries to do so as well. Other countries differ widely in their responses; many noble Lords have made the point that it is to be regretted that the US Government have chosen to ignore the advice of their scientists. Nevertheless, a number of individual US states and global companies in the US have voluntarily agreed to limit emissions.
But what of the developing countries? Although pressure can reasonably be brought to bear on developed countries to reduce their emissions, the same cannot be expected of developing countries. Developing countries in general have much lower per capita CO2 releases than the developed world, and as their economies become more prosperous so will their energy use grow. They are also the countries where greatest population growth, and hence growth in energy demand, is to be expected. They may reasonably argue that the problems that the Earth now faces are the direct result of the developed world passing through the stage on which they themselves are now entering.
They will need energy and they will take it from the cheapest source. For at least two major countries, India and China, that source will be coal. Both countries have abundant supplies of readily accessible
994
coal which they seem bound to use. For a given amount of energy produced, coal releases more CO2 to the atmosphere than any other fossil fuel. That could completely dwarf and overwhelm the emissions savings of ourselves and other countries.
That suggests for the developed world that there should be a twofold strategy: first to limit its own emissions as tightly as possible—as is beginning to happen; secondly, and as the very highest priority, to redouble efforts to find an inexpensive and efficient means of carbon sequestration. It is possible in principle thereby to remove CO2 from gases produced by burning fossil fuels and preventing it entering the atmosphere. Then we would need to make that technology available inexpensively to the developing world. Arguably it is the most important contribution the UK could make to the problem of global warming. It has the additional advantage that, if successful, it could considerably ease our own transition to a low carbon economy.
It makes good sense to move away from fossil fuels as fast as we can, but we have to recognise that the full transition will take a number of decades. However, it would be wildly irresponsible for us not to use other means of reducing CO2 emissions during that transition. We should urge the Government most strongly to set carbon sequestration as a prime challenge for the relevant UK research community and to make the funds available to meet it.
I declare an interest as a former chairman of the Government's inter-departmental panel on climate change and as a non-executive director of Shell Transport and Trading.
7.22 p.m.
Baroness Sharp of Guildford: My Lords, the debate has been extremely interesting and I thank my noble friend Lady Miller of Chilthorne Domer. I also congratulate the right reverend Prelate the Bishop of Leicester on providing a thoughtful and thought-provoking discussion of some of the developments that are taking place in his own diocese, among others, and raising wider matters for us to think about.
One of the conclusions that we can draw from the debate is that climate change is for real. Despite people sometimes wondering over the past 25 years whether we are merely experiencing a little variation in the ice ages, the speeches we heard from the noble Lords, Lord Hunt, Lord Tanlaw and Lord Oxburgh, and the changes we have seen leave us in no doubt, as the noble Lord, Lord Oxburgh, said, that there is an unassailable circumstantial case that humankind is bringing about unprecedented climate change.
As a result, as we have seen in south-east England, there have been relative rises in temperature. It is expected that by 2050 we will see an average change of between 2 and 4 per cent—with mostly higher summer temperatures and less snow and frost in winter. But some of the violent swings and violent storms that we have seen, even in the past week, have shown us how quickly we can move from a cold climate to a much warmer one. I believe that that is to be expected. One

995
prediction is that inevitably we shall see worldwide rises in sea levels from the melting of the Antarctic and Arctic ice caps—88 centimetres by the end of the century. That will swamp many low-lying parts of the world. Even here in Britain we will see many of our wetlands dry out in the summer unless we do something. The danger of flood damage from winter rains will be extreme.
Nature over the ages, as the noble Lord, Lord Tanlaw, said, has been unforgiving and indiscriminate. Such changes have been discussed, both nationally and internationally, over the past 25 years on many occasions. The big international conferences in Rio de Janeiro, Kyoto and Berlin, particularly, have made people aware of such developments and what we need to do if we are to limit their implications. We all know that we have to do something about CO2 emissions. Some countries have done more than others. It is an issue that has been taken up by many European countries, including our own. Sometimes we have not been slow in congratulating ourselves on our actions, but if we look around the world there are other countries that have done rather more than us.
In today's debate we have castigated the United States many times for its failure to ratify, or put its name behind, the Kyoto agreement. We are also worried about Russia's position. As economic development progresses throughout Russia and the former countries of the Soviet empire we are seeing economic benefits for people who inevitably wish to follow the same paths as ourselves. At the moment if the whole population of the world was to live at the standards of south-east England we would need three and a half planets to satisfy our need. If we all lived at the level of the United States that figure would be six planets.
What is to be done? The Motion calls for action at "national and international" levels. It is vitally important that we operate at an international level and that we manage to forge international agreements that pursue strategies to limit carbon emissions. The noble Baroness, Lady Byford, talked about the need to set in motion an international emissions trading system. Again, picking up the point made by the noble Lord, Lord Oxburgh, about the development of China and India, whose economies are largely based on coal, unless we begin to develop some form of international trading system for emissions there is no way in which the inevitable increase in those countries' emissions can be counterbalanced by reductions elsewhere. Therefore, it is vital for us to pursue those international agreements. I also take to heart the point made by the noble Lord, Lord Oxburgh, about the development of carbon sequestration. If we go back 20 years to the middle of the 1980s, when microelectronic technologies were pouring forth—if only we had picked up, used and applied some of those technologies—it is sad to reflect that countries such as China, which were beginning to emerge from the process of industrialisation, could have jumped over the fossil fuel stage and moved more quickly to pick up
996
new technologies that were far more energy efficient. We missed those opportunities and we are now "ruing the day".
I want finally to return home and examine some developments that are taking place next door to where I live; the borough of Woking. They were mentioned by the noble Lord, Lord Hunt. They illustrate very well how small measures, consistently taken over time, can build up to something that is more significant. We should still bear in mind that the contribution is remarkably small, but if all local authorities were to pursue the same policies we might begin to see more consistent results. It picks up the point made by the noble Lord, Lord Tanlaw, that unfortunately politicians tend to expect a three-year time scale. Here we are looking at a much longer one.
Woking began its development in the early 1990s, which was post-Rio when Agenda 21 started to appear on local authorities' agendas. It was also stimulated by the Home Energy Conservation Act 1995. It looked at its sheltered housing and recognised that if it converted its boilers, or used mini-turbines, it could have micro-combined heat and power facilities. It therefore converted the boilers in the larger establishments so that they generated electricity. It had mini-CHP facilities within its sheltered housing developments.
As the authority was building some affordable houses around those developments, it piped them into the same system. That proved to be most efficient. It was able to supply electricity to people at lp per unit less than that provided by the National Grid. The heating was also cheaper than it would otherwise have been.
The success of those developments was helped by a decision of the borough council to create a recyclable fund. One quarter of a million pounds was put into the fund to assist some of the developments and that was receded by the savings made. That £500,000 rotating fund, which continues to exist, has enabled the borough to pursue other measures.
It extended the development to the leisure complex, where there is a combination of solar heating for the water and the swimming pool, and a heat exchanger which generates cooling systems for air conditioning as required. It has installed photovoltaics and it is using fuel cell technology which converts the surplus heat generated into electricity that goes into the system. There is also a similar system in the council offices, with combined heat and power and chillers That has been extended to a nearby Holiday Inn that has recently been built.
Overall, the system illustrates extremely well how small processes pursued over time—Woking is looking at a 10 to 12-year development horizon—can generate considerable savings. There is a 41 per cent energy saving and a 60 per cent saving on carbon emissions. That example is well worth examining and pursuing by other local authorities, but time is against me and I must wind up.
7.34 p.m.
Lord Dixon-Smith: My Lords, as has been said, it is only 200 years since the Industrial Revolution, the point at which mankind began to develop philosophically, technically, politically and in population numbers. We now know that we are having an adverse influence on the atmosphere because of the philosophical knowledge base developed over the same period. We should not be too depressed that we have had such an adverse effect provided—the big "if—we have the brains and the application to apply that knowledge so that we diminish the adverse effect.
The debate, prompted by the noble Baroness, Lady Miller of Chilthorne Domer, is most welcome. I agree with all she said about the need for international action. We have 1 per cent of the world's population and, it is true, 2 per cent of its emissions—our record is not good—but we cannot solve the problem on our own. If it is to be solved, it will take the involvement of the developed and the under-developed nations.
I welcome the right reverend Prelate the Bishop of Leicester. The Bishops Bench always has a way of making me feel inadequate and small because I always feel that perhaps I do not have the necessary dedication to good in my life. But there it is. The right reverend Prelate is most welcome.
I also welcome the statement that was published by the Government's Chief Scientific Adviser which prompted the noble Baroness. I suspect that that was published as a kite-flier because he is this week addressing the American Society for the Advancement of Science. We should welcome that. It bears out what the noble Baroness was talking about. Moreover, I am sure that he will have a sympathetic audience, but he needs to get through to the politicians. Indeed, politicians though we are, we need to get through to them. I am not yet wholly convinced that political leadership in this country is wholly appraised of the danger we are in. The pace of change that is taking place certainly frightens me.
The lion's share of the burden in trying to find solutions to the problem must, at the present time, fall on the developed world. After all, we have the facilities. But it is everyone's problem. We tend to think of it in terms of the heatwave in France last summer and milder winters than those to which we are accustomed. Predictions for some of the countries bordering the sea in south-east Asia will not be very different from the predictions for this country. They show that a one in 100 year flood event will by 2080 be a one in three year flood event. Consider that in the context of those millions of people around the world who live under threat from the ocean and we can see that we have a great problem.
Furthermore, all the economic assessments I have seen of the consequences of climate change show that the cost of trying to tackle the issue is less than the likely cost of doing nothing. The simplest way to illustrate that is simply to say that we need only one flood to go over the top of the Thames barrier, which is predicted as possible somewhat later this century, if we do not do something about it, for the immediate
998
loss to be £30 billion in London alone, without considering the adverse effect that such a high tide would have across so many of our low lying coastal areas. That is 2 per cent of present GDP, lost like blowing out a candle.
So we must tackle the issue. Although that will require international action, I return to what we can do ourselves. I have the pleasure of sitting with the Minister on the Committee considering the Energy Bill. I am not sure that the Government have really been listening to the arguments advanced about nuclear power, and so forth. With the exception of an agency to wind up nuclear power stations, nuclear power is not really the matter of the Bill. However, it is in the nature of debate that we try to widen the issues.
If we consider what has happened in this country, and the reason for the Government's complacency, it is a matter of luck. The Government are pledged to reduce CO2 emissions below the 1990 level by 20 per cent, I think, by 2010. We have a successful record, but by good fortune. It has been mentioned that the privatisation of the electricity industry led to a big surge in gas generation of electricity, which is much more CO2-efficient—30 per cent more efficient—than coal. That gave us a huge start in reducing CO2 emissions.
The second thing that has happened since 1990 is an industrial run down. Industries such as the steel industry have almost disappeared. It was the biggest electricity user in British industry. To a certain extent, that industry may have been sent abroad. That does not reduce CO2 emissions at all, but that works out well for this country's statistics.
A huge wind-generating programme is under way at present as a result of the Bill. Unfortunately, we do not yet know whether there are potential ill-effects from that, but that will not alter this country's CO2 emissions one jot because, as has been said, we are closing more nuclear power stations than we are creating wind farms, as far as I can tell.
In Committee the other day, the Minister mentioned that about 6 gigawatts were to be installed. I was not sure whether his figure was net or gross. Wind is inherently inefficient. The installed capacity and the output capacity are very different; the output capacity is only about 30 per cent of the installed capacity.
In the mean time, road transport is giving off another 250,000 tonnes of carbon dioxide per annum; while aviation is giving off another 500,000 tonnes of carbon dioxide per annum. We may reach our 2010 target, but if we go as on we are, we will do much worse after that. That is why I am not wholly convinced that the Government have their mind round the scale of the problem that we face.
I return to our debate on the Severn barrage, which unfortunately occurred while I was detained in hospital, and ask the Minister the question that I wanted to ask him then. The Government rightly say that, on the basis of their costings, the Severn barrage is very expensive. The costings were based on various economic regression rates established in a study first

999
undertaken at the beginning of the 1990s. I think that the figures of 15, 12 and 8 per cent were used. Even at 8 per cent, the barrage was uneconomic.
The Government reviewed all that work just a couple of years ago. However, one thing that they did not review was the economic regression rate. The Severn barrage would have a 120-year life, which is much longer than most projects. It would rely entirely on proven technology. More than that, the economic climate has totally changed in the decade since the early 1990s, when interest rates were much higher. I cannot help but wonder why the interest rate was not reviewed to calculate that economic regression rate. If it was reduced to 6 per cent, I suspect that we might get some interesting answers. However, I ask the Minister no more than that he would consider what would happen if those figures were reduced.
I have taken enough of the House's time. This has been a useful debate and I look forward to hearing the Minister's reply.
7.46 p.m.
Lord Whitty: My Lords, I first thank the noble Baroness for initiating this debate, which has been extremely wide-ranging and informed. There is widespread recognition of the importance of this topic around the House; I am glad that we have this time to debate it. I also congratulate the right reverend Prelate on his maiden speech. The Church is never slow to tackle the major issues, and this is in many ways one of the major issues facing us all. We need to take to heart much of what he said.
To answer the noble Baroness's specific Question, I agree with the Chief Scientific Adviser. There is no doubt that climate change is one of the most—probably the most—serious challenges that the world faces. I agree with the noble Lord, Lord Beaumont, that other challenges fade into the second order when compared with this one. That means that as politicians and leaders of opinion and action, we have a special responsibility. As several noble Lords said, politicians'timescale tends to be three years, but we must all be clear that the political and business leadership of this generation will be judged severely if it does not take a longer view of the challenges arising from climate change. We all have our responsibilities in that respect.
We all accept the basics: that the world is getting significantly warmer at a dramatic rate and that that rate is likely to increase during the course of this century. There are doubts about causes and speed, some of which I shall address later—especially those expressed by the noble Lord, Lord Tanlaw—but there is great clarity about how scientists' models and actual experience suggest that the world is getting warmer and will continue to do so.
Sir David King's article in Science, which provoked the debate and which I am sure that he will reinforce in his various addresses to the American scientific community, suggests the degree to which the world will be changed if those trends continue. Just to take one example, a quarter of land species could be committed to extinction by 2050 under the middle range of the climate projections.
1000
To consider the international dimension, it is true to say that the majority of the international community recognises the importance of that challenge. The UK Government and most others have signed the United Nations Framework Convention on Climate Change and a substantial number of countries have now ratified the Kyoto Protocol. At the recent conference of the parties in Milan in December, which was attended by representatives of 171 countries, there was near universal support for the Kyoto protocol. As noble Lords have said, the Kyoto Protocol is only a start, but it is an important one. If we fail to deliver Kyoto, we are failing seriously on the longer-term problems that have been put forward in this debate and more broadly.
Formally speaking, ratification of Kyoto now depends on Russia. The noble Baroness asked us to use all our methods of persuasion to try to ensure that the Russians ratify. I suspect that patience is needed, as the Russian elections are unlikely to be preceded by ratification. However, I hope and believe that, assuming that President Putin wins the election—I think that we probably can—every pressure will be put on him and he will then take steps to ensure that Russia takes a lead and recognises its own interests in ratifying the rest of the Kyoto Protocol.
In that respect, Russia is only crucial in one sense, because the United States has opted out of the process. We all recognise that that is deeply regrettable. Dave King's article indicates a grave responsibility on the Americans. The decision was deeply disappointing and presents the rest of us with a very wide range of problems. Although there are efforts, even within the current administration, to take action domestically, that action is insufficient. At best, it will slow the growth of US greenhouse gas emissions, but it will not reduce them.
We must engage with the United States on many different levels, including the field of technology. There is considerable enthusiasm in the corporate and business sector and the government in the United States to move faster to combat climate change. But we need political commitment from the United States also. The United States has only 4 per cent of the world's population but is responsible for 20 per cent of all global emissions of greenhouse gases. Its present targets, such as they are, would do nothing to reduce that proportion. The absolute amount of United States emissions is on course to increase, whereas those for the UK and Europe will diminish and, it is to be hoped, meet the Kyoto targets.
We need to use all our diplomatic influence on the United States. We must use the consecutive presidencies of the US and the UK in the G8 in 2004–05 to bring to life the energy commitments of the previous G8 in the Evian action plan. On a European level, we must use the UK presidency of the EU to ensure that, domestically within the EU and internationally with the United States, we try to make climate change central to our political objectives for that period. It is therefore vital that we use all such influence and take a leadership role. The Government are committed to doing precisely that.

1001
I wish briefly to mention the slight doubts raised by the noble Lord, Lord Tanlaw, about whether the cause of global warming was primarily industrial activity and the effects of man in the past 200 years. However, as the noble Lord, Lord Oxburgh, and others indicated, all the scientific evidence shows that, since the industrial revolution, the process of warming has speeded up. Changes in the emissions and radioactivity of the sun may have a significant effect. However, at whatever level the sun influences our climate—it is obviously a very important factor—additional heat generated by mankind through the creation of greenhouse gases must aggravate that situation. We can and must do something about it.
The severity of the impact of global warming, which the noble Lord, Lord Tanlaw, also raised, may be variable. It may not be entirely predictable and in line with what every model suggests. There will be differential effects in different parts of the world. As the noble Lords, Lord Tanlaw and Lord Oxburgh, mentioned, it is important that we look at the possible effects on ocean currents, particularly, in our parochial but important case, the gulf stream. It is possible that the changes could effect significant cooling of the climate. Although most models show the likelihood of that to be relatively low in the short term, it is nevertheless one of the potential implications and uncertainties that arise from the science of global warming.
Throughout the planet, global warming determines the nature of climates, vulnerability to climatic conditions such as drought, floods and storms, and the nature of agriculture. Many noble Lords with far greater experience than me—the noble Lords, Lord Hunt, Lord Methuen, and others—referred to the need for better modelling and more work and details in that respect, with which I agree. We must engage substantially in that area, and in mitigating and offsetting action.
There is much discussion here, as elsewhere in my life at present—the Committee stage of the Energy Bill—on the role of energy policy, particularly the potential role of nuclear power. It is also important to recognise that the big issues of energy policy are matched by the importance of small issues. Those include changing consumer behaviour and adopting new energy systems—the noble Baroness and the right reverend Prelate mentioned the example of Woking. Planning small-scale or medium-scale energy entirely differently can make a big difference. The sourcing of our energy sources is an important issue. It is not true that the Government are not listening, as the noble Lord, Lord Dixon-Smith, said; I have been listening quite a lot in Committee. I have not agreed entirely with everything, but that is a different matter.
To tackle climate change one must consider seriously the role of nuclear power—I do not deny that—on either a UK or worldwide basis. However, at present, nuclear power is neither a sustainable technology—it is a low-carbon technology—because we have not yet worked out how to deal with waste, nor is it a particularly cheap way of saving carbon. As
1002
regards tonnes of carbon saved per buck, nuclear energy remains an extremely expensive short-and long-term way of saving carbon.
Nevertheless, it is government policy and a clear part of the energy White Paper that we should keep the nuclear option open. Discussions in the Committee stage of the Energy Bill and here today about how we should keep it open—for example, the expertise and research needed—are relevant to that prospect. The noble Lord, Lord Tanlaw, asked whether I could stand up in three years' time and say that the UK did not need nuclear power in the medium term. I probably will be able to do that, but, then as now, I could not say that either the UK or the world will never need it. Therefore, keeping the nuclear option open is important.
The rest of the energy White Paper, some of which is dismissed slightly in this debate and those on the Energy Bill, is palpably deliverable. If we can manage to change consumer and business behaviour to double the rate of energy efficiency improvement, a substantial part of our demand for energy, and therefore our production of carbon, will have been avoided. If we can generate an equivalent amount of energy through renewables, where for the most part the technology either already exists or is within our grasp, that renewable energy will help effectively and reliably to replace some of the carbon and some of the nuclear energy in the old nuclear power stations.
I find slightly odd the attack on wind power in this House, which the noble Lord, Lord Dixon-Smith, repeated today. Any single wind source is unreliable in that wind will be intermittent, but, if a substantial amount of our power generation is through wind from different sites around these islands, it is unlikely to be intermittent. It is certainly as reliable as many fossil fuel stations that we have had in the past as regards reliance on delivery, or long-term reliance on any other form of energy, including nuclear power. Other contributions both to the sourcing and use of our energy must be made if we are to meet the targets in the Energy White Paper and our targets beyond Kyoto, from 2020 into 2050; a 20 per cent reduction to 2020 and a 50 per cent reduction of carbon use by 2050.
Other technologies will be coming on stream that will help in the short term in relation to biofuels and using biofuels in a transport component, where the use of carbon-based fuels has grown and has not been restrained as it has been in industry and the energy-producing industries. Biofuels could certainly play a significant role there. The noble Baroness, Lady Byford, indicated some encouragement for that. We are shortly to consult on the Biofuels for Transport Directive, which requires higher targets for the use of biofuels in that sector. That might make a big impact.
In the longer term, in the transport sector we may be moving to both hybrid vehicles and to hydrogen vehicles in a big way. Certainly, if we do not, the contribution of transport to the continuing escalation of carbon emissions will be a real problem.
Lord Tanlaw: My Lords, I thank the Minister for giving way. He mentioned hydrogen. How will the

1003
hydrogen be produced? Hydrogen is produced by running electric current through water. Nuclear energy was going to be the supplier of hydrogen. How will hydrogen be made to drive our cars in the future?
Lord Whitty: My Lords, hydrogen will be made by the balance of sourcing of electricity by that stage. In the initial stages, as we move across to a hydrogen-based economy, the manufacture of hydrogen will be by the mixture of conventional and renewable sources of energy. The degree to which hydrogen will be carbon-reducing will depend to some extent on the mix of energy at the point when the hydrogen is being produced. It is certainly true that hydrogen could be produced efficiently through nuclear power. It can be produced with a relatively low level of carbon take by other forms of power as well. At the point of use, and the recycling of use, it has a nil carbon effect and therefore a great benefit to the kind of vehicles that we power by hydrogen, which at present are almost completely reliant on fossil fuels.
It is not only road transport that needs to play a role in this, but aviation, which has hitherto largely escaped the restraints on the use of fossil fuels on surface transport. Surface transport has, particularly in this country, been pretty highly taxed and has led to a reduction in use via energy efficiency and the move to more energy efficient cars and fuels. That is an important effect of fiscal intervention that is not always appreciated by the motorist but is making the situation considerably better in the long term.
No such development has taken place in the same way in relation to aviation, and nor is there a longer-term solution in the sense of alternatives to fossil-based fuels for aviation. We need to consider how to curb the growth of demand in aviation. At present, international aviation is excluded from the Kyoto calculations, but it will need to come into play before and beyond Kyoto and reduce the use of fossil fuels over the longer term. A significant step was indicated in the recent aviation White Paper, when we talked about the need for aviation to internalise its external costs in the environmental sense, and also the specific proposition that aviation should join, at least on a European basis, in the second stage of the European Emissions Trading Scheme. While there were difficulties with that, it is the immediate way forward, and one that could help aviation to make its own contribution. Otherwise, aviation will be one of the biggest contributors to global emissions in a decade or two, although it is currently a relatively small contributor.
All sections of the economy need to take a role in this. One of the most important roles is to change consumption in our homes and buildings. The Government have taken a number of steps in relation to building regulations and labelling and promotion of domestic appliances. Greater efficiencies can be obtained from that area. The recent sustainable building summit set out a number of objectives for how to deal with the construction and use of our buildings and how to deliver carbon savings. How we use our buildings will enable the consumer sector and
1004
the household sector to make contributions to the targets on climate change to offset the pressures on global warming.
A number of other questions were raised in the course of this debate. I will check Hansard to see whether there are any specifics that I need to reply to, which may well include the sudden barrage that the noble Lord, Lord Dixon-Smith, sprung on me at the last moment, not entirely unexpectedly. There may be other points that deserve a reply. I thank the noble Baroness for initiating this important debate. I am sure that it is a subject to which we shall return in one guise or another in this House, as its importance is accepted by politicians of all parties and all nations.
8.6 p.m.
Baroness Miller of Chilthorne Domer: My Lords, I warmly thank all noble Lords who have spoken in the debate. Your Lordships who are scientists painted graphic pictures that certainly increased my understanding. Your Lordships also built on the idea that local action is important. The right reverend Prelate the Bishop of Leicester introduced the important theme of global community and responsibility. I thank the Minister for his very thoughtful reply. I beg leave to withdraw the Motion for Papers.
Motion for Papers, by leave, withdrawn.

Business
Lord Grocott: My Lords, before we start this Second Reading debate, I want to say a brief word about timings. As the House will know, we have a target rising time of 10 o'clock. We should be able to accommodate that comfortably if noble Lords other than the openers and the winders limit their remarks to around eight minutes.

Mersey Tunnels Bill
8.8 p.m.
Lord Smith of Leigh: My Lords, I beg to move that this Bill be now read a second time.
The Bill is promoted by Merseytravel, the Passenger Transport Authority (PTA) for Merseyside with a duty to operate the two tunnels linking Liverpool with Birkenhead and Wallasey. It may surprise noble Lords to know that these days Merseytravel only provides the services of operating and managing the tunnel. The PTA is composed of 18 elected councillors appointed by the five Merseyside local authorities in proportion to their size. The Bill is supported by all five local authorities, including Wirral.
The Bill seeks to amend the County of Merseyside Act 1980, which currently establishes the powers to maintain the tunnels, to collect and raise tolls and to apply tolls to meet debt repayment as well as maintaining, operating and refurbishing the tunnels. The current procedure for raising tolls requires a

1005
public inquiry, and is cumbersome and costly. In order to justify an increase, the tunnels must effectively be running at a financial deficit, which falls on the council tax payers of Merseyside to subsidise. Those arrangements surely are unacceptable.
The Bill seeks to enable the authority to raise tolls by inflation annually. Any increase above inflation would require the Secretary of State to approve the exceptional circumstances. The principle of maintaining the real value of tolls mirrors the process in the Dartford-Thurrock Crossing Act 1988, which is a comparable estuary crossing. That Act was promoted by the then government.
The Bill also gives freedom to Merseytravel to apply any future surpluses to support public transport services across the county. It removes the requirement to reduce tolls when existing debts are repaid, probably around 2048–49. The final provision is the least controversial. Properties adjacent to the Kingsway Tunnel are in a legal hole because no one has the power to install noise insulation. The Bill will provide Merseytravel with such power.
Refurbishment costs on the tunnel are expected to rise. It is like all of us; we require more attention as we grow older. Investment in safety will also increase as standards have changed following horrific accidents in road tunnels across Europe. In 2002, Merseytravel commissioned a report, Eurotest 2002, and, as a result, is committed to increased expenditure on safety. A European directive on tunnel safety is anticipated during the next 12 months. Merseytravel would intend to raise safety standards in its tunnels in line with the directive.
Although the Bill did not face any hostile petitions during its consideration by another place, there was opposition from some local Members of Parliament. A number of concerns were expressed; no doubt they will be echoed in your Lordships' House tonight. I think that they focus on three issues, which I shall address in turn. First, how accountable would Merseytravel be to local people in exercising the powers under the Bill? Would it still be committed to operate the tunnels efficiently? Finally, would raising tolls be regarded as fair and equitable?
The noble Lord, Lord Hunt, in his instruction is concerned about accountability to local authorities. The relationship between PTAs and their constituent local authorities involves the formal process of appointment and informal checks and balances. I am most familiar with the arrangements for Greater Manchester where I chair for the local authorities in the Association of Greater Manchester Councils, which provides strategic leadership for the county and for the joint bodies.
From my contacts with colleagues in Merseyside, I know that their co-ordinating committee fulfils a similar role. For example, when Merseytravel is preparing its budget—changes to tunnel tolls would be part of that budget—it consults the local authorities. The PTAs are levying authorities. For those noble Lords who are not familiar with the intricacies of local
1006
government finance, that means that the expenditure by Merseytravel effectively is regarded as expenditure by each of the local authorities. So, in times of financial difficulties, that expenditure is in competition with education, social services and other forms of local expenditure. I assure noble Lords that local authorities take their job seriously. They have a role in scrutiny and they do it.
What if the PTA decides to ignore the instructions from the local authorities? That is when the power of appointment becomes a power of replacement. The authorities would replace members who would not obey the instructions with people who would, and I can assure noble Lords that that would happen.
The Bill will be an incentive to Merseytravel to operate even more efficiently. It is currently under best-value rules that require it to evaluate its activities to secure improvement. If anyone feels that Merseytravel is not doing that adequately, they have the option of going to the Audit Commission. However, the most recent letter from the commission states with no qualifications that Merseytravel is operating most satisfactorily.
But the further incentive the Bill will give to Merseytravel is the ability to apply surpluses to its primary purpose of improving public transport across Merseyside. That will make Merseytravel even keener to be efficient about the tunnels because it can use the money to do what it wants to do.
I turn finally to the difficult question: is it fair and equitable for tunnel users to contribute through tolls, as provided for in the Bill? I believe that it is fair. The tunnels provide a clear and direct benefit to those who use them. Users comprise just 3 per cent of the people of Merseyside. The alternative form of funding available to Merseytravel is through the council tax. Why should the overwhelming majority of Merseyside council tax payers subsidise the few who use the tunnel? Further, if the real value of tolls falls and, as is likely, other transport costs rise, the relative attractiveness of using the tunnels against public transport changes and the tunnels become more attractive. But Merseytravel is under an obligation to follow the Government policy of encouraging greater use of public transport, therefore tolls ought to rise in line with inflation to avoid the possibility of using the car through the tunnels becoming more attractive. In any case, during the rush hours, the tunnels are operating at pretty much capacity and there is no space for more cars.
I look forward to the contributions to the debate. I hope that the Bill will receive a Second Reading, thus allowing the Select Committee to do its work unencumbered. I commend the Bill to the House.
Moved, That the Bill be now read a second time.—(Lord Smith of Leigh.)
8.15 p.m.
Lord Hunt of Wirral: My Lords, I am grateful to the noble Lord, Lord Smith of Leigh, for so clearly introducing the Bill. However, when he referred to its passage through the other place, he might have added

1007
a few words to give noble Lords a feel for the hostility which it seems to have engendered. On looking at the provisions, it is difficult to imagine the extent of that hostility, but at Third Reading on 29 October last year, the Labour Member for Wirral South, Ben Chapman, seemed almost to euphemise when he said:
"It is a bad Bill, which is unfair, unwarranted and unwanted".—[Official Report, Commons, 29/10/03; col. 399.]
The speeches of Bob Wareing, a Liverpool Labour MP. Andrew Miller, Stephen Hesford and Frank Field made one realise that there was a significant level of opposition to the Bill.
Then, surprisingly, the person asked to chair the private Bill proceedings. Bob Spink, the Conservative Member for Castle Point, said:
"Except for the noise reduction measures, the Bill is thoroughly bad … I hope that the Lords will severely amend it or throw it out".—Official Report, Commons, 29/10/03; cols. 396–397.]
Mr Chope, speaking from the Opposition Front Bench, said:
"The Bill is not fair … it runs contrary to the results of a consultation process".—[Official Report, Commons, 29/10/03; col. 404.]
Noble Lords will forgive me if I pause for a moment to say "Phew". What is it about the Bill that has given rise to such strong feelings, ones which I know are shared by a number of noble Lords? I have therefore put forward an instruction to which I shall allude, in the main because I understand that it exempts me from the time restriction. I shall seek to refer to it so that, later in the proceedings when moving it after the debate on Second Reading, I may be brief and to the point.
I turn to the history. There are three road tunnels known as the Mersey Tunnels, the oldest of which was completed in 1934. It has four lanes and links Liverpool with Birkenhead on the Wirral peninsula. The others comprise a pair of two-lane tunnels opened in 1971. They run from Liverpool to Wallasey on the Wirral peninsula. Those tunnels are in fact a continuation of the M53.
To understand the strong feelings that have been engendered, it is necessary to go back as far as I can to the days when I was a little boy being driven through the tunnels. In the little green booths at the mouth of the Liverpool tunnel, one or two of which are still preserved to this day, the toll collector would say to every young child entering the tunnel, "Don't worry, young man. When you grow up, there will be no tolls". This was a commitment made at the time and expressed by all the tunnel collectors. It remains a vivid memory.
The period over which tolls could be collected was limited. The limit was initially set at 20 years, then increased to 25, and finally, a 1933 Act set a maximum of 40 years. Because of the popularity of the tunnels, it eventually became necessary to have a second and third road tunnel. Those tunnels—the twin tunnels to Wallasey—were authorised in a 1965 Act. At that point, Wallasey Corporation joined Birkenhead and Liverpool to run the tunnels. Following the completion of the Wallasey tunnels in 1971, the tunnels started to make substantial losses, and things started to go wrong.
1008
I hope that I have been able to set in historical context the reason why there are such strong feelings. After the period when the tunnels made losses, the debt built up significantly. It was always agreed by tunnel users and everyone else that the primary purpose of the tolls after the necessary administration costs would be to repay the debt. Slowly but surely over the years considerable progress has been made in repaying that debt.
The noble Lord did not mention an earlier Bill produced in 1999, which was withdrawn the following year. A consultation exercise was entered into by Merseytravel. I have the results of that consultation, which give us a feel of why people feel so strongly about the Bill. There was a question:
"Should the Mersey Tunnel toll levels be index linked with inflation?"
Generally, there was a 50:50 attitude towards that. No doubt that will require closer scrutiny in the coming weeks, but 47 percent said, "No", and 45 percent said, "Yes". When the question was put to public consultation:
"Should the requirement to reduce tolls when the tunnel's debt is paid off be removed?"
Seventeen per cent said, "Yes", and 71 per cent said, "No". The third question:
"Should surplus toll income be used to cross-subsidise and improve local public transport services benefiting the wider Merseyside community?"
Twenty-three per cent said, "Yes", and 67 per cent said, "No".
On the fourth point about the necessity to have insulation powers to finance noise insulation work in adjoining properties around Wallasey, there was a general view that that should be done. Indeed, there were questions about why it should not have been done already.
When those who were in favour of the tolls being index linked were asked why, they said because it meant that the tunnel's debt would be repaid quicker. The theme that has always been present with the tunnel tolls, which was repaying the debt, was seen as important, and those who were consulted said that that would hasten the point at which tolls could be reduced.
One of our local universities, the Liverpool chamber of commerce and the Liverpool Stores committee all supported the index linking of tolls, but opposed using surplus toll income to cross-subsidise other local public transport facilities. They and the three national motoring organisations all favoured lowering tolls when the tunnel debts were paid off.
My instruction to look at the detail asks at point (a) whether it is necessary at a time when the tolls are to be index linked to retain a power for the Secretary of State to increase tolls by more than inflation. I hope that the committee will consider that two-pronged

1009
approach, and then decide whether both powers are necessary, or whether one would be preferable. The second part of the instruction asks in paragraph (b)
"whether the provisions of the bill provide an adequate mechanism for taking into account the views of the five district councils … in respect of:

(i) increases in tolls;

(ii) the use of surplus tunnel toll income"—

to cross-subsidise, and—

(iii) the desirability of repaying the existing debt".

To summarise, there are very strong views held locally. Indeed, Liverpool has just captured the competition to become the European city of culture in 2008. I know how strongly local people feel, led by Esther McVeigh, that in 2008 there should be a lifting of the tunnel tolls to permit the free passage of cars and lorries during that very important year. I hope that the committee will turn its attention to the petition of the Mersey Tunnel Users' Association and to the need to ensure that the five district councils are properly consulted. The debt has now reduced from 140 million to 98.7 million. Therefore, with the tunnels now in surplus, as they have been since 1992, there is a firm belief that at last we shall see real inroads made into that crippling debt. One person has estimated that the tolls have already raised £500 million, and it is sad that we still have a debt of £98.7 million.
When the committee comes to consider the Bill, I hope that it will take into account all these points. I believe that it is right for me to give notice that if the Bill is not substantially amended, there may well be grounds for your Lordships to reject it at Third Reading, but I do not seek to oppose it at Second Reading today.
8.27 p.m.
The Earl of Mar and Kellie: My Lords, I am not a resident of the Merseytravel area and have no personal knowledge of it. However, I am interested in major infrastructure issues.
In Schedule 1, paragraph 3(a) to 3(e), the Bill seeks to reorganise the future income and expenditure attributable to the three tunnels. It is completely understandable that Merseytravel should wish to fulfil three of the five objectives that are laid down in sub-paragraphs (a) to (e): first, the payment of day to day operating costs and the indexation of the tolls; secondly, the repayment of the costs of financing the tunnels; and, thirdly, the making of payments into a reserve fund to deal with upgrades required by European and other legislation and heavy duty repairs at a future date, which are bound to be necessary with the passage of time.
Noble Lords have previously heard me comment on infrastructure matters in Norway, Scotland's neighbour. The arrival of the EU tunnel directive is most likely to reinforce in the Norwegians a further reluctance to join the EU. Their countless miles of tunnel, almost all bare rock, are unlikely to conform to EU standards, which presents a risk of ever higher costs.
1010
The other two objectives are more surprising. Sub-paragraph (d) would enable the PTA to cross-subsidise the passenger ferries crossing the Mersey. That suggests that the ferries are either too expensive to operate at an economic fare or that there is a desire to charge a less than economic fare, presumably with the purpose of encouraging more people to use those passenger ferries. It is in relation to that issue—a deliberate attempt to reduce the number of vehicles using the tunnels—that we may find a form of congestion charging.
As a non-resident, I am concerned about two matters. First, if I am right about boosting ferry traffic, will there be sufficient parking facilities in the vicinity of the slipways for more cars. Secondly, there will undoubtedly be considerable local disappointment over the abandonment of the promise eventually to reduce the tolls when the original capital debt is deemed to have been repaid. I suspect that the plan to cross-subsidise the ferries or to contribute to the implementation of local transport plans will be unpopular with tunnel users. There is a need to be up-front about the tolls being a form of congestion charge. That would at least make it clear that there is a policy of reducing road traffic into Liverpool.
The other objective, to be able to make grants for noise insulation work in Wallasey, will, no doubt, be popular with those who live adjacent to the approach road, even after all this time of slightly more than 30 years. How this will be viewed by everyone else is to be imagined.
Some will view the abandonment of the promised reduction as a complete betrayal. However, I strongly suspect that the increased running costs of the tunnels, their upgrade and their future repair provision into a reserve fund would have wiped out any real reduction in toll.
When considering the tunnels, I cast my mind back across the North Sea to Norway. Noble Lords will be aware that the Norwegians have become great tunnellers ever since they decided to abandon ships as their first line of transport and to develop a road network in the coastal areas. Tunnel charges are usually 10 or 15 kroner—that is, 90p to 125p—except when a tunnel is new. I recall paying 75 kroner—about 6—to go through the tunnel from Stavanger to Rennesoy on the challenging new highway between Stavanger and Bergen. I learnt at my tourist destination that the 75 kroner toll was expected to reduce to the normal 10 or 15 kroner "when the tunnel was paid for". Given the scale of the difference—a sore thumb if ever there was one—I would expect that toll to reduce in the future.
The £1.20 toll in the Mersey is not exorbitant and, in any case, matches ordinary Norwegian tolls. In Scottish terms, the Forth road bridge is 90p northbound only; and the Skye bridge is a disgraceful £4.70 one way.
I believe that the Bill should receive a Second Reading, preferably without an instruction.
8.32 p.m.
Lord Faulkner of Worcester: My Lords, like the noble Earl, I, too, support the Second Reading of the Bill. I commend the way in which my noble friend Lord Smith of Leigh introduced it. I should also like to express my appreciation to the noble Lord, Lord Hunt of Wirral, for the meeting that he convened for interested Members of the House on 28 January. I suspect that some of us had other matters on our minds that day as the attendance consisted, I am afraid, only of my noble friend Lord Harrison and myself from this House plus a number of the opponents of the Bill from the other place. There were not, unfortunately, any of the Members who spoke at Second Reading in favour of the Bill—such as George Howarth, Claire Curtis-Thomas, Dr John Pugh or any of the others who made up the very large majority that voted for the Bill when it went to a Division on 9 July 2002.
The only interest I have to declare in the debate—it is a wholly unremunerated one—is that I am an honorary vice-president of Transport 2000, the national environmental body which seeks answers to transport problems and promotes solutions which respect the needs of people and the environment. Transport 2000 is a petitioner in support of the Bill.
I welcome the Bill for a number of reasons, not the least of which is that it is wholly in accord with the principles which those of us in my party—and, indeed, in the Liberal Democrat party—have sought to adopt on congestion charging and traffic demand management. I support the idea of index-linking tolls and applying surplus revenues to fund public transport.
Thirdly, in addition to those two reasons, I believe that we need to adopt environmental policies that return streets to the people who live in them and make our towns and cities pleasant places not dominated by traffic. A further benefit of traffic demand policies is that by reducing total vehicle emissions they improve air quality. Traffic that moves smoothly spews out fewer pollutants.
All these principles were contained in the DETR's consultation paper Breaking the Logjam; they were enshrined in the Transport Act 2000 and are now being followed by the Secretary of State for Transport and by the Government as a whole. Indeed, during the time that I had the pleasure of working with my noble friend Lord Macdonald of Tradeston, I remember that we spent many hours in your Lordships' House putting forward the case for local transport plans and for the need for local authorities to be able to raise some of the funds necessary to pay for those plans from local charges. The Mersey Tunnels Bill is wholly consistent with that principle and also with the approach adopted by the Government towards the Dartford crossings.
As my noble friend Lord Smith explained very clearly, it is evident that the financial structure of the Mersey tunnels has been manifestly unjust to residents of the city of Liverpool and to the council tax payers in the other districts that make up the Merseyside PTA. For decades, whenever the tunnel's finances have fallen into deficit, the 97 per cent of Merseysiders
1012
in those five boroughs who do not use the tunnels—an extraordinary statistic—have found themselves subsidising the 3 per cent of their fellow council tax payers who do. That injustice is compounded by the fact that 90 per cent of journeys through the tunnels are made by private cars, yet as many of your Lordships will know, car ownership across Merseyside is relatively low due to the widespread deprivation in the conurbation.
The use of local authority funds to bail out the tunnels in the past has thus been a regressive form of taxation. However, at least it can be said that the 3 per cent of local residents who use the tunnels have made some contribution through the rates or council tax. That cannot be said of motorists entering Merseyside from Cheshire, Lancashire, North Wales or further afield. They contribute nothing to the tunnels through local taxes. It is right and proper that the possibility of council tax payers subsidising the tunnels in the future should now be removed.
In rectifying these injustices, the Bill that we are considering tonight also creates the opportunity to bring two further public benefits. First, the proposed indexation of tolls is a demand management tool consistent with the principles of the Transport Act 2000. It would assist in attempting to unclog the congestion in the streets of Liverpool city centre caused by the unrestrained growth of road traffic. The second additional benefit of the Bill is that it allows for the use of surpluses to assist in the delivery of a local transport plan at some point in the future when indexation has enabled the fabric of the tunnels to be improved, the safety requirements to be met. safety standards to be increased, and the soundproofing of local residents' houses to be carried out.
Merseytravel's local transport plan has been widely-praised as one of the very best in the country and has brought benefits to all modes of transport. Those transport modes include ferry, bus and rail services across the Mersey, which provide alternatives to driving through the tunnels. It is interesting that the Government are now reviewing whether the Merseyrail model can be copied elsewhere in the country. The Merseyrail Electrics network is particularly important for residents on the Wirral side of the river. It provides them with direct access to the heart of Liverpool for work, shopping or leisure without the need to drive and find a parking space in the city. Being further able to enhance the rail system for the Wirral through the LTP with surplus funds from the tunnels is vital for the long-term success of Merseyside. That is why I commend Merseytravel for its initiative in linking the services from the tunnels to the LTP by means of this Bill.
We have heard, and I suspect that we may hear from others in this debate, that the Bill imposes an unfair burden on motorists. However, the effect of indexation of the tolls can hardly be described as punitive. The 10p per trip toll increase every three years, amounting to £1 per week for someone crossing the river every working day, will not seriously damage the pockets of commuters. Nor can anyone seriously claim that it will adversely affect the local economy

1013
Should there be any prospect of economic disadvantage, the Merseyside PTA—a body made up of elected councillors from five districts—will be able to use its discretion not to increase tolls in exactly the same way as it did in 1992 when it had the authority from the Government to double tolls from 60p to £1.20. The authority then held the toll down to £1 because of the condition of the local authority.
It seems to me that the opponents of the Bill wish to immunise car drivers from the effects of inflation and from the small toll increases which the Bill proposes. But what about bus, rail and ferry fares? Each one of these rises in line with the RPI. In the case of buses they have tended to rise by far more than the retail price index. So why should public transport users be made to pay their way, and motorists be protected? There are countless studies which show that the costs of motoring will continue to fall in the years ahead. It will be difficult everywhere to maintain the attractiveness of public transport through the price mechanism. The opponents of this Bill are trying to lead us in exactly the opposite direction by preventing the tunnels' tolls from rising in line with the RPI.
There is a great deal more that I would like to say but we are time limited and I intend to finish there. I commend the Bill wholeheartedly to your Lordships' House and hope very much that the instruction which the noble Lord, Lord Hunt, is proposing to move is not accepted because that will add unnecessary delays to the committee; it will interfere with the rights of local authorities in the way in which they consider these matters and is entirely unhelpful.
8.41 p.m.
Lord Dixon: My Lords, I, too, support the Bill's Second Reading, as moved by my noble friend Lord Smith of Leigh.
I begin by admitting that my experience in Merseyside is limited to the period I worked as a ships' carpenter in the Liverpool Docks in the early 1960s. The whole of my local government experience during the 1960s and 1970s was in the Tyne and Wear area; I also served for a short period on the Tyne and Wear PTA. I know only too well from my experience that local councillors are on the sharp edge of politics—every May they have to knock at doors and get votes to keep their jobs.
This Bill is promoted by, as my noble friend Lord Smith said, the Merseyside Passenger Transport Authority, made up of 18 democratically elected councillors who are nominated annually by the five Merseyside local authorities. The Bill has the support of those five local authorities, the trade unions and—judging by a glance at the report in Hansard of the debate in the other place on the Bill—the majority of MPs in the area.
The Bill was given a thorough examination in the other place from the time it was deposited in November 2001. The Bill had its Second Reading on 9 July 2002, when it was carried by 105 votes to 22. The report came from the Unopposed Bills Committee on
1014
12 March 2003 and received consideration and Third Reading on 29 November 2003. It spent almost two years in the other place.
Having a little experience, like the noble Lord, Lord Hunt, of the practices in the other place, I know that the procedures gave ample scope for detailed examination by a small number of Members who were not happy with the contents of the Bill. To get a vote for a private Bill means that those in favour have to move a closure or the Bill may be talked out. This requires those supporting the Bill to have at least 100 Members pass through the Aye Lobby, usually at 10 o'clock at night. This is not an easy task on an unwhipped Bill at 10 o'clock without the help of the Government's Whips Office.
I well remember the Felixstowe Bill in the mid 1980s, as I am sure does the noble Lord, Lord Hunt, because he and I were then sitting in the other place. It was opposed by a handful of MPs from mining constituencies who were concerned that Felixstowe Harbour would be used to import coal at a time when many pits were closing. I remember my late and good comrade Lord Hardy of Wath speaking for hours about the effect on wildlife that that Bill would have. From my scant reading of this Bill in the other place I learnt more about the Queensway Tunnel than I know about the Tyne Tunnel, although I have lived a mile from the Jarrow entrance to the Tyne Tunnel. I found out, for example, that King George V opened the Queensway Tunnel on 18 July 1934. My honourable friend Bob Wareing is the only Member of the House of Commons to have walked through the tunnel in 1934, with his father who had made a donation to charity. I also found out that there are 1 million bolts in the iron lining of the tunnel and 140 miles of caulked joints. All those interesting facts surfaced during the detailed examination in the other place. That was perfectly in order.
The Bill empowers Merseytravel to increase tolls in line with RPI. However, it does not require the authority to exercise that power; it merely gives it a discretion. What is wrong with that? In one way or another, every Bill considered in this House takes power away from local authorities. This Bill will do the reverse and give local authorities the power to increase tolls in line with RPI.
The Bill also provides for noise insulation in the homes of residents near the Wirral approach roads to the Kingsway Tunnel. They have suffered from tunnel traffic noise since that tunnel was constructed in 1970.
Between 1988 and 1992 the tunnel had a deficit which was made the subject of a precept paid by local tax payers in the five district councils. Noble Lords have already referred to that twice. Why should the people in the area have to subsidise people outside the area who use the tunnel? The statistics mentioned by my noble friend show that only 3 per cent of those who use the tunnel reside in the area. So 97 per cent of tunnel users live outside the area but are subsidised by those who live there.

1015
I support the Bill also because it is not a privatisation Bill. In fact, the preamble states that the authority has resolved that it wishes the tunnels to remain in public ownership.
The Bill was examined thoroughly in the other place. I hope that it has a speedy passage through this place. I support the Bill and hope that the noble Lord, Lord Hunt, will not press his instruction.
8.47 p.m.
Lord Wade of Chorlton: My Lords, I should first declare an interest. I live near Chester and have business interests in Liverpool, so I use the tunnel fairly frequently. However, that does not stop me from accepting that the rates have to increase. I am very happy to accept the Bill's proposal that the costs and tolls should be index linked. I think that that makes sense. I accept the argument that those who use the tunnels should be the ones who pay for them. However, like my noble friend Lord Hunt, I was brought up to believe that one day the tunnel would be free. I should like at least to see the money paid off. So I agree with my noble friend that there should be a clear commitment that the borrowings will be paid off.
I am also concerned that we do not end up with the reverse of what the noble Lord, Lord Faulkner, described as an unfair arrangement whereby those who do not use the tunnel pay for those who do, so that those who use it and pay the increased costs end up paying for other matters over which they have no control. People in my part of Cheshire are concerned about those issues—that costs will continue to increase although all the debts are paid off, and yet they have to contribute towards issues that are of no benefit to them but to the benefit of others who are paying nothing at all.
I think that those two issues need to be examined. I am concerned about the extra powers being given to the Secretary of State to deal with matters of which we are unaware. I do not see why the Bill has to give definite increases and powers to Merseytravel and potential powers to the Secretary of State to do other things of which we have no indication. So although I support the main thrust of the Bill, I support my noble friend's Motion that these matters should be considered by the Committee and the Committee should undertake a proper review of the issues that we have raised.
8.49 p.m.
Lord Harrison: My Lords, everyone on Merseyside knows that Gerry and the Pacemakers sang "Ferry Cross the Mersey". Few, however, know the Beatles' song about that other form of crossing, the Mersey tunnels. It is entitled, "I Feel Fined". That is because after 70 years and after paying 500 million for tunnels that cost only one-tenth of that sum—and, I might add, for the privilege of crossing from one part of their own city to the other side—the people of Merseyside are fed up of paying the toll tax.
1016
The Bill before us not only fails to right that historic wrong; it abandons the promise to abolish the tolls once the historic debts have been paid off. This cannot and is not right. I declare an interest: I and my family in Chester regularly use the Mersey tunnels to visit friends and family, hospitals, art galleries, football stadiums and shops in Liverpool. I also declare an interest as a former MEP for the Mersey tunnels and the Runcorn bridge. Indeed, I waged a campaign on behalf of the good people of Widnes, who rightly objected to having their local roads clogged up by those fleeing the Mersey toll tax, itself an early and unfortunate experiment in road pricing.
All Merseysiders are dismayed, but none more so than Wirralians and those in the hinterland of West Cheshire and North Wales, who have greatest reason for, perforce, using the tunnels and who still, at the dawn of the new millennium, find themselves coughing up on broken promises. How badly timed is this proposed change. Do we really want to celebrate Liverpool's enthronement as European City of Culture in 2008 with welcoming signs on the Wirral side of the tunnel saying, "Willkommen to the toll tax"?
Secondly, the Bill proposes that the tolls should be inflation-proofed, regardless of the historic and real cost of running and maintaining the tunnels. That is irrational and unfair to toll-users. The tunnels should be treated as self-standing cost centres. Given the almost wholly predictable nature of the car flows through the tunnel, appropriate toll levels can be arrived at easily and for stable periods.
My third objection is that toll-payers should not have to fund transport projects beyond the immediate purview of the running of the tunnels; a major change brought about by the Bill. Toll-payers should most certainly not be taxed to fund entirely ungermane projects associated, say, with boosting tourism. I say that as someone who flies the flag for the tourism industry in your Lordships' House and someone who has played a modest role in obtaining Objective 1 moneys for Merseyside. Those worthy projects for transport and tourism seem ideal for European regeneration funding. Indeed, I remember fondly associating with colleagues at Merseytravel to secure Euro-funding for the innovative smart buses some five years ago.
My fourth objection is to the potential for privatisation of the tunnels—the subject of the earlier withdrawn Bill—which would be facilitated by abandoning the current pledge to set the tolls free once the debt had been repaid, and by the fact that the tunnels in the Bill are turned into cash cows by the introduction of the liberty to allocate surplus moneys for other non-tunnel purposes.
That leads me to my fifth concern: the accounts. I have only recently received some information on the accounts. At first glance, it would appear that the company's finances are more than comfortable. That view is reinforced by the recent withdrawal of the application to increase tolls by 10 pence and by the fact of the accelerated debt repayment of £3 million last year.

1017
I have many questions about the accounts that I have seen, but will the Minister confirm whether the current voluntarily-produced accounts of the Mersey tunnels are specifically covered by the district auditor's opinion and certificate? I understand that they are not.
Finally, plans for a new crossing of the Mersey upriver from the tunnels will have a material effect on whether it is wise to change now along the lines proposed. For instance, we do not know whether the new crossing will be tolled. In the light of that, should we not instead pledge ourselves to fulfil earlier promises made about dispensing with the tolls, and at the same time make the running of the tunnels transparent, simple, fair, effective and efficient for the benefit of all the people of Merseyside and its hinterland, especially on the eve of Liverpool's finest hour?
8.55 p.m.
Viscount Simon: My Lords, my noble friend Lord Smith is to be congratulated on his presentation of the powers contained in the Bill, and of the positive benefits that it will bring to Merseyside. I am pleased to speak in favour of the Bill, which modernises an anachronistic system of financing and managing the famous Mersey tunnels. I make no apology if I repeat some comments that other noble Lords have already made. However, I shall keep my comments brief, as the Bill has been debated at length on a number of occasions in another place and was substantially unamended.
I see four key benefits to the Bill. First, the powers sought by Merseytravel will remove a major burden currently placed on Merseyside's council tax payers. Under the existing legislation, it is they who must meet any deficits that arise as a result of the operation and maintenance of the tunnels. While that has not happened recently, it could easily do so again under existing legislation. Indeed, people in Merseyside still talk of the £28 million deficit that had to be funded in that way between 1988 and 1992. Furthermore, Merseytravel, the body responsible for managing the tunnels, can manage its finances with only a limited degree of forward planning. The Bill rectifies that.
Secondly, the Bill will ensure continuing investment in the tunnels' infrastructure and the potential to invest any surpluses in public transport in the region. That has to be a positive development, one which I support. Thirdly, by removing the need for a public inquiry every time that there is an application for an inflationary toll rise, the Bill will remove red tape and place decisions in the hands of those with responsibility for implementing them. That also has to be a welcome step forward.
Finally, I am entirely convinced of the need for the Bill in terms of enabling Merseytravel to undertake noise insulation works to the 200 or so properties situated at the Wallasey end of what is known locally as the Queensway tunnel. Being asthmatic, I know of the dangers that car fumes pose to people's health, as well as the associated health risks from the dust
1018
particles that will pollute their homes. I can therefore fully empathise and sympathise with the dangers that the families living in those properties have experienced on a daily basis for many years. As well as those dangers, there are the added difficulties of the constant noise impacting on their privacy and comfort. The sooner the Bill is enacted, the quicker Merseytravel can commence that work and mitigate the dangers to the health and quality of life of those long-suffering residents.
In closing, I would like to comment briefly on the instruction tabled by the noble Lord, Lord Hunt. Unlike him, I am satisfied that Merseytravel is the proper body to make decisions about the finances of a major piece of transport infrastructure which it is ultimately responsible for managing. The instruction seems to be an attempt to further the Conservative Party's campaign against PTAs and I consider that it could well place an intolerable burden on the Select Committee by inappropriately widening its remit. Existing laws, particularly on best value, ensure that the tunnels undertaking is run efficiently, economically and with proper consultation with stakeholders. I am not persuaded by those who voice arguments to the contrary.
8.59 p.m.
Lord Berkeley: My Lords, I congratulate my noble friend Lord Smith of Leigh on introducing the Bill. My interest is in encouraging public transport. Given that the Bill is promoted by Merseytravel, the passenger transport authority and executive for Merseyside, and with the PTA comprising 18 elected councillors who set the policies for the executive, it is about as democratic as it can be. The PTA has a high reputation around the country among transport professionals generally.
I was interested in some of the comments made by the noble Lord, Lord Hunt, about the consultation process. I find it difficult to link the 67 per cent who said "No" to cross-subsidy with the 40 per cent of people in the Merseytravel area who, I understand, do not have access to cars. It would be odd if they did not want some of the toll money put towards public transport if they had no other means of travelling around. The most surprising statistic quoted by the noble Lord was that motorists do not want tolls. That really is a novelty. People really would like to drive around for nothing. But that is not what life is about.
Both the noble Lord, Lord Hunt, and my noble friend Lord Harrison mentioned Liverpool as the 2008 City of Culture. That will be exciting and the key is not to create a toll-free gridlock—"Willkommen aus gridlock " perhaps—but a car-free environment for the period, where the really beautiful Merseyside landscape can be enjoyed without gridlock and the fear of being run over. That should be the objective and the Bill goes some way towards it.
It is a local Bill, promoted by the local PTA. That authority is made up of elected people who should be capable of deciding what is good for Merseyside's travel

1019
needs. There is nothing particularly new about the principles behind the Bill. As several noble Lords have said, the principle is consistent with the Government's policy set out in the transport White Paper and the Transport Act 2000, which is to encourage public transport and limit car use for the benefit of all. Perhaps it is the start of a 21st century solution, although we have some way to go. The principle is also similar to the legislation governing the finances of the Dartford crossing and the provisions set out in the Traffic Management Bill, currently before Parliament, which, no doubt, your Lordships will be discussing soon, relating to the use of surplus parking revenues. Just for completeness, that principle is a major part of the European Commission's White Paper on strategic links, which proposed that revenue from tolls on roads and such links should be put aside for investment and support for public transport, rail and so on.
What is wrong with cross-subsidy? The London congestion charge is wholly a cross-subsidy, because Mr Livingstone has used much of it to buy those wonderful new bendy buses that we all love so much. They are very good and I believe that bus use in London has increased by 20 per cent. As for charging for crossings—estuarial or otherwise—that happens for the Humber, the Severn, the Dartford tunnel and the Channel Tunnel. Tolls on the Channel Tunnel for a car sometimes approach £200—significantly higher than that envisaged in the Bill.
There is nothing wrong with paying a small amount to use a piece of infrastructure for one's own benefit, which, as many noble Lords have said, does not benefit 97 per cent of the population. I believe that the Bill places responsibility in the hands of local people, where it should be. We have seen the benefits of local solutions to local issues by local people in Merseyrail Electric's network, which has been the best performing railway on the UK mainland since Merseytravel took over the Strategic Rail Authority's franchising responsibilities. I am not sure it is better than the Isle of Wight railway, but I shall leave that to one side.
My noble friend Lord Faulkner mentioned that the plan was looking at vertical integration, which I might not generally like if I was wearing my rail freight hat, but is good for the area. Whether that principle will be extended to the whole network is not part of the argument. We should devolve decision-making where we can—cut out the bureaucracy and speed up the decision-making. This Bill has been around for far too long in my view.
Turning to the instruction tabled by the noble Lord, Lord Hunt, I do not believe that it is necessary or appropriate. Nor do I agree that it is correct in its central assertion because the seven PTAs, which are responsible for setting public transport policy in the former metropolitan counties, are, in my view, best placed to assert the needs and views of the local population and their stakeholders. They are elected—they are the people who run it. It seems extraordinary that the noble Lord, Lord Hunt, should seek to instruct the Select Committee to consider,
"whether the provisions of the bill provide an adequate mechanism for taking into account the views of the five district councils",
1020
when the promoter of the Bill is the five district councils. This looks to me like a monumental piece of navel gazing by the Select Committee. It would be boring and waste an awful lot of time for absolutely no benefit whatever.
To conclude, the Secretary of State for Transport recently said in another place:
"Local transport decisions are often best taken by the people who are providing the service and who pay for it. They can be better placed to know what is needed and how best to provide it. as well as being able to make sensible and informed decisions".—[Official Report, Commons, 19/1/04; col. 1076.]
This seems to me to be absolutely sound, and having met many transport professionals throughout the country, including Merseytravel's chief executive, Neil Scales, I am confident that the Secretary of State is quite right, certainly in this case.
I commend the Bill to the House. It should be allowed to follow its course without the instruction from the noble Lord, Lord Hunt.
9.6 p.m.
Baroness Hooper: My Lords, I am most grateful to your Lordships for allowing me to speak briefly in the gap. I had not expected to be here this evening and therefore had not put my name down to speak.
It seems appropriate to be considering this issue on a day when Eurotunnel announced that without changes to simplify its structure and more flexibility to help it repay its debts, its future would not be viable. I appreciate that here we are talking about tunnels for cars and not the uses made of Eurotunnel.
As a former Member of the European Parliament for Liverpool I was a great user of the tunnel. Perhaps I may be allowed a personal reflection. My mother often talked of her excitement at going through the first Mersey tunnel before it was officially opened. So there are a number of reasons why I believe the tunnel needs to be put on a more secure footing.
As a great supporter of Liverpool's status as a future European capital of culture, I welcome the suggestion, which was raised by my noble friend Lord Hunt, that the tolls should be lifted during that period. What therefore will happen in 2007, when Liverpool will be celebrating the 600th anniversary of its charter?
Many of the arguments advanced in favour of the Bill were persuasive, particularly those of the noble Lord, Lord Faulkner, but no one has answered the points raised by my noble friend Lord Hunt about the failure to take into account the results of the public consultation. On that basis, and on the others he advanced so clearly, I support him in his request for an instruction to the Select Committee.
It seems to me that the processes of which we can take advantage in Parliament should be thoroughly used in order to meet the concerns which have been expressed not only as shown by the results of the public consultation but also as expressed most vehemently in another place. I see no reason why the use of the instruction should delay proceedings. It simply

1021
underlines the fact that we in this House give a thorough examination to all the legislation that comes before us, whether public or private.
9.9 p.m.
Baroness Scott of Needham Market: My Lords, I offer my wholehearted support for the Bill and in doing so declare interests as the chair of the Local Government Association's transport executive and as a member of the Commission for Integrated Transport. Having offered to take on the job of winding-up on what I thought would be a quick and easy debate on a Bill held late at night, I realise that I rushed in where angels fear to tread.
Nevertheless, having considered it in detail, I remain of the view that this a sensible piece of private legislation, which arrives in your Lordships' House in the unusual state of having been scrutinised by another place. That happens all too rarely these days. The Bill is now in its third parliamentary Session. I am dismayed that it has taken so long to reach us. Someone from another planet would wonder why on earth it would take so long to approve something that is in essence entirely in conformity with government policy, as the noble Lords, Lord Berkeley and Lord Faulkner of Worcester, suggested.
I support the Bill because it will allow its promoter to correct a number of fundamental flaws in the legislation that governs the management of the Mersey tunnels with which it has now been struggling for some time. Probably the most glaring example of those flaws is that the tunnels are essentially deficit-driven. The Mersey tunnels must be making a loss before any adjustment can be made to the toll.
As we have heard, in those circumstances it is the council tax payers of Merseyside who are required to make up that deficit, as happened not too long ago. As the noble Lord, Lord Smith of Leigh, said, only 3 per cent of the local populace use the tunnel. I am sure that noble Lords would agree that requiring taxpayers as a whole to meet the debts of a service that is not used by the vast majority of them is not an equitable approach to public finances. In fact, many of them probably do not even own cars, which must make it all the more sickening for them. The Bill would remove that irregularity and enable Merseytravel to place the tunnels' finances on a sound economic footing, removing local taxpayers from that misplaced financial liability.
Also, under existing arrangements, proposed adjustments to the tolls must be referred to the Secretary of State, no matter how modest those increases may be. The Secretary of State almost always decides that there needs to be a public inquiry—in fact, every time Merseytravel has sought such an increase, there has been a public inquiry and the Secretary of State has approved the toll rise. That seems a disproportionate response to the scale of the problem.
That all adds to the delay. Historically, there has been about 22 months between application and approval. During that time, debts can accrue and the
1022
public inquiry causes considerable costs. That system inhibits Merseytravel's ability to look forward rather than back and plan investment for the tunnels' structures and operating systems.
The Bill removes the need for Merseytravel to seek the Secretary of State's approval for increases in line with the retail price index. To put that into context, I am told that in 1992, the toll was £1; it is now £1.20. An RPI increase would be approximately 10p every three years for a car. Do we really need the Secretary of State's approval and a public inquiry for such rises? I think not. To respond to the point made by the noble Lord, Lord Harrison, who referred to visitors from Europe, most visitors from Europe would find the idea of paying a £ 1.20 toll perfectly normal, because they do so all the time all over Europe.
Having said all that, the most important and controversial provision in the Bill is that to allow surplus funds to be invested in public transport on Merseyside. That will enable public transport to be delivered more quickly; for that reason, we should support it. It is entirely in line with proposals advanced under the Transport Act 2000 for workplace charging and congestion charges. In that sense, it is entirely consistent with government policy. It seems odd that opponents of the provision seem to think that it is all right for council tax payers widely to subsidise deficits but not for surpluses to be invested across the wider area. I struggle to understand that inconsistency.
Lord Harrison: My Lords, will the good Lady, my noble colleague on the other side, reply to this question: what is her justification for requiring the 3 per cent who, it is claimed, use the tunnel to pay for those extra items that are not tunnel-related but are related to transport infrastructure in Merseyside and tourism activities?
Baroness Scott of Needham Market: My Lords, to start with, I am "noble" rather than "good". Difficulties arise once we start down the road of deciding that we must itemise exactly what people use and how it gets paid for. In the end, one must come to a balance. The balance that I have reached in my mind is that, when 3 per cent of the local populace use the tunnel, it is inequitable to expect the wider population to pay for it.
As the chair of the LGA's transport executive, I have worked very closely with the PTAs. In my opinion, they deliver the only thing approaching integrated transport in this country. They deliver budgets worth many millions of pounds and comprise elected representatives from local authorities. It is extraordinary to think that we need a parliamentary procedure to look in detail at whether they have done properly the job of consultation. All the political parties now talk about localism and local decision-making. It is difficult to understand in any sense how localism comes into play in this context.
In public consultation, when people are asked whether they would like to pay more, of course they will say no. It is natural that people want to stick to the arranged proposition—that the tolls would be reduced

1023
when the debts were paid off. But time marches on. The traffic situation on our roads bears no resemblance to how it looked when those arrangements were agreed to. I say that with all deference to the boyish looks of the noble Lord, Lord Hunt. When he heard those propositions as a boy, the traffic situation was quite different, as I am sure he would agree. The PTA has a duty to reflect wider issues of transport policy, and those that pertain now rather than when the legislation was originally drafted.
I support the Bill and wish it a speedy passage on to the statute book from this side of the House, although it took a long time in another place.
9.17 p.m.
Lord Luke: My Lords, several noble Lords have said that they do not know the Merseyside area very well. I can at least say that I have been through one of the tunnels—I notice that that creates surprise—but I am afraid that it was so long ago that I cannot remember which one.
This has been an interesting debate and has been sharply divided between those supporting the promoter of the Bill, the noble Lord, Lord Smith of Leigh, and those such as my noble friend Lord Hunt who question whether it is morally right to divert funds that are effectively being used to pay off debts incurred both in tunnel-building, maintenance and unprofitable working through the years.
In another place, supporters of the Bill broadly came from the Liverpool side of the tunnels, and those broadly against came from the Wirral. Arguments, as I have read, swayed to and fro during the four separate occasions on which the Bill was discussed during 2002 and 2003. There was clearly no thought of compromise on the part of the promoters at any time. Most of the relevant arguments have been put again tonight, and I shall not waste noble Lords' time by repeating them at such a late hour.
I wish to quote from an amendment moved by my honourable friend Christopher Chope in another place on 29 October 2003. He said that the purpose of the amendment was to delete from the Bill the provision to use tunnel income to make payment to,
"the Authority's general fund for the purpose of directly or indirectly facilitating the achievement of policies relating to public transport in its local transport plan, or for other purposes".—[Official Report, Commons, 29/10/03; col. 360.]
This sensible amendment, which was needless to say defeated, although it was supposed to be on a free vote, encapsulates the main concern about this Bill. Again, Mr Chope said in the debate at Third Reading,
"This Bill is provocative and contentious … the promoter has missed a great opportunity to try to reach a compromise".—[Official Report, Commons, 29/10/03; col. 403.]
I understand that there has been a long-standing agreement that income arising from the tolls should be used to pay off the debts, which I mentioned earlier, and that when that has been done the tolls should be lowered and just used to pay for ongoing maintenance. This Bill would seem to be about to kill off that understanding, just when the debt burden is coming down fast.
1024
This is just another anti-private motorist measure, this time promoted by the Labour-controlled local authorities in Merseyside. The way has been trenchantly indicated by my noble friend Lord Hunt of Wirral. I hope that the Minister will support his most sensible instructions and that they will be accepted by the noble Lord, Lord Smith of Leigh, as well.
9.21 p.m.
Lord Triesman: My Lords, I join in congratulating my noble friend Lord Smith of Leigh on the able way in which he has put the case for the Bill. I also thank the noble Lord, Lord Hunt of Wirral, for providing what I can only describe as so passionate a response. I commend all those who have taken part in the debate on all sides of the House, because it has been a useful debate on issues of some importance. I have been through both the Kingsway and Queensway tunnels, but I shall not say that it gives me any special qualifications in any respect.
As noble Lords will know, it is the convention that the Government take a neutral stance on private Bills that do not contradict stated Government policy. That is the position that the Government will take this evening on this Bill. That said, the Government have stated through my right honourable friend the Secretary of State for Transport that they have no general objections to the aims of the Bill.
The Bill includes a number of provisions. It will permit Merseytravel to increase tolls at the tunnels based on the retail price index, the RPI formula, without having to seek permission from the Secretary of State for Transport to use some of the proceeds from the toll revenues for wider transport objectives in Merseyside. That is broadly in line with the options available to local authorities through legislation that already allows them to introduce road user charging. The Government are therefore not opposed in principle to Merseyside's proposals to use some of the additional toll revenue for local transport purposes, a point that was well made by my noble friend Lord Faulkner of Worcester concerning the whole issue of transport demand management, and my noble friend Lord Simon, who also emphasised the effectiveness and efficiency arguments that are inherent in what I said.
The Bill would permit increases to toll charges in line with the RPI. As the noble Lord, Lord Smith of Leigh, said earlier, any increase beyond the RPI would continue to be a basis of a right to object, and the Secretary of State would still have to consider any such proposition. The Government are not opposed to this principle, especially as the tunnels are owned and operated by a passenger transport authority made up from members of Merseyside's five local authorities. As such, it is already subject to clear democratic accountability. It does so in a credible way, as the noble Lord, Lord Dixon, said and as the noble Lord, Lord Berkeley, reinforced.

1025
The Bill would give Merseytravel the ability to undertake and finance noise insulation work to properties on the Kingsway tunnel approaches to the roads on the Wirral. The Government welcome the introduction of those new powers because they understand that this is responding to a longstanding concern expressed by local residents. The power to take such a welcome step does not currently exist in legislation. My noble friend Lord Simon made that point forcefully and others have echoed it.
The key argument against this general approach is that the only proper use for the money is to repay the debt. I carefully listened to the arguments about that. With great respect to noble Lords, when the toll collectors were talking to small children in the past, they may not have provided a definitive economic analysis or plan for the whole of the future of the Merseyside transport system, let alone the tunnel. No doubt I would have been gratified—although I went through the tunnels as an adult and did not have the benefit of that discourse—on hearing it, but I do not think that it could be regarded as a serious proposition now.
The noble Lord, Lord Hunt, questioned the appropriateness of what he described as allowing Merseytravel, in effect, to "tax" tunnel users to fund other transport projects in Merseyside. The use of net proceeds from the toll or from any charging revenue for wider transport objectives is not unique. Matters move on. Safety demands become greater. Traffic management issues become more important. Environmental demands cannot be set aside lightly and they make new calls on all of us. I know that my noble friend Lord Harrison will see that point—at least, I hope that he will. Perhaps the noble Lord, Lord Luke, will as well; but from what he said, perhaps not.
The Government have already introduced similar powers within the legislation allowing for the introduction of road user charging under the Greater London Authority Act 1999 and the Transport Act 2000. In those cases, the relevant legislation states that net revenue from road user charging must be used for transport purposes. Of course, historic issues are important. I understand that. But the future is probably much more important if we are to get it right. The noble Earl, Lord Mar and Kellie, was right when he referred to that issue.
While the Government generally have no objections to the aims of the Bill, in the past they expressed two areas of concern. First, the Government were conscious of the strength of local feeling about allowing the Merseyside Passenger Transport Authority (Merseytravel) to increase tolls by RPI without any check; and secondly, that some of the Bill's proposals for using revenue derived from heavy goods vehicles for purposes not related to the costs of
1026
the tunnel's construction, maintenance and operation could be in breach of EU Directive 99/62 on the charging of heavy goods vehicles for the use of certain infrastructure.
Amendments were made by the House of Commons' Unopposed Bills Committee, which sought to satisfy those concerns. Schedule 1 to the amended Bill now includes a new sub-paragraph (4) to the amendment of Section 91 of the County of Merseyside Act 1980, which, for brevity, I shall refer to as the 1980 Act. The new sub-paragraph obliges Merseytravel to ensure that toll revenue used for any purpose other than the operation, maintenance and policing of the tunnels will not contravene the EU directive. It also obliges Merseytravel to apply sufficient toll revenue to ensure the safe, efficient and economic management, operation and maintenance of the tunnels before applying toll revenue for any other purpose.
The Government believe that including this sub-paragraph will satisfy the legitimate concerns about a possible breach of the EU directive. It is important to include the sub-paragraph within the Bill because of the extra powers that the Bill gives Merseytravel (unlike operators of some similar undertakings) to be able to apply toll revenue for purposes other than the operation, maintenance and policing of the tunnels.
Schedule 1 to the amended Bill also contains a new sub-paragraph (5) to the amendment of Section 91 of the 1980 Act. That new sub-paragraph places a duty on Merseytravel to consult with the people of Merseyside once all debts have been repaid on the justification for not reducing tolls and for retaining the ability to increase tolls. Surely, that has been at the heart of any of the objections made with any force today.
The Government are satisfied with the amendments because they meet the concerns that have been expressed. The noble Baroness, Lady Scott of Needham Market, covered many other issues raised over several years and I shall not repeat those. I conclude simply by saying that the Government have no objections to the Bill going forward.
9.30 p.m.
Lord Smith of Leigh: My Lords, in replying to this interesting and wide-ranging debate, I thank all noble Lords who have contributed to it. I appreciate the support of the majority of speakers and the way they developed the arguments in favour of the Bill. I appreciate in particular the attendance of the right reverend Prelate the Bishop of Liverpool, showing his support. I am glad of the support of the Liberal Democrat opposition and that of the Government through my noble friend Lord Triesman, who has just confirmed that they have no objections. The

1027
legislation will mean better management of the tunnels. It will promote public transport and, by doing so, will encourage a better environment in Merseyside.
In his typically robust contribution, my noble friend Lord Harrison defended tunnel users, a position perhaps not consistent with Labour's transport policy of the moment. He was concerned about the use of surplus income from the tunnels for wider purposes. However, my noble friend Lord Berkeley covered the point by explaining what happens in London and elsewhere. It is not inconsistent to regard use of the tunnels as a transport mode. Merseytravel is under an obligation to encourage more people to use public transport and to improve transport facilities, including those in the Wirral.
Seeing that I was to introduce the Bill in this House, the Mersey Tunnel Users Association contacted the local newspaper in Wigan. As a result, a typical headline appeared: "Leader upsets Scousers". I am not sure whether that is a benefit, but judging from the contributions of my noble friend Lord Harrison and the noble Lord, Lord Wade, I must have upset those from Chester as well.
I want to say how much I appreciated how the noble Lord, Lord Hunt of Wirral, in moving his instruction and responding to my opening remarks, graciously agreed not to oppose the Second Reading of the Bill. I, too, had boyhood experiences of travelling through the Mersey Tunnel. I was always concerned that we should emerge on the other side because I was nervous about it. However, as my noble friend Lord Triesman pointed out, the comments of toll collectors anticipating future free use of the tunnels were somewhat naive. The current operators cannot be held to that. As I said in my opening remarks, the costs of operating and maintaining the tunnels are likely to increase.
The financial accounts of Merseytravel, in particular the elements applying to the tunnel operations, show that in 2004–05 they will break even because of taking out an additional loan. There are problems.
The consultation exercise is important and all in public life must listen to the responses. However, that does not mean to say that we must follow consultation exercises slavishly. As my noble friend Lord Berkeley pointed out, it is not surprising that road users do not want to see increased tolls. Such responses are partial within any form of consultation and need to be properly interpreted.
The promoter of the Bill, Merseytravel, has sought to put forward legislation that meets the concerns of everyone. I shall comment on what was said by the noble Lord, Lord Luke, who said that it is being promoted by Labour local authorities. If he checks the record in Merseyside. I think that he will find two Labour authorities, two hung authorities and Liverpool still controlled by the Liberal Democrats. However, we are to have local elections later this year and on this side of the House we hope that that may change. For the moment, however, it is a Liberal Democrat authority.
1028
We in Greater Manchester have supported Liverpool as the future city of culture. However, my noble friend Lord Faulkner was right to ask why, in celebrating the culture of Liverpool, do we have to have the streets clogged with traffic through free use of the tunnel? That is not the way to celebrate culture in the city.
I hope that the Select Committee will be left to turn to the task in hand. No doubt the members will be informed by the contributions made by noble Lords in our debate. I hope that the noble Lord will think it unnecessary to move his somewhat restrictive instruction to the committee, thus enabling it to do its job and allowing the Bill to come back to the House for further consideration.
On Question, Bill read a second time, and committed to a Select Committee.
9.35 p.m.
Lord Hunt of Wirralrose to move, That it be an instruction to the Select Committee to whom the Bill is committed that they should consider—

(a) whether the power of the Secretary of State to increase all or any of the tolls by order is justified; and

(b) whether the provisions of the Bill provide an adequate mechanism for taking into account the views of the five district councils on Merseyside (the Metropolitan Borough of Wirral, Liverpool, Sefton, Knowsley and St Helens) in respect of:

(i) increases in tolls;

(ii) the use of surplus tunnel toll income to improve public transport services on Merseyside; and

(iii) the desirability of repaying the existing debt on the tunnels before applying surplus toll income to other projects.

The noble Lord said: My Lords, I understand from the Clerks that this is an appropriate moment for me to address the points that have been made about the instruction because I still believe it to be necessary.
First, I can tell the noble Lord, Lord Dixon, that in his day the Government in the other place would have adopted a position of strict neutrality. If, however., he reads the speeches—of Labour Members, in particular—he will see that the Bill has only ever come to this place after lengthy opposition in the other place because the Government made time available for the debate to continue in government time. We always follow a better code of practice than the other place in dealing with private Bills. As one Minister admitted—perhaps inadvertently—not having followed the neutral example of the noble Lord, Lord Triesman, in this debate, the Government were whipping in favour of the Mersey Tunnels Bill. In the days of the noble Lord, that would never have happened. Of course, if it had not happened, we would not have the Bill before us now.
I wish to address one or two of the points made by the noble Lord, Lord Faulkner, who was the only noble Lord to address the instruction as such, although one or two others referred to it. First, the noble Lord said that the instruction would cause delay;

1029
secondly, that it would interfere with the rights of councils; and thirdly, that it was entirely unhelpful. The real problem, especially with the Birkenhead Tunnel, is that it links the two cities of Birkenhead and Liverpool. There is another crossing—a bridge at Runcorn—that is toll free. That crossing is completely free to cars, which can come and go as they please.
It is interesting that in a survey on 4 October 2002, the bridge linking Runcorn and Widnes carried exactly the same number of vehicles in a 24-hour period as the tunnels. The tunnels have eight lanes and the road bridge has four. The points made by noble Lords that there is enormous congestion and a surfeit of cars using the tunnels is only when people are going to and from work. There is huge feeling among the people in Liverpool and Birkenhead because if they go to Runcorn to cross, it is free. Let us not forget that we are talking about Merseyside, which is a deprived area, and the cars going through the tunnels are not of the greatest value. Often that is the only way in which people can get to work—especially at certain hours of the day. They also need to carry their equipment, and so on.
Let us examine and understand the strong feelings. The position is unlike other city centres, such as London. We do not have to pay a toll on the bridges or the tunnels. There has always been a strong view in Liverpool and Birkenhead that the tolls are to pay off the debt on those marvellous tunnels that take people to and from work. But the amount produced by the tolls must eventually result in the payment of their construction costs so that the tolls will fall once the debt has been repaid.
With regard to the point made by the noble Lord, Lord Faulkner, that it will cause delay, there is already a petition, which is why the Bill will now go to an Opposed Bill Committee. As the noble Lord, Lord Harrison, mentioned, that petition is from the Mersey Tunnel Users Association. Many of the points raised in the petition, which I am not permitted to mention in my instruction because they are already covered by the petition, will result in close scrutiny of the Bill.
I feel, and I am strongly supported by those who have spoken on this side of the argument, that the committee should consider very carefully the points that I have raised in the instruction. The first point is that there should not be two ways of raising tolls. The Bill not only allows for automatic increases in accordance with the RPI but also perpetuates the old system of having a mechanism for a public inquiry and for the Secretary of State to authorise increases over and above the rate of inflation. I hope that the committee will look at the instruction from the point of view of the five councils.
1030
The noble Lord, Lord Berkeley, said that in many ways the instruction is not necessary because there are elected councillors. However, let us not forget that those councillors are not elected to the Mersey Passenger Transport Executive. They are voted on to the MPTE by their own respective councils. The point was made that they could be removed by the councils. I hope that noble Lords will accept that it would be far better to ask the committee to check that the views of the five councils are being carefully considered, alongside the views, as the noble Lord, Lord Harrison, pointed out, of the Mersey Passenger Transport Executive.
The noble Lord, Lord Berkeley, made the point that there should be a 2008 toll-free gridlock. As I have already demonstrated, the bridge is free. The tunnels being free as well would not create a huge gridlock. If one uses the tunnels at most times of the day, it is fairly easy to get through. The problem of congestion arises only as a result of people going to and from work first thing in the morning and in the evening. I have already demonstrated that the four lanes on the bridge are equivalent to the eight lanes of the tunnels in relation to the amount of traffic that they carry. The problem is that the congestion arises early in the morning and late at night.
Lord Davies of Coity: My Lords, I thank the noble Lord for giving way. The noble Lord says that there would be no greater congestion if the use of the tunnel was free of charge. Does he not think that people now travelling on the bridge would instead go through the tunnel, thereby increasing the traffic flows?
Lord Hunt of Wirral: My Lords, I agree that that may happen. However, the majority of the traffic on the Runcorn bridge would be travelling to and from work in that direction at peak hours, and those of us who are familiar with the area know that they are not people making what is a 30-minute detour from Birkenhead and Liverpool to go over Runcorn bridge and back again. I therefore do not believe that it would make a significant difference, but I have to acknowledge that the noble Lord may be right; there may be some difference. Interestingly, over the past 10 to 15 years the volume of traffic has gone neither up nor down. The total number of vehicles was 25.1 million in 1995 and 25.2 million in 2001–02.
If any noble Lord wants to make any further comment on my instruction, I shall be happy to give way. However, I hope that when noble Lords vote on the instruction, they will see it as a mechanism for highlighting to the committee the points of concern.
I know that the committee will carefully read Hansard and consider some of the points. By stressing them in the way that I have, I hope it will give the

1031
Committee an opportunity to recognise the main areas of concern and to deal with them before the Bill comes back before your Lordships again. I beg to move.
Moved, That it be an instruction to the Select Committee to whom the Bill is committed that it should consider—

(a) whether the power of the Secretary of State to increase all or any of the tolls by order is justified; and

(b) whether the provisions of the Bill provide an adequate mechanism for taking into account the views of the five district councils on Merseyside (the Metropolitan Borough of Wirral, Liverpool, Sefton, Knowsley and St Helens) in respect of:

(i) increases in tolls;

(ii) the use of surplus tunnel toll income to improve public transport services on Merseyside; and

(iii) the desirability of repaying the existing debt on the tunnels before applying surplus toll income to other projects.—(Lord Hunt of Wirral.)

9.45 p.m.
On Question, Whether the said Motion shall be agreed to?
Their Lordships divided: Contents, 26; Not-Contents, 27.

Division No. 1

CONTENTS

Anelay of St Johns, B.

Jones, L.

Astor of Hever, L.

Luke, L.

Attlee, E.

Lyell, L.

Brougham and Vaux, L.

Montrose, D.

Cope of Berkeley, L.

Newton of Braintree, L.

Dixon-Smith, L.

Noakes, B.

Fookes, B.

Northesk, E.

Fowler, L.

Seccombe, B.

Harrison, L.

Shaw of Northstead, L.

Henley, L. [Teller]

Skelmersdale, L.

Hooper, B.

Waddington. L.

Hunt of Wirral, L.

Wade of Chorlton, L. [Teller]

Inge, L.

Wilcox, B.

NOT-CONTENTS

Addington, L.

Liverpool, Bp.

Berkeley, L.

McNally, L.

Campbell-Savours, L.

Mar and Kellie, E.

Clark of Windermere, L.

Miller of Chilthorne Domer, B.

Davies of Coity, L.

Pendry, L.

Dean of Thornton-le-Fylde, B.

Rennard, L. [Teller]

Dixon, L.

Roper, L.

Eatwell, L.

Scott of Needham Market, B.

Faulkner of Worcester, L. [Teller]

Shutt of Greetland, L.

Simon, V.

Gale, B.

Smith of Leigh, L.

Haskel, L.

Thomas of Gresford, L.

Hogg of Cumbernauld, L.

Walmsley, B.

Lea of Crondall, L.

Whitty, L.

Resolved in the negative, and Motion disagreed to accordingly.
House adjourned at five minutes before ten o'clock.