Lords Sitting of 19 July 2004

Preamble
The House met at half-past two of the clock: The CHAIRMAN OF COMMITTEES on the Woolsack.
Prayers—Read by the Lord Bishop of Southwark.

Lord Gould of Brookwood
Philip Gould, Esquire, having been created Baron Gould of Brookwood, of Brookwood in the County of Surrey, for life—Was, in his robes, introduced between the Lord Hollick and the Baroness Gould of Potternewton.
Lord Broers
Sir Alec Nigel Broers, Knight, having been created Baron Broers, of Cambridge in the County of Cambridgeshire, for life—Was, in his robes, introduced between the Baroness O'Neill of Bengarve and the Lord Oxburgh.

Pension Funds and Taxation
2.47 p.m.
Lord Peyton of Yeovil Lord Peyton of Yeovil asked Her Majesty's Government:
Whether they anticipated the effects on pension funds of the changes to the rules for advance corporation tax.
The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord McIntosh of Haringey): My Lords, I hope I am right in thinking that the noble Lord, Lord Peyton, is referring to payable tax credits on dividends. Those were a
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distortion in the tax system under which non-taxpayers such as pension funds were better off if companies distributed profits as dividends rather than retaining them for investment. They were abolished in 1997 as part of a balanced package of measures, including reductions in corporation tax, designed to encourage companies to reinvest their profits for growth. While the abolition of payable tax credits reduced the income of pension funds by around £3.5 billion per annum, the long-term effect of that package of measures will benefit all investors, including pension funds and those saving for retirement.
Lord Peyton of Yeovil: My Lords, the noble Lord will forgive me if I say that, coming from the Treasury's most skilled apologist, that Answer was really not very welcome. Will he not at least try to explain how the Chancellor of the Exchequer came to aim such a blow at both the whole of the savings movement and the arrangements made for retirement by many pensioners? A word of regret or sympathy would not come amiss.
Lord McIntosh of Haringey: My Lords, I have not had time to look up the word "apologist" in Roget's Thesaurus, but I suspect that it is related to very many words that are much less approving than the noble Lord, Lord Peyton, would be prepared to use in public. Having said that, I do not think that any apology is required. The change was a redress of a distortion that has existed for some time and has not been a significant element in pension funds' ability to meet their obligations in the years between then and now. There have of course been significant changes in the financing of pension funds, but those have been due much more to interest rate reductions than to the fall in the price of equities and, even more significantly, to increased life expectancy.
Lord Newby: My Lords, does the Minister accept that companies are currently increasing the amounts they are putting into corporate pension funds at an

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annual rate of 25 per cent? What estimate have the Government made of the loss of corporation tax that will follow those increased flows?
Lord McIntosh of Haringey: My Lords, when figures are quoted on which an estimate can be made, no doubt an estimate will be made. The noble Lord, Lord Newby, referred to the increasing amounts that companies are putting into their pension funds, and that is welcome. I would remind him that in the period preceding the abolition of payable tax credits on dividends, companies—many of them the same companies—took very much longer pension fund holidays, amounting over a period of years to something like £19 billion.
Lord Higgins: My Lords, is it not clear that the change in ACT to which my noble friend referred was only the first in a series of actions by the Chancellor that have added to the present crisis in provision? The Government admitted only last week in Grand Committee that the Pensions Bill was introduced in a hurry. As a result, there was not adequate time to debate it in the Commons. We in this House will have to sort out the details of the Bill, which seeks to rectify some of the damage that the Government have caused. Your Lordships will need to make that effort.
Lord McIntosh of Haringey: My Lords, I am sorry to correct the noble Lord, Lord Higgins, but the abolition of advance corporation tax took place roughly at the same time, and on the basis that advance corporation tax and dividends tax credit were generally set at the same rate. What we are talking about now is not advance corporation tax; it is only the payable tax credits on dividends that directly affected pension funds. On the issue of the Pensions Bill, I leave the noble Lord, Lord Higgins, to debate that at his usual length and with his usual assiduity with my noble friend Lady Hollis.

Zimbabwe: Human Rights
2.52 p.m.
Lord Howell of Guildford Lord Howell of Guildford asked Her Majesty's Government:
What studies they have made of the report on Zimbabwe from the African Union's Commission on Human and People's Rights.
The Minister of State, Foreign and Commonwealth Office (Baroness Symons of Vernham Dean): My Lords, we received the executive summary of the report at the time of the African Union summit on 6 to 8 July. The full report will be available later this year, after Zimbabwe has responded to the observations about human rights abuses. We welcome the summary as clear criticism of the human rights situation in Zimbabwe by the African Union.
Lord Howell of Guildford: My Lords, does the noble Baroness agree that it is a damning report on the
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abuses in Zimbabwe and on the activities of the racist regime there? Does she further agree that the way in which it has been handled, having been suppressed, it seems, for two years, reflects poorly on the African Union and on its aspirations, vision and strategy, which we all support, for a better and reformed Africa in the future? Is there any channel by which this can now be brought into the United Nations forum? Hitherto, the Government have taken the view that there are too many obstacles to bringing the issue to the United Nations, but this could provide the vehicle for doing so.
Baroness Symons of Vernham Dean: My Lords, I agree that the executive summary is a full criticism of Zimbabwe on human rights. The noble Lord said that the report is damning, but I reiterate that I have not as yet seen the full report. It will not be forthcoming for at least another month, or possibly longer, in order to give Zimbabwe the opportunity to comment on what is said.
The African Union has pointed out to Zimbabwe that three reports are now outstanding on Zimbabwe's failure to comply over human rights issues, and it has urged Zimbabwe so to do. On the last point, the United Kingdom Government are considering taking an issue to the United Nations General Assembly.
Lord Hughes of Woodside: My Lords, is it not a welcome sign that the African Union has commented so stringently on human rights abuses in Zimbabwe? We should be encouraging the African Union for doing so, since it is always under criticism. Does my noble friend agree that it is also important that the African Union has now said to African leaders that they can no longer expect a defence from the African Union where there are abuses of human rights?
Baroness Symons of Vernham Dean: Yes, my Lords, I strongly agree with that. That is why I said in my initial Answer that we welcome the report by the African Union. It is most welcome that it has spoken out in the way that it has. I remind noble Lords that the Zimbabwean Government, in the person of the Information Minister, last Wednesday accused the opposition Movement for Democratic Change of "smuggling" the report onto the AU agenda at the behest of the British Prime Minister. That is complete and utter rubbish, but it gives your Lordships an indication of how far the Zimbabweans are prepared to go in order to try to protect their backs.
Lord Avebury: My Lords, while it is unfortunate that the AU summit declined to publish the report on the basis of the false claims made by Zimbabwe that they had never seen it before, as well as the allegations by Mr Moyo that the Minister has quoted, and considering that the report is already two years old, should we not be looking ahead? Will the noble Baroness consider whether the G8 secretariat, which is preparing for the meeting to be hosted by the UK at Gleneagles in June 2005, might request its opposite numbers in the African Union to commission reports

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from the High Commissioner for Human Rights on the human rights situation in Zimbabwe, from the UNHCR on the 3 million exiles from Zimbabwe in neighbouring countries, and from the FAO and the World Food Programme on the starvation of Zimbabweans as a result of the economic policies of the Mugabe regime?
Baroness Symons of Vernham Dean: My Lords, the noble Lord, Lord Avebury, is right to point out that it is not just a question of straightforward human rights. There are also issues around the appalling economic situation in Zimbabwe, which has resulted in many of its people being put in jeopardy. The noble Lord raised the question of next year's G8. It is too soon to state with any certainty whether we will be able to focus on these issues next year, although I see certain attractions in what the noble Lord, Lord Avebury, has said. One note of caution is that it is already the case that Zimbabwe believes that anything that has UK fingerprints on it can be discredited. We must be careful how we handle that.
Lord Renton: My Lords, in view of the way in which the people of Zimbabwe have now suffered for some years, has not the time come for the United Nations to be inspired to intervene there?
Baroness Symons of Vernham Dean: My Lords, as I indicated to the noble Lord, Lord Howell of Guildford, we are considering whether it might be possible to pursue a resolution at the United Nations General Assembly this year. As the noble Lord will know, UN sanctions, which are binding on all member states, would require the agreement of the Security Council. Security Council agreement to such sanctions at this stage is not an option.
Lord Lea of Crondall: My Lords, is it not important to reflect on the development of the constitutional position of the African Union? The ambition to have peer group review of sovereign states by other sovereign states in Africa is a recent development. It may be that we are looking through the wrong end of the telescope if we see only what they have not done. I agree with my noble friend in seeing what they are now developing as a role for the future.
Baroness Symons of Vernham Dean: Yes, my Lords, that is a fair comment. The African Union has a great difficulty in how it deals with Zimbabwe. There are clearly a number of differences of opinion within that organisation. It is important that at the end of the executive summary of the report the African Union notes that the republic of Zimbabwe now has three overdue reports in order to fulfil its obligations to the African charter. The African Union is laying it on the line in that way with the Government of Zimbabwe, and it is to be congratulated on doing so.
Lord Acton: My Lords, is my noble friend aware that the commission was chaired by an eminent South African academic? In the hope that this is a favourable
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augury of South Africa's attitude, are the Government planning to hold talks about the executive summary, and ultimately about the report, with the South African Government?
Baroness Symons of Vernham Dean: My Lords, as I understand it, the investigation team was led by the vice-chair of the African Commission on Human Rights, Mr Jainaba Johm of Gambia. However, it included a South African churchman and academic, Barney Pityana, who is the commissioner responsible for Zimbabwe, and, of course, Fiona Adolu of Uganda. Barney Pityana is the past chair of South Africa's human rights commission.
My honourable friend Mr Mullin will meet the South African deputy Foreign Minister on Wednesday of this week. I have not seen their agenda, but I believe that it is highly probable that the report will be discussed.
Baroness Park of Monmouth: My Lords, does the Minister agree that the African Union is undoubtedly to be congratulated on having tried for so long to bring the matter out into the open and face the facts about what is happening? Could it not be encouraged through the EU—not by us, I accept—to bring the matter, as the AU bloc, to the UNHCR meeting in Geneva? On previous occasions, it has prevented discussion there: this time, it could initiate a clear call for Zimbabwe to recognise the human rights of its people.
Baroness Symons of Vernham Dean: My Lords, that idea has considerable merit. I thank the noble Baroness, Lady Park of Monmouth, who has taken such a close interest in the affairs of Zimbabwe.
There may be some difficulty in trying to persuade the African Union to adopt the course of action that the noble Baroness suggests. Zimbabwe tried to persuade the African Union to withdraw the report altogether, on the extraordinary pretext that it was all a put-up job by the United Kingdom. It was supported by at least one other country in that endeavour, but, I am happy to say, they were overruled.
Zimbabwe now has the opportunity to respond to the report, and it may be that the response will overrun the period of the next meeting of the UNHCR in Geneva. The situation is still uncertain with regard to the point at which the report will see the full light of day. No doubt, when it does, there will be many people who are most anxious to discuss it.
Lord Blaker: My Lords, has the noble Baroness's attention been drawn to reports last week in two reputable South African newspapers of talks between the ANC, which is President Mbeki's party, and ZANU-PF, which is Mr Mugabe's party, about the future of Zimbabwe? In particular, they are said to have discussed co-operation by the two parties on preparations for the Zimbabwe elections next spring. If those reports are correct, do they not cast doubt on

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the suitability of President Mbeki as an impartial interlocutor between ZANU-PF and the opposition in Zimbabwe?
Baroness Symons of Vernham Dean: My Lords, I know that concerns have been raised about President Mbeki, but I remind the noble Lord, Lord Blaker, that my right honourable friend the Prime Minister discussed Zimbabwe with President Mbeki following South Africa's elections in April. The Minister for Africa has also had regular opportunities to discuss such issues with the South Africans.
President Mbeki and Foreign Minister Zuma have stated that negotiations between ZANU-PF and the MDC are imminent. However, the noble Lord is right: we would be more interested to see some firm evidence of progress in those discussions, rather than just reports that the discussions are imminent.

Syria: Trade
3.3 p.m.
Lord Hogg of Cumbernauld Lord Hogg of Cumbernauld asked Her Majesty's Government:
Whether they have plans to renew trade ties with Syria.
Baroness Symons of Vernham Dean: My Lords, the trade relationship between the European Union and Syria is underpinned by the EU-Syria co-operation agreement of 1977. Negotiations are under way for an EU-Syria association agreement, as part of the Euro-Mediterranean partnership under the Barcelona process, which aims to create a Euro-Mediterranean free trade area by 2010.
Lord Hogg of Cumbernauld: My Lords, I thank my noble friend for that helpful and informative reply. I recognise the importance of trade and the development of normal, peaceful relations between nations, but is it not the case that Syria has failed to meet important international obligations? In the past, that has led to sanctions against other countries, such as Iraq and Libya. Are we operating different standards here? Is the standard applied to Syria different from that applied to other countries?
Baroness Symons of Vernham Dean: My Lords, I do not believe that it is. The European Union has concluded a number of trade agreements with the countries involved in the Euro-Med process and the Barcelona process. I have been part of those meetings this year, and I have seen no difference in the way in which the negotiations are conducted or in the criteria that trigger those negotiations. I would, however, be misleading your Lordships if I were to say that the negotiations were the easiest that I had ever observed.
Lord Clinton-Davis: My Lords, is it not clear that Syria is still the sponsor of terrorism in the Middle East
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and adheres to a policy of having weapons of mass destruction? How is that compatible with increased trade between ourselves and that country?
Baroness Symons of Vernham Dean: My Lords, my noble friend uses very strong language. He claims that Syria is a sponsor of terrorism and a possessor of weapons of mass destruction. The fact is that there are causes for concern about Syria's activities on weapons of mass destruction, which is why there is a clause—not only in the agreement that we hope to conclude with Syria but in all future agreements in the EU association agreements process—that deals with the very important question of weapons of mass destruction.
I think, without going into any detail, that it is important that we are clear—I might say "blunt"—with a number of countries in the region about the way that terrorism—even if not sponsored—is perhaps a subject from which individuals turn their face in the opposite direction when it is discussed.
Lord Wallace of Saltaire: My Lords, we recognise that critical engagement—with as much emphasis on "critical" as on "engagement"—is the only way forward with Syria. I have two questions. First, how much more scope is there for engaging with Syrian civil society by, for example, expanding the network of Chevening and other scholarships and inviting young Syrians to spend time in this country? Secondly, can the Minister expand a little on what she said about including clauses on weapons of mass destruction in all other European agreements with Mediterranean countries? Does that, for example, include future association agreements with Israel?
Baroness Symons of Vernham Dean: My Lords, we already have an association agreement with Israel. There are new European neighbourhood policy action plans—I am sorry to use such Foreign Office jargon in your Lordships' House—which involve clauses about weapons of mass destruction. Those who want to have a closer relationship with the EU will be asked to negotiate on that basis. I cannot tell your Lordships that there will be standard wording for every clause; one size does not fit all in negotiations. However, the issue will certainly be raised in all future agreements of that nature.
I agree with what the noble Lord said about Chevening scholarships. We regard them as one of the key areas for developing a relationship.
Lord Howell of Guildford: My Lords, I am sure that we all want better trade relations with Syria, and I know that the noble Baroness has been directly involved in discussions with Syria about its attitude. Does she think that the American decision to apply sanctions has helped the situation, given the very poor state of the Syrian economy? All the tourists have been driven away from Syria's marvellous sites, and Syrians have a very low standard of living.

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Can the Minister confirm that the conditions that we seek are that Syria should not only denounce weapons of mass destruction but should truly cease to harbour terrorists and conceal any terrorists who may have fled over the border from Iraq? Are the Syrians even prepared to contemplate such things?
Baroness Symons of Vernham Dean: My Lords, I myself have discussed those matters with the Syrians. The right way to tackle such issues is through a process of critical engagement, rather than by adopting the attitude of the United States of America, which has imposed sanctions that prohibit the export of goods and services from the US to Syria, with the exception of food, medicine, cellphones and Internet equipment—interestingly enough—and aircraft parts. It is also the case that US investment is still allowed. By tackling the issues of terrorism and weapons of mass destruction with the Syrians, we at least stand a chance of enhancing not only our relationship but the security of the region, which of course is our ultimate objective.

Public Appointments
3.10 p.m.
Baroness Perry of Southwark Baroness Perry of Southwark asked Her Majesty's Government:
What steps they are taking following the findings of the Commissioner for Public Appointments concerning the rules on appointments to public posts and the practice in certain government departments.
Lord Bassam of Brighton: My Lords, the Government are aware of the commissioner's concerns about how Ministers are involved in the public appointments process. The current inquiry by the Committee on Standards in Public Life is considering this issue. It is expected to report by the end of the year and we will study its findings very carefully.
Baroness Perry of Southwark: My Lords, I thank the Minister for that reply. Can he tell the House what has been done to civil servants to make possible these breaches of the Nolan rules, with Ministers adding names to short lists, drawing up their own short lists and taking names off short lists?
Lord Bassam of Brighton: My Lords, I am not aware that the situation is as the noble Baroness suggests. There are wide-ranging differences between departments in regard to public appointments. I understand the fact and identify that the commissioner has drawn attention to four departments which have varied their practice from what she sees as being the appropriate procedure. But those departments have been entirely transparent; it has always been a part of their process and interventions are properly recorded.
Lord Goodhart: My Lords, why have the Government not accepted the recommendations of the Public
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Administration Select Committee that the commissioner's office should be responsible for the recruitment and training of all independent assessors, and that she, herself, should have power to report to Parliament material non-compliance with the appointments code?
Lord Bassam of Brighton: My Lords, we obviously welcome the advice we are given by the commissioner, but it is not always going to be the case that the Government will accept all of that advice. As it is, the commissioner has her own group of 12 independent assessors who offer advice, and we greatly value that.
Baroness Howe of Idlicote: My Lords, in the light of the commissioner's latest report showing that the percentage of female public body appointees remains the same as last year at 39 per cent, with the number of women chairmen of public bodies almost invisible, can the Minister say whether the 2005 target set by the Cabinet Office for achieving between 45 and 50 per cent of women on public bodies remains realistic? If not, what further measures will be taken?
Lord Bassam of Brighton: My Lords, we are obviously disappointed that the appointment figures to which the noble Baroness refers are as they are, but we do not think that this is a new trend. We hope that our targets are realistic. I think everyone would accept that it is a highly desirable objective. There is some good news in the commissioner's report. I am particularly pleased to see that there has been an increase in the number of appointments for those with disabilities, up to 3.2 per cent from 2.7 per cent in the previous year.
Lord Strathclyde: My Lords, I am almost incredulous at the sheer complacency of the Government's answers to this most serious Question. It is the Commissioner for Public Appointments who has made an official complaint on the basis that appointments could be interpreted either as political interference or personal preference. Should not the Government be taking firm action now and drafting clauses for a Civil Service Bill to be presented to Parliament to deal with this terrible problem?
Lord Bassam of Brighton: My Lords, the noble Lord is conflating two separate issues. There is a disagreement between the commissioner and some departments about the appointments process. Those departments have always had Ministers involved at an early part of the appointments process, and that is accepted by the commissioner, those departments and all other departments. As I am sure the noble Lord will know from his own background and time in government, it is a part of the process that has been commonly accepted.
Lord Marsh: My Lords, if Ministers have traditionally taken a position whereby they make these appointments and make suggestions, what on earth was the point of appointing a commissioner to do the same job?
Lord Bassam of Brighton: My Lords, the noble Lord should take a very close look at the report and at what

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has been accepted practice in the past. We are very keen to ensure that there is integrity, openness, probity and transparency in these matters. The commissioner accepts that that is absolutely the case. There is a minor disagreement—some might even call it a misunderstanding—over this issue.
Lord Dholakia: My Lords, further to the question of the noble Baroness, Lady Howe, is the Minister satisfied that the membership of ethnic minorities on such bodies is in proportion to their representation in the community?
Lord Bassam of Brighton: My Lords, I think the noble Lord will accept that this Government have made great progress in ensuring that ethnic minorities have an appropriate level of representation in all public appointments. The figures suggest that we are making great progress. As I understand it, in 2002–03, 8.4 per cent of all appointments were to ethnic minorities, which is fractionally down on the previous year. But that does not disappoint us; it gives us greater encouragement that we are absolutely right to ensure a fair representation. We shall go on pursuing that objective. We do not see this as a long-term trend and, in any event, we intend to ensure that we get the balance absolutely right, fair and proper.
Baroness Oppenheim-Barnes: My Lords, will the noble Lord confirm that it does not matter whether they are men, women, transvestites, black, white or yellow; the only criterion that should apply is that they are the best people for the job, approved by the commission and not interfered with by the Government?
Lord Bassam of Brighton: My Lords, it is not the commission that makes the appointments; these are public appointments made by the Minister. The noble Baroness is of course right that everyone should be appointed on merit.
Baroness Howells of St Davids: My Lords, I find slightly disturbing the way in which the discussion is going. We have fought for many years to have people from ethnic minorities included. I know that it is not my business to make a statement, but I should like to ask why the inclusion of ethnic minorities is such a problem.
Lord Bassam of Brighton: My Lords, it is clearly not a problem for the Government. We celebrate our record in this respect. We have made great progress in opening up the public appointments process so that we have a diversity of appointments which genuinely reflects our society. The Government should be congratulated on their record, not condemned as some are seeking to do in your Lordships' House today.
Baroness Park of Monmouth: My Lords, does the Minister agree that if the Commissioner for Public Appointments expresses the concerns she has expressed,
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there is bound to be some public concern that matters are not right? May I suggest that the Secretary to the Cabinet should put out a statement, a set of rules, for all Permanent Secretaries to make it perfectly clear where they stand? This would probably help them in their relations with Ministers and, indeed, might help Ministers.
Lord Bassam of Brighton: My Lords, it may be worth reading to your Lordships' House from the commissioner's report, in which she stated:
"I was concerned to discover in the course of last year that four Departments were routinely showing shortlists privately to Ministers during the appointments process. Ministers are given a choice of candidates at the end of the process and can, if they wish, be involved throughout the process".
She said that her particular concern is the unrecorded involvement of a Minister at such a late stage. Three Permanent Secretaries wrote to the Committee on Standards in Public Life as part of their evidence, and they dispute the fact that this is done privately. They state quite categorically that it is an open part of the process and has been a routine part of the process for many years. We are all concerned to ensure that there is transparency, integrity and openness in the process. All government departments believe that they are achieving that.

Civil Contingencies Bill
3.19 p.m.
Lord Bassam of Brighton: My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That the Bill be committed to a Committee of the Whole House.—(Lord Bassam of Brighton.)
On Question, Motion agreed to.

Carers (Equal Opportunities) Bill
Read a third time, and passed.

Patents Bill [H.L.]
3.20 p.m.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville): My Lords, I beg to move that the Commons Amendments be now considered.
Moved accordingly, and, on Question, Motion agreed to.

COMMONS AMENDMENTS
[The page and line refer to Bill 90 as first printed for the Commons.]
1 Clause 13, page 8, leave out lines 1 to 3 and insert—
"(6) In relation to a decision of the comptroller whether to issue an opinion under this section—

(a) for the purposes of section 101 below, only the person making the request under subsection (1) above shall be regarded as a party to a proceeding before the comptroller; and

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(b) no appeal shall lie at the instance of any other person."

Lord Sainsbury of Turville: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 1.
This amendment clarifies the drafting in Clause 13 in relation to a matter that might otherwise be in some doubt. It ensures that there is no general right of appeal to the Patents Court under Section 97 of the Patents Act 1977 on whether or not to grant a request for an opinion. It will be recalled that only the person who requested the non-binding opinion from the Patent Office will have the right to be heard under Section 101 on whether this request should be granted. For the same reason, only the requestor should have the right to appeal to the Patents Court against a final decision to refuse that request. Amendment No. 1 ensures that only decisions to refuse an opinion will be subject to appeal.
Moved, That the House do agree with the Commons in their Amendment No. 1.—(Lord Sainsbury of Turville.)
On Question, Motion agreed to.

COMMONS AMENDMENT
2 After Clause 13, insert the following new clause—
"Costs and expenses in infringement proceedings etc
(1) Section 106 of the 1977 Act (costs and expenses in proceedings before the Court under s. 40) is amended as follows.
(2) In subsection (1) (relevance of parties' financial position), for the words from "proceedings" to "the court)" there is substituted "proceedings to which this section applies".
(3) After that subsection there is inserted—
"(1A) This section applies to proceedings before the court (including proceedings on an appeal to the court) which are—

(a) proceedings under section 40;

(b) proceedings for infringement;

(c) proceedings under section 70; or

(d) proceedings on an application for a declaration or declarator under section 71."

(4) This section applies in relation to proceedings commenced on or after the commencement of this section."
Lord Sainsbury of Turville: My Lords, with the leave of the House, I beg to move that the House do agree with the Commons in their Amendment No. 2.
Noble Lords will recall that when we were considering the Bill previously, we had some useful exchanges about how to improve the enforcement framework for patent disputes. Indeed, the noble Earl, Lord Attlee, brought forward an amendment that enabled us to identify an additional improvement to the provisions in the Bill that adjust the threats provisions in the Patents Act 1977. We believe that Commons Amendment No. 2 provides another small improvement to the enforcement framework which may be particularly beneficial for SME patent holders in certain circumstances.
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The amendment would ensure that the courts have regard to all the relevant circumstances, including the financial position of the parties, when making an award of costs in a patent dispute where a decision has to be made regarding infringement. This amendment would still leave the courts with discretion over whether or not to require the losing party of a patent dispute to pay the costs of the winning party. There may well be circumstances in which financial circumstances should not be reflected in the actual award of costs. However, this amendment would put an SME engaged in a patent dispute against a wealthier party in a better position than the current one. It ensures that the financial position of the parties will always be a relevant factor to be weighed in the balance when the courts consider what award of costs to make.
We hope that the amendment will have an effect beyond those cases that reach the stage in the courts where costs are considered. With wealthier parties aware that they may not necessarily get an award of all their costs in a dispute against a less financially secure party, even when they win, there may be greater willingness to agree to settle the dispute more cheaply in the first place by, say, mediation or voluntary binding arbitration.
I hope that noble Lords will therefore agree with the sentiments in the other place that this is an amendment worth making. I stress, however, that it does not mean that we will not also continue to explore other approaches to facilitate quicker and cheaper enforcement of patent rights. For example, I am delighted to be able to confirm today that the Patent Office-led feasibility study into the patent enforcement project has concluded that there may be a way of constructing new, mutual insurance-based arrangements to help SMEs enforce their patent rights. We are looking at how best to work with insurers and others to make this happen. The Patent Office will publish the feasibility study by the end of the month.
With those comments, I invite noble Lords to approve this new clause and a small consequential repeal in Schedule 3, as made by Commons Amendment No. 4.
Moved, That the House do agree with the Commons in their Amendment No. 2.—(Lord Sainsbury of Turville.)
Earl Attlee: My Lords, I am grateful for the Minister's explanation of the amendment. My slight anxiety is that some cases will still never get to a final decision in the court and the plaintiff might drop out—a problem that the noble Lord has already identified. Let us just hope that it works.
On Question, Motion agreed to.

COMMONS AMENDMENT
3 Schedule 2, page 12, line 24, at end insert—
"In section 1 (patentable inventions), in subsection (1)(d), after "subsections (2) and (3)" there is inserted "or section 4A"."
Lord Sainsbury of Turville: My Lords, with the leave of the House, I beg to move that the House do agree with the Commons in their Amendment No. 3.

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This amendment relates to the patentability of medical methods, and to the changes made by Clause 1. Noble Lords may recall that, under the existing law, a patent cannot be granted for a method of treatment or diagnosis. If such a patent is granted, it can later be revoked.
Clause 1 provides a new section, Section 4A, in the 1977 Act. This sets out, in a much simpler way than at present, that such medical methods are not patentable, while also clarifying the law in respect of the patenting of substances which are used in such medical methods. However, in Committee in another place, it was pointed out to us that the new provision in Clause 1 could have cast doubt on the fact that a patent can be revoked if it has wrongly been granted for a method of treatment or diagnosis. So we brought forward a small amendment—Amendment No. 3—which would make it clear in the 1977 Act that a patent may be revoked if it does not comply with any of the provisions of new Section 4A. It is a small improvement to the drafting that I hope will be welcomed by noble Lords on all sides.
Moved, That the House do agree with the Commons in their Amendment No. 3.—(Lord Sainsbury of Turville.)
On Question, Motion agreed to.

COMMONS AMENDMENT
4 Schedule 3, page 15, line 46, at end insert—

"In section 106, in the heading, the words "under s. 40"."

Lord Sainsbury of Turville: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 4.
Moved accordingly, and, on Question, Motion agreed to.

Horserace Betting and Olympic Lottery Bill
3.26 p.m.
Report received.
Clause 1 [Dissolution of the Tote]:
Lord Moynihan Lord Moynihan moved Amendment No. 1:
Page 1, line 8, at end insert—
"( ) The order referred to in subsection (2) must not be made unless a draft of the statutory instrument containing the order has been laid before Parliament and approved by a resolution of each House."
The noble Lord said: My Lords, it is important to reiterate that we on these Benches support the principles behind Part 1 of the Bill. It is designed to fulfil the Government's 2001 manifesto commitment, which said:
"We are committed to sell the Tote to a racing trust to allow it to compete commercially, with all long-term profits invested in the sport".
Noble Lords will be aware that, since it was set up in 1928, the Tote has had a long and distinguished tradition of serving British horseracing. Last year it provided £11 million to racing. Similarly, the House will need no reminding of the importance of horseracing as an economic activity and a major spectator sport in the United Kingdom and in the world.
The Minister will be pleased to learn that we on these Benches are grateful for the reassurances he gave in Grand Committee when he set out the Government's good intentions for the Tote. However, it is clear that Part 1 is merely seeking approval for the Tote to be abolished, as set out in Clause 1, with its assets transferred to a successor company wholly owned by the state. This much is clearly contained in the Bill.
The other issues surrounding the transfer and sale are slightly less certain. The Government stated in Committee that the newly nationalised Tote will then be sold—it is to be hoped on the same day. The difficulty lies in the fact that Ministers are unable or unwilling to guarantee either that the nationalised Tote will be sold or to whom it will be sold, be it to the Racing Trust or a private bookmaker. Nor are the Government able to confirm what the sale price will be. That is essential, given that the racing trust will need to borrow the money to pay for the Tote.
We are concerned because these issues are of fundamental importance to our deliberations over the sale of the Tote, and yet so little is on the face of the Bill. I am afraid that the Government's amendment, which we shall debate shortly, makes matters even less certain.
The purpose of our amendment is to ensure that Parliament has the opportunity to approve the Government's final decision to sell the Tote. This is necessary because the Government have not yet been able to conclude their negotiations with the shadow Racing Trust, although I understand that progress is being made and that a deal may be agreed before we return to the Bill at Third Reading.
To my mind, the best course of action would be if the Government were able to report to the House today that progress is being made, and at such a pace that we will delay Third Reading, if necessary, until such time as a deal has been agreed. I very much hope that that will not be the case; Third Reading is pencilled in for 7 September—154 days, or 22 working weeks, since the last day of Committee. I very much hope that that will be adequate time to finalise negotiations on the manifesto commitment which the Government are putting before the House today. If the Minister is able to give such an assurance to the House today, then this amendment may not be required, and I would be pleased to withdraw it.
As I said, our amendment provides the necessary check on the Government's intentions, because in previous discussions in Grand Committee, the Minister indicated that the Tote would not be abolished until an agreement was in place to transfer it

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to the successor body—preferably to the Racing Trust under the chairmanship of the noble Lord, Lord Lipsey. The Minister said:
"We intend that the sale to the Racing Trust will occur as soon as the Tote is vested, under the appointed day order, in the successor company.
More to the point, we can ensure that that is the case because we will not transfer the assets of the Tote until a deal is ready".—[Official Report, 31/3/04; col. GC 473.]
In other words, when the Government are ready to abolish the Tote, they should also be in a position to confirm to the House that an agreement is in place to meet the Government's manifesto commitment either, preferably, with the Racing Trust, or with another body. Similarly, the Government should be able to tell the House the price that they intend to charge for the transfer to the successor body.
The amendment is designed to ensure that this House would approve the final decision when all the facts are known. So much remains undecided and unclear at present that it is important that Parliament has final approval of the Government's plans. I beg to move.
3.30 p.m.
Viscount Falkland: My Lords, we on these Benches have little to add to what the noble Lord, Lord Moynihan, said. We agree that, if the Government were able to give us some assurances now, it would be unnecessary for us to proceed further with this amendment, which we are inclined to support. The transfer of the Tote to the Racing Trust has been well discussed in Grand Committee and it is not appropriate now to rehearse the same arguments or make Second Reading speeches. It is a complex issue, but we support the philosophy behind the move of the Tote to the private sector, preferably to the Racing Trust, which was mentioned by the noble Lord, Lord Moynihan, and is headed by the noble Lord, Lord Lipsey, who I am happy to see is in his place.
As the House is aware, there may be problems in arriving at the result that we all hope for—a transfer that benefits racing. The Treasury plays an important role in this and has its own agenda to follow. We would not argue with the criteria that the Treasury uses, which include its consideration of this transfer. As the noble Lord, Lord Moynihan, said, we understand that the Government are well forward with their negotiations for a sale along the lines that we all hope will result. If that is the case, the Minister will tell us now and we will have no need to discuss these matters further, but will wait until September.
Lord Lipsey: My Lords, I am grateful to the two noble Lords who preceded me for declaring my interest for me as chairman of the shadow Racing Trust and the Racing Trust that is emerging from that. My Amendment No. 2 differs from Amendment No. 1 in the name of the noble Lord, Lord Moynihan. His amendment says that before anything is done to the Tote, the Government have to come back to the House. I quite understand that amendment but, personally, if a deal is done with my Racing Trust, I
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hope that the House would then take it that we would not have done such a deal unless we wanted it to go ahead and that the parliamentary procedure is therefore not necessary. My amendment concentrates on a different position. After the negotiations, there may not be a deal and the Government may proceed to flog the Tote off to whoever they can get the most money from. In that event, my amendment would provide that there must be a vote in both Houses before the sale can proceed.
We may as well admit that there is suspicion in some quarters that underneath this legislation is a deep-laid Treasury plot to pretend to sell to the trust and, when both Houses have finished with the Bill, to sell to the highest bidder. Quite frankly, I do not believe that there is such a plot, not because I believe that the Treasury is incapable of plotting—I wrote a book about the Treasury so I have some authority on Treasury plots—but it would not benefit the Treasury to go down such a road. The Treasury's paramount objective in this is to get rid of the Tote. It is not a business that belongs in the public sector—it is an historic anachronism that it is there—and, while we still have it, there is a suspicion that the Treasury stands behind its debt, which could amount to many times any proceedings from the sale.
Secondly, the Treasury will not have failed to note that the proceedings, even from selling to the highest bidder, amount to peanuts—half of the peanuts that the Government want to go to racing, anyway. Thirdly, the Treasury did not get it where it is today by loosely ignoring manifesto pledges. There is a clear government manifesto pledge and it is no light thing for any official to say, "Ditch your manifesto pledge, Chancellor, so that we can make a bob or two". Therefore, I do not think that there is a plot of that kind.
My Amendment No. 2, however, guards against the possibility that things could go wrong. I will give some examples, all of which are slightly unlikely, but may help the House. There may be an adverse state aid ruling from Brussels or the Government's advisers on the sale—PwC—may lose all touch with reality and ask the Tote to pay a price that it could neither fund nor afford. I do not think that that is likely, but it could happen. Or, the tiny minority in racing that does not want to own the Tote and would rather take the money and run may get a temporary hold on racing's policy making and racing itself decides not to proceed. That is even less likely than the other scenarios, but it could happen.
If any of those things happened, a decision clearly falls to be made whether we stick with the status quo or sell the Tote on the open market. It would not be appropriate that, when Ministers have declared in this and the other House that their policy is to sell to the Racing Trust, they could turn on a sixpence and say, "Oh no, sorry that's dead. We Ministers in our wisdom have decided to abandon everything that we previously said and it has nothing to do with Parliament".

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This Bill involves a manifesto pledge. It has been carried by both Houses of Parliament—with almost unanimous support—for a particular objective; namely, that racing should fulfil its long-held ambition to own the Tote. It would be wholly inappropriate—even constitutionally inappropriate—for that decision to be taken and implemented without reference back to the two Houses of Parliament. If the Government came back with good reason, the two Houses may agree with the Government—they usually agree with government proposals, after all. However, both Houses would at least have the right to a further and final say before the Government proceeded. To be honest, I have found it difficult to understand why the Government have been resistant to that, but resistant they are.
As the noble Lord, Lord Moynihan, said in his speech, we have made useful progress in the negotiations in recent weeks. I am delighted to tell the House that the Minister recently wrote to me offering the Racing Trust a period of exclusive negotiations. They are not talking to anyone else. They are talking only to us and we will try to get the deal sorted. We will try as far as we can to get a deal—or as near as dammit—by 7 September. Therefore, this is not a decision that the House needs to finalise this afternoon. On 7 September, it will have the fullest and latest information at its disposal about how the negotiations have gone.
As I say, I hope that we will have a deal but, if we do not, we can consider the right course then. In the mean time, it is not necessarily the best solution to press these amendments. The best solution would be to have a deal that is signed, done and dusted and then we would not have to worry about wasting further time on hypothetical situations that I hope and believe will never arise.
The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord McIntosh of Haringey): My Lords, we did indeed debate comparable amendments in Grand Committee. I can update the House on developments since then. The amendments are variations on a theme that was aired in Grand Committee and the intention is to make the Government return to Parliament for further approval before a sale of the Tote can be completed.
I entirely respect the motives behind these amendments. They are clearly intended to reflect the noble Lord's commitment to the horseracing industry. But I hope that they will agree that we share their commitment to the horseracing industry.
The Tote and the racing industry as a whole have achieved record figures under this Government. That has, in no small part, been due to the reform of the betting tax regime—a regime that was developed in the Treasury, which is the object of such suspicion for some Members of this House.
At every stage of the Bill, the Minister for Sport and I have gone out of our way to provide public assurances that there is no hidden agenda—no Treasury plot, as the noble Lord, Lord Lipsey, puts it.
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We want to effect a sale to the Racing Trust as soon as possible. There are no grounds for suspicion that we want to get the Bill safely on to the statute book on the basis of a sale to racing and then switch to a purchaser who will pay more.
But I have to make it clear to the House that it will not be possible to finalise the terms of the sale to racing while the Bill is before Parliament. We have to respect government accounting rules, which prohibit expenditure on new services—and this is a new service—before Royal Assent if that expenditure would be nugatory if Parliament were ultimately not to approve the Bill.
We can properly undertake planning and preparatory work and we are doing so. We are making useful progress in taking forward discussions with racing. We will go as far and as fast as we can with the negotiations, but we have to recognise that we cannot take them beyond a certain point or conclude them in advance of Royal Assent.
The noble Lord, Lord Lipsey, used the example of state aid. It is certainly the case that before Royal Assent we could obtain an independent evaluation for the purpose of clearance of state aid. However, we cannot conclude negotiations beyond a point of no return before Royal Assent. This is not a Treasury plot. If it had been, we would not be in this position; we would not have this complicated Bill which, as the noble Lord, Lord Moynihan, rightly says, does not express the ultimate intention of the Government on the face of the Bill.
The Tote does not belong to the Government; it belongs to Parliament. In the end, only Parliament can make the final decision, through passing legislation and achieving Royal Assent for that legislation.
Everything that we are doing and everything that we are saying is aimed at securing the sale to the Racing Trust. Absolutely no steps have been taken to prepare for any other eventuality.
As has been said, discussions are taking place between the Government's financial advisers and those of the Racing Trust. The Minister for Sport and I met the noble Lord, Lord Lipsey, and Peter Jones, the chief executive of the Tote, a week ago to restate the Government's support for the longstanding proposals. As the noble Lord, Lord Lipsey, said, we provided them with a letter promising that in the first instance we would commit to a period of exclusive negotiations with the Racing Trust.
I mention that only because they are the most recent examples in a very long line stretching back to 1998 of the Government's determination to sell the Tote to racing, which, as the noble Lord, Lord Moynihan, reminds us, was a Labour Party manifesto commitment in 1981.
I return to the specifics of the amendments. I remain convinced that they are unnecessary. As the Bill stands, dissolution of the Tote will take place on "the appointed day" and that appointment will be made by statutory instrument without any parliamentary procedure. There is nothing unusual in that, and the Select Committee on Delegated Powers and Regulatory Reform found no reason to comment on it.

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It has been previously stated in debate that it is not for the Secretary of State to run, on behalf of the Crown, the Tote's successor. The clear intention is to effect the appointed day order contemporaneously with the sale.
We seek the approval of Parliament now for a Bill which leaves open the fall-back option of selling the Tote to someone other than a racing consortium. That much is obvious. If we remind ourselves of the Government's commitment to a sale to racing—and all the work that has been put into achieving that—that must be beyond doubt to any reasonable observer.
By Third Reading of the Bill on 7 September—or whenever it is; we cannot fix a date until this Report stage is completed—we will have made progress on the sale preparations, subject to the provisos that I have made about the rules of government accounting.
3.45 p.m.
I am sure that the rules of government accounting, which prevent the Government committing to expenditure without the approval of Parliament expressed through passing legislation, will be agreed by everyone on all sides of this House. There may still be negotiating problems that I do not know about, but that is the reason why, in principle, we cannot accept amendments that would commit the Government in advance of Royal Assent. That is why, with regret, I have to resist the amendments.
Lord Moynihan: My Lords, I am grateful to the Minister and other noble Lords for their contributions to the debate on this amendment. A number of important points arise.
First, I want to clarify that the Tote—I think that noble Lords on the other side were about to jump to their feet on this point when the Minister stated it—is not owned by Parliament; the Tote is owned by no one. It would be owned by Parliament if the Government nationalised it, but until they do so in order to privatise it, it is not owned by Parliament. As a Minster in another place said, the Horserace Totaliser Board,
"is responsible for the assets owned by the Tote but the Tote itself is owned by no one".—[Official Report, Commons, 26/5/99; col. 152W.]
I move on to the substance of what the noble Lord stated. There is widespread support on all sides of the House for the Minister to continue his work to ensure that the Tote is successfully sold to a racing trust. He stated just now:
"We want to effect a sale to the Racing Trust as soon as possible".
He went further than that and said that it must be "beyond doubt" in this Chamber that that is the intention.
I fully appreciate the rules of government accounting and I am sure that noble Lords on all sides do also. But, equally, the rules of government accounting would apply had we placed the Racing Trust on the face of this legislation. Had the will of Parliament been expressed by an amendment to Part 1 that requested that the Tote should be sold to a racing
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trust, then that sole condition on the face of the Bill would have to be observed and in due course it would be wholly appropriate, after the legislation was enacted, for the rules of government accounting to come into play and to be observed to the letter. No one doubts that.
The issue is not the rules of government accounting; it is whether or not Parliament should be requested to pass legislation which, as drafted at present, does not require the Government to sell to a racing trust. I do not deny the integrity or the wish of the Minister, nor that of the Minster for Sport, in achieving that goal. The more he states clearly that that is exactly what the Government wish, the more I ask why it is not placed on the face of the Bill.
Given that no alternative is under consideration by the Government and given that it is "beyond doubt" that that is the Government's intention, then it seems wholly reasonable to put that intention on the face of the legislation and ensure that, once it is passed, the Government can conclude their negotiations. That is the position taken by noble Lords on these Benches.
We have a good amount of time between now and the first day back in September for those negotiations to be completed in principle. I accept that it can only be in principle. But by completing these negotiations in principle and coming back to this House with the outcome of those negotiations, we would be in a position in early September where we had a deal in principle that could be put before the House. I should be very surprised if independent valuations had not already been taken by both sides. I understand that those negotiations are already under way, and so there is no time constraint and it would be perfectly possible for negotiations to be completed within that period.
The point at which a deal could be put before the House is the point—here I agree with the Minister—at which the House would need to consider whether to approve Part 1 as it stood or whether to amend it further. We have a great opportunity at Third Reading to have an admissibility of amendments to enable the Government to fulfil undertakings given at earlier stages of the Bill. Never was it more appropriate than in this Bill. In those circumstances, I will not press my amendment to a vote because the Government have every opportunity to return to the issue, to state that their intention to sell to the Racing Trust has been completed in principle and to give details about the work that has been done on exclusivity. This is the first time that we have heard that the Government will give the Racing Trust exclusivity. I hope that that will involve a standard exclusivity agreement and that it will have a deadline. I also hope that a deadline of early September, subject to parliamentary approval of the legislation, would be reasonable.
Why am I still therefore concerned about the Minister's position? I beg to differ with the noble Lord, Lord Lipsey, who said that the Treasury's paramount objective was to sell the Tote. In my experience, the paramount objective of many Treasury mandarins is to maximise revenue for the Government. If the Treasury

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had the opportunity to sell the Tote for £300 million, for example, rather than for £100 million while making an arrangement that was in the interests of racing, there would be people in the Treasury, I regret to say, who would urge very strongly that it should be sold for the maximum value achievable. That is the basis of my concern. I hope that all the good comments made by noble Lords and Ministers in another place prove that the will of Parliament, reflecting the manifesto commitment, recognise that in this case it is in the interests of racing for the Tote to be nationalised and then privatised again to a racing trust.
I remain unconvinced in this regard. I cannot understand why, if that is the whole purpose of Part 1, we do not include in it the sale to the Racing Trust and ask Parliament to approve that. Today we have not done so and we will hear in September about whether progress has been made to the point at which Parliament can be convinced that there is no need to refer to the Racing Trust in the Bill.
Until that time comes, I will leave the Minister with the following conclusion. Unless all the preparatory work has been done to reach an agreement in principle with the Racing Trust, as it stands the Opposition cannot support Part 1. Either there must be significant progress towards the delivery to a racing trust through the sale process that the Minister outlined or it should be argued that the Tote is better off staying as it is, rather than being nationalised and sold—at whatever price, in whatever circumstances and on whatever terms—by the Government to whomever they wish. I regret to say that that is exactly how Part 1 currently reads.
I hope that those provisos and remarks will encourage the Minister to get motoring and conclude the deal by the date on which we will return in September. I respond to the noble Lord, Lord Lipsey, who was concerned about the amount of parliamentary time that may be involved, by assuring him that if an adequate deal is done with the Racing Trust, proceedings on Part 1 will be covered very quickly indeed by both Houses.
Lord Lipsey: My Lords, before I withdraw Amendment No. 2—
Lord Moynihan: My Lords, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 2 [Successor company: transfer]:
Lord Lipsey Lord Lipsey moved Amendment No. 2:
Page 1, line 12, at end insert—
"( ) Any transfer to a successor company other than one that is owned by a consortium whose primary purpose is the improvement and support of horseracing shall not take place unless the transfer is approved by a resolution of each House of Parliament."
The noble Lord said: My Lords, I apologise to noble Lords for interrupting just now. Before I do not move this amendment—I apologise; I am moving it. I will get my procedures right in a minute, perhaps.
I am interested in probing the nature of the constraint on the Government spending money. I said that I wanted the arrangement to be as near as dammit a deal and, to be frank, there is much that cannot be done by 7 September, including due diligence, a total funding package and state aid clearance for some matters, although we could be pretty much on top of various other issues. If the Government's position is that they cannot finalise the deal until we have the Bill, because we are not allowed to do so by the conventions, we will require an amendment of the kind moved by the noble Lord, Lord Moynihan, or myself to give Parliament a chance to come back if it does not like the consequences. The obvious thing to do on 7 September would be to say, "Sorry, we cannot really get as far as we had hoped, and we will accept one or other of the amendments", which would not cut across any parliamentary or accounting conventions. If enough progress is made—we will be some way short of the full deal, as I said—we may be able to dispense with that. I hope that the Minister will comment on the exact nature of the constraint, as he sees it. I beg to move.
Lord McIntosh of Haringey: My Lords, I cannot go very much further than I did previously. I am afraid that there is still an element of misunderstanding in this regard about government accounting rules. We cannot conclude or complete negotiations even in principle in advance of Royal Assent. That means that we cannot take actions that are irreversible. Perhaps it would be better if I wrote in more detail about this to noble Lords who have taken part in this debate because, inevitably, I am simplifying. It does not matter whether the date is 7 September, 7 October or 7 November. There is preparatory work that we can do; I gave an example of that. We can have and agree an independent valuation, which we can submit for state aid purposes. However, we cannot conclude or complete negotiations in advance of Royal Assent. To do so would be for the Government to assume Parliament's wishes before it had expressed them.
We do not own the Tote—the noble Lord, Lord Moynihan, is right in one sense that no one owns it. However, even if no one owns it, Parliament is its guardian; I hope that the noble Lord can agree with that. We can make good progress and I hope that by early September we will have done so. But there is a point beyond which, for entirely proper reasons, we cannot go. I know that that sounds to some extent like Catch-22; there is an element of that. However, it is for the protection of the public interest and Parliament that we must act in that way.
Lord Moynihan: My Lords, with the leave of the House, if the Bill as drafted receives Royal Assent and negotiations are subsequently completed with the Racing Trust, would it not be wholly in order for the House to amend Part 1 to ensure that the

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commencement order was subject to consideration by the House after Royal Assent and the subsequent completion of negotiations? I hope that the Minister can answer that point.
Lord McIntosh of Haringey: My Lords, we grouped Amendment No. 42 with these amendments but I understand that that was not acceptable. There is nothing constitutionally wrong with that; we simply believe that it would be the wrong thing to do.
Lord Lipsey: My Lords, I am grateful to the Minister for his answer and his offer to write a letter; we could do with clarification in this regard. However, I do not need clarification now for me to beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 3 [Sections 1 and 2: supplemental]:
Lord Moynihan Lord Moynihan moved Amendment No. 3:
Page 3, line 4, at end insert—
"( ) If, six months after the appointed day, the successor company is wholly owned by the Crown, Part 1 of this Act shall cease to have effect and the Horserace Totaliser Board shall be reestablished as on the day before this Act was passed."
The noble Lord said: My Lords, this amendment puts in place a check on the length of time for which the newly nationalised Tote can remain wholly owned by the Crown. We have already debated whether there is a need to put a parliamentary check on the body to which the Tote is sold. However, the amendment covers a different issue. It requires the Tote to be sold rather than to remain wholly owned by the Crown. We have already heard from the Minister that the Government are nationalising the Tote only as a means of selling it to, I hope, the Racing Trust. My concern is that there is nothing in the Bill that requires the Government to sell the Tote once it has been nationalised. That concern has not been helped by the wording of the Government's later amendment, which includes the phrase "if" the Secretary of State disposes of the Tote, rather than "when".
In Grand Committee, there was considerable discussion about whether it would be preferable for the Tote to remain as it is in the unlikely event that it was not possible to sell it to the Racing Trust. I hope that this amendment is less contentious and that all sides of the House agree that it would be preferable for the Tote to remain as it is—owned by no one—rather than to become a nationalised industry. This amendment states that if the nationalised Tote has not been sold within six months, then Part 1 of the Bill falls and the Tote reverts back to its previous ownership.
4 p.m.
A similar amendment was debated in Committee, when I suggested that there should be a one-year limit on the time that the Tote could remain nationalised without reference back to Parliament. Perhaps it would be helpful to remind the House of the Minister's response in Committee when he said:
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"We do not want to retain Crown ownership of the Tote for more than a day. A few hours was suggested, and that would do very well … We intend that the sale to the Racing Trust will occur as soon as the Tote is vested … in the successor company. More to the point, we can ensure that that is the case because we will not transfer the assets of the Tote until a deal is ready. So there will be no question of the Crown being the owner of the successor company for a year".—[Official Report, 31/3/04; col. GC 473.]
The Minister's response in Committee was helpful and reassuring, although it fell somewhat short of the guarantee that was requested. I have no doubt that one year is far too long. Thus I have settled upon six months as a reasonable length of time, although I must admit that I was tempted to take the Minister at his word and to include a time limit of one day.
When this was debated in Grand Committee, the Minister pointed out that the wording of my amendment could be tightened. I am grateful for his suggestion, which I have duly taken on board. This amendment puts in place a safety check: something that it hopefully will never be necessary to use, but nevertheless a sensible strengthening of the Bill before us.
In order to assist understanding the argument in favour of such a safety check and the appropriateness of its inclusion within this Bill, it would perhaps be helpful to draw upon the precedents previously brought to the attention of the House by the Minister in Grand Committee. The Postal Services Act 2000 reorganised the Post Office by establishing it as a public limited company, wholly owned by the Crown. That is precisely what the Bill does with the Tote. However, while we are concerned that the Tote might remain nationalised, in 2000 there was concern that the Post Office might be privatised. To overcome this concern, the Government made sure that the Postal Services Act had checks to prevent such an occurrence. That is exactly the effect of my amendment.
The Post Office was subject to a manifesto commitment, as is the Tote. The Government have set up similar enabling legislation for both the Tote and the Post Office. I hope and trust that the Government will recognise the benefit of building upon this precedent and of putting in place a similar mechanism for this Bill. I beg to move.
Lord McIntosh of Haringey: My Lords, I do not think that there is an issue of great principle here; there is an issue of priorities and of which is the more desirable of the options available to us.
We are all agreed that we want a sale to a racing trust. There is apparently a disagreement about what is the second-best option. We take the view that if, for reasons beyond our control, sale to a racing trust is not possible, we should sell it commercially with 50 per cent of the proceeds of the sale going to racing. The Opposition take the view that the second alternative should be a return to the status quo, with the Tote being as it is now.

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I do not know what the view of the racing industry would be. I suspect that those concerned would rather have 50 per cent of the proceeds of a sale to the situation as it is now, but in any event it would be contrary to our manifesto commitment and, for that reason, I cannot accept this amendment.
Lord Moynihan: My Lords, I thank the Minister. I will not revisit the fact that it would be contrary to that manifesto commitment to sell to anybody but the Racing Trust. That said, however, it will not surprise the Minister that I am disappointed that the Government do not recognise the need for this amendment. It seems to do nothing but strengthen the Bill and it is entirely in keeping with the Government's stated wishes.
If the whole argument revolves around whether or not the racing industry will be in favour of returning the Tote to its current position, then I think that it would be wise to consult the racing industry in advance of Third Reading. As it stands, without this amendment, there is no requirement for the Government to sell the Tote once it has been nationalised.
As I mentioned at the start of the proceedings, these Benches welcome the principles behind Part 1 of the Bill but we continue to remain concerned that so much must be taken on trust. The Minister had previously accepted that the time-scale within the amendment was more than generous—compared, as I mentioned to the House, to the period of one day that he himself envisaged in Committee. Similarly, the Minister freely admits that the Government have no intention of owning the Tote for longer than it is necessary to permit the sale. I therefore cannot understand why the Minister is unable to accept this eminently sensible check on the Government's powers to retain the Tote as a nationalised industry.
However, this amendment is linked with the previous amendments which we have been discussing. It is something we shall need to revisit in the totality of Part 1, when we return after the Summer Recess. In those circumstances, I beg leave to withdraw my amendment.
Amendment, by leave, withdrawn.
Clause 5 [Pre-sale issue of shares &c. to government]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 4:
Page 4, line 9, leave out subsection (7).
The noble Lord said: My Lords, I rise to move Amendment No. 4 and to speak also to Amendment No. 5, the substantive amendment, the purpose of which is to put on the face of the Bill the policy that has already been announced in both Houses.
In the event of a sale to racing, the disposal will reflect the stake that racing has in the Tote. If the Secretary of State decides to sell to someone other than racing, then racing will receive 50 per cent of the proceeds of that sale—again reflecting the stake that racing has in the Tote.
I find it impossible to distinguish the argument for this amendment from the arguments on the preceding amendments, and in particular on Amendments Nos. 1 and 2. It raises again the issue of how far we can go down the road of what we all intend, which is the sale to a racing trust before Royal Assent. I appreciate that the amendments which have been put down to my Amendment No. 5 are intended to press the Government further in that direction than it is possible, under government accounting rules, for them to go.
I very much sympathise with noble Lords opposite and with my noble friend Lord Lipsey, who find it frustrating that the Government are not able—for reasons which I think they understand better now but which were not adequately understood at an earlier stage of this Bill—to commit themselves on the face of the Bill to the outcome which we all desire. As a result, it must be extremely frustrating for those who have not been paying attention to the Bill's proceedings to find that we are now discussing matters which are not on the face of the legislation.
I do not intend to press this amendment. I put it down in order to show the extent to which we could go in putting on the face of the Bill, if we had to, a second option of a sale with 50 per cent of the proceeds going to racing. In other words, the intention was to cast aside any doubts there might be that, in the event that the sale to a racing trust was not possible, the Treasury would simply take the money and run—which is what the noble Lord, Lord Moynihan, said, though much more elegantly and politely.
I do not think that it is necessary to have an amendment of this kind on the face of the Bill. I put the amendment down solely because of the doubts which have been expressed. I think that the air is now clearer than it was, and that my undertaking to write to noble Lords and to put a copy of my letter in the Libraries of both Houses ought to straighten up the situation before we reach Third Reading.
I move Amendment No. 4 now and leave the following amendment before the House so that the amendments to it can be considered; but, when Amendments Nos. 6 to 9 have been debated, I give notice of my intention not to move Amendment No. 5. I beg to move.
Lord Moynihan: My Lords, I am very grateful to the Minister. We are making good progress on Part 1 of the Bill as much will be left to what we hope will be successful negotiations between now and September. However, there is one aspect of this which I should be grateful if the noble Lord would cover in his correspondence that he intends to put in the Library of the House—I hope as soon as possible so that we can consider it over the recess—and that is the link between what the Minister has just said and European state aid rules.
I should be grateful if the Minister could confirm what discussions have taken place with the European Commission since Committee before Easter about the return to racing, which is at the heart of this

29
amendment, in the event of a sale to someone other than a racing trust. Having studied the DTI information on state aid, it clearly says:
"The Commission will take a minimum of two months from receipt of a complete notification to take a decision. Recently the average time taken is four-five months from the date of notification".
This is an important area for discussion. If the Commission says that the Government are unable to return the money to racing, or that they can return, say, 10 per cent only, what power does the House have over such a decision? Can the Minister confirm what would happen if the House refused to accept the European Commission's ruling on the percentage that the Government could legally return to racing? In other words, if the House today were to approve the amendment, or a similar amendment were reintroduced in September, on the basis that 50 per cent of the proceeds would be returned to racing, what would happen if the European Commission ruled against that and ruled that none of the money should be returned to racing, for example? What would happen if the House voted against such an order changing the percentage to zero?
It seems to me that we may be being offered a full sense of control by the Minister when, in fact, the power to vary this particular percentage rests almost entirely with Brussels. All I am seeking from the Minister in a spirit of co-operation is an explanation of how negotiations are progressing with Brussels. The earlier negotiations were time limited. They expired and now we are in a vacuum where further discussions are under way and are clearly critically relevant if at some stage of the Bill's proceedings we were to accept a percentage on the face of the Bill. For that reason I should be grateful if, first, the Minister could let us know how discussions are progressing with the European Commission and, secondly and more importantly, the specific answers to the points that I made with regard to Commission procedure in the event that it overrules any given percentage subsequent to the House considering this amendment if it were returned in this or a similar form in September.
It might also assist the Minister to know that, in the light of all these discussions, like him I will not vote on the relevant amendments nor will I put them before the House.
Lord Lipsey: My Lords, I thank the Minister for having tabled this amendment in the first place because it was designed to deal with certain worries racing had both as regards the price at which the Tote would be sold and the share that racing would get were it not to be sold to a racing trust. For that effort we are grateful. We are grateful even if the amendment is withdrawn today as it provides a statement of where the Government's policy stands, even if we cannot all agree with it.
Within racing there is something of a divide on this amendment. All racing thought that some of it was helpful but some of racing did not think that all of it was helpful. Therefore, it gets us off the hook as well
30
as the Government if the amendment is withdrawn this afternoon. We shall be much better able to consider whether an amendment of this type has value in the Bill, whether as a government amendment or otherwise, when we return on 7 September with the knowledge that we shall then have.
4.15 p.m.
Lord McIntosh of Haringey: My Lords, I am grateful for the correction; of course, we are debating Amendment No. 4 and we cannot advance on that formally. I am grateful to the noble Lords, Lord Moynihan and Lord Lipsey, for what they have said.
I can help the noble Lord, Lord Moynihan, some but perhaps not all of the way on the state aid issue. We recognise that there are two legitimate shareholders in the Tote; that is, racing and the taxpayer, although the legal position is that the Tote's assets are owned by the Tote board. It is right that taxpayers should receive market value for racing for their share in the Tote. In effect we are not selling the Tote but the public's share in the Tote. It will be subject to a full independent valuation at the time of sale and the price paid by racing will reflect this. I have already indicated that there is no reason why that independent valuation should not be prepared for state aid purposes before Royal Assent; in other words, we would work very hard to secure that that is done before Third Reading. If that were to mean moving Third Reading slightly, I think by agreement with the usual channels that might be possible. It might be a better outcome than having Third Reading too early.
The European Commission was originally notified of the sale plans in 2001 and we have submitted an updated notification. The Commission has responded with further questions and we shall reply shortly. I do not have in front of me the dates of our submission and the dates of the Commission's response and of our reply but I shall include them in correspondence to noble Lords. The Commission has indicated that it will not be able to give state aid clearance until a valuation is completed nearer the time of sale but we are hopeful that this will not be a problem. Again, I should like to take advice on whether that can be done before Royal Assent. My understanding is that it would be possible. I should like that to be achieved, if possible. Under those circumstances I beg leave to withdraw Amendment No. 4.
Amendment, by leave, withdrawn.
[Amendments Nos. 6 to 9, as amendments to Amendment No. 5, not moved.]
[Amendment No. 5 not moved.]
The Deputy Speaker (Baroness Thomas of Walliswood: My Lords, I should inform the House that Amendment No. 10 is misplaced in the Marshalled List. It is, in fact, an amendment to page 5, line 45. I shall therefore call it after Amendment No. 12.
Clause 8 [Exclusive licence]:
Lord Moynihan Lord Moynihan moved Amendment No. 11:
Page 5, line 24, leave out paragraph (c).
The noble Lord said: My Lords, from our discussions in Committee there appeared to be a considerable degree of support for the principle behind this amendment; namely, that we should not rule out the possibility of extending the exclusive licence for pool betting. Noble Lords will be aware that there has been an exclusive licence for pool betting in place since the Tote came into existence in 1928. The arguments should be studied carefully—very carefully—before we agree to legislation that will remove this exclusive licence in seven years with no possibility of its renewal.
It is ironic that throughout our earlier discussions the Government argued that the Bill should allow them flexibility about how best to proceed and yet when we on these Benches suggest an amendment to provide such flexibility for future governments Ministers now seem reluctant to accept our suggestion. If I may, it is worth briefly recapping on our discussions with the Minister in Committee. First, the Minister appeared to suggest that the Competition Commission and the Office of Fair Trading had insisted on a one-off seven year licence. When pressed the Minister then went on to say that the European Commission's rules on the single market did not allow the extension of the Tote's exclusive licence.
This latter point was quickly picked up by the noble Viscount, Lord Falkland, who highlighted the exclusive pool betting licences in France, through the Pari Mutuel, as well as in Germany and Italy. Eventually the Minister changed tack and decided that it was safest to say that the Government had chosen the seven-year licence of their own free will although it appeared that they were aware of the possibility of challenge. The Minister said:
"I am not saying that the deal we have has been dictated by anyone, by the European Commission, the Office of Fair Trading or anyone else. The Government believe in competition because we believe in the single market and because we know that rules exist which, if they are breached, create at the very least a risk of challenge".—[Official Report, 5/4/04; col. GC 504.]
I fear that Ministers are seeing the spectre of legal challenges where none exists. There are clear precedents within Europe for exclusive pool-betting licences on horseracing. I am sure that many noble Lords will share my view that the European Commission would think long and hard before ruling against pool betting, particularly given the importance of the Pari Mutuel to the French, for example.
On the domestic front there is a clear precedent in support of the amendment, which I trust will reassure the Minister. As I mentioned in Grand Committee, the National Lottery, which is covered in Part 3 of the Bill, has an exclusive seven-year licence. My amendment is designed to follow the precedent of the National Lottery, although in this instance there is no requirement for the licence to be renewed.
It is worth restating that the amendment merely gives future Secretaries of State the option to renew the licence, or not to renew it, at the end of seven years. Noble Lords may recall my brief foray into economic theory to justify the retention of the exclusive licence. There is indeed a strong economic argument for such retention, although the precedent of the National Lottery is perhaps more compelling, particularly as both the Tote and the National Lottery return money to good causes.
The gambling market in the UK offers a number of alternative yet easily substitutable forms of betting on a horse race. Punters can use bookmakers, with either fixed price or starting price odds; there is the new option of the betting exchanges; and there is still the Tote. All these options are easily interchangeable, which limits the downside of a monopoly in any one betting market. This tripartite system for betting helps to ensure that all three markets run efficiently and smoothly.
The same logic applies to the Tote as to the National Lottery. It is clear that the bigger the pool, the more efficient it will be. We have only one National Lottery because this guarantees big prizes, increased efficiency and more money returned to good causes.
I briefly touched on the emergence of betting exchanges, which raises another important point. Development of new technologies within the gaming market is progressing quickly. Who could have imagined the importance of betting exchanges just a few years ago? This rapid advance in technology is yet another reason for the Government to retain sufficient flexibility within the provisions of the Bill, so that they can continue with the exclusive licence if this is found to be in the best interests of both racing and the public.
The amendment would remove the present subsection (11), which prohibits the renewal of the licence, and replace it with a new subsection (11), giving the Secretary of State the option to direct the Gaming Board to renew, not to renew or to revoke the exclusive licence at the end of seven years. Any decision made by future Secretaries of State would need parliamentary approval. This is a sensible check, and would provide future governments with specific authority in the public interest in the event of any challenge.
Paragraph (b) gives the Secretary of State the ability to award the licence either to the incumbent or to another company. This is designed to keep the licence holder on its toes by making sure that it does not abuse its market position. Again, the precedent for this arrangement is drawn from the National Lottery.
Finally, paragraph (c) would allow the exclusive licence to be renewed ad infinitum.
In conclusion, the amendment is sensible and seeks to give future governments sufficient flexibility to make the decision nearer to the time of the renewal or otherwise of the seven-year licence. The amendment makes no commitment to renew that licence. I trust

33
that the Minister will recognise the strength of feeling behind the amendment and respond accordingly. I beg to move.
Viscount Falkland: My Lords, I had not intended to enter into this debate, but since my name was mentioned in reference to the debate in Committee, I thought that I would reinforce the point that I made then with the additional point that in this country we have gone down a road that is uncommon, if not unique. We have bookmakers who offer odds to the betting public in competition with the Tote, which offers pool as opposed to fixed-odds betting. An inevitable result of this freedom of movement in the market in which bookmakers operate is that the success of the Tote pool has been patchy to say the least in areas where there is not a lot of interest from the public. Where public interest is present and large betting pools arise, the Tote does very well in competition with bookmakers.
In other countries they have opted to go down the other road. Indeed, gambling is illegal in France, as we discovered in the pre-legislative scrutiny committee on gambling. I had not known that, and I thought I knew a lot about France. Gambling there is illegal, but their way of dealing with these matters is to introduce exceptions to the ban when it is appropriate—very French, one might say. There are two fundamental exceptions. One is the Pari Mutuel, which was created in 1928. They decided not to allow bookmaking at all in the world of racing and to make it exclusively a betting pool. The other exception of course is casinos in resorts and spas in France. An additional exception has also been introduced recently whereby towns with populations of more than 500,000 may apply for one casino.
That is by the by. We have a curious situation here which may mean that, psychologically, there is a underrating of the role of the Tote in its relationship with bookmakers. As the noble Lord, Lord Moynihan, said in comparing the Tote to the National Lottery, the size of the pool is fundamental to the success of the Tote in raising money. People can choose which horses to support in racing, but the bigger the pool the better.
Recent talk about dividing the pool up into small parts does not offer a practical or realistic solution. It is just unfortunate that the phrase "Tote monopoly" has been current for so many years. For most of us, "monopoly" has a pejorative note to it. In reality, however, in the day-to-day world, the bigger a pool, sweepstake or totaliser is, the better it will be for all those who benefit from it. To divide that up into small pools and to allow other operators to compete is a prescription for the end of pool betting.
Lord Lipsey: My Lords, for all the reasons so eloquently set out by the noble Viscount, Lord Falkland, the Racing Trust and the Tote sought a longer period of exclusivity than seven years—that is no secret. We also took the view that seven years was enough. It was the lowest number of years at which a deal could be done, and a deal was agreed.
34
I am about to go into negotiations with the Government on this deal and this price. I would like to do so with a reasonably intact reputation for keeping my word. Having signed up to this deal—although I understand the strong arguments of the noble Lord, Lord Moynihan, and the noble Viscount, Lord Falkland—I do not seek an extension or even a power for the Government to extend the exclusive licence.
If that sounds rather high-minded, I am afraid there is also a low-minded reason. We are negotiating the price that will have to be paid. Obviously, a Tote with a seven-year exclusive licence is worth more than a Tote with a nought-year exclusive licence, and less than a Tote with an infinitely long exclusive licence. If we accept the seven-year exclusive licence, that brings the price down.
That is not an abstract point. At this very moment—I trust—the Tote will be negotiating arrangements with the racecourses designed to cement its position after the seven years have expired. Those arrangements will be costing it current cash out of the accounts, but they are designed to cement its position in the long term in light of the seven-year exclusive licence. They are all reducing the value of the Tote. So there will be money off in return for the Government rejecting the amendment. At this stage in the negotiations, I recommend that Tote supporters in the House go for that.
4.30 p.m.
Lord McIntosh of Haringey: My Lords, I agree with both the high-minded and low-minded arguments of the noble Lord, Lord Lipsey. I would like to retain a reputation for consistency as well. It has always been the view of the Government that an exclusive licence is a transitional measure to foster a strong pool-betting market, so far as we can obtain it, and allow the Racing Trust-owned successor an opportunity to establish itself in a fully commercial environment. The business should not be in public ownership.
Any provision that would permit the continuation beyond the seven years would run counter to our objective of opening up the pool-betting market to greater competition. As the noble Lord, Lord Lipsey, rightly said, seven years without the option to continue was the deal. In the interests of consistency and in view of how we have been making progress, I ask the noble Lord, Lord Moynihan, not to press the amendment.
Lord Moynihan: My Lords, I am grateful to the Minister for his comments. I agree with the noble Lord, Lord Lipsey, on 99 per cent of issues when it comes to the interests of racing, but I differ with him and the Minister on this matter. I simply do not accept the economic argument that the noble Lord, Lord Lipsey, put to the House. Competition in racing is effectively between different opportunities to individual punters when it comes to choice. Removing one of those choices reduces competition; it does not enhance it.
I understand that Ministers within the Department for Culture, Media and Sport have found it a struggle to convince their colleagues in government to permit even a

35
seven-year exclusive licence, and I praise the Minister for the achievement. In those circumstances, it is wholly understandable that he is unwilling to accept any amendments that might upset that arrangement. However, future Ministers for Sport and, if I may say so, future chairmen of the Racing Trust might have a different point of view from those that we heard this afternoon. The Minister said in Committee that this deal was the only deal on the table; that is his prerogative. However, it is the duty of this House to decide whether the deal before us is acceptable.
In the context of the comment of the noble Lord, Lord Lipsey, about competition, I remind the House that the Government's own regulatory impact assessment stated that without an exclusive licence there would be:
"Lower Tote contributions to Racing",
and the:
"Possible loss of pool betting at some race meetings/racecourses".
That is the crux of the matter—the safeguarding of the Tote's contribution to racing and helping to make sure that all race meetings, particularly the smaller meetings and courses, benefit from pool betting well into the future. For those reasons, I have no doubt that the amendments strengthen the Bill and British horseracing. I therefore wish to test the opinion of the House on the issue.
4.33 p.m.
On Question, Whether the said amendment (No. 11) shall be agreed to?
Their Lordships divided: Contents, 88; Not-Contents, 129.

Division No. 1

CONTENTS

Addington, L.

Gray of Contin, L.

Ampthill, L.

Harris of Richmond, B.

Astor of Hever, L.

Higgins, L.

Attlee, E.

Holme of Cheltenham, L.

Avebury, L.

Howe, E.

Barker, B.

Howe of Aberavon, L.

Blatch, B.

Howell of Guildford, L.

Bowness, L.

Hunt of Wirral, L.

Bradshaw, L.

Jenkin of Roding, L.

Brougham and Vaux, L.

Kimball, L.

Campbell of Alloway, L.

Lamont of Lerwick, L.

Carnegy of Lour, B.

Lucas, L.

Colwyn, L.

Luke, L.

Cope of Berkeley, L. [Teller]

Lyell, L.

Crickhowell, L.

MacGregor of Pulham Market, L.

Dholakia, L.

Dixon-Smith, L.

Mackay of Clashfern, L.

Elles, B.

Mackie of Benshie, L.

Elliott of Morpeth, L.

Maddock, B.

Elton, L.

Marlesford, L.

Falkland, V.

Masham of Ilton, B.

Falkner of Margravine, B.

Moynihan, L.

Fookes, B.

Murton of Lindisfarne, L.

Fowler, L.

Naseby, L.

Garden, L.

Neuberger, B.

Glentoran, L.

Newby, L.

Goodhart, L.

Noakes, B.

36

Oakeshott of Seagrove Bay, L.

Seccombe, B. [Teller]

O'Cathain, B.

Sharp of Guildford, B.

Onslow, E.

Sharples, B.

Phillips of Sudbury, L.

Shaw of Northstead, L.

Prior, L.

Shutt of Greetland, L.

Rawlings, B.

Smith of Clifton, L.

Redesdale, L.

Taverne, L.

Rees, L.

Tebbit, L.

Thomas of Gresford, L.

Renton, L.

Thomas of Walliswood, B.

Roberts of Conwy, L.

Tordoff, L.

Rogan, L.

Ullswater, V.

Roper, L.

Waddington, L.

Russell-Johnston, L.

Wallace of Saltaire, L.

Ryder of Wensum, L.

Walmsley, B.

Saltoun of Abernethy, Ly.

Walpole, L.

Sandberg, L.

Wilcox, B.

Scott of Needham Market, B.

Williams of Crosby, B.

NOT-CONTENTS

Acton, L.

Hart of Chilton, L.

Ahmed, L.

Haskel, L.

Alli, L.

Haworth, L.

Amos, B. (Lord President of the Council)

Hayman, B.

Henig, B.

Andrews, B.

Hilton of Eggardon, B.

Bassam of Brighton, L.

Hogg of Cumbernauld, L.

Berkeley, L.

Hollis of Heigham, B.

Bernstein of Craigweil, L.

Howells of St. Davids, B.

Bhattacharyya, L.

Hughes of Woodside, L.

Blackstone, B.

Hunt of Kings Heath, L.

Boothroyd, B.

Jay of Paddington, B.

Borrie, L.

Jones, L.

Brennan, L.

Jordan, L.

Brett, L.

Judd, L.

Brookman, L.

Kilclooney, L.

Burlison, L.

King of West Bromwich, L.

Campbell-Savours, L.

Lea of Crondall, L.

Carter, L.

Leitch, L.

Carter of Coles, L.

Lipsey, L.

Christopher, L.

Lofthouse of Pontefract, L.

Clarke of Hampstead, L.

McDonagh, B.

Clinton-Davis, L.

Macdonald of Tradeston, L.

Cohen of Pimlico, B.

McIntosh of Haringey, L.

Craig of Radley, L.

MacKenzie of Culkein, L.

Crawley, B.

Mackenzie of Framwellgate, L.

David, B.

McKenzie of Luton, L.

Davies of Coity, L.

Mallalieu, B.

Davies of Oldham, L. [Teller]

Manchester, Bp.

Dean of Thornton-le-Fylde, B.

Mason of Barnsley, L.

Dixon, L.

Merlyn-Rees, L.

Donoughue, L.

Mitchell, L.

Drayson, L.

Morris of Manchester, L.

Dubs, L.

Nicol, B.

Eatwell, L.

Patel, L.

Elder, L.

Patel of Blackburn, L.

Evans of Parkside, L.

Paul, L.

Evans of Temple Guiting, L.

Pendry, L.

Falconer of Thoroton, L. (Lord Chancellor)

Pitkeathley, B.

Prosser, B.

Farrington of Ribbleton, B.

Prys-Davies, L.

Filkin, L.

Puttnam, L.

Fyfe of Fairfield, L.

Radice, L.

Gale, B.

Randall of St. Budeaux, L.

Giddens, L.

Rendell of Babergh, B.

Gilbert, L.

Richard, L.

Golding, B.

Roll of Ipsden, L.

Goldsmith, L.

Rooker, L.

Gordon of Strathblane, L.

Rosser, L.

Goudie, B.

St. John of Bletso, L.

Gould of Potternewton, B.

Sheldon, L.

Graham of Edmonton, L.

Simon, V.

Grocott, L. [Teller]

Smith of Leigh, L.

Harris of Haringey, L.

Snape, L.

Harrison, L.

Stone of Blackheath, L.

37

Strabolgi, L.

Uddin, B.

Symons of Vernham Dean, B.

Wall of New Barnet, B.

Taylor of Blackburn, L.

Warwick of Undercliffe, B.

Temple-Morris, L.

Watson of Invergowrie, L.

Thornton, B.

Weatherill, L.

Tomlinson, L.

Triesman, L.

Whitaker, B.

Truscott, L.

Whitty, L.

Tunnicliffe, L.

Williams of Elvel, L.

Turnberg, L.

Williamson of Horton, L.

Turner of Camden, B.

Woolmer of Leeds, L.

Resolved in the negative, and amendment disagreed to accordingly.
4.44 p.m.
Lord Lipsey Lord Lipsey moved Amendment No. 12:
Page 5, line 39, leave out paragraph (a) and insert—
(a) may make an order revoking the exclusive licence if a material term or condition of the licence has been materially breached and that breach has not been remedied within 28 days of written notice having been given by the Gaming Board to the successor company notifying it that if it does not remedy the breach the Gaming Board may make an order revoking the exclusive licence, and"

The noble Lord said: My Lords, we have just been arguing about the status of the seven-year exclusive licence for the Tote and we said, "Seven years; nothing but seven years; the whole seven years". The amendment provides a kind of protection for that because at the moment the Bill allows the Gaming Board to remove the exclusive licence without very much ceremony, I fear. So the aim of the amendments in the group is to inject ceremony—for example, the 28 day rule—and I hope that the Government, who rightly put so much store on the seven years, will accept them. I beg to move.
Lord Moynihan: My Lords, I am pleased to support the amendments m this group, which bear more than a passing resemblance to those tabled in Grand Committee. I hope and trust that the noble Lord, Lord Lipsey, in his brevity has been more successful in convincing the Minister with his compelling argument than I was in Grand Committee.
Perhaps I may elaborate a little, as the issues involved are important. They relate closely to those that affect the amendment that I have tabled, to which I shall speak in a moment. Having re-read our discussions in Grand Committee I am afraid that, unlike the noble Lord, Lord Lipsey, I am no wiser as to what, if any, circumstances could justify the immediate removal of an exclusive licence. I hope that when the Minister addresses the amendment he can give a clear answer to that simple question.
It would also be appreciated if the Minister could clarify whether the removal of the exclusive licence would prevent the successor body continuing to offer pool betting on a non-exclusive basis. The amendments in the group similarly concern the ability of the Gaming Board to remove the exclusive licence of the successor body. As currently drafted, the Bill gives the Gaming Board the ability to remove the successor body's exclusive licence,
"if they think that a term or condition of the licence has been breached".
38
In Grand Committee it was clear that there was concern among a number of noble Lords that the Bill gave the Gaming Board too much power and could be against the principles of natural justice. Their concern was heightened when we learned that the only appeal against such a decision would be through judicial review, which can often be clumsy, time consuming and expensive.
Nevertheless, the Minister was, as always, robust in his defence of government policy and went on to say that the Gaming Board already had those powers. By way of an example, he went on to draw an analogy with its powers to close down casinos. It is greatly appreciated that the Minister subsequently reflected upon his comments and wrote to me and other Members who attended the Grand Committee to clarify that point. His letter recognised that he may have somewhat overstated the existing powers of the Gaming Board. The letter also went on to set out the powers which it is anticipated would be given to the new gambling commission with which the Draft Gambling Bill proposes to replace the Gaming Board.
These new powers will require that before any licence can be revoked it will be necessary to have a review to which the licence holder rightly has the opportunity to make representations. Similarly the putative Gambling Bill proposes that there should be a gambling appeal tribunal to hear any appeals against the decision to suspend the licence. Those safeguards form the basis of my amendment, which, together with the amendments in the name of the noble Lord, Lord Lipsey, improve the Bill by adding checks and balances to the powers that the Gaming Board will have over the successor company and the operation of its exclusive licence.
I am grateful to the Minister for outlining in his letter of 26 April the latest government thinking about the regulation of gambling and I trust that my proposal sits within that framework and that the amendments have been drafted in a manner that the Government may find acceptable.
Lord McIntosh of Haringey: My Lords, the intention of my letter of 26 April was to head off amendments like this at the pass. It was not my intention that we should continue to debate this issue. The Government intend to sell the Tote to a consortium of racing interests. As part of the sale, the Tote will be given a seven-year exclusive licence to provide pool betting. As I said in response to the previous amendment, this is a transitional measure to foster a strong pool betting market and to allow the Racing Trust-owned successor company an opportunity to establish itself in a fully commercial environment. After the seven-year period of exclusivity the licence will expire and under the terms of this Bill any bookmaker holding a permit will be able to provide pool betting services on horseracing.
The Bill does contain a reserve power for the Gaming Board to revoke the exclusive licence in the event that the terms and conditions are breached. But we do not believe that the Gaming Board will ever need to exercise this power. We believe that the successor company—assumed to be the Racing Trust-owned

39
Tote—will co-operate fully with the Gaming Board in complying with the terms of the licence. The Tote, which has an excellent reputation, would have to commit an extremely serious breach in order for the licence to be revoked. A revocation in any circumstances other than a serious breach would be unreasonable and, on that basis, open to judicial review.
We do not believe that it is appropriate to set up a review procedure and an appeals process. A licence of this kind would not be revoked lightly. If the holder of an exclusive licence committed an offence so serious that the Gaming Board decided to revoke it, we believe that it would be in the public interest to revoke the licence without delay; in other words, if there were something so seriously wrong that it had to be done immediately and any damage may be compounded by leaving it for 28 days. However, under the Bill, the Gaming Board is already obliged to specify the reasons of any decision to revoke a licence. If the holder of a pool operating licence disagrees with the Gaming Board's decision, he or she can challenge the decision through judicial review. We do not consider that an additional statutory right of appeal is necessary.
My officials are already working on a draft code of practice that will inform the licence as a whole. It will be circulated to the current Tote management and to the Gaming Board shortly. A meeting has already been arranged for early August to discuss it. I am sure that a collaborative approach of that kind will deliver sufficient clarity on the issue without any need for provisions appearing in primary legislation. I believe that those discussions and the final code will greatly assist in spelling out the relationships between the parties and their responsibilities and should be an entirely satisfactory way of proceeding. A formal system of review, representation and appeal may simply serve to harden the relative positions of the parties at an early stage, when an informal approach may be good enough to resolve matters.
As I have been able to give additional information about the way in which negotiations are proceeding, the results of which should be available before Third Reading, I hope that the amendment will not be pressed.
Lord Lipsey: My Lords, I am grateful to the Minister, particularly for saying that the code will be available before Third Reading. I take his point that in such extreme circumstances there would be a case—
Lord McIntosh of Haringey: My Lords, I qualified that remark. I believe I said that I hope it will be available before Third Reading.
Lord Lipsey: My Lords, I am glad that the Minister has clarified his clarification. It enables me, even more comfortably, to end up where I hoped to end up. I can see the point about taking it away if something really disastrous takes place and it turns out that the chairman of the Tote is taking 20 per cent out of the pools and putting it into his Mauritian bank account. Of course, that could not happen under the current chairman; but
40
in the past there have been some strange chairmen of the Tote. Nevertheless, I do not find the promise of judicial review as a backstop very comforting. The judicial review hoops are relatively easy to jump through as long as one follows the procedure, but they may have little to do with justice.
In the circumstances, given what the Minister has said, I hope that the code will be available and that we shall be able to study it before Third Reading. That will give us a good idea about where the balance between the Minister's argument and that of the proponents of these amendments stands. In the mean time, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 10, 13 and 14 not moved.]
Clause 9 [Section 8: supplemental]:
[Amendments Nos. 15 and 16 not moved.]
Lord Moynihan Lord Moynihan moved Amendment No. 17:
Page 6, line 24, at end insert—
"( ) An exclusive licence shall not be revoked under subsection (1)(c) unless the Gaming Board has previously published a code of practice for the interpretation of subsection (1)(c)."
The noble Lord said: My Lords, Amendment No. 17 follows on from our entertaining and informative discussion in Grand Committee on Clause 9. My understanding is that the clause to which my amendment refers is designed to replace the requirement that the Tote is a fit and proper organisation. Today we are in a somewhat strange position as the Bill seeks to incorporate a clause of the Draft Gambling Bill which may or may not find parliamentary time this Session.
I was indebted to the noble Viscount, Lord Falkland, for his explanation in Grand Committee of the terms contained within this clause. There can be no doubt that we all benefited from his experience on the Greenway committee, examining the detail of the Draft Gambling Bill. Nevertheless, now that the Minister has had three months to consider the issue, I trust that he is in a better position to provide a full response to what the Government mean by the terms referred to and the scope of the definition in sub-paragraphs (i) to (iii) of Clause 9(1)(c). In Grand Committee the noble Viscount, Lord Falkland, best summed up the meaning when he said:
"anyone who has money and goes to a racecourse, casino or amusement arcade is vulnerable by the very fact that he or she is going to lose money … It is a question of common sense".—[Official Report, 5/4/04; col. GC 517.]
While it is undoubtedly correct that it is a matter of common sense, I think that our duty today is to make sure that the Government set out very clearly what they intend the clause to achieve. Clause 9 sets out the conditions of the exclusive licence, which the successor body will be required to promote, and which it could forfeit if it were seen not to be protecting vulnerable adults.
To return to the detail of the amendment, I trust that it is non-controversial and that Members on all sides of the House will recognise that it is not only right but manifestly sensible that the Gaming Board clearly set out

41
what is expected from the successor body and how it is supposed to fulfil its obligations to protect vulnerable adults.
It would be appreciated if the Minister were able to clarify whether the on-course bookmakers will also be subject to the same obligations to protect vulnerable persons. I ask that because it seems to be a somewhat hollow and superficial exercise for the successor body's staff to protect drunken punters from throwing away their money on long shots on the Tote if the same punters can walk to the rails and give their money to the bookmakers instead.
To conclude, I trust that the Minister is able to provide the House with a clear indication of what the Government intend the new subsection to achieve and what is meant by,
"protecting … vulnerable persons from being harmed or exploited by betting".
I beg to move.
Lord McIntosh of Haringey: My Lords, as the noble Lord, Lord Moynihan, says, the noble Viscount, Lord Falkland, reminded the Grand Committee that Clause 9(1)(c) duplicates the intended objectives of gambling regulations under the Draft Gambling Bill. The intention in this Bill is that the issue should apply also to the exclusive licence of the Racing Trust or whoever it is.
Clause 9(1) provides that the Secretary of State, in considering whether to require the Gaming Board to issue or to revoke a licence, is to consider whether such issue or revocation would satisfy the objectives of the Draft Gambling Bill. Straightaway I say that those objectives have been welcomed by the Joint Committee on pre-legislative scrutiny and have achieved the general recognition that they are desirable objectives.
The Secretary of State can exercise this power only while the Crown wholly owns the successor company. I can envisage only very limited circumstances where it has come to her notice that there was good evidence to suggest that the holder of the licence was somehow failing with regard to the objectives in paragraph (c). In other words, something would have to come to light after the successor company had been issued with a licence to cause the Secretary of State to reassess her decision to require the Gaming Board to issue the licence in the first place.
The circumstances in which the Secretary of State could do that would be fairly obvious and would not require any detailed interpretation of the paragraph. For example, if the Secretary of State discovered that the successor company was letting children into its betting shops to place bets, depending on the extent of the problem, she might be entitled to consider whether it was a suitable body to conduct pool betting. Of course, she would have to ensure that good administrative practice—namely, that she acted lawfully and reasonably—was followed in reaching such a decision.
I can give the noble Lord, Lord Moynihan, the assurance that he wants—that on-track betting is covered in the licensing objectives. In Schedule 4, paragraph 2 of the Draft Gambling Bill all forms of
42
gambling are included, including on-track betting. However, I think that the power of revocation and the occasions on which it might be necessary are so limited that it would be unnecessary to include the proposed amendment, and I hope it will not be pressed.
5 p.m.
Lord Moynihan: My Lords, I thank the Minister very much for his clarification of the scope of Clause 9. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 10 [Control when no exclusive licence]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 18:
Page 8, line 1, leave out "4" and insert "7"
The noble Lord said: My Lords, I am glad to see the noble Viscount, Lord Ullswater, in his place. He tabled an amendment in Grand Committee, which I call the "Larkhill amendment". Its purpose was to remove the number of race days which qualify a racecourse for point-to-point exemption notices for the purpose of conducting pool betting once the exclusive licence comes to an end. He said that there were racecourses which hold point-to-point races on more than four days a year—the number of days stated in the Bill. He mentioned Larkhill as an example. I was sympathetic to what he said and stated that I would give it consideration.
I should explain that this provision is not limited to Larkhill. Otherwise, I suppose it would become a hybrid Bill; it would mean that any racecourse could apply for a point-to-point exemption notice. That is what would happen if the original amendment of the noble Viscount, Lord Ullswater, had been agreed to. It would defeat the purpose of the notice, which is to provide a lighter regulatory regime for pool betting on point-to-point racecourses. The right thing to do is to raise the limit from four to seven days. That is what the amendment does. I beg to move.
Viscount Ullswater: My Lords, I thank the Minister very much for tabling this government amendment in response to the amendment that I put down in Grand Committee. It deals with almost all the concerns that I raised at that stage. Since then, I have been informed that point-to-point courses receive certificates of approval from the Levy Board to conduct betting. That appears to make the restriction in the Bill ineffective. I trust that when the gambling commission inherits the issuing of these certificates of approval from the Levy Board, it will look again at this matter and make sure that no point-to-point courses are disadvantaged.
I think I stressed at the time that the Bill introduces a new regime for point-to-point meetings. Responsibility is now placed on the course managers rather than on the point-to-point secretaries. Of course, in many instances that may be the same individual. Applications must be made before the commencement of the calendar year, which means that decisions must be made long beforehand by the different organisers if they wish to run their own tote.

43
At present, the Tote grants an "authority" to run pool betting to the organisers of a meeting during the year. Not all courses wish to run pool betting systems.
Larkhill, as the Minister mentioned, is the only course that runs eight meetings. I did not want the number seven. That is why I said that the amendment addressed almost all the concerns. But I am an old hand and seven-eighths is much better than four-eighths; so I would not want to query the number at this time. Presumably, on most point-to-point courses, eight days is self-limiting in that the ground would not stand more than eight days' racing on the same turf. Where there is more than one meeting, discussions can be held with the Gaming Board of Great Britain to see how many exemption notices would be appropriate for that course.
I am very grateful to the Minister. With that, I hope that the House will agree to his amendment.
Lord Lipsey: My Lords, in Grand Committee, we took the separate but related point of harness racing and the possibility of exemption certificates for harness racing to complement those extended to point-to-points by the amendment originally suggested by the noble Viscount, Lord Ullswater. I declare my interest as president of the British Harness Racing Club, and indeed a provisional driver under its rules. I want to square off the circle by reporting that it has emerged that it is possible to make progress in harness racing without a change to primary legislation. Discussions are well advanced with the Levy Board on how to permit that. That fully discharges the commitment made by the Minister in Grand Committee to deal with this problem. I am extremely grateful to him and his department for their assistance.
Lord Moynihan: My Lords, before I start, I should also like to pay tribute to my noble friend Lord Ullswater for drawing this important issue to the attention of the House. As he mentioned, Larkhill had eight days of racing last year, but applied on only seven days for the use of a totalisator.
It would be helpful to the House if the Minister could explain how the figure of seven was reached. Having re-read the excellent speech of my noble friend, I am concerned that the Government may have simply looked at the number of licences awarded in 2003 and used that as the basis for the higher figure. I am not certain that that is the best way to draft primary legislation.
Nevertheless, I recognise that the amendment represents a significant step forward by the Government in protecting point-to-point racing. Subject to clarification from the Minister on the rationale for the number seven, I am very pleased to support the amendment.
Lord McIntosh of Haringey: My Lords, seven is better than four. The noble Viscount, Lord Ullswater, said so. I rely on what he said. We could not have had the number uncontrolled, as I have explained. Seven is satisfactory for all point-to-point racing, except for
44
Larkhill, as far as I can see. This is a compromise; I hope it is an acceptable compromise. I am grateful to my noble friend Lord Lipsey for his remarks.
On Question, amendment agreed to.
Clause 16 [Property of the Levy Board]:
Lord Moynihan Lord Moynihan moved Amendment No. 19:
Page 11, line 17, at end insert—
"( ) In exercising his responsibilities under this section, the Secretary of State shall ensure that the Horserace Forensic Laboratory is established as an independent agency with the same aims and purposes as it had at the time which this Act is passed."
The noble Lord said: My Lords, the amendment covers the critically important area of drugs in sport. This is a very important subject and my analysis, far from digressing from the amendment, is central to it. I am therefore pleased to have this opportunity to facilitate the House's understanding of the arguments involved and to explain how it is central to the amendment.
As noble Lords are aware, the Government propose to transfer the Horserace Forensic Laboratory to the British Horseracing Board, which is of course the governing body for the sport. I am concerned that such a proposal is fundamentally flawed and that it would not be in the best long-term interests of racing.
Anti-doping arrangements for any sport, including horseracing, should be independent of the governance of that sport and should at all times avoid conflicts of interest and the possibility of governing bodies being put in the invidious position of being gamekeeper turned poacher. Parliament has a duty to hold the Government to account in that respect, especially if sports bodies do not wish to tackle the problem of drugs seriously and in an open and transparent manner. I should stress that there is no implication whatever that horseracing is anything but totally committed to the fight against drugs in sport.
Before I address the detail of my amendment, it may be helpful to recap briefly on the excellent work of the Horserace Forensic Laboratory so that the House has a fuller understanding of the purpose behind the amendment. Since 1963, the HFL has successfully provided drug surveillance services to British horseracing to help to maintain the integrity of the sport, both for participants and the betting industry. The laboratory is now one of the leading authorities in the world on drug testing horses and dogs. This is an achievement of which racing can rightly be proud. It is the mark of the excellent work done by the laboratory that it has been successful in its application to the World Anti-Doping Agency for accreditation to test human samples.
There are only 32 such laboratories in the world, with the UK joining Germany and Spain as the only countries with two accredited laboratories. That was achieved only last week. I congratulate the staff at the laboratory on that impressive achievement.
Many noble Lords already know that I have a passionate interest in ensuring that sport remains drug-free. No doubt that is in part influenced by the memory of being beaten to an Olympic gold medal by

45
athletes who were, as documented by subsequent analysis following the collapse of Communism, in all probability part of a systematic doping policy.
I believe that the Government have a fundamental role to play in helping sports to remain drug-free. In Committee, the Minister accepted that the Government have a responsibility for anti-doping in sport. That responsibility has been ably demonstrated by the strong lead that we took, and the Government took, in the establishment of the world anti-doping code, and the Government's decision, led by the Minister for Sport, to sign up to the declaration on the code. It is worth reviewing the wording of the WADA code, which in Article 8 outlines the right to a fair and impartial hearing as a fundamental basis for drug testing. That is particularly important, because there is the potential for significant breaches of that right in the Government's proposals for the transfer of the Levy Board's assets under Clause 16. As the Minister said in Committee, talking about the transfer of assets:
"Although we have not reached a final decision on that, our approach has been to look to the British Horseracing Board, as the governing body of the sport, to be the most appropriate home for many of the assets held at present by the Levy Board. The BHB is the guardian of the sport".—[Official Report, 5/4/04; col. GC 544.]
I stress again that no criticism of the British Horseracing Board is intended, either explicitly or implicitly, in the amendment. It is about the principle of independence, and it applies equally to any sport. It just so happens that this Bill, and hence this amendment, covers horseracing and the transfer of the Horserace Forensic Laboratory.
The House will be aware of the high stakes that are now involved in drug testing in sport, particularly since the financial rewards of sport have increased so significantly. Just as the incentives for the few greed-ridden athletes to cheat have increased, so has the pressure on the sports organisers to limit the damage done to their sports by positive drug tests. There is always a danger that sports bodies will seek to overlook or minimise the publicity associated with potentially embarrassing drug findings. Perhaps equally important, there will always be the perception that governing bodies want to avoid positive findings, which has not been helped by cases such as the United States Track and Field Federation, which allegedly covered up adverse drug tests by its athletes in the past.
It is essential that the Government take a strong lead in promoting drug-free sport. It is simply not good practice for the sports governing body to control the drug testing laboratory that carries out tests in its own sport. Such a system lays itself open to possible accusations, however false, that the anti-doping process will never be free from interference by that governing body. It is to prevent such accusations that I have tabled this amendment to Clause 16. There have already been cases where sports governing bodies have had to hold hearings for players accused of doping offences when the governing body itself had supplied the drugs. That is no one-off occurrence. In tennis, there was the well publicised case of Greg Rusedski, who was given an ATP-approved supplement that
46
may have been contaminated. Similarly, in rugby there was Keiron Cunningham, the Welsh rugby league captain, who was given HGH by a bogus fitness adviser employed by the Rugby Football League. I am sure that the House can imagine how much more complicated it would be if the same governing body was also responsible for the drug-testing laboratory and the collection of samples. It cannot be right for the Government to hand over control of an anti-doping laboratory to the selfsame governing body responsible for prosecuting adverse drug tests on its athletes, as well as handing out and enforcing any punishments.
To put it bluntly, in Part 2 of the Bill the Government are proposing the principle that the national governing body be responsible for choosing the athlete to be tested, testing the sample, holding the hearing to determine any guilt, deciding any penalty, and then enforcing the penalty. How can such a system ensure a free and fair hearing for anyone accused of a doping offence? It will make it all but impossible for an athlete or an owner of a horse to receive a free and fair hearing, particularly if there was a concern over the actions of the national governing body, as had been the case for Greg Rusedski and Keiron Cunningham. It is that aspect of the system that represents dereliction of the Government's responsibilities under the World Anti-Doping Agency.
5.15 p.m.
My amendment proposes that the laboratory be set up as an independent agency, free from any undue interference or, what is more likely, the perception of undue interference. It is that perception that is important from sporting interests. The appearance, the very suspicion, of undue interference, is one of the key issues here. This year has seen a couple of unfortunate instances where the integrity of racing and jockeys has been questioned. It is of key importance that punters maintain their faith in racing and their faith in the sport as a whole. It would be a tragedy for the sport if the industry were in any way compromised.
My amendment will not resolve the many conflicts of interest that already exist within the UK's anti-doping policy. It would at least prevent another potential flaw being introduced by the Government. The clause, which encodes the Government's intention to give the drug-testing laboratory to the British Horseracing Board, sets a worrying precedent. What is to stop other sports—in particular professional football, where the athletes are often worth as much as the best thoroughbred horses—following a similar route? We have already seen unconfirmed press reports that the football authorities are thinking of moving drug testing away from UK Sport, the Government's anti-doping agency. Can we really expect the international sporting community to believe that we are tough on drugs in sport if we allow a leading sport to control its own drug-testing?
I am aware that racing has put significant resources, particularly financial, into the Horserace Forensic Laboratory. It is right that should be recognised. It seems clear that the terms of the transfer scheme

47
should take account of that investment, perhaps including free tests for horseracing in the future. It is also worth reflecting on the current uncertainty in the racing industry owing to the OFT investigation. While an agreement has been reached, it is still subject to public consultation, and we still cannot be certain that either the British Horseracing Board or the other racing bodies will remain unchanged. It makes far more sense for the future of such an important drug-testing laboratory to be safeguarded through its establishment as an independent agency. I stress again that there is no criticism of the British Horseracing Board implied in anything that I have said. It is the perception and the principle of the sports governing body owning the anti-doping laboratory and testing procedures for its own sport that troubles me. My amendment would dispel such concerns.
I trust that the Minister will agree that on this occasion I have not strayed from the amendment. In the interests of assisting him, it might be helpful if I highlighted three key points, which I would be grateful if he could consider in his reply. First, does the Minister agree that the Government have a lead role, perhaps even a statutory role, in the fight against drugs in sport? Does he further recognise that when his colleague the Minister for Sport signed up to the declaration of the World Anti-Doping Code, that committed the Government to upholding the principle of the right to a fair hearing under Article 8? Finally, does the Minister recognise that handing the drug-testing laboratory and drug-testing collection process for a sport to its own governing body could fundamentally jeopardise the right of an athlete, or anyone involved in the sport, to a fair hearing before that same governing body?
I ask the Minister whether his department has sought advice from the World Anti-Doping Agency, whose chairman, in Parliament, responded to a question I put to him upstairs as to whether it would be better to have an independent anti-doping agency with an unambiguous, "Yes". I beg to move.
Viscount Falkland: My Lords, I congratulate the noble Lord, Lord Moynihan, on so fully and comprehensively explaining his amendment. His arguments were persuasive, as I am sure the Minister will acknowledge in his response.
We are talking about an exceptional institution. Those of us who have had the privilege of visiting it know that it is a centre of excellence. It has scientists of the highest repute internationally, as indeed has the British Horseracing Board. The perceptions mentioned by the noble Lord are important in racing, for the reasons that he gave. Many of the rows and disagreements—I do not want to put it too strongly—involve the public perception of what, people hope, is a fair and honest sport. By and large, it is fair and honest, but we must maintain the utmost vigilance to sustain the reputation that racing rightly has worldwide.
Apart from that, it was clear to the All-Party Group on Racing and Bloodstock, when we visited, that the work of the laboratory was much wider than just racing.
48
It deals with all kinds of scientific research with regard to animals—dogs and horses mainly, but others too. It is appropriate, as the noble Lord, Lord Moynihan, has argued, for such a body to stand independently of any sport. I agree with the noble Lord that that is no criticism of the British Horseracing Board, which has been suggested as the successor. I am sure that it would not want its ownership to inhibit in any way the ability of the laboratory to maintain its high scientific reputation. I hope that the Minister will say that, ultimately, he and the Government hope that the laboratory will stand independently as a centre of excellence and that this is only a temporary measure.
Lord Lipsey: My Lords, I understand, as will the whole House, the logic behind the arguments made by the noble Lord, Lord Moynihan, and by the noble Viscount, Lord Falkland, but I am not sure whether their practical impact is the same. The thing about the British Horseracing Board and racing as a whole is that it is vital to the continuation of racing that there should be a fair system of drug testing and that cheats should be discovered and dealt with. The BHB has such a strong vested interest in that that I find it hard to see how there would be a conflict of interest with the HFL, which is trying to do the same thing.
I have another point to make about the HFL. I must declare a third quadrupedal interest as chairman of the British Greyhound Racing Board. Greyhound racing is not an area, perhaps, into which the HFL will be moving, as human drug testing is. The HFL is already absolutely central to it, and a huge amount of greyhound drug testing goes on. The number of drug-positives has diminished tremendously, although, as noble Lords will know, we lost a Derby winner last year through a drug test. That work must continue, and it seems to me that the British greyhound racing industry has an important interest in the HFL. I trust that, when the ownership arrangements are sorted, that interest will be duly recognised.
Sometimes, our poor old dogs are the poor cousins of the horseracing industry, with all its grand and noble advocates, but attendances at the races are two-thirds the size of those at horseraces. I hope that, with regard to the ownership and control of the HFL, the Minister will not downgrade the importance of greyhound racing just because it is a sport of the working classes.
Lord McIntosh of Haringey: My Lords, I can go some way along the path outlined by the noble Lord, Lord Moynihan, and others. I can confirm, as I did in Committee, that the Horserace Forensic Laboratory is a world-renowned centre for equine drug testing. It conducts nearly 9,000 tests a year for the Jockey Club and provides services for other clients, such as the National Greyhound Racing Club, as my noble friend Lord Lipsey reminded us. It is also true that the Horserace Forensic Laboratory has gained accreditation from the World Anti-Doping Agency for testing human sport samples, which significantly enhances its international status. It has also gained a

49
major two-year contract to participate in UK Sport's anti-doping programme. So far, we are all entirely in agreement.
I yield to the noble Lord, Lord Moynihan, in my understanding of drug testing in sport. I acknowledge his expertise, and I admire the passion with which he pursues his concerns. I fully support what he says about drug testing, but it does not lead me to the same conclusion about the amendment and the future of the Horserace Forensic Laboratory.
The first point is that the HFL was established via the Levy Board with racing's money. That means that it should be transferred to racing, along with other Levy Board assets. That is what Clause 16 does, and our intention is to transfer it to the British Horseracing Board. As the governing body of the sport, it is the most appropriate home for the HFL. It will be for the BHB to decide what terms of payment are most suitable for services provided to the Jockey Club and other clients of HFL.
This is the fundamental point: the amendment is based on the assumption that there is a conflict of interest if the same body decides which horses will be tested, how the testing should be done and who should adjudicate on the results. There is not. The testing done by the Horserace Forensic Laboratory is not done for the British Horseracing Board; it is done for the Jockey Club. The British Horseracing Board is the governing body, but the Jockey Club is the regulator. The testing is done for a different organisation. I am sorry to say that, therefore, the whole thrust of the noble Lord's argument is misconceived.
Lord Moynihan: My Lords, it is far from misconceived. The fact that the BHB pays for the Jockey Club seems to render any distinction somewhat arbitrary.
I shall move from dismissing the Minister's last argument to the fundamental point. It is and will remain the case that the principle here is one of having an independent anti-doping agency. It is wrong that UK Sport should meet, one day, to consider which elite athletes to fund and, the next day, meet under the same chairman to determine who will be tested in an anti-doping programme. Even if that works with all the professionalism evident in UK Sport—Michelle Verroken ran the anti-doping agency with integrity and professionalism that was second to none in the world—it remains possible that there will be a perception that there is a conflict of interest. That perception could be dealt with by separating the two functions. That is the thrust of the amendment.
It is clear that we have a difference of opinion on the matter, and I would like to test the opinion of the House on whether there is merit in setting up the anti-doping laboratory for horseracing—the HFL—as an independent body. I fully recognise the Minister's second point that the Horserace Forensic Laboratory has received significant money from racing. That must be recognised in the terms of any transfer scheme. The scheme must take into account that investment.
5.28 p.m.
On Question, Whether the said amendment (No. 19) shall be agreed to?
Their Lordships divided: Contents, 64; Not-Contents, 136.

Division No. 2

CONTENTS

Astor of Hever, L.

Lyell, L.

Blatch, B.

MacGregor of Pulham Market, L.

Bowness, L.

Bridgeman, V.

Mackay of Clashfern, L.

Brooke of Sutton Mandeville, L.

Marlesford, L.

Brougham and Vaux, L.

Masham of Ilton, B.

Burnham, L.

Miller of Hendon, B.

Buscombe, B.

Monson, L.

Campbell of Alloway, L.

Moynihan, L.

Carnegy of Lour, B.

Murton of Lindisfarne, L.

Chalker of Wallasey, B.

Naseby, L.

Colwyn, L.

Noakes, B.

Cope of Berkeley, L. [Teller]

O'Cathain, B.

Denham, L.

Onslow, E.

Elles, B.

Prior, L.

Elliott of Morpeth, L.

Rawlings, B.

Elton, L.

Rees, L.

Fookes, B.

Renton, L.

Fowler, L.

Roberts of Conwy, L.

Fraser of Carmyllie, L.

Rogan, L.

Gardner of Parkes, B.

Saltoun of Abernethy, Ly.

Seccombe, B.[Teller]

Goschen, V.

Shaw of Northstead, L.

Gray of Contin, L.

Slynn of Hadley, L.

Higgins, L.

Stewartby, L.

Howe, E.

Strathclyde, L.

Howe of Aberavon, L.

Tebbit, L.

Hunt of Wirral, L.

Tugendhat, L.

Jenkin of Roding, L.

Ullswater, V.

Jopling, L.

Waddington, L.

Laird, L.

Walpole, L.

Lucas, L.

Wilcox, B.

Luke, L.

Windlesham, L.

NOT-CONTENTS

Acton, L.

Crawley, B.

Ahmed, L.

David, B.

Alli, L.

Davies of Coity, L.

Amos, B. (Lord President of the Council)

Davies of Oldham, L. [Teller]

Dean of Thornton-le-Fylde, B.

Andrews, B.

Desai, L.

Ashton of Upholland, B.

Dixon, L.

Bassam of Brighton, L.

Donoughue, L.

Berkeley, L.

Drayson, L.

Bernstein of Craigweil, L.

Dubs, L.

Bhattacharyya, L.

Eatwell, L.

Blackstone, B.

Elder, L.

Boothroyd, B.

Evans of Parkside, L.

Borrie, L.

Evans of Temple Guiting, L.

Bragg, L.

Falconer of Thoroton, L. (Lord Chancellor)

Brennan, L.

Brooke of Alverthorpe, L.

Farrington of Ribbleton, B.

Brookman, L.

Filkin, L.

Brooks of Tremorfa, L.

Fyfe of Fairfield, L.

Burlison, L.

Gale, B.

Campbell-Savours, L.

Giddens, L.

Carter, L.

Gilbert, L.

Carter of Coles, L.

Golding, B.

Christopher, L.

Goldsmith, L.

Clarke of Hampstead, L.

Gordon of Strathblane, L.

Clinton-Davis, L.

Goudie, B.

Cohen of Pimlico, B.

Gould of Potternewton, B.

Craig of Radley, L.

Graham of Edmonton, L.

51

Grantchester, L.

Pitkeathley, B.

Grenfell, L.

Prosser, B.

Grocott, L. [Teller]

Prys-Davies, L.

Harris of Haringey, L.

Radice, L.

Harrison, L.

Ramsay of Cartvale, B.

Hart of Chilton, L.

Randall of St. Budeaux, L.

Haskel, L.

Rendell of Babergh, B.

Haworth, L.

Richard, L.

Hayman, B.

Richardson of Calow, B.

Henig, B.

Rooker, L.

Hilton of Eggardon, B.

Rosser, L.

Hogg of Cumbernauld, L.

Sainsbury of Turvile, L.

Hollis of Heigham, B.

Howarth of Breckland, B.

Scotland of Asthal, B.

Howells of St. Davids, B.

Sheldon, L.

Hughes of Woodside, L.

Simon, V.

Hunt of Kings Heath, L.

Smith of Leigh, L.

Irvine of Lairg, L.

Snape, L.

Jay of Paddington, B.

Stoddart of Swindon, L.

Jones, L.

Stone of Blackheath, L.

Jordan, L.

Strabolgi, L.

Judd, L.

Symons of Vernham Dean, B.

King of West Bromwich, L.

Taylor of Blackburn, L.

Kirkhill, L.

Temple-Morris, L.

Lea of Crondall, L.

Thornton, B.

Lipsey, L.

Tomlinson, L.

Lofthouse of Pontefract, L.

Triesman, L.

McDonagh, B.

Truscott, L.

Macdonald of Tradeston, L.

Tunnicliffe, L

McIntosh of Haringey, L.

Turnberg, L.

MacKenzie of Culkein, L.

Turner of Camden, B.

Mackenzie of Framwellgate, L.

McKenzie of Luton, L.

Uddin, B.

Mallalieu, B.

Wall of New Barnet, B.

Mason of Barnsley, L.

Warwick of Undercliffe, B.

Mitchell, L.

Watson of Invergowrie, L.

Morris of Manchester, L.

Whitaker, B.

Nicol, B.

Whitty, L.

Patel, L.

Wilkins, B.

Patel of Blackburn, L.

Williams of Elvel, L.

Paul, L.

Williamson of Horton, L.

Pendry, L.

Woolmer of Leeds, L.

Resolved in the negative, and amendment disagreed to accordingly.
5.39 p.m.
Lord Moynihan Lord Moynihan moved Amendment No. 20:
After Clause 21, insert the following new clause—
"EXEMPTION OF OLYMPIC LOTTERY FROM LOTTERY DUTY
After section 24(4)(e) of the Finance Act 1993 (c. 34) there is inserted—
"(f) of an Olympic Lottery within the meaning of the Horserace Betting and Olympic Lottery Act 2004"."
The noble Lord said: My Lords, we move to Part 3 and the London 2012 Olympic bid. In Committee it was clear that the exemption of the Olympic lottery from duty was one of the key points of difference in the Bill between the Government and these Benches. The purpose of Part 3 is to create a new lottery game specifically to raise money for the London 2012 Olympics and Paralympic Games.
We believe that all the money raised through the new Olympic lottery game should go to the Olympics and Paralympics rather than the Treasury. This is the first lottery game exclusively hypothecated to one good cause and we hope that it will help to rejuvenate the lottery that John Major set up so successfully in 1995. If the opportunity to stage the Olympic and
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Paralympic Games in London is so important that it merits a new hypothecated game, then it also merits a decision by the Treasury to hypothecate its usual 12p lottery duty to the games.
The scale of the tax raid on the Olympic lottery is worth highlighting. As the House is aware, the new Olympic lottery games are expected to raise £750 million towards the cost of staging the games. However, the fact that the new Olympic lottery will also raise £340 million for the Treasury may not be so well known. In seeking to understand the Government's justification for levying a £340 million tax on the nation's efforts to raise money for the London 2012 Olympic and Paralympic Games, it might be helpful to revisit what the Minister said in Committee. He stated:
"The lottery is a mainstream gambling activity in competition with other gambling activities".—[Official Report, 6/4/04; col. GC 566.]
The more I think about this statement, the more I am concerned that the Government have not fully understood the unique contribution of the National Lottery to the nation's good causes. It is both perplexing and inconsistent that, on the one hand, the House is being asked to approve a special measure to raise money for the London 2012 Olympic Games, and yet, on the other hand, the Minister considers this to be no more than another mainstream gambling opportunity.
Perhaps this is the reason for the difference of opinion between us and the Government on the merits of the amendment. We do not consider the lottery—and especially the Olympic lottery being set up under the Bill—to be simply a mainstream gambling opportunity. Our view is shared by the Culture, Media and Sport Select Committee, and I fear the Minister may be on his own in this case.
I shall quote for the Minister's benefit the Select Committee's report on the reform of the National Lottery. The Select Committee viewed the taxation of lottery returns for good causes as an,
"inappropriate double hit for the Treasury".
The report continued:
"Returns for good causes should be treated more like charitable giving than other spending on gambling products. Within the gambling sector we note that the Government recognises the unique status of the Lottery for the purposes of regulation but not for the purposes of taxation. This is inconsistent and wrong".
The Select Committee concluded that there was a strong case for treating the lottery as charitable giving rather than mainstream gambling, thereby qualifying it for gift aid rather than the 12p lottery duty. The Minister will be relieved to know that the amendment stops short of the Select Committee's recommendation. Instead it would enable the new Olympic lottery games to be treated as one of the special exemptions qualifying for zero-rate lottery duty within the 1993 financial legislation which governs the tax on all lotteries. There are clear precedents for lotteries to be exempt from the duty; these include private lotteries, society lotteries and perhaps, my personal favourite, a lottery promoted in accordance with the Art Unions Act 1846.
As I have said before, if the Olympic lottery were tax free it would send out a very strong message signalling the Government's commitment to hosting the Olympics to lottery ticket buyers, to supporters of the London Olympics, to the international sporting community as a whole and, most important, to the IOC. The importance of this message should not be underestimated. It is clear from the International Olympic Committee report on the bidding cities that the London bid would benefit from stronger governmental support.
If the new game is to raise the required £750 million towards the cost of staging the 2012 games, then why place obstacles in its way. If more money from each lottery ticket sold went to the Olympics, then the sales of tickets would be boosted and the Olympic lottery financial goals would be secured. Similarly, if the Olympic lottery is tax free, this will help to impress upon the international sporting community just how serious we are in our desire to bring the Olympics and Paralympics to London in 2012.
At Second Reading, the noble Lord, Lord Judd, eloquently put forward the view, supported by the National Council for Voluntary Organisations, that the new Olympic lottery game should be tax free as this would reduce the need to raid quite so much from other good causes. The Minister's rejection of these arguments in Committee begs a closer examination of the Treasury's financial commitment to the London 2012 bid. On first examination of the figures for the funding of a London 2012 Olympic and Paralympic Games it is now clear how much money the Exchequer will be contributing. We know that the Treasury remains the ultimate guarantor of the Games, but in the small print even this ultimate responsibility is shifted onto the lottery and the Mayor of London. The fact of the matter is that after winning the bid in Singapore next July, if we still have a Labour Chancellor, the Treasury will not put a single penny towards the cost of the Games.
Indeed, it is possible that because of the financial arrangements and the burden placed on the lottery, the Treasury will actually make a direct profit from the Games. That is why, when asked about the Chancellor's support for the London bid, Michael Howard said:
"To describe Gordon Brown as a little half-hearted in his support for the bid is possibly a compliment".
As we know, the Treasury is currently reviewing the taxation of the National Lottery. In Committee I quoted the words of the Economic Secretary to the Treasury who said that the Government were in "listening mode" about possible changes to the way in which the lottery is taxed. Why then in Committee did the Government appear to go suddenly and conveniently deaf?
On that occasion, the Minister tried to pour cold water on these proposals by stating that the Treasury review would be in the context of maintaining Exchequer revenues. This is not as disappointing as it might initially appear to be. It is clear that a significant part of the revenue from the new Olympic lottery game will be additional ticket sales and will therefore
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represent a bonus to the Exchequer. Thus the hypothecated Olympic lottery games will, as I mentioned before, if anything be helpful to the maintenance of the Exchequer coffers.
The amendment provides an opportunity for the Minister to demonstrate before the House just how seriously the Government are listening to the arguments for reduced taxation on the National Lottery. The House is, of course, limited in its powers with regard to financial issues and especially Finance Acts, but we owe it to sport, as we do to the other good causes, to send a clear message to the Treasury that where there is a hypothecated game with a specific intent—in this case to raise money for a successful bid and to host, from that successful bid, the London 2012 Olympic and Paralympic Games—and where Parliament is being asked to agree to the first ever hypothecated game for a purpose, it must be right that the Treasury does not pocket 12p of every ticket sold for that purpose. It should ensure that our disabled athletes and our able-bodied athletes receive every part of the pound that is spent in order to back the London Olympics, rather than pocketing 12p and making sure that the tax does not go to the games.
That is the fundamental principle behind the amendment. From these Benches, the Conservative Party has not only committed to ensuring the 12p goes to the London Games, but that, in practice, represents more than four times as much money as the total sports budget of the DCMS. That is a commitment from these Benches and from the Conservative Party to the success of the Olympic and Paralympic Games, which we believe should be at the heart of any party's sports policy at the present time.
I hope that the Treasury will be persuaded to forgo the tax on the new Olympic Lottery. It certainly should. I beg to move.
Lord McIntosh of Haringey: My Lords, having recovered from my surprise at seeing an amendment on the Marshalled List which purports to amend a Finance Act—which I have not seen in this House before—I reflect that the Public Bill Office must have accepted the amendment. It must have snuck in somehow from round the corner and must be legitimate, but it does not seem to me that if I went to the Chancellor of the Exchequer with this suggestion he would be terribly happy.
If the noble Lord, Lord Moynihan, were to press the amendment and succeed in a Division, the Commons would of course reject it on the grounds of privilege, not only because it purports to amend a Finance Act but it would cause a considerable reduction of Exchequer income.
There has been no secrecy about this issue all the way through. We have said that although the Chancellor is always looking at the current tax treatment of the lottery—he keeps the lottery duty under review and gives consideration to representations made in the course of the Budget and Finance Bill process—he does not, and we do not, think it appropriate to make this exception to the rules set out when the lottery was established by a Conservative administration. I do not find the argument that this is hypothecated to a single cause at all

55
convincing. After all, the lottery funds have been set up—again, by a Conservative administration—to be hypothecated to good causes. Although the good causes then have the freedom to distribute their funds, they are nevertheless hypothecated to a very substantial degree.
The principle of the taxation of the National Lottery was accepted by Parliament when the lottery was introduced. Lottery duty—that is, the 12 per cent—brings in more than £500 million a year for spending on essential public services such as schools and hospitals. When the noble Lord, Lord Moynihan, says, with great confidence, that his party supports this amendment, I hope that he will understand that we will be using that statement in any future election. He had better be very clear that he has Mr Letwin's agreement that additional expenditure will be added to the sums on which it is proposed that the Conservative Party will fight an election.
The National Lottery is a mainstream gambling activity, in competition with other gambling activities. It is reasonable that it should make a fair contribution to revenue for public expenditure at the same time as raising money for good causes. We debated in Grand Committee how much of the money raised from the Olympic lottery would in fact be diverted from other good causes. The figure that I have is 51 per cent. I hope that when the Conservative Party is fighting an election, it will be expecting some reaction from sport, the arts, heritage and the projects funded by the New Opportunities Fund if such an exception were to be made for only one of the National Lottery good causes.
We intend that the same principles that apply to the existing National Lottery should apply to any Olympic-themed games. There are not, at this stage, any plans to exempt the National Lottery from tax. It has not, and it has never been, the Government's intention to fund the 2012 Olympic and Paralympic Games from central Government tax receipts. Indeed, the public funding package for the games does not rely on central Government revenue, and that did not cause an adverse reaction from the International Olympic Committee. Hypothecating taxes from the Olympic lottery, as this amendment proposes, runs contrary to this principle.
Of course I am sympathetic to any desire to boost the Olympic cause, and I have no doubt that the noble Lord, Lord Moynihan, will plead that cause. However, this amendment is a departure from the principles on which, right from the outset, we have proposed to fund the Olympic Games, and it is not acceptable to the Government.
Lord Moynihan: My Lords, let me respond to the Minister's comments. First, I am well aware that tax matters are the responsibility of another place. However, I would be doing this House, particularly the noble Lords, Lord Phillips of Sudbury and Lord Pendry, among others, a disservice if I failed to mention that we have previously managed to persuade the Treasury on the merits of tax cuts for sport, most recently tax breaks for community amateur sports
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clubs. However, I take the Minister's point about the Finance Act and, in that context, I shall not be pressing the amendment to a Division.
Before I conclude my remarks, I should like to make a few points. The Minister is concerned about the hit on other good causes to which the amendment would, in his view, lead. I have already demonstrated in Committee—some might argue at somewhat too great a length; it was certainly a long speech—the merits for starting the Olympic lottery game at the time of the Athens Olympics rather than in a year's time. I did so because I was driven by the fact that we would reduce the take on other good causes if we were to raid a contingent fee in order to host the games in London 2012 at any stage between winning the bid next summer and 2012.
Had we been able to launch the hypothecated game at the same time as the Athens games started, there would have been a direct benefit to other good causes. Such an amendment has not been tabled before your Lordships today simply because it has been a long time since we last considered the Bill. In fact, the day before the Easter Recess was the last day of the Committee stage, and we are so close to the Athens games that it is impractical—it is too late—to launch the game at the same time as the Athens Olympics, which will take place in a matter of weeks. So in that regard I reject the Minister's argument.
The noble Lord also questioned whether I had support for the amendment. I have the support not only of the Leader of the Conservative Party, the shadow Chancellor of the Exchequer and every member of the shadow Cabinet, but, I believe, of every Londoner committed to sport and recreation to ensure that that 12 pence tax take goes towards hosting the Olympic and Paralympic Games in 2012. It is simply not credible to argue that the generic term "good causes", which is very widely drawn, is a hypothecated single cause. It is not. If it were, there would be no need for Part 3 of the Bill. We would have no need for a specific hypothecated game because it could easily be managed within the context of good causes.
In bringing forward this legislation, the Government recognised that they required parliamentary approval to have the first ever hypothecated game—a game that was specific in its intent and totally directed towards hosting the 2012 London Olympic and Paralympic Games. The Government recognise that this is the first ever hypothecated game. They are seeking parliamentary approval to recognise and to launch that hypothecated game. The Government cannot accept that proposal while taking the opportunity to pocket the 12 pence, which, quite frankly, in a hypothecated game, should go towards the games.
Londoners would expect this to go towards the games. Sportsmen and women the length and breadth of this country will expect that all but a very small administrative charge on the pound they spend in choosing to buy an Olympic 2012 ticket after the decision in Singapore next year should go to the games. We back Londoners in that view; we back the sportsmen and women the length and breadth of

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this country, with whom I have spoken on many occasions about the intent of this amendment. We have complete support from the shadow Cabinet and on these Benches. I believe, from many discussions with noble Lords opposite, that there is a lot of support on their Benches as well.
I take the point that the Minister made at the beginning of his reply. There was unquestionably a major discussion within Cabinet over whether a bid should be backed. We have had prevarication for three and a half months. There were two schools of thought: one said no; but the other recognised there would be tremendous benefit for the sporting world and particularly for the pride of London if we were successful in hosting the Olympic and Paralympic Games. The decision finally came down to a yes, with the proviso that the Treasury would not pay for the games. Ultimately, Londoners, through an increased precept, would pay a significant part of every additional pound that was required to host the games as well as paying for the games. I argue that that is one very strong reason why the IOC did not recognise the level of government support as being high when it undertook its interim adjudication of all the competing cities. We were not at the top; we were very close to the bottom.
We need to address the financing of the games, and we need to look at how we can encourage the private sector to play a far greater role. After all, these games will be right next door to the City of London. Within two miles of the City of London, we should have a structure to encourage private sector support for the games which is far more prominent than that which we have seen to date. It is for all those reasons that, in tabling the amendment, I believed the Government had an opportunity to demonstrate their support for our able-bodied and our disabled athletes in their bid to back my noble friend Lord Coe and his team in winning the bid in Singapore next year to host the games in London in 2012. However, I am grateful, as always, to the Minister for his reply. For the reasons I have given, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Deputy Speaker (Lord Haskel): My Lords, I remind the House that, if Amendment No. 21 is agreed to, I cannot call Amendments Nos. 22 to 27, because of pre-emption.
6 p.m.
Clause 22 [Timing]:
Lord Moynihan Lord Moynihan moved Amendment No. 21:
Page 13, line 22, leave out from "has" to end of line 29 and insert "made an order under subsection (3).
(3) If a United Kingdom city has decided to bid to host the Olympic Gaines, the Secretary of State shall, by order, make a declaration to that effect.
(3A) Where the Secretary of State has made a declaration under subsection (3), he shall then make a progress report every three months to Parliament on the bid and its financing until the International Olympic Committee has elected a host city for the Olympic Games.
(3B) The duty in subsection (3A) continues after the election but only in relation to a successful bid by a United Kingdom city to host the Olympic Games; and the duty then ceases once the Olympic Games have taken place or have been fully financed, whichever is the later.
(3C) Subsection (4) applies if the Secretary of State by order declares—

(a) that the International Olympic Committee has elected a host city other than a bidding United Kingdom city as the host city for the Olympic Games in any bidding round, or

(b) that the election by the International Olympic Committee of a United Kingdom city as the host city for the Olympic Games has been revoked."

The noble Lord said: My Lords, this is a somewhat complicated amendment, but its aims are simple. First, proposed subsection (3) would permit an early start to the Olympic lottery for the 2012 London Olympics bid or any subsequent British bid. That is to say that the lottery could start once it has been announced that a British city is bidding for the games. Secondly, subsection (3A) would ensure that the Secretary of State makes regular reports to Parliament on the progress of the bid with an update on the financing. Finally, subsection (3B) would require that those regular reports continue once the British city has won the bid until the Olympics have taken place and the financing has been signed off.
Noble Lords may recall that we on these Benches have previously argued that the proposed Olympic lottery games should have been launched to coincide with the Olympic Games in Athens this summer. I referred to that a moment ago. In Grand Committee in April—some three months ago—I highlighted the benefits that an early start would bring. Not only would it help to raise the domestic profile of the London 2012 bid, which is essential to any successful bid, but it would also raise an additional £50 million and save the other good causes money.
As many noble Lords will already be aware, the International Olympic Committee rules require that the proceeds from the Olympic lottery be used towards Olympic purposes, including funding for the British Olympic Association, the British Paralympic Association and Olympic athletes as well as the cost of staging the Olympics. The Minister and no doubt the House will be pleased to learn that I do not intend to develop that argument further today, mainly because delays in bringing forward the Report stage have removed many of the benefits of starting the lottery game early.
However, the main purpose of this amendment is to require the Government to make regular reports on the progress of our London bid as well as the latest financial projections. Noble Lords will be aware that the Government are a key stakeholder in the London 2012 Olympic bid, even though they have discharged their financial responsibilities through the National Lottery and London council tax payers. It is therefore right and proper that Parliament receives regular updates on how our bid is progressing.
A great deal has happened to the London 2012 Olympic bid since our discussions in Grand Committee. I feel sure that all sides of the House will join me in congratulating the noble Lord, Lord Coe,

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on his new position as chairman of the London 2012 Olympic bid. I was fortunate enough to compete at the same time as the noble Lord in both the 1980 and 1984 Olympics and I know that we have an excellent chairman for the bid.
The other major development in our Olympic bid has been the publication of the report by the IOC Candidature Acceptance Working Group to the IOC Executive Board on 18 May 2004. The report was the basis for the short-listing of the bids in which London came third out of the nine applicant cities. It must now act as a road map of what the Government need to do in order to achieve our aim of winning a gold medal in the race to host the 2012 Olympics. With this proposed clause at the heart of the Bill, we would have regular reports and that road map would form the basis for regular reports to government.
The amendment would ensure that we have the opportunity to study the 11 key criteria by which our bid would be judged, with a ranking given to each one. On government support, legal issues and public opinion, London finished eighth out of nine, but we would have the opportunity, through this amendment, constantly to see the improvement that I believe must and will come if we are to win the bid. On general infrastructure we were third and on sports venues, fourth. Our Olympic village concept was rated sixth. On environmental impact we came joint second. On accommodation, one of the few areas outside government control, we came first. Our transport concept came a distant fourth, with parts of our transport system being described as "often obsolete".
Again, if the amendment were passed, we would have the opportunity to consider and review the improvements that I am sure we will see—and must see—in the transport system between now and when the decision is made in July next year, and to monitor, consider and discuss those improvements. When necessary we must cajole the Government to make those improvements, but I hope to return to this House regularly to congratulate the Government on making those improvements.
On finance, we were ranked joint second. On the overall project and legacy, we came third. Perhaps one of the advantages of this amendment being passed is that, although experience of past sports events is critical, London's ability to host those events would be considered by your Lordships. We would be promoting London and the Government would be supporting London through UK Sport to host more international events successfully, as we have done with Wimbledon and as I hope that we would do on future occasions within Olympic sports. The fact of the matter is that we were judged sixth out of the nine bidding cities on those criteria.
Agreeing to the amendment would enable the Minister to come back and show the good progress that I am sure he intends to make between now and July next year. As the Minister knows, we have a long way to go if London is to be successful, but we should not be downhearted. We now know what needs to be done and it is up to the bid team, the Government and the GLA to learn from the IOC report, to strengthen those areas that need
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strengthening and to deliver a much improved final bid book to the IOC on 15 November. However, the bid team can only do so much on its own. It needs dedicated and committed government support. That is the key to success.
Government support for an Olympic bid is essential for success. That is why the amendment calls for regular updates from the Government on the progress of our bid, so that we can monitor much needed improvement and higher levels of support from the Government. So far, most of the Government's comments on the bid have come from Parliamentary Questions and media speculation. Although Parliamentary Questions and their Answers are helpful, I am afraid that they can only do so much. There would be merit in regular reports, when both Houses would have the opportunity to hold the Government to account and continue, as we consistently have from these Benches, to make positive contributions to the Government's thinking.
For example, it worries me deeply that Ministers can write to me on 14 July saying that:
"London did not score badly for Government support".—[Official Report, 14/7/04; WA 153.]
That followed on from the Secretary of State with responsibility for the Olympic bid saying, no doubt somewhat tongue in cheek, that London scored badly on the IOC criteria for government support,
"because of the uncertainty created by the forthcoming mayoral elections".—[Official Report, Commons, 28/6/04; col. 15.]
The House will recall that, at the time the IOC report was completed, none of our London mayoral candidates had been officially adopted.
It is clear that the Government need to accept the facts, learn from them and then move on by stepping up at least two gears in their support. Noble Lords may have seen the speculation in the media that the Prime Minister will use his summer reshuffle to appoint a Minister with specific responsibility for our Olympic bid. That is to be welcomed. I have been calling for that appointment for over a year. I hope that the Minister is able to feed back the support of these Benches and indeed, the House, for a government response to a classic example of a positive contribution to government thinking.
The other major area that the Government rather than the bid team will need to address if we are to win the race to host the games is, as I have mentioned, the state of London's transport infrastructure. The scale of the investment needed is such that that clearly falls within the Government's area of responsibility. The Government are responsible for the delivery of the East London Line extension and improvements to the Jubilee Line. Both those developments were promised within our initial bid to the IOC and the Government's credibility will not be improved if they cannot find the funding required to deliver those projects in time for the 2012 games. I hope that, as a result of what was in the press this morning, the Minister will report to this House that that money has been found and that we are moving forward on a

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timetable to meet the Games. Indeed, I hope that he can confirm that the same applies to Crossrail, which was mentioned on the front page of The Times today.
Amendments such as this provide an opportunity for the Minister to report to the House on progress towards this important Olympic bid. The opportunity to report to the House at regular intervals on all the issues that I have mentioned will, I hope, be warmly welcomed by the Minister. I hope that he is about to stand in front of us and address those key issues on transport infrastructure.
The House will be aware that noble Lords on these Benches are passionate supporters of the London Olympic bid and we are committed to doing everything in our power to help deliver the games to London. I believe that this amendment will further strengthen the excellent work being done by the London bid team.
I trust that my suggestions will be acceptable to the Minister, who will, with his colleagues—in every aspect of the IOC interim report conclusions—consider them, react to them and push London to the top of the tree so that we win in Singapore in July next year. I also trust that, with this amendment, we shall have the opportunity in your Lordships' House to consider all the points that I have outlined consistently at regular opportunities and in detail. I beg to move.
Lord Addington: My Lords, this is an interesting amendment. As the noble Lord told us, the Government did not come out of the initial bidding process very well.
The idea that the Government should report every three months is an interesting one. If this amendment is not accepted, can the Minister give us some idea about what plans there are for reporting progress to Parliament on this matter? What ministerial responsibility has been assigned for doing this job?
We need parliamentary backing—and noisy backing. To speak as charitably as I can, the Government have not been banging their own gong enough about what they have been doing. Do the Government have a plan of how they will keep this House and the other place informed about what is going on? It would give a better perception of what is going on and a better perception of the Government's commitment.
If the Minister can give us a satisfactory answer on that matter, I believe that the amendment tabled by the noble Lord, Lord Moynihan, is not needed. But that will be the case only if we have a firm commitment to have regular reporting on what is going on and not a process where we have to drag information out of the Government.
Lord Glentoran: My Lords, I want to add my support to my noble friend's amendments and make a couple of sharp comments to the Government.
The Government had to take—and did take—the lead in our Olympic bid and we have supported them in that for some time. They appointed the first director, Mrs Cassani. That was not the greatest success as she did not stay very long. We now have my
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noble friend Lord Coe, and the press is giving us some strange messages about how the team is coming together.
Bearing in mind that the Government are still responsible for driving this bid, we have not seen a great deal of commitment in the work that they have done. The communication to win over the support of the rest of the country does not seem to have had an impact. So far, I have not read anything or seen a great deal about the promotion of our Olympic bid nationwide. The French, who are perhaps our major competitors on this side of the Atlantic, have the whole of their government machine behind them. Their bid is driven loudly and obviously by the French Government.
I do not believe that it is too late. I am not one to give up a race until the race is well and truly lost. I wish to make the point that the British Government have an awful lot of work to do, and we are looking to some serious initiatives and some serious public support and leadership to get our bid well and truly up front.
Lord McIntosh of Haringey: My Lords, the noble Lord, Lord Moynihan, started by saying that his amendment was complicated. I can forgive him for that. Clause 22, in which it is placed, is also complicated. He need not be ashamed of that.
If the noble Lord, Lord Moynihan, thinks that I am going to make a stump speech of the kind that he has just made—it was a very fine stump speech; the noble Lord, Lord Glentoran, added to it and I admired it—I am going to disappoint him. My responsibility in this legislation is to respond to the amendment before us rather than to the very interesting, but more general, views which have been expressed.
The amendment would enable Olympic lottery games to begin as soon as any UK city had decided to bid for the Olympics. It would therefore allow Olympic lottery games to begin before the International Olympic Committee had elected a host city. We argued against that in relation to the London 2012 Games and the same arguments apply to any future bid.
6.15 p.m.
We believe—and the distributors of lottery funds also agree—that only the unique opportunity of hosting the Olympic and Paralympic Games can justify the establishment of a lottery fund specifically for that purpose. If Olympic lottery games were to begin before the IOC had elected a host and a UK bid was unsuccessful, the funds raised in relation to that bid would need to be allocated to Olympic and Paralympic sport. The noble Lord, Lord Moynihan, was right and open about that. He knows what can and cannot be spent before a host city is selected. Olympic and Paralympic sport are worthy causes but they do not justify a hypothecated funding stream separate from the existing sports lottery funding stream.
We have asked the existing distributors and their funding sectors to work with us, in the event of a successful bid, to manage the impact that the Olympic lottery games would have on the income to their good

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causes. They have agreed to that because of the wide-ranging benefits that hosting the games would bring. The majority of lottery distributors have confirmed that they would not want Olympic lottery games to begin before a decision had been made on the host city because of the probable impact on the income to their good causes. I have no doubt that they would hold the same views in relation to any future bids.
To amend the Bill to extend the opportunity to run Olympic lottery games to any time in the future, provided that a UK city had simply declared an intention to bid for the Olympics, would certainly cause widespread concern among the lottery distributors and the good causes. Effectively, the lottery would be held hostage to fortune.
The amendment is also drafted to enable legislation to apply to any future Olympic bids. We do not believe that that is appropriate in advance of more detailed knowledge of all relevant considerations. I will consider that matter when I respond to the next group of amendments.
The remainder of this amendment places a statutory requirement on the Secretary of State to submit progress and finance reports to Parliament on this current bid and any future UK Olympic bid every three months. If the bid is successful, the Secretary of State will be required to continue submitting three-monthly progress and finance reports to Parliament—presumably on the staging of the Games—until the Olympic Games have taken place or they are fully financed, whichever is later.
That is a real burden. It is not necessary to place such a requirement on the face of the Bill because robust accounting and governance arrangements are already in place in relation to the bid. London 2012, the bidding company, is already obliged to produce annual accounts that will be placed in the Libraries of both Houses. In addition, the stakeholders have in place arrangements—including meetings and updates—to ensure appropriate and rigorous oversight of the progress and financing of the bid company.
Speaking as someone who does not usually pay a great deal of attention to the sporting pages, there has not exactly been a shortage of public comment on the progress of the Olympic bid. The noble Lord, Lord Moynihan, referred to it himself. It has certainly attracted my attention in a way that it might not otherwise have done.
In the event of a successful London bid for the 2012 Olympics, the bodies directly involved in the delivery of the Games will be required to give full account of any public monies received.
An additional requirement to lay three-monthly reports before Parliament on progress and financing arrangements of the Olympic bid—and, if successful, on the staging arrangements—would be extremely onerous. It would duplicate reporting structures and accountability arrangements that are in place with the stakeholders and the International Olympic Committee and could lead to unnecessary delay or interference.
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We recognise the legitimate and important role of Parliament in the scrutiny of public expenditure. However, we believe that existing arrangements, including the Public Accounts Committee and the Select Committee on Culture, Media and Sport, which is extremely active, in conjunction with the laying of annual reports as described, will ensure an adequate level of parliamentary involvement. I hope that the amendment will not be pressed because it would, in effect, allow for the immediate introduction of an Olympic lottery bid before a host city was announced, and because of the reporting requirements.
Lord Moynihan: My Lords, I believe that I should thank the Minister for referring to my speech and that of my noble friend Lord Glentoran as being very fine stump speeches. If that description reflects the passion for sport that my noble friend and I have, we shall take the Minister's comments as a compliment.
Lord McIntosh of Haringey: My Lords, they were intended as a compliment.
Lord Moynihan: My Lords, I very much appreciate that confirmation.
Briefly, the specific point is that publication of annual accounts is insufficient to monitor progress on the bid, as we should do in Parliament. I hope that we will win the bid; the one critical factor that can ensure that we do so is government leadership. With that, with strong government policies to support the bid and with government commitment, the excellent work that is being done will lead to a winning bid. Looking at the examples of the active support of Chirac when he was mayor in Paris—he now leads his country—or at what is happening in Madrid shows that that is the litmus test of success for a bid.
The Minister should reflect between now and the announcement next year in Singapore on the fact that the reporting structure that the amendment would put in place would, I am sure, take us from pretty low in terms of ranking in terms of government support to the very top. All those working on the London 2012 Olympic bid and every sportsman and sportswoman the length and breadth of the country deserve and expect government leadership, commitment and strong policies towards success. I hope that they will be forthcoming. However, in light of our debate, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Moynihan Lord Moynihan moved Amendment No. 22:
Page 13, line 23, leave out "London" and insert "a United Kingdom city"
The noble Lord said: My Lords, this amendment is similar to one that we debated in Grand Committee. Briefly, its purpose, and that of those grouped with it, is to extend the Bill's shelf life. If London is unsuccessful in the 2012 bid—we all hope that that will not be the case—we on these Benches believe that there is a strong case for retaining the legislation so that it could be used to support subsequent bids.
We are all aware that primary legislation is time-consuming and that it is not always easy to find parliamentary time. These relatively simple amendments are designed to ensure that we do not need to revisit our deliberations if the government of the day decide to bid once more for the Olympics and Paralympics. Having re-read our discussions in Grand Committee in Hansard, I am slightly unclear about whether the Minister was unable to accept the amendments because the Bill is a bespoke Bill for the London 2012 games or if it was because there was not the necessary Cabinet authority to extend the Bill's shelf life.
I do not wish to embarrass the Minister, who has always been helpful, not least today, but it would be appreciated if he could clear up a few queries arising from the Committee stage. The Minister agreed that if we did not have the amendments, there would be a need for primary legislation to set up an Olympic lottery Bill for any subsequent bid. However, he also said that even if we accepted the amendment, there would still be a need for primary legislation because,
"the Bill is so specific to London and the funding arrangements".—[Official Report, 6/4/04; col. GC 586.]
I have studied the Bill carefully and I can see nothing in Part 3 that could not be altered to include another city besides London. The other cities across the UK that are capable of bidding for the games will almost all have a mayor. Likewise, they will need to have a suitable local government structure that is analogous to the Greater London Authority. Similarly, and very importantly, I can see nothing in Part 3 that refers to any specific funding arrangements for the London 2012 bid. There is no reference to the expected £750 million that we anticipate the Bill will provide; there is no reference to the £750 million from the other lottery good causes; and there is no reference to the £625 million from the council tax levy or to the £250 million from the London Development Agency. I could go on.
It should be clear that all that the Bill does is to permit the setting up of an Olympic lottery with its specific remit to fund the Olympic Games. Of course, all funding arrangements have been carefully worked out. The memorandum of understanding between the Government and the Mayor of London on funding to the London 2012 Olympic and Paralympic Games is very helpful in that respect but it does not appear in the Bill and is not referred to by it.
Is the Minister able to highlight which clauses of the Bill are so specific that they cannot be altered? Similarly, could he kindly point out the clauses on funding that are specific to the London 2012 bid, which it appears I may have missed? If nothing else, the Minister's response in Committee made a refreshing change from the exchanges on Parts 1 and 2, when the Government stressed the need to maintain sufficient flexibility in the Bill to handle events beyond the Government's control. When these Benches sought to extend that flexibility, the Government suddenly appeared to be keen on making sure that the legislation is very specific.
In light of the Minister's comments in Committee, I considered altering my original amendments so that they referred only to future London bids. That would have
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been easier to draft. I am also very much aware that there is a strong view in the OIC that it would prefer a London bid. However, after much deliberation, I decided to stick with my original wording because it is vitally important that those cities are not excluded from bidding.
The noble Lord, Lord Addington, and the Minister were concerned that the amendment might be portrayed as undermining the London 2012 bid. They will be the first to know that I completely reject that suggestion. Anyone who underestimates the commitment of the London bid team and its chairman, my noble friend Lord Coe, does so at his peril. London remains a serious bid and is now putting in place a world-class bid team with world-class plans. In parenthesis, I mention that it saddens me to think that there have been those who apparently do not realise what a great honour it is to be associated with an Olympic bid. Everyone involved with the bid is there to serve the sportsmen and sportswomen of this country, not to serve vanity. At least my noble friend Lord Coe is now putting together such a group, with the welcome appointment of Mr Sloman.
To conclude, all our amendments are designed to support and strengthen the London 2012 bid. Those amendments in particular will help to ensure that if the unthinkable happens and we get pipped at the post, we are able to learn from the London bid and to try again. I believe that we owe it to future Ministers of Sport to ensure that this legislation is not lost. That is what the amendments are designed to achieve. I beg to move.
Lord Addington: My Lords, the noble Lord has been consistent in his idea that we should have something on the shelf that we could wheel out for more bids. However, one of the most important points about 2012— this does not undermine the noble Lord's support for it but is merely a difference in approach—is that we have a one-shot deal in this regard. In a few years, we will not be able to advance with this type of Bill. We would probably need new financing arrangements in that case. Over-reliance on the lottery, as is currently the case, would not have been my ideal. However, we have the current show and we must support it—let us go with what we have now. That is the only reason why I am not 100 per cent behind the noble Lord in this regard.
I feel that we could do better. If we put our heads together we could come up with a more aggressive stance than that in the Bill. However, this Bill is what we have now. Racking up the process for a couple more goes would probably not be as advantageous. The politics behind our being able to win the bid are pretty well known. These amendments contain an approach that I recommend we do not follow. A bespoke Bill, for this occasion or in relation to any future bid in which we believe we stand a realistic chance, is the least that the Olympic bid deserves.
Lord McIntosh of Haringey: My Lords, if it was thought at any stage that I accused the noble Lord, Lord Moynihan, of attempting to weaken the London bid through these amendments, that was a mistake. I certainly did not intend to make that accusation; that is not what he intends to do. I know that he is fully behind the London bid and I applaud him for it. We are at one on that.

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6.30 p.m.
This is a series of very modest amendments. They are designed to see if it is possible to have a Bill which could be brought off the shelf again on a future occasion if, as we hope will not happen, the London bid fails. As such, I am very sympathetic to it. I should like to think that it would work, because I should like to think that we could avoid primary legislation. Alas, I have been persuaded by those more expert in these matters than I am that it would not work and therefore, regretfully, I am not able to support it.
It is an attractive and flexible proposal, but we think that it would be unwise to have the broader powers and such open-ended legislation as proposed by these amendments. We do not think that it would remove the need for more specific legislation, if at a future date there were another UK city bidding for the Olympics.
The provisions of the Bill are focused on the London Olympics in 2012. They set up a hypothecated lottery stream to fund those Games. As the noble Lord, Lord Addington, said, there are those who wish it was not financed in that way; there are those who think that the balance between lottery and local funding should be different. These are legitimate points of view. The Bill as it stands, however, reflects current lottery funding arrangements and the bespoke funding package that has been put in place by the Secretary of State for Culture, Media and Sport, together with the London Development Agency and the Greater London Authority, to help fund the 2012 Olympics, and it would not work anywhere else.
In order to reach this agreement, we had extensive cost-benefit analysis by the consultants, Arup; we had negotiations between the Government and the Mayor; we needed to have Cabinet agreement to back the bid; and a bespoke policy framework for the 2012 Olympics in London. The results are in this Bill. It was undertaken in respect of the London 2012 bid but not with the possibility of it being extended to other cities and to later dates.
The assessment of the amount of money to be raised from the Olympic lottery by Camelot was based on the current lottery performance. We cannot be sure that that would be true for another city at another date. I know that the figures are not on the face of the Bill, but this is the primary legislation which was necessary to bring into force the deal which has been reached between the London Development Agency, the Mayor, and the Government. All of these things could well be different and could make it necessary to have a quite different pattern of legislation for another city at a future date.
I am enormously sympathetic to the idea of saving parliamentary time. Nobody is more sympathetic than me. However, valuable time and effort have gone into the preparation and consideration of this Bill. That consideration and effort need not be lost. The Bill could provide a useful framework in the future. It could even be amended by future legislation to enable it to be extended to another city at another date, but that should not be done without more detailed knowledge of the proposals and the circumstances in
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which the support of Olympic lottery games would be expected. It is therefore with a heavy heart that I ask the noble Lord, Lord Moynihan, not to press these amendments.
Lord Moynihan: My Lords, it has taken a long time during this Bill to reach one of those magic moments in parliamentary procedure when one hears the Minister respond to an opposition amendment by saying, "This is a series of modest amendments", and then almost immediately to follow it up with the phrase that he is "very sympathetic". For the first time in I do not know how many hours of deliberation on this Bill, I thought that the Government were going to make a concession and accept my amendment.
The magic moment passed and, like Ernie Els, my optimism was dashed. I move forward to fight another day, in particular with the next amendment standing in my name, which I very much hope will find a consensus in the House and lead to agreement by the Government.
I am grateful to the noble Lord for his comments. Above all, I am grateful to him for pointing out one persuasive argument. That is, should we not win the London 2012 bid—which all of us are united in hoping that we shall, when it is determined in Singapore—it is possible, and indeed likely, that any future bid from another city in the United Kingdom would be tailored in a different way from that in which this one was originally construed, and which this legislation seeks to enact. In those circumstances, it is probably wise to have that flexibility. It would then be appropriate for the government of the day to bring new primary legislation to back the different circumstances, to support the British Olympic Association and the bidding city.
In those circumstances, and given the lucid explanation by the Minister on that specific point, while I am disappointed and I think that we owe it to future Ministers for Sport to make sure that this legislation is not lost—and that is what these amendments were designed to achieve—nevertheless, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 23 to 27 not moved.]
Clause 26 [Payments out of Fund]:
[Amendment No. 28 not moved.]
Lord Moynihan Lord Moynihan moved Amendment No. 29:
Page 14, line 37, at end insert—
"( ) to the British Paralympic Association;"
The noble Lord said: My Lords, I very much hope the Government will accept this amendment, which I am particularly pleased to introduce. It is designed to include the British Paralympic Association within the list of bodies that can receive funding direct from the Olympic Lottery Distribution Fund rather than through the Olympic lottery distributor.
As the Bill is currently drafted, the British Olympic Association, the Greater London Authority, the National lottery distributor, and even the Secretary of

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State can receive money directly from the Olympic Lottery Distribution Fund. It seems to me that if the Secretary of State can receive such money, then there is a very compelling and strong case for including the British Paralympic Association, which looks after our disabled athletes, in the list which includes the British Olympic Association.
There is a great deal of support for the excellent work of the British Paralympic Association and there is a general feeling that the Bill before us today could, and should, do more to recognise that work. The Government have made a start with the very welcome indication that they intend to support my amendment to Clause 31 in favour of the British Paralympic Association. However, this amendment provides the Government with the opportunity to back up their fine words with the necessary finances.
We must never forget that the London bid for the 2012 Olympics is also a bid for the 2012 Paralympic Games. It is the intention of these Benches that the London Olympic bid and the proposed Olympic lottery should give sufficient emphasis to the Paralympics.
I am very aware of the comments of the Minister for Sport in another place that the reason for the inclusion of the British Olympic Association within the list of beneficiaries in Clause 26 is because they are required to transfer their commercial rights—including their ability to market the Olympic symbol of the five rings—to the London organising committee. This will result in a loss of income to the BOA, and Clause 26 is designed to compensate for that loss.
I must admit, however, to being unclear why the BOA, and indeed the Greater London Authority, cannot just receive this compensation from the Olympic lottery distributor. If the Minister is able to clarify this point, it would be appreciated.
The reason for bringing back this amendment is that there have been a number of developments since it was debated in another place. First, UK Sport announced on 13 July that it is providing some £800,000 to the British Olympic Association to help pay for Team GB's pre-Games preparation camps in Cyprus and Barcelona. That changes the historic independence of the BOA from any source of government or government-influenced funding.
Secondly, the British Paralympic Association has announced that it needs to find some £200,000 in order to stave off financial problems and impending bankruptcy after the Paralympics in Athens this September.
I know that this House contains many friends of disability sport in general and the British Paralympic Association in particular. Noble Lords will be aware that our Paralympic athletes were outstandingly successful at the Sydney 2000 Paralympics, landing an impressive medal haul of 41 gold medals, 43 silvers and 47 bronzes. That was enough to secure Britain second place in the overall medal table: a performance only bettered by the host nation, Australia.
While I welcome the Government's commitment to ensuring that the British Paralympic Association and the British Olympic Association are treated similarly, I am afraid that there is still some way to go. As a nation our sports policy must ensure that we reward winners and this should start as much with the British Olympic Association as with the British Paralympic Association and their athletes to enable them to go one better in the medal table in Athens in September. I beg to move.
Lord Addington: My Lords, this amendment is absolutely right. The British Paralympic Association has added considerable lustre to the British colours for quite a while. Apart from that, if we are serious about equality for the disabled, we must try to start thinking outside the box of, "Let's help him across the road". We need full participation in all aspects of life. If that means that an Olympic athlete with a disability is funded differently from one without a disability, I suggest that he or she should receive support on those grounds alone, irrespective of any medal haul. This measure constitutes a sensible step towards that. I appreciate that the Government have not yet got round to dealing with this. I hope that that is the case. If they do not think that this body is big enough, they are wrong. If they do not think that the issue is important enough, they are wrong. I hope that the Minister will give a favourable response or at least tell us why the amendment is not needed. That would be enough. If he cannot do either of those two things, I certainly would support the amendment.
Lord McIntosh of Haringey: My Lords, I endorse everything that both the noble Lords, Lord Moynihan and Lord Addington, have said about the importance of the Paralympic Games. Clearly, not only are they important for this country but they are also important worldwide. They are symbolic of an attitude that ought to apply throughout our lives. I have no doubt that the noble Lord, Lord Moynihan, through this amendment intends to give equal treatment to the British Paralympic Association and to the British Olympic Association. If I may trespass on the next group of amendments, our willingness to support Amendments Nos. 37 and 39, which the noble Lord, Lord Moynihan, has already indicated, shows that we are entirely in agreement with him about that. I am sorry to say that I have a boring technical reason why Amendment No. 29 does not achieve what it sets out to achieve and would introduce unnecessary discrimination.
There is a specific reason why the British Olympic Association appears in the legislation as a potential recipient of Olympic funds, and why the British Paralympic Association does not. I believe that once I have explained the reason it will be clear why there is no need for this amendment.
If London is successful in its bid, the International Olympic Committee requires the British Olympic Association to enter into a joint marketing programme with the London Organising Committee for the

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Olympic Games. Under this arrangement the British Olympic Association must give the London Organising Committee,
"a sole and irrevocable licence to use and reproduce the whole or any part of the BOA property".
Effectively, the British Olympic Association transfers commercial rights, including the ability to market the Olympic emblems, to the London Organising Committee.
That arrangement greatly reduces the British Olympic Association's ability to generate sponsorship income, which is its main source of funding. The IOC joint marketing programme must include financial provision to the British Olympic Association in consideration for the rights granted to the London Organising Committee.
The British Olympic Association will have a key role to play during this period, both in helping to stage the Games and in supporting Team GB. It will be vital for the British Olympic Association to receive revenues, in spite of its decreased ability to generate income. The inclusion of the British Olympic Association as a possible recipient of Olympic Lottery Distribution Funds was designed in case it was necessary to compensate the British Olympic Association for the transfer of its rights to the London Organising Committee, as required by the IOC, from the Olympic Lottery Distribution Fund. I told noble Lords that this was a boring explanation but I am afraid that it is logical.
It is possible that the funding for the British Olympic Association will come directly from the London Organising Committee marketing and sponsorship programmes. That would mean that the power to transfer funds from the Olympic Lottery Distribution Fund to the British Olympic Association would not be used. However, the power was included in the Bill to ensure that the BOA could receive essential revenue from the Olympic Lottery Fund if necessary.
The British Paralympic Association is in a different position. There is currently no requirement from the International Olympic Committee or the International Paralympic Committee for the British Paralympic Association to surrender its rights. Additionally, the British Paralympic Association does not rely so heavily on marketing and sponsorship income as the British Olympic Association. The BPA receives Exchequer funding for its running costs, unlike the BOA.
The possible requirement to compensate the BOA for loss of income is the only reason why the BOA appears as a possible recipient of Olympic Lottery Distribution Fund payments. There is no need for a similar arrangement for the British Paralympic Association. However, I shall support Amendments Nos. 37 and 39.
6.45 p.m.
Lord Moynihan: My Lords, I am grateful to the Minister. I was aware that there would be a technical response—indeed, I flagged it up during my opening
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remarks—due to the possibility of a loss of income for the BOA. I refer to the explanation that the Minister has just given regarding compensating for this loss. However, I am not persuaded by the Minister's argument about the wider benefits of the British Paralympic Association being excluded. There is real merit in including the British Paralympic Association within the overall list, which goes much wider than the British Olympic Association. As I mentioned, it covers the Greater London Authority and the National Lottery distributor. Even the Secretary of State can receive money directly from the Olympic Lottery Distribution Fund. For those reasons I should like to test the will of the House on this amendment.
The Deputy Speaker: My Lords, the Question is that Amendment No. 29 shall be agreed to. As many as are of that opinion will say, "Content". To the contrary, "Not-Content". Clear the Bar.
Division called.
Tellers for the Contents have not been appointed pursuant to Standing Order. 54. A Division cannot therefore take place, and I declare that the "Not-Contents" have it.
Amendment negatived.
Clause 30 [Distribution]:
[Amendments Nos. 30 to 35 not moved.]
Clause 31 [Distribution policy]:
[Amendment No. 36 not moved.]
Lord Moynihan Lord Moynihan moved Amendment No. 37:
Page 17, line 18. at end insert ", and
(iv) the British Paralympic Association"
The noble Lord said: My Lords, I am pleased to introduce these amendments, which include the British Paralympic Association in the list of consultees on the Olympic lottery strategy. I hope that they will meet with approval from both the Government and the House. A similar amendment was debated in Committee and it was encouraging to learn from the Minister that the Government were minded to look favourably on the principle contained in the amendment, provided that some changes were made.
I am also grateful for the support of the Liberal Democrats, including that of the noble Lord, Lord Addington, in Committee. Subsequently, the Minister wrote to me on 12 July and indicated the Government's support for the amendment, for which I am grateful. I have always believed that many sporting issues cut across party lines in the House, and in many cases those lines are erased altogether.
All sections of the House have worked together in the past to bring about improvements to legislation to the overall benefit of sport. This amendment is one of those areas where there should be no difference between the political parties. There is a great deal of support for the excellent work of the British Paralympic Association, and there is a general feeling that the Bill could and should do more to recognise that work. That is the underlying rationale for the

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amendment. It is designed to ensure that when the new Olympic lottery distributor prepares or revises its distribution policy, it will have a statutory requirement to consult with the British Paralympic Association.
As the Bill is presently worded, when the Olympic lottery distributor draws up its distribution policy it is under a statutory requirement under Clause 31(4)(b) to consult with the National Lottery Commission, the Mayor of London and the British Olympic Association. It is eminently sensible that the key stakeholders in the London 2012 bid are consulted. They are well placed to help to set the main parameters for the spending of the £750 million of lottery funding for the bid.
Yet the original Bill made no reference to the British Paralympic Association. Were anyone tempted to ask why it is so important for the British Paralympic Association to be included in the list of statutory consultees for the Olympic lottery distributor, the answer is simple. It is because the British Paralympic Association can bring uniquely valuable experience and expertise to the distribution policy, and can help to ensure that the Olympic lottery distributor takes proper account of the Paralympic Games.
One of the more satisfying aspects of my time in another place as Minister for Sport was the opportunity to help oversee the setting up and funding of the first million pounds to go to the British Paralympic Association, in 1989. Since that time, the role and reputation of the British Paralympic Association has grown immensely. It sends teams to every Paralympic Games, and supports the development of elite athletes. In so doing, the BPA has developed a body of expertise in high performance disability sports which is second to none.
The Paralympic Games have their own special organisational requirements. To give the House an idea of the scale of the task ahead, it is helpful to look back on the Sydney 2000 Paralympic Games. A record 122 countries participated at those games, the largest games in paralympic history. During the games, the paralympic village was home to 6,943 people, of whom 3,284 were athletes, 2,315 were team officials and 804 were technical officials.
Clearly, there were a number of specific issues concerning the staging of the Paralympic Games and it is important that the Olympic lottery distributor has access to the best advice available. The British Paralympic Association is in a position to supply that advice, and it is more than happy to do so. It is essential that the Bill is amended to take maximum advantage of the skills in the BPA and to ensure that the 2012 Olympic and Paralympic Games are a huge success.
The amendment will help to ensure that the London 2012 games are fully inclusive and that that inclusiveness starts right at the very top, with the lottery distribution policy, and then permeates down to every level of the games. I beg to move.
Lord Addington: My Lords, what happens should reflect the reality of the situation, and I hope that the Government will still support the amendment.
Lord McIntosh: My Lords, I endorse every word that the noble Lord, Lord Moynihan, said and I support the amendment.
On Question, amendment agreed to.
[Amendment No. 38 not moved.]
Lord Moynihan Lord Moynihan moved Amendment No. 39:
Page 17, line 23, at end insert ", and
(d) the British Paralympic Association"
On Question, amendment agreed to.
Clause 33 [Interpretation]:
[Amendments Nos. 40 and 41 not moved.]
Lord Addington Lord Addington moved manuscript Amendment No. 41A:
Insert the following new Clause—
"Reports on financing of Olympics
"(1) A report about the financing of the Olympic Games in London, including the raising and distribution of Lottery money, shall be commissioned following—

(a) the decision of the International Olympic Committee to elect a city to host the 2012 Olympic Games, and

(b) the completion of 2012 Olympic Games in London, that is published and presented to both Houses of Parliament.

(2) Such a report shall incorporate any additional reports on the same subject by—

(a) the House of Commons Culture, Media and Sport Select Committee,

(b) the House of Commons Public Accounts Committee,

(c) the National Audit Office, and

(d) the Organising Committee of the 2012 Olympic Gaines.

(3) Such a report shall contain an analysis of the advantages and disadvantages of establishing National Lottery games to raise money in connection with future sporting and cultural events in the United Kingdom."
The noble Lord said: My Lords, I must apologise for having a manuscript amendment—it appears that my original drafting was slightly outside the scope of the Bill. This is a fairly simple point. This is a narrow Bill, which deals with the 2012 Olympic bid for London. The amendment is an attempt to guarantee that if something goes wrong within the scope of the Bill, a report can be produced or any reports can be brought together so that we know what happened and what went wrong for all future events. The primary reason for the amendment is that the lessons learned will not only apply to any future Olympic bid but to any major event we care to take part in, such as the cities of culture competition or other games or championships.
It was suggested in Committee that this information is generally available if one knows where to look. The amendment is an attempt to bring it together coherently, so that there is at least a starting point for making an assessment with regard to future activities. That is the aim and objective of the amendment and I beg to move.
7 p.m.
Lord Moynihan: My Lords, I shall be very brief. I am pleased to support the principle behind the amendment. What the noble Lord proposes seems eminently sensible

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and should be of benefit to sport in the United Kingdom. It is hard to believe it, but now is the first time that London has bid for the Olympic Games since it last hosted them in 1948. If the unthinkable happens and London is not chosen to host the 2012 Olympic Games, there should be an inquiry into how we could have done better. That should include such areas as government support and transport, as well as finance. I very much hope that the Minister will support the amendment.
Lord McIntosh of Haringey: My Lords, we considered a comparable amendment in Committee, and I said that I was very happy to discuss the matter with the noble Lord, Lord Addington, and wrote to him to that effect to invite him to a meeting. However, I had no response.
Lord Addington: My Lords, if a letter were sent, it never got to me.
Lord McIntosh of Haringey: My Lords, I am sorry; it must have been one of those things. I am afraid that my answer is very similar to what it was on the comparable amendment. The amendment would make the creation of two reports—one to be commissioned when the IOC decides who will host the games in 2012, and a further on completion of a London games—a statutory requirement. Certainly there must be due process to capture and make the most of all the available information in relation to staging the Games, but I do not believe that the amendment is the best way to achieve that.
As we said in Committee, there are already a number of arrangements in place to capture key information, and hold accountable those bodies charged with delivering the Games and ensuring an appropriate sporting legacy from them. In terms of parliamentary scrutiny, there are appropriate measures through existing parliamentary powers, and I am confident that those would be exercised. The Select Committee on Culture, Media and Sport has already demonstrated a close interest in the London Olympic bid. We have welcomed that and contributed to it. I am sure that the committee will continue to do so, and the Public Accounts Committee will play an appropriate role. My department already works closely with other key stakeholders in the bid, including the sports lottery bodies and the devolved administrations, to consider how best to capture the benefits of the Games, whatever the outcome, so that knowledge can be transferred and used for future bids.
As for the report on the completion of the Games, the host-city contract that will be entered into with the International Olympic Committee requires that within three months of the conclusion of the Games, the organising committee for the Olympic Games it has the horrible acronym of OCOG—submits to the IOC a report on all aspects of the organisation of the Games, including an analysis of performance. A report has been produced for each Olympic Games since Athens in 1896. I cannot see how commissioning a further report with the same purpose will enhance the legislation, nor can I see a good reason for such a provision to appear in the Bill.
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The proposals should not be translated into additional statutory requirements as part of the legislation. I honestly think that the issues are already covered by the arrangements in Parliament and from the International Olympic Committee. I shall be very happy to discuss the matter in more detail with the noble Lord, Lord Addington, without the necessity for a letter, which might not reach its destination.
Lord Addington: My Lords, if there is a letter in future, we hope that the parliamentary postal service will meet its normally excellent standards and will not let us down. I have a nagging suspicion that I shall discover that the letter has fallen down the back of a file somewhere; that is the normal fate of letters that do not get through. I shall leave the mess of my office aside.
We have not moved any further forward. My thrust was to try to bring the matter to one coherent whole, so that people can actually find out what is going on and so that there is a report that is better designed for the reference purposes of those who look at it from outside. If there is some way to achieve that, it would help dramatically in the whole process through which we are going. It might even help in all future relevant situations in which we try to get something to encourage public attention, as there would be something from which we were able to break down information for other sporting events.
One of the changes in tack between the noble Lord, Lord Moynihan, and myself is that I regard the Olympics as the best thing on a conveyor belt going past us, although other events are very important. The Olympics are the cherry on top of the cake—they are something to strive for, but there are many other sporting and cultural events for which we should go. That is one reason why it is so important that we have better information.
Given the very favourable response and the fact that the Minister has been prepared to discuss the matter, it would be totally inappropriate to take the amendment to a Division at the moment, but I shall endeavour to get in touch with the Minister's office this time. Let us see if I can get a message through. We can discuss the matter and see whether there is some caveat, or something else that can be done. There is a practical point here that is not addressed by the current systems, which seem only to address the top-level organised professionals. With that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 40 [Commencement]:
Lord Moynihan Lord Moynihan moved Amendment No. 42:
Page 21, line 25, at end insert—
"( ) No part of Part I shall be brought into force unless a draft of a statutory instrument containing the order has been laid before Parliament and approved by a resolution of each House."
The noble Lord said: My Lords, the intention behind the amendment is to ensure that Parliament has the final approval on the Government's decision to sell the Tote. I recognise that there has been much debate about the need to hold the Government to their manifesto commitment to sell the Tote to a racing trust. As such, I will endeavour to provide a brief

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overview of the benefits of the amendment, while recognising that it clearly falls into the category of an amendment that has far greater relevance if the Government fail to fulfil their undertakings given earlier this afternoon when we return in September.
As we know, so many of the Government's intentions for the Tote are to be taken on trust. Although I recognise that there has been some movement during the passage of the Bill, the Government still refuse to specify the Racing Trust in the Bill. Noble Lords will also be aware that the price charged for the Tote is of vital importance to the Racing Trust. That is because the trust will need to borrow the money to pay the Government, and so is limited by the cost of interest payments on the debt. In other words, the promise to sell to the Racing Trust is worthless unless the price is one that the trust can afford.
I shall not develop the full detail of the argument during my short speech. I want to underline that the amendment is designed to do the next best thing to delaying Third Reading until a satisfactory sale of the Tote to a racing trust is achieved. It does so by allowing the Government a free hand to negotiate or complete the sale of the Tote, with the proviso that the final agreement is then subject to parliamentary approval. If Parliament does not agree with the Government's intentions, the whole of Part 1 will fall and the Tote will remain as it is currently constituted.
The amendment overcomes all the concerns that the Minister put before the House earlier. It overcomes the concerns about finalising the negotiations and waiting until the European Commission has come up with its ruling—if any. It overcomes all the concerns shared by many people, both inside this House and outside, that there is a possibility, if Part 1 is passed unamended, that the Government could simply nationalise the Tote and sell it to whomever they like, whenever, at whatever price and under whatever circumstances.
The Minister and the Minister for Sport have been eloquent in arguing that selling the Tote to a racing trust is sacrosanct—that it is a manifesto commitment and a policy that the Government will see through. The amendment allows them to go ahead and deliver, with Parliament having the final say. I am sure that that final say would take only minutes, if that, when it was finally requested, but at least it would be a backstop. It would enable myself or someone in my position in future to praise the Minister and the noble Lord, Lord Lipsey, as chairman of the Racing Trust, for their work in achieving the goal that they set out before Parliament.
The amendment has the benefit of allowing flexibility for the Government and the House. I humbly suggest that it offers more flexibility than the Government's own amendment. It has also the not inconsiderable advantage that, rather than relying on the Secretary of State's opinions about whether someone is a person,
"representing the interests of the sport of horse racing",
it relies on the facts as presented to both Houses of Parliament.
As I mentioned at the start of this speech, the principle behind the amendment has already been well debated. I am conscious that it would be unwise to move to a Division at this stage, because it is absolutely the type of amendment that we would need to consider when we return in September on the first day after the Recess to assess the effectiveness or otherwise of the Government's commitment to negotiate a successful sale with the Racing Trust.
Every day between now and mid-September, therefore, is focused towards that goal and the amendment could be returned to if the undertakings that the Minister has given the House today are not achieved. For those reasons the principle behind the amendment is important and becomes even more important as a result of today's proceedings. I beg to move.
Lord Lipsey: My Lords, I greatly welcome the decision of the noble Lord, Lord Moynihan, not to press the amendment to a vote this afternoon. I have been reflecting, while your Lordships have been debating the Olympic lottery, which is not a subject upon which I could contribute, that we have seen two important developments today.
First, the Minister has said what the Government can and cannot do under the conventions in terms of negotiating a deal and he has promised to write to noble Lords with his view. That letter will be of great importance to all of us in assessing what we should do when we return to the Bill. We need to assess that letter before we decide on fundamental steps.
Secondly, the Minister said that he would have no objection if the date of 7 September goes—I paraphrase him although it is perhaps not entirely accurate. I can see wisdom in shifting that date back—perhaps not too far, but to give us a little time to take stock at the beginning of September when we are all assembled. In those circumstances the noble Lord, Lord Moynihan, would be doing the right thing in coming finally to the right decision and withdrawing the amendment.
Lord McIntosh of Haringey: My Lords, I have little to add to what I said at the beginning. In so far as there are new matters raised by the amendment, I undertake that they will be addressed in the letter that I propose to write.
Lord Moynihan: My Lords, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
7.15 p.m.
Schedule 1 [New Schedule 1A to the Betting, Gaming and Lotteries Act 1963]:
Lord Lipsey Lord Lipsey moved Amendment No. 43:
Page 22, line 18, at end insert "in all material respects"
The noble Lord said: My Lords, having been almost reprimanded by the noble Lord, Lord Moynihan, for being brief in moving certain earlier amendments

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which were of value in protecting the Tote, I had drafted a two and three-quarter hour speech on the amendment. But I suspect that at this time of night that might not be wholly welcome to the House.
I should say that, given that the breach of the condition set out in the schedule constitutes a criminal offence, only material failures should constitute such an offence. If a totalisator is not working one morning because someone has put glue in it or it is not operated properly, that would constitute an immaterial factor and it would not be fair for anyone to go to gaol as a result. Therefore, I hope that the Minister will accept the amendment, which is minor and technical but will provide some comfort to the wives and husbands of Tote employees who will find that their spouse is not likely to be locked up as a result of this drafting. I beg to move.
Lord Moynihan: My Lords, given that I am not surrounded by my Whips at this stage of our proceedings, I am pleased that the noble Lord, Lord Lipsey, is not planning to push the amendment to a vote. However, I am delighted to support the amendment which is similar to Amendments Nos. 10 and 12 which we debated earlier and bears more than a passing resemblance to an amendment in my name that we considered in Grand Committee.
I hope and trust that in being brief the noble Lord, Lord Lipsey, has more success convincing the Minister with his compelling arguments than I had in Grand Committee.
Lord McIntosh of Haringey: My Lords, no such luck. I am afraid that the words, "in all material respects" do not add anything at all to the meaning of the schedule. Parliamentary counsel are deeply reluctant to add words that do not have any meaning and I have some sympathy with that. However, I think that what the noble Lord, Lord Lipsey, is looking for is an assurance that the wives and children of unfortunate operators of totalisators will not find themselves in prison as a result of a minor infringement which could hardly be called their fault. A minor technical glitch will happen from time to time and the Gaming Board will have to decide whether a pool betting operator has failed to comply with the requirements set out in paragraph 4 of Schedule 1A. I believe that the Gaming Board will not behave unreasonably. It will be required by administrative law not to behave unreasonably and it would not be constrained by the phrase "in all material respects".
Lord Lipsey: My Lords, my noble friend the Minister's comforting words will no doubt be nailed above the beds of the partners of every Tote employee in the land. In view of his comments I shall not press the amendment to a vote. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
In the Title:
[Amendments Nos. 44 and 45 not moved.]
Lord Davies of Oldham: My Lords, I beg to move that House do now adjourn during Pleasure until 7.30 p.m.
Moved accordingly, and on Question, Motion agreed to.
[The Sitting was suspended from 7.16 to 7.30 p.m.]

Parliamentary Commissioner Act 1967 (Amendment) Bill [H.L.]
7.30 p.m.
Baroness Noakes: My Lords, I beg to move that this Bill be now read a second time.
Before I speak to the Bill, I offer an apology to the House for causing the adjournment 10 minutes ago. I have found that it is impossible to be in two places at once. At the time, I was in the Grand Committee.
I am very pleased to have the opportunity to bring this Bill to your Lordships' House. It is a very short Bill, with one substantive clause. That clause does two very simple things to the Parliamentary Commissioner Act 1967. First, in subsection (2) the Bill extends the circumstances in which the Parliamentary Commissioner, who is better known as the Ombudsman, will investigate a complaint; and, secondly, in subsection (3), it adds the Government Actuary's Department to the list of bodies that are within the Parliamentary Commissioner's remit as set out in Schedule 2 of the 1967 Act.
Before explaining those two subsections, it might be of assistance to the House if I paint a little of the background that has led me to introduce the Bill for consideration. The Parliamentary Commissioner has an important role in carrying out independent investigations into the administrative actions of government departments and other public bodies. The Parliamentary Commissioner is an important part of the framework of checks and balances in our constitution and is held in very high regard. My Bill extends the scope of the Parliamentary Commissioner's work.
The real background to my Bill is the sorry story of Equitable Life Assurance Society, which was closed to new business in December 2000. I am extremely pleased to be able to report to the House that I have absolutely no interests to declare in this regard as neither I nor any of my family invested a penny piece in Equitable. But I feel sure that many noble Lords join me in having at least second-hand experience of the sense of outrage felt by those whose financial security was removed or severely dented by Equitable.
I shall not delve into the fall of Equitable itself. Earlier this year, we had the very extensive study into Equitable by the learned Lord Penrose, and we have had the opportunity to debate that. The driving force behind my Bill is the role of government departments in the financial misery meted out to Equitable policy holders. The Penrose report highlighted the management and governance failures that beset the conduct of the company's affairs. But the report also singled out the role

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of other agencies involved, notably the Financial Services Agency, the Treasury and the Government Actuary's Department.
The Penrose report did not, of course, opine on maladministration as such, but it offered much evidence to contribute to a judgment about the relevant administrative actions—that is, it is very relevant to a consideration by the Parliamentary Commissioner.
As would be expected, the Parliamentary Commissioner received many complaints from aggrieved policy holders. Having resisted initially, the Parliamentary Commissioner eventually decided in October 2001 to examine one representative complaint. That investigation was to cover only the work of the FSA and only for a period of a little less than two years from 1 January 1999.
In November 2002, a new Parliamentary Commissioner was appointed and she confirmed that the investigation would not cover a longer period. She repeated that conclusion in June 2003, when her report on the representative complaint was eventually made to Parliament. She also stated that she had no legal power to examine the Government Actuary's Department as it was not listed in the 1967 Act.
It was not surprising that those Equitable policy holders who lost so much financially could not comprehend the Parliamentary Commissioner's decision, and could not understand why she would not look at the whole sorry history of Equitable, as the learned Lord Penrose did. They also did not understand why the Parliamentary Commissioner would not look at the Government Actuary's Department along with the DTI and the Treasury before 1999. Honourable and right honourable Members of another place could not understand it either, which is why there was much pressure for the Parliamentary Commissioner to think again.
In April this year, the Parliamentary Commissioner said that she would look again at whether she should re-investigate matters related to Equitable Life. A few hours ago she announced her decision, which is that she will re-open the case and investigate the period before 1999. That is a welcome decision for all those who have suffered because of Equitable. But the bad news is that she confirmed that she had no power to examine the Government Actuary's Department, although she has asked the Treasury to extend her powers in that regard.
I now turn to the specifics of the Bill. Under the 1967 Act, the Parliamentary Commissioner may conduct an investigation outside the normal time limit for complaints if he considers that there are special circumstances that make it proper to do so. The Bill that I present to the House goes one step further and says that the Parliamentary Commissioner shall conduct an investigation if the House of Commons so resolves.
The Parliamentary Commissioner reports to the House of Commons and receives complaints via MPs, so it seems right that the other place should be able to direct that the Parliamentary Commissioner carries out an investigation, even if it is outside the normal
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timeframe. That deals with a general frustration that has been felt that the other place ought to have a little more say in what cases the Parliamentary Commissioner should investigate. It is a modest extension of the powers of the other place.
Subsection (2) brings the Government Actuary's Department within the scope of the Parliamentary Commissioner Act 1967 by adding it to Schedule 2. The Penrose report describes the Government Actuary's Department as "persistently naive" and "complacent". In her report today the Parliamentary Commissioner says at paragraph 33:
"I consider there is sufficient initial evidence to suggest that the actions of GAD are key to an assessment of whether maladministration by the prudential regulator constituted an unremediated injustice to complainants".
As I said earlier, the Parliamentary Commissioner has asked the Treasury for her jurisdiction to be extended to cover the Government Actuary's Department. My Bill is directly in point. I am delighted that the Minister is here this evening to respond to the Bill. I hope that he will say that the Government support my Bill. If the Minister cannot say that, I hope that he will at least indicate how the Government intend to respond to the Parliamentary Commissioner's request. I commend the Bill to the House.
Moved, That the Bill be now read a second time.— (Baroness Noakes.)
7.38 p.m.
Lord Newby: My Lords, I congratulate the noble Baroness, Lady Noakes, on bringing forward the Bill today. Whether she is unusually prescient or whether she has precipitated the ombudsman to bring forward her report, I am not sure. The timing is absolutely perfect.
We, on these Benches, have supported the ombudsman route as the most likely way, post Penrose, of achieving progress on Equitable Life. Therefore, we are extremely pleased that the ombudsman has decided, in principle, that she would like to investigate Equitable. However, the question is whether the Government will allow her to do so by extending the scope of the Act that we are discussing tonight to bring the Government Actuary's Department within it. A failure by the Government to agree fairly rapidly to do that would suggest that they are obstructing a possible definitive ruling on at least one aspect of the Equitable Life debacle. Therefore, I hope very much that they accede to the ombudsman's request.
Given that we have a Bill before us which does that—here is one that the noble Baroness prepared earlier—it would seem that the sensible way forward from the Government's point of view is just to agree to it and be done with it, save the time and let the ombudsman get cracking. One of the main problems with this whole sorry story is the amount of time that has passed since the problems arose and even the possibility of any redress.

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So I hope that the Minister will be very forthcoming this evening. If not, I hope that the Government will come forward with a speedy response. It is a very simple request. The legislation required is short and sweet. There can be no "in principle" argument against introducing it. So I am afraid that it is over to you, Minister.
7.41 p.m.
Lord Bassam of Brighton: My Lords, I congratulate the noble Baroness on her prescience in bringing this Bill before your Lordships' House and on pursuing this matter with her usual vigour.
As the noble Baroness said, the parliamentary ombudsman has this afternoon announced that she will conduct a further investigation into the prudential regulation of the Equitable Life Assurance Society—Equitable Life.
I know that the House is aware of the background. The ombudsman agreed to give further consideration to the position following the publication of the Penrose report and the Government's response to that report. In the special report laid before Parliament today, the ombudsman makes clear the reasons for her decision. Her decision was reached following an extensive consultation exercise. In her report, she states that she,
"received approximately 2,000 responses, including 211 from Members of Parliament, 1,603 from policyholders or former policyholders, three from policyholder action groups, and responses from Equitable Life, the Treasury, the Financial Services Authority, the Government Actuary's Department and the Department of Trade and Industry".
So I think we need be under no illusion that there is considerable concern about the whole issue—a very sorry saga, as the noble Baroness described it.
As part of the consultation exercise, the ombudsman also invited a number of interested parties to meet her, and the details are set out in the report.
The ombudsman states in her report that the new investigation will focus on the actions of the government departments responsible under the relevant legislation for the prudential regulation of Equitable Life. She makes clear that her investigation will, subject to the approval of a request she has made of the Government, also include the actions of the Government Actuary's Department.
This afternoon the Government received a formal request from the ombudsman to make the necessary arrangements to include the Government Actuary's Department within her jurisdiction. We have only just received this request and we will give it urgent consideration, not least because of the time that has elapsed since the onset of problems with this particular issue relating to Equitable Life. We will reply to the ombudsman as soon as we possibly can.
I have been invited to make some observations on the noble Baroness's Bill. I shall keep these brief. First, if the Government agree to the request to include the Government Actuary's Department within the ombudsman's jurisdiction, Section 4(3) of the
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Parliamentary Commissioner Act 1967 provides that public bodies which meet certain criteria can be added to her jurisdiction by Order in Council. Bodies not meeting those criteria could only be added by primary legislation.
Therefore, if the Government agree to the ombudsman's request to include the Government Actuary's Department within her jurisdiction, they could be expected to do this by Order in Council rather than primary legislation. The Government are therefore not convinced of the need for this part of the Bill.
Secondly, in addition to including the Government Actuary's Department within the ombudsman's jurisdiction, the noble Baroness's Bill also proposes amending Section 6(3) of the 1967 Act. That section of the Act provides that, where there are special circumstances which make it proper to do so, the ombudsman may consider complaints more than 12 months old.
The amendment proposed by the noble Baroness would add a new paragraph, which would provide that the commissioner,
"(b) shall conduct an investigation pursuant to a complaint not made within that period if the House of Commons so resolves".
At present, the ombudsman decides what cases to investigate. To give the other place the power to tell the ombudsman that she must investigate would, I believe, have implications for the operation of the office of ombudsman. I also think it unlikely that the ombudsman herself would support a Bill that sought to fetter her decision-making powers.
I make these observations on the noble Baroness's Bill, not in the spirit of great hostility because I recognise the spirit in which the Bill has been constructed. I am prepared to give an undertaking, which is a quite easy one to give, that we will reply to the ombudsman on the issue of including the Government Actuary's Department within her jurisdiction as soon as possible because we recognise the urgency of the issue.
The ombudsman's report is most helpful. We will make a rapid response. While we are not hostile to the Bill, it is deficient in the ways we have described. So, it is not for us obviously to deal with that matter today. Much as we welcome the opportunity to make our views known with regard to the usefulness of the ombudsman's report, it is probably best if we leave it there.
7.46 p.m.
Baroness Noakes: My Lords, I thank the noble Lord, Lord Newby, for his support for the Bill and I thank the Minister for his response. Perhaps I may say to both noble Lords that I do not feel that I had prescience in the matter; I think I was lucky with my timing.
The Minister used the sorts of formulations that we often hear from the Government Front Bench—that the matter will be given urgent consideration and that a reply will be made as soon as possible. We know that that can mean many things to many Ministers. I hope that the Minister will send a message back to

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colleagues in the Treasury that this really is an important matter which needs to be dealt with earlier.
If the Government do agree, I accept that the simplest procedure would be to add the Government Actuary's Department by Order in Council. But until we see the Government's response we must wait and see.
I hear the Minister's comment that the additional power to the other place may well be deemed to be excessive, but I would say to the Minister that the purpose of the existence of the parliamentary ombudsman is as a check on the executive, not as a
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check on the other place. If we can improve ways in which the executive can be held to account, then I cannot see that anybody really can object to that.
Inevitably, today's report of the parliamentary commissioner has changed the scenario. Over the summer obviously I shall be considering what to do with my Bill alongside consideration of any government response.
On Question, Bill read a second time, and committed to a Committee of the Whole House.
House adjourned at eleven minutes before eight o'clock.