Lords Sitting of 22 March 2004

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

Royal Assent
The Lord Chancellor (Lord Falconer of Thoroton): My Lords, I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified her Royal Assent to the following Act:
Consolidated Fund Act.

"Flying Scotsman"
2.37 p.m.
Lord Faulkner of Worcester: My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In doing so, I declare an unpaid interest as a member of the Railway Heritage Committee.
The Question was as follows:
To ask Her Majesty's Government what assistance they are giving to the National Railway Museum in its bid to acquire LNER Gresley A3 Pacific "Flying Scotsman" for the national collection.
The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord McIntosh of Haringey): My Lords, I start by wishing my noble friend a very happy birthday.
The Government have not been asked for assistance by the National Railway Museum with its hid to acquire the "Flying Scotsman" for the national collection. However, I understand that the museum has applied for a grant to the National Heritage Memorial Fund.
Lord Faulkner of Worcester: My Lords, I thank my noble friend for his Answer and, indeed, for his kind wishes. He will know that the "Flying Scotsman" is viewed by the British public as an icon, a national treasure and an extraordinary feat of British engineering. It is almost unthinkable that it could be sold abroad or, worse still, finish up on the forecourt of a pub car park.
Is my noble friend aware of how well the NRM appeal is going? So far it has received over 2,000 contributions in little more than two weeks ranging from £5 to £50,000. I ask the Minister to do two things. First, can he give an undertaking that the DCMS will defer an export licence for an overseas overbidder, if that is the outcome of the tender process, to give the NRM more time to see whether it can match the bid?
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Secondly, the Minister referred to the National Heritage Memorial Fund, which I understand meets tomorrow to discuss the bid. Will he give every encouragement for support by the fund to be as generous as possible?
Lord McIntosh of Haringey: My Lords, my noble friend Lord Faulkner is right about the support for the campaign to keep the "Flying Scotsman" here. I understand that in that regard the National Railway Museum receives more than 100 letters every day. As to whether we support the grant, the arm's length principle requires that awards by the National Heritage Memorial Fund are made independently of government by the trustees of the fund, who will make their decision after receiving expert advice.
As regards an export licence application, my noble friend made a good case for saying that this is a suitable subject for meeting the Waverley criteria. It has a close connection with our history and national life. I am sure that as a railway enthusiast he would say that it is of outstanding aesthetic significance, and it is of outstanding significance for the study of art, learning and history. However, that does not mean that I can anticipate what decision will be taken about an export licence application if and when it is made.
Baroness Buscombe: My Lords, does the Minister not agree that it is imperative that the "Flying Scotsman" remains in the United Kingdom, the country where it was built and where it remains a powerful symbol of our heritage?
Lord McIntosh of Haringey: My Lords, as always, the noble Baroness, Lady Buscombe, makes a very good case.
Lord Bradshaw: My Lords, as someone who was born and brought up by the Great Western Railway, I acknowledge that this locomotive has some value. However, will the Minister acknowledge the great value that the railway heritage industry brings to this country in terms of education and the training of craftsman, and to the tourism industry? Although there are "anoraks" connected with the industry, there is a very serious purpose behind the Question.
Lord McIntosh of Haringey: My Lords, as befits someone brought up by the Great Western Railway, the question of the noble Lord, Lord Bradshaw, is to a wider gauge—perhaps the Brunel gauge—than the Question originally asked. However, I am sure that there can be no objection to the general statement that he made.
Lord Monro of Langholm: My Lords, I appreciate the Minister's response. However, will he bear in mind the relevance to Scotland, where there is a particular enthusiasm for the engine, especially for pulling tourist trains? Perhaps he will drop a hint to the Scottish Executive that it might put some money into this.
Lord McIntosh of Haringey: My Lords, I would not dare. However, on the other hand, the National

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Railway Museum has stated that if it does succeed in acquiring it, the engine will not be kept just at York but will be shown at Shildon in County Durham and will be available for other sites in the country. No doubt that would include Scotland.
Lord Berkeley: My Lords, my noble friend gave the House great confidence when he said that this locomotive would need a licence for export. Is that the same kind of licence that would be required for a Constable painting or any other work of art? Can he confirm that the criteria used to evaluate what should be allowed to be exported and what should stay are the same, and will be the same for any other works of art one might mention?
Lord McIntosh of Haringey: My Lords, in this case the criteria would be that it is more than 50 years old—the "Flying Scotsman" was built in 1923; that it is worth more than £65,000—I think it would meet that criterion; and that it has not been previously exported or imported. The "Flying Scotsman" has been around Canada and the United States but I understand that it has always been under UK ownership. Therefore, my understanding is that it would qualify.

Courts Martial
2.42 p.m.
Lord Thomas of Gresford: My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In doing so, I declare an interest as having appeared as an advocate in various courts martial.
The Question was as follows:
To ask Her Majesty's Government whether, in the light of their objections to the procedures proposed by the United States Government for Guantanamo trials, the practice of the escort accompanying a defendant in a British naval court martial with a drawn and brandished sword, and the wearing and display of sheathed swords by the prosecutor and members of the court martial, is to be maintained.
The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Bach): My Lords, the Royal Navy has determined, for reasons wholly unconnected with Guantanamo, that there is no longer a requirement for the escort accompanying a defendant in a naval court martial to carry a drawn sword, or for members of the court martial to wear sheathed swords. The first naval court martial to be held without swords was convened at Her Majesty's Ship "Drake" in Plymouth on 15 March 2004.
Lord Thomas of Gresford: My Lords, I am most grateful to the Minister for that response. I have heard that a drawn sword was used very much later than that—
A noble Lord: Not very much—I can tell you.
Lord Thomas of Gresford: Well, not very much—since. Does the Minister consider whether, in the current atmosphere, courts martial should be confined to questions of military discipline and that the practice of prosecuting soldiers, sailors, airmen and their families for civil offences in cases which are much more apposite to the Crown Court should be abandoned?
Lord Bach: My Lords, first, I hope that the noble Lord will let me know of those cases that have occurred within the past seven days. Secondly, the answer to his serious question is that we do not intend to abandon courts martial. We believe that civilian courts are less likely than service courts to possess a full appreciation of the importance of discipline to the operational capability of the Armed Forces and of the possibility that an offence committed in the service environment may have even more serious implications than a similar offence committed in civilian life. Moreover, at the moment civilian courts do not have jurisdiction to try service disciplinary offences.
There are other reasons, too. As the noble Lord will know much better than I, in most cases civilian courts in the United Kingdom do not have jurisdiction in respect of offences alleged to have been committed overseas. The world-wide application of service law is particularly important for mobile forces which need to be able to maintain discipline as a key to operational capability. Service courts are also able to try alleged offences committed outside the United Kingdom. That can be a useful means of ensuring that the accused are dealt with in English courts and in accordance with the system of English law rather than in foreign courts where language, law and procedures can be rather different.
Lord Astor of Hever: My Lords, in the light of the recent challenges made to the European Court of Human Rights, do the Government believe that the courts martial system is secure from further challenges?
Lord Bach: Yes, my Lords. We do believe that the system is secure from further challenges. After all, the judgments made it quite clear that the principle of courts martial was upheld and was deemed not to be against the Human Rights Act.
Lord Campbell of Alloway: My Lords, how can a drawn and brandished sword used for ceremonial purposes be contrary to any article in the Human Rights Act?
Lord Bach: My Lords, we do not know whether or not it is against any article in the Human Rights Act, because no case has been taken to the European court suggesting that it is against human rights. We are doing this because we want to make our procedures more closely in line with those in the Army—in which I believe the noble Lord served gallantly a few years ago—and the RAF, but mainly in preparation for a

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tri-service Bill, in which a common disciplinary system across all three services is intended. I think the House would agree that that would be a good thing.
Lord Redesdale: My Lords, as they have acted so promptly on the tabling of a Question by my noble friend, can the Minister say whether the Government have any further plans as regards wigs and gowns for judges?
Lord Bach: My Lords, there was a time when I could answer that question, but now I cannot.

Brazil: Street Children
2.47 p.m.
Lord Alton of Liverpool Lord Alton of Liverpool asked Her Majesty's Government:
What representations they have made to the Brazilian Government about the killing of street children and about their obligations under the United Nations Convention on the Rights of the Child.
The Minister of State, Foreign and Commonwealth Office (Baroness Symons of Vernham Dean): My Lords, we engage frequently with the Brazilian Government, both bilaterally and with our partners in the European Union, on a broad range of human rights issues, including about the situation of street children. Together with our European Union partners, we call for all states parties to the Convention on the Rights of the Child to implement their reporting obligations.
Lord Alton of Liverpool: My Lords, I am grateful to the noble Baroness for that reply. Would she confirm that the new dimension that has emerged in the Brazilian favelas is the proliferation of drugs and small arms and that between four and five children and adolescents are murdered in Brazil every day? Does she agree that there needs to be an end to the cycle of retaliation, fear and violence that dominates the streets in Brazil and that the Brazilian authorities need assistance in honouring their obligations under the United Nations convention which they signed in 1990?
Baroness Symons of Vernham Dean: My Lords, I agree that the prevalence of drugs and small arms has the effect the noble Lord has detailed to your Lordships. I thank him for the excellent report he produced after his recent visit to Brazil. Its description of what is going on was horrifying but very vivid.
I agree that the Brazilian Government need some assistance in trying to deal with these terrible problems. They are showing a great willingness to do that. We are engaging with them. Only last month a further round of talks between officials and Brazilian authorities took place. We are trying to help them in relation to prisons, the police and in particular small arms issues.
Lord Janner of Braunstone: My Lords, having seen something of the awful miseries suffered by street
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children in Rio, I plead with Her Majesty's Government to increase assistance to all aspects of help for them, not least projects working with street children in Brazil such as the Sao Martinho Princess Diana Centre for orphaned girls, which the wife of my right honourable friend the Prime Minister opened a short time ago. Recognising the terrible human suffering of all sorts, surely we could make a greater effort to be of help directly and with our European partners.
Baroness Symons of Vernham Dean: My Lords, DfID's Latin America bilateral programme focuses on several issues. DfID will provide about £41 million for the period 2004–05 to 2006–07. The Government fund a number of projects in the human rights field that are aimed at tackling some of those very difficult problems. As I told the noble Lord, Lord Alton, we are tackling issues associated with the police, prisoners and small arms, but my noble friend rightly points to difficulties with orphaned children. Child prostitution is also a very difficult problem in Brazil.
Lord Hannay of Chiswick: My Lords, can the Minister tell us whether, since his administration took over, President Lula has taken any steps to deal with the problem of street children? I should declare an interest as having a son who works with street children in Sao Paulo. Could she also say a little more clearly what help we could give the Brazilian Government in the matter beyond advice?
Baroness Symons of Vernham Dean: My Lords, we are providing quite a lot of money. The noble Lord asks about President Lula. As he will know, under the president's predecessor, President Cardoso, a special secretariat for human rights was set up. I can tell the noble Lord that President Lula has continued that work and made the human rights secretariat directly responsible to him as president. So that is strengthening the human rights dialogue.
There have been several discussions. My honourable friend the Parliamentary Under-Secretary, Mr Rammell, raised the issue last May. His discussions were then taken on by Sir Michael Jay, the Permanent Under-Secretary, when he visited the country in October. I mentioned the visit only last month by FCO officials, but that was a second visit to follow up one in December 2003. So we are providing advice on a wide range of issues but also financial help.
Baroness Miller of Chilthorne Domer: My Lords, does the Minister agree that the problem of killing street children is by no means confined to Brazil? The All-Party Group on Street Children has heard from a number of NGOs working in several countries, including Honduras and Guatemala, that hundreds of children are being killed in those countries every year. The judicial system is simply not following that up. People known to be perpetrating those crimes are not

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being prosecuted or the cases fail in court. Does the Minister feel that it is time to call a special meeting of the United Nations to discuss that widespread issue?
Baroness Symons of Vernham Dean: My Lords, the noble Baroness raises an important point. When I was discussing the issue with officials, I was regrettably told that Brazil is by no means the worst example of abuses of children. On the question of overdue reports, I understand that Brazil is not alone. It currently owes about 13 reports under the six core UN human rights treaties, but 226 reports are overdue from various nations under the United Nations Convention on the Rights of the Child.
The UN has an important role to play here. I take on board the point made by the noble Baroness about some sort of meeting and will talk to my colleagues about it. The UN is the forum where those matters ought to be discussed and where pressure can be brought to bear, as well as through the bilateral help that we are trying to give.
Baroness Rawlings: My Lords, as the Minister rightly said, street children anywhere in the world need help. What support has DfID given to such highly successful organisations as the Bulgarian alliance for children and youths, which helps street children to receive food, clothing, medical treatment and to take part in general education and training programmes? Will Her Majesty's Government tender some suggestions to the Brazilian Government along those lines to help to set up a sister organisation in that country?
Baroness Symons of Vernham Dean: My Lords, I hope that the noble Baroness will forgive me when I say that the Question is about Brazilian street children, so I fear that I do not have any information about the Bulgarian alliance. I can tell the noble Baroness that our bilateral programme takes a regional approach. It is moving away from a country focus to problems; we are trying to deal with them in a holistic way. I have already said that we are approaching a number of problems, including the way in which prisons operate in relation to children and the issue of firearms. As the noble Lord, Lord Alton, told us, many of those difficulties spread through drugs and firearms. One of the most telling phrases in the noble Lord's report was when he was talking to a young boy who told him that there was no way that he could advance from his parlous state in life without recourse to illicit trade in drugs and firearms. We are trying to concentrate much of our help in those areas.
Baroness Hooper: My Lords, does the Minister agree that corporate social responsibility is yet another approach? Will the Government therefore encourage government-led and government-sponsored trade missions run by the British Council and other organisations in the field to raise the issues with companies in Brazil, in order to avoid allegations of indifference or acceptance of the terrible plight of those children being made by the population at large?
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On a recent visit to Brazil, I did just that and. without exception, the companies that I met could point to positive action that they were taking in education and training to help children and young people and to alleviate the problem. But, of course, much more could be done.
Baroness Symons of Vernham Dean: My Lords, I agree that a practical approach to this issue is enormously important. We try to do that by going into the.favelas, as has the noble Lord, Lord Alton, in both Rio de Janeiro and Sao Paulo to talk to young people about alternatives to their involvement in violence and organised crime. The noble Baroness is right: that is an interesting approach that we may try to adopt through our trading partners. I shall certainly bring that suggestion to the attention of my honourable friend the Minister for Trade and Investment.
The Earl of Listowel: My Lords, can the Minister tell us whether there is particular concern about HIV infection with those children? If so, are they being provided with the advice and means to protect themselves from HIV infection?
Baroness Symons of Vernham Dean: My Lords, there is a real problem with young people being drawn into prostitution. I would deduce from that that there are almost certainly problems with the spread of all sorts of sexually transmitted diseases, which would include HIV/AIDS. I do not have any particular information about work being done on HIV/AIDS, but I will see whether there is anything more helpful that I can tell the noble Earl and write to him accordingly.
Lord Clarke of Hampstead: My Lords, does my noble friend agree that running through the excellent report by the noble Lord, Lord Alton of Liverpool, is an indication of the breakdown in the country's administration concerning the police force, which appears to cause many of the problems that it is called on to solve? Whatever may be the position regarding corporate responsibility, the government of that country should be getting their own house in order.
Baroness Symons of Vernham Dean: My Lords, I agree with a lot of what is said in the report of the noble Lord, Lord Alton of Liverpool, but we must be careful not to be too condemnatory of the Brazilian Government's efforts to deal with the problem. There is no doubt in my mind that sincere efforts are being brought to bear on the problem, from which I would not want to detract; rather, I want to encourage the Brazilian Government to do more. Part of the problem is based on the fact that Brazil has a federal set-up. The implementation of policies has to go through state police forces because there is no national enforcement. So although we lobby and try to persuade nationally, implementation is done at state level.

Alcohol Harm Reduction Strategy
2.59 p.m.
Baroness Buscombe Baroness Buscombe asked Her Majesty's Government:
How they propose to implement the new cross-department alcohol harm reduction strategy to challenge the culture of binge drinking.
The Minister of State, Home Office (Baroness Scotland of Asthal): My Lords, the strategy includes a series of measures aimed at achieving a long-term change in attitudes to irresponsible drinking and behaviour. We will work in partnership at both the national and local level with a range of agencies, including the alcoholic drinks industry, to challenge the binge-drinking culture.
Baroness Buscombe: My Lords, I thank the Minister for her reply. In practice, who will be in charge of the so-called cross-departmental national and local new partnership? Will it be the Home Office, which wants to impose more draconian measures, having so far failed to combat binge drinking, according to its own leaked report? Will it be the Department for Culture, Media and Sport, which has liberalised our licensing laws? Will it be the Department of Health, bearing in mind that alcohol is behind 40 per cent of accident and emergency admissions and that alcohol misuse costs £20 billion a year in healthcare and lost earnings?
Baroness Scotland of Asthal: My Lords, in order for the strategy to be successful, it must be owned by all. It is not something that the Government can do on their own. Individuals, communities and the industry must take responsibility, and there must be a joined-up government response. That is what the strategy sets out: a holistic response that will make a difference. The noble Baroness will know that the empirical data support the suggestion that only when we join up will we make a successful impact.
Lord Turnberg: My Lords, does my noble friend agree that one way in which we can reduce excessive alcohol consumption is to reduce the ludicrously large amounts of alcohol that we are allowed to bring across the English Channel duty-free?
Baroness Scotland of Asthal: My Lords, I hear what my noble friend says, but it does not matter how much we bring across; what matters is how much we consume. Some of us consume nothing at all; others consume a great deal.
Baroness Sharples: My Lords, am I alone in wondering how young people can afford binge drinking? Are the parents largely to blame?
Baroness Scotland of Asthal: My Lords, we have a buoyant economy at the moment, and we thank God for it. I do not know how all young people afford binge
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drinking, but it certainly causes great concern. That is why I say that responsibility lies with everyone, not just one sector.
Lord Avebury: My Lords, have the Minister and her colleagues seen the BBC programmes "Drunk and Dangerous"? They portrayed a horrifying picture of mayhem on the streets of our towns and cities every Friday and Saturday night. When will the Government publish the report by Professor Colin Drummond of St George's Hospital Medical School and others, which showed that 70 per cent of attendees at A&E departments between midnight and 5 a.m. were alcohol positive? Does the Minister really think that jargon about holistic approaches is an adequate response to the carnage that we see every weekend?
Baroness Scotland of Asthal: My Lords, it is not jargon. I remind the noble Lord that all the evidence shows that, in order to make an impact, we need a multi-faceted response. I cannot give the noble Lord precise details of when the St George's report will be published, but I can tell him that Professor John Shepherd from Cardiff played a large role in the deliberations that led to the strategy. We are determined to make an impact on the behaviour of young people, particularly with regard to drinking, and I agree with the noble Lord that that will make a difference.
Baroness Howarth of Breckland: My Lords, does the Minister agree that action on binge drinking, like all excessive drinking, must be part of all the other programmes? We discussed that in the domestic violence debate, and we discuss it in child abuse programmes. The matter should be taken forward in all government policies, as it cannot be seen in isolation.
Baroness Scotland of Asthal: My Lords, I reassure the noble Baroness that the matter is not seen in isolation. She is right: crime figures—in particular, domestic violence figures—show that alcohol seems to play a large part in the abuse that takes place. That is why we need an integrated approach across government, together with the industry, to address the issues.
Lord McNally: My Lords, is that not precisely the reason why there is such grave concern? Road accidents, domestic violence and sexual assaults—the litany goes on—are directly related to alcohol, but the Government are going ahead with the relaxation of our licensing laws, even though every report that comes out questions the wisdom of that strategy.
Baroness Scotland of Asthal: My Lords, I hear what the noble Baroness—I mean "the noble Lord"; his attractions are overwhelming—is saying. We will monitor the impact of the Licensing Act 2003 on crime and disorder and on other licensing objectives under the Act. If necessary, we will, in the light of those findings, introduce further legislation, with the consent of Parliament, to strengthen or alter any provision.

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It would be wrong for noble Lords simply to say glibly that the relaxation of licensing laws was a cause. Your Lordships will know that we had a problem before the new Act, which brings in several important measures that will help us to control the abuse of alcohol, not least the ability to remove it from those who have already had a little too much.
Lord Brooke of Alverthorpe: My Lords, does my noble friend agree that the position that we face now is worse than it was when the Government came to power seven years ago? Those of us who have been waiting for the strategy are, to say the least, disappointed that a greater onus has not been placed on the shoulders of the alcoholic drinks industry. If the voluntary approach does not work, how long will we have to wait before we see legislation to toughen things up?
Baroness Scotland of Asthal: My Lords, I hear my noble friend's disappointment. I do not agree that the situation is worse than it was before the Government came into office. We have had a favourable response to the voluntary scheme from the industry. We want to work energetically with the industry to make sure that it takes the issues on board voluntarily. Of course, if the voluntary scheme does not work, we will have to look for other options
Baroness O'Cathain: My Lords, will the Minister say whether the Government are consulting other European countries? This is not just a United Kingdom problem. Binge drinking by young people is going on in many other member states, including Ireland, where there is a huge problem at the moment. Are we finding out what other countries are doing? Is there a sort of pan-European group that could assist to formulate a strategy?
Baroness Scotland of Asthal: My Lords, the noble Baroness will know that, in general, we consider what other countries have done. I cannot answer specifically on those matters, but, as part of the justice and home affairs agenda, we talk regularly with our European partners about the issues that affect us jointly. I shall endeavour to find out precisely what is happening on the European dimension and write to the noble Baroness with a more specific response.

Business
3.8 p.m.
Lord Grocott: My Lords, with the leave of the House, later this afternoon—sometime after 3.30 p.m.—my noble friend Lord Bach will repeat a Statement on the deployment of British troops in Kosovo.

Privileges
The Chairman of Committees (Lord Brabazon of Tara): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That as proposed by the Committee of Selection, the Lord Brooke of Sutton Mandeville be appointed a member of the Select Committee in place of the Lord Trefgarne.—(The Chairman of Committees.)
On Question, Motion agreed to.

Constitutional Reform Bill [H.L.]
The Chairman of Committees: My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That as proposed by the Committee of Selection, the following Lords be named of the Select Committee on the Bill:

V. Bledisloe,

L. Carlisle of Bucklow,

L. Carter,

L. Craig of Radley,

L. Crickhowell,

L. Elder,

L. Falconer of Thoroton (Lord Chancellor),

B. Gibson of Market Rasen,

L. Goodhart,

L. Holme of Cheltenham,

L. Howe of Aberavon,

L. Kingsland,

L. Lloyd of Berwick,

L. Maclennan of Rogart,

L. Richard (Chairman),

L. Windlesham;

That it be an instruction to the committee that they should report the Bill to the House not later than Thursday 24 June next;
That the committee have power to appoint specialist advisers;
That the minutes of evidence taken before the committee from time to time shall, if the committee think fit, be printed; and
That the committee do meet on Wednesday 24 March at five o'clock.—(The Chairman of Committees.)
Lord Renton: My Lords, this will be a Select Committee of unusual constitutional importance. I draw your Lordships' attention to the proposal set out in the Order Paper:
"the minutes of evidence taken before the committee from time to time shall, if the committee think fit, be printed".
Your Lordships' House as a whole will need to know what has happened during the discussions of this important committee. I ask, therefore, that the committee be persuaded to have as much as possible of the evidence brought before it printed in the way suggested.
The Chairman of Committees: My Lords, as the noble Lord says, that is a matter for the committee. I

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see the chairman-to-be of the committee in his place, and f am sure that he will take note of what the noble Lord said.
Lord Barnett: My Lords, my question is not really for the Chairman of Committees, it is more for the noble and learned Lord the Lord Chancellor or, indeed, the Leader of the House. Clearly a deal was done in these two matters. It would not be unreasonable for the House to be informed in some detail, before we approve of this Motion, what the deal is, so that we can all approve it or disapprove it.
The Chairman of Committees: My Lords, the setting up of this committee—its composition and the carry-over Motion which the Leader of the House will be moving immediately after this Motion—were all agreed by the usual channels. The House agreed to set this committee up following the Second Reading debate on 8 March. The membership was agreed by the Committee of Selection and was published in its second report on Thursday 18 March. The timing of the first meeting and the time when the report will be made are also subject to the Motion today. All this was agreed by the usual channels.
Lord Peston: My Lords, I should like to ask the Chairman of Committees more than one question on this, assuming that it is in order for someone who is not a lawyer to involve themselves in a committee which seems to have a majority of lawyers as its membership. We might like to reflect on that when we eventually have the committee's report.
In 18 years in your Lordships' House, I have had no experience of a committee of this kind, so I have no idea what sort of committee it is. Is it a committee like other House of Lords' committees, meaning that it will meet in public? Can we be assured that it will meet in public?
Secondly, like other committees, can all other noble Lords attend if they so wish, although they cannot take part without the permission of the Chairman? That is normal with our committees.
Thirdly, it is customary in our House, certainly in the committees that I have chaired or been a member of, that we proceed by consensus. I have never chaired a committee in which I have allowed a vote. Of course, I do not believe in votes anyway, I believe in reason. Will the aim in this committee be to produce a report which is agreed by every member consensually? That is another question that needs an answer.
More generally, what is the point of the committee anyway? Will it go through the Bill as if it were the Committee stage, clause by clause, and, having done so, will it then come back to your Lordships with an enormous list of suggested but agreed amendments that your Lordships will be able to consider? Before agreeing to the membership—and if we disagree to the membership, we would be in the rather nice position of being able to disagree with having the committee altogether, which some of us would dearly like—we need to know, for the sake of your Lordships' House, the answers to the questions I have put to the
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Chairman of Committees. It is not a question of it being up to the committee to decide—this is a committee of the House of Lords and it is up to us to decide.
The Chairman of Committees: My Lords, I do not know if the House would prefer me to answer these questions one by one or to take them several at a time, but I will attempt to answer the questions of the noble Lord, Lord Peston. My understanding is that the committee will normally meet in public. Other noble Lords not on the committee may attend when it is meeting in public. Of course, occasionally it may wish to meet in private, as any committees may when they are deliberating, as the noble Lord knows well. I cannot answer on how the committee will proceed on whether it reaches agreement or not. All I know is that the committee has the power to amend the Bill, but how it will proceed in finding a consensus view is not a question for me.
Lord Marsh: My Lords, we seem to be moving towards a slightly unusual way of looking at this. I intended to speak on the next Motion, but it is already becoming part of the somewhat general debate on the issue.
Given the controversial nature of this Bill, am I right in believing—I think I am because people have already mentioned this—that it is entirely appropriate for the committee to amend the Bill in any way it wishes by a simple majority? It does not have to agree at all. If that happens, is there not a danger that we would go back to square one? I would be interested to hear how we would get out of that.
The Chairman of Committees: My Lords, the setting up of this committee was somewhat controversial in the first place, but it was a decision of the House, not a decision of mine. I cannot, therefore, say what happens if the committee fails to agree. It does, as I have just said, have the power to amend the Bill. That is set down on page 121 of the Companion to the Standing Orders; if noble Lords wish to refer to it, they will see some detail about how these committees proceed. It is a fairly unusual type of committee; it does not happen very often, but it is not my choice that we have found ourselves in this position.
Lord Laming: My Lords, I do not wish to cause offence, and I have no personal aspirations in this, but bearing in mind the nature of the work of the committee, is it wise that the membership is so unrepresentative and unbalanced, in favour of lawyers?
The Chairman of Committees: My Lords, the list of names I am putting forward today was agreed by the usual channels. Had the noble Lord wished to sit upon the committee, he should have made representations to the Convenor of the Cross Benches. This is the list that was agreed by the usual channels—very quickly, by the way—and that is what we have before us.
Lord Barnett: My Lords, I remain unhappy with the answers, but not because the Chairman of Committees

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has given a wrong answer in any way—I understand his problem. I was really putting my question to those who made the deal. If nobody on the Government side is prepared to tell us, perhaps the noble Lord, Lord Strathclyde, will give us the detail. I have no objection to a deal so long as I know what it is and can approve it.
My noble friend Lord Peston asked whether there would be an opportunity to amend the Bill. We are told that if it comes back in the next Session or subsequent Sessions, it will go through pro forma which means, I assume, on the nod. I really would like to know what kind of arrangement has been agreed. No doubt my dear friend the Chief Whip will be able to tell me precisely what is going on here. We have not been told in any detail and we would like to know.
Lord Renton: My Lords—
Lord Grocott: My Lords, I shall briefly answer my noble friend, I hope to his satisfaction, as he invariably did when answering my queries in the other place when the positions were reversed. I do not like the word "deal"—the word is "agreement", and everything is transparent. It is there in the two Motions before the House. There were discussions in the normal way to decide the size of the committee and the respective number of members from each group. I obviously regret that there are only five Government members on the committee, but that is the nature of reaching agreement, and five out of 16 is the number agreed. There is agreement on the length of time that the committee should consider. As has been explained, there are no instant answers to all these questions, because this procedure has been used only three times in the past century—before, even, my noble friend's membership of the House.
Finally, part of the agreement is the Motion that is shortly to come before us; because this obviously delays the progress of a government Bill, agreement has been reached by the usual channels that the Bill should, unusually, overlap from this Session to the next. So I do not think we have done too badly, really.
Lord Renton: My Lords, will the Leader of the House clarify one important matter? It has been suggested that this Committee of Selection would have power to amend the Bill, but surely all the powers that it would have would be to recommend amendments.
The Chairman of Committees: My Lords, that is not correct. The committee has the power to amend the Bill, as set down in the Companion to the Standing Orders. Following that, the Bill will be recommitted to a Committee of the Whole House.
Lord Rees-Mogg: My Lords, will the Committee of the Whole House, to which the Bill will be recommitted, have the capacity to amend the amendments that this committee has passed?
The Chairman of Committees: Yes, my Lords.
On Question, Motion agreed to.
The Lord President of the Council (Baroness Amos): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved to resolve, That it is expedient that if the Constitutional Reform Bill [HL]—

(a) has not completed all its stages by the end of this Session of Parliament, and

(b) is reintroduced in the next Session of Parliament, the new Bill shall, notwithstanding the provisions of Standing Order 47 (No two stages of a Bill to be taken on one day), be taken pro forma through all the stages completed in this Session.—(Baroness Amos.)

Lord Strathclyde: My Lords, I have been tempted by the noble Lord, Lord Barnett, to rise to my feet. I thank the noble Baroness for moving the Motion and I thank the Government Chief Whip for all the work that both of them did in the usual channels with my noble friend Lord Cope to make sure that we had a sensible agreement so that we could complete the bulk of the scrutiny of the Bill in the course of this Session and then use the new carry-over procedure that was introduced by the Labour Party—what a benefit it has been for this legislation—to enable the House of Commons to examine it in the new Session that will begin in the autumn. All those who have been involved in the negotiation have provided a service not just to this House and to Parliament, but to the Government to make sure that we end up with a better Bill.
On Question, Motion agreed to.

Air Traffic Emissions Reduction Bill [H.L.]
Report received.

Energy Bill [H.L.]
3.21 p.m.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Whitty): My Lords, I beg to move that the Bill be now further considered on Report.
Moved, That the Bill be further considered on Report.—(Lord Whitty.)
On Question, Motion agreed to.
Clause 18 [Directions by NDA to the person with control]:
Lord Jenkin of Roding Lord Jenkin of Roding moved Amendment No. 36:
Page 18, line 23, at end insert—
"(3A) In any case in which subsection (3)(g) would require the person with control of the installation, site or facility to disclose to the NDA information, the disclosure of which (otherwise than under any enactment) would constitute a breach of confidence actionable by any person—

(a) the NDA shall consider, having regard to any representations made promptly following receipt of the direction by the person to whom the direction was given, whether the provision of the information is strictly

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necessary for the purposes for which it was required to be provided and shall require the provision of the information only if it is strictly necessary; and

(b) the person to whom the direction was given shall have no duty to disclose the information to the NDA unless or until the NDA has agreed to be bound by confidentiality obligations in substantially the same terms as the confidentiality obligations which are binding on that person in relation to the information."

The noble Lord said: My Lords, we have a long list of amendments to debate, so I shall be uncharacteristically brief. The point of this amendment is simply that anyone given a direction under Clause 18 by the Nuclear Decommissioning Authority will have to be subject to some of the usual constraints on what should not be disclosed on the grounds of confidence.
Last Thursday, the Government moved two amendments in response to long debates that we had in Grand Committee on what should be disclosed in the NDA's plans, in the strategy that it publishes and in its annual reports. As far as we could see, the government amendments completely and satisfactorily met the anxieties that had been expressed.
However, those amendments did not cover directions given under Clause 18. That is why I have tabled Amendments Nos. 36 and 37. The whole House accepts that in pursuit of its objectives the Nuclear Decommissioning Authority must have a series of powers, in particular, if I may put it in the vernacular, the power to tell other people what to do. There will be site licensees, contractors and, in many cases, sub-contractors. The clause gives the power to make directions to give effect to that intention.
Most of those are uncontroversial, but there are dangers in the directions that may be given to disclose information. Amendments Nos. 36 and 37 would excuse somebody to whom a direction has been given from a disclosure that would constitute a breach of confidence actionable by any person. Paragraphs (a) and (b) of Amendment No. 36 set out the procedure by which this should be considered. In the first place, the NDA should require information only if it is strictly necessary. Secondly, the person to whom a direction is given shall have no duty to disclose it to the NDA unless the NDA has agreed to be bound by the same confidentiality obligations.
The Government have proved very sensitive to the issue of disclosure of information that could be to the detriment of individuals or organisations, particularly in relation to commercial confidentiality, but there are no restrictions, as I see it, on what they can require to be disclosed in response to a direction. Amendments Nos. 36 and 37 remedy that lack and are one way of dealing with the problem. They are not on exactly the same terms as the noble Lord, Lord Whitty, very briefly described to the House last Thursday on disclosure under the other circumstances, but in the circumstances of Clause 18 they are perfectly reasonable amendments.
Government Amendment No. 38 is also in this group. It is very much shorter than my amendments and I am not sure how, if at all, it deals with the
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problem that I have described. If the NDA is going to do its job properly, of course it must require all the information that it needs, but there must be some constraint because of the need for confidentiality. I am not at all sure that government Amendment No. 38 provides that, but no doubt the noble Lord, Lord Whitty, will satisfy my curiosity and anxieties. I beg to move.
Lord Whitty: My Lords, Amendment No. 38 deals with the balance of the relationship between the NDA and site licensees and others. The rationale behind taking it together with Amendments Nos. 36 and 37 is that our amendment rests on giving the parties flexibility to choose which aspects of their relationship should be governed by the contract and which parts will be subject to directions. It may not be entirely obvious to the noble Lord from the wording, but our amendment addresses some of the concerns that have inspired his two amendments. As he said, we have had prolonged debate on this and other clauses dealing with the disclosure of information.
Clause 20 suspends the entire duty to comply with directions from the NDA given under Clause 18 at any time when an agreement is in force. We have reached the conclusion that the wholesale suspension of the duty to comply whenever there is a contract may be too rigid. There should be greater flexibility so that the parties themselves can agree which aspects of their relationship should be governed by directions and which by contract. That flexibility would have benefits for the NDA as well as for the contractors. It would give the NDA the ability to give directions to the person with control in circumstances where such a person may not be complying with all the terms of the contract. That would enable the NDA to ensure compliance with what needs to be done to discharge its responsibilities without that affecting the rest of the relationship.
The amendment addresses the concerns behind Amendments Nos. 36 and 37 by allowing the flexibility to suit the needs of the contractor—the counterparty—in different circumstances. For example, existing contracts with third parties may contain confidentiality provisions that would be breached if that information was disclosed to the NDA as a consequence of a contract. As part of our continuing discussions with stakeholders, we have been advised that such confidentiality provisions would not be breached if the information were disclosed in order to comply with the statutory requirement. However, they also advise us that there may be instances when it would be preferable for the disclosure of information from the counterparty to the NDA to be provided for in a contract.
We have explored the options with those who would be affected and have had some considerable discussions with them. We have informed them that it would be best if it were possible to choose which aspects of the relationship would be governed by directions and which by contract. They agree. and the amendment is aimed at providing the necessary level of flexibility.

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The effect of the amendment would be that the parties could decide whether Clause 18(3)(g) should be subject to the terms of that contract, for example. In our view, if this amendment were agreed, it would be a more fit-for-purpose framework to deal with confidentiality issues, which are the objective of Amendments Nos. 36 and 37. It will enable companies with control to determine with the NDA on a case-by-case basis which matters are governed by contract and which by statutory powers of direction. The stakeholders—the main companies involved—have indicated that they welcome this flexibility. In such circumstances, when the company in control has a large degree of control over whether arrangements for disclosure of information are governed by contract or direction, and that is the nature of the relationship, we do not consider it necessary to further amend the Bill in line with this and the other amendment, which was moved by the noble Lord, Lord Jenkin.
On that basis, and with that explanation of the admittedly rather terse terms of Amendment No. 38, I hope that the noble Lord will not press his amendments to a Division.
3.30 p.m.
Baroness Byford: My Lords, I thank the Minister for explaining the government amendment and my noble friend for giving the reasons why he moved his amendment. Will the Minister tell the House a little more? He said that the government amendments are there to give greater flexibility, that a decision will be taken on a case-by-case evaluation and that the Government gave the options to the companies involved to come to a decision. I have not had any comeback from the companies as to whether they are happy with the situation—and I do not know whether my noble friend has had any response. But it seems strange that the provision is left so open-ended—in other words, that the matter will be judged on a case-by-case basis to give greater flexibility. The provisions need greater clarification than the Minister has given us, bearing in mind the proposition put by my noble friend. I should be glad for a little bit more from the Minister.
Baroness Carnegy of Lour: My Lords, it seems to me, listening to this debate for the first time, that the important thing is to know what happens if the company concerned will not make an agreement—although the Minister has suggested that those who are likely to be concerned are happy with the government amendment. If the agreement each time is to be case by case, what happens then? The House will probably need to know that.
Lord Whitty: My Lords, when I refer to a case-by-case basis, I am referring to a contract-by-contract basis, not to every individual instance. The House needs to recognise that the vast majority of relationships with the NDA and the site contractors will be covered by contract; they will not be covered by the area that is subject to direction, to which the
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concerns expressed by the noble Lord, Lord Jenkin, relate. Apart from the information for which there is a statutory duty to be published, which we discussed the other day, the NDA will need to pass on the type of information that Amendments Nos. 36 and 37 are seeking to protect only in response to a freedom of information inquiry or, possibly, to fulfil its own functions as required by this Bill and other legislation.
It is feasible that such situations are excluded from the contract, so that there would be areas still subject to direction for those reasons, but for all other areas covered the contract there would be a specification as to how a request for information would be dealt with, and therefore the confidentiality attached to it. The reason for the case-by-case basis is that the process is done contract by contract with each site licensee; that does not mean that an individual case would always be subject to negotiation. They would normally fall within the guidelines set out in the contract.
Lord Jenkin of Roding: My Lords, I am sure that the Minister has done his best to explain what in Grand Committee we found an extremely complex subject. We were very confused about the role that the Freedom of Information Act 2000 would play, which comes into effect next year, and what would have to be dealt with by contract. Indeed, the Government have sought to deal with the issue by putting in specific statutory protection, which they did through the amendments that the Minister moved towards the end of Thursday's sitting, to give protection for personal information and commercial confidentiality.
I am not at all clear from what the Minister said, and in particular from the answers that he gave to my noble friend Lady Byford, exactly how the matter is to be dealt with. However, as we have discovered, there are occasions when one needs to read the Minister's words very carefully to be able to understand them. Mostly, one does understand them—but, sometimes, one does not.
It is splendid to see my noble friend Lady Carnegy of Lour back in her place, as we missed her on Thursday. I do not believe that her question has been answered. I shall not press the amendment to a Division today, but I reserve the right to return to the matter at Third Reading when we have studied the Minister's remarks. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 37 not moved.]
Clause 20 [Duty to comply with directions under s.18]:
Lord Whitty Lord Whitty moved Amendment No. 38:
Page 20, line 4, leave out from "duty" to end of line 14 and insert "to the extent that he is relieved of it by the provisions of an agreement—

(a) between the NDA and that person; or

(b) between the NDA and a body corporate of which that person is a subsidiary."

On Question, amendment agreed to.
Clause 21 [Financial responsibilities of NDA]:
Lord Triesman Lord Triesman moved Amendment No. 39:
Page 21, line 7, after "authorised" insert "or required"
The noble Lord said: My Lords, this group of amendments on Clause 21 make technical and drafting changes, whose purpose is to improve and offer greater clarity to the contracting framework through which the NDA will introduce competition for nuclear site management.
Amendment No. 39 tackles a particular concern on the proper interpretation of the phrase "authorised by" in Clause 21(4). As a consequence of discussions with stakeholders we wish to clarify that all actions under Clause 17, including any costs that may arise as a consequence of doing nothing, are covered by the NDA's funding obligations. There was some uncertainty expressed at an earlier stage over whether Clause 17(2) authorises the person with control to stop using a site. In other words, the concern is that the person with control would not need to be authorised not to do something which could then result in the NDA not meeting the costs of such an eventuality, where for example regulatory action had halted work. Incidentally, I know that there were three "nots" in that sentence; as there was an odd number, noble Lords can see that the sentence ended up in negative form I make that point for the mathematical purists in the House.
The amendment to add "or required" makes it clear that, if there is a cost attached to the person with control not doing something, Clause 21(4)(b) would also cover that. An example might be a situation in which the person with control is obliged to pay off sub-contractors as a consequence of regulatory action, which prevents or delays the work that they were engaged to do being carried out. The amendment means that any cost that the person with control incurs as a result of using the site for regulatory compliance—covered by the term "authorised"—or preventing the use of the site for a purpose which would be a contravention—which is covered by the term "required"—will be met by the NDA.
Amendments Nos. 40 to 43 clarify that the NDA's financial responsibility under Clause 21 does not preclude the person with control from incurring liabilities—for example, to pay staff salaries or sub-contractors—even though the costs will in effect be reimbursed by the NDA. That was always the intent, but we have sought to respond to uncertainty brought to our attention by the stakeholders and their advisers.
Finally, I turn to Amendments Nos. 44 and 45. Clause 21 as currently drafted requires the NDA to pay for everything that relates to its responsibilities unless it is allowed by the clause to pass that burden on under subsection (9). This reflected the view at the time the Bill was finalised for introduction that payment under the contract would be on the basis of reimbursement of costs, plus a fee. We expect this to remain the case in respect of contracts awarded in the initial stages of the NDA's existence.
However, as work on setting up the NDA and on the proposed contract structures has continued it has become clear that in the long term it would be overly
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restrictive if the NDA could not enter into contracts that provided for payment on the basis of a fixed price as opposed to cost reimbursement. We believe that we should enable the NDA and a contractor to agree on the element of risk sharing, for example on outturn cost. I beg to move.
Lord Jenkin of Roding: My Lords, I shall make a few observations on what the noble Lord, Lord Triesman, has said. In the somewhat acrimonious exchanges that we had at the beginning of business last Thursday, when we complained about the plethora of government amendments that have poured on to the Marshalled List in the past few days, I think that I was guilty of not expressing sufficient thanks to Ministers for the amount of trouble that they have taken in writing letters to us to try to explain what they were going to do. Other noble Lords may feel the same. Some of the letters were not wholly intelligible, at least to my feeble mind, but I am sure that Ministers were trying to be helpful.
In this case, the noble Lord, Lord Whiny, sent a number of us copies of an exchange of correspondence between one of his senior officials, David Hayes, director of the NDA team, and Mr Alvin Shuttleworth of British Nuclear Fuels. Unlike some of the other letters I referred to, these were extremely clear. I understand that British Nuclear Fuels now feels that it is sufficiently covered by the addition of the words "or required" in the first amendment.
The only question that I have to ask—which we discussed at length in Committee and again on Thursday—is why the complex relationship between the department, the NDA, which is being set up by the Bill, the management in charge of the site, the site licensees and the contractors could not have been worked out before legislation was brought before the House. One gets the impression that this was all patched up in the department and when the Bill was published a lot of people said that it was not right. It is not a good way of legislating.
Nevertheless, having said that, I agree that the words "or required" will meet the concerns that BNFL has expressed to us: that it would find itself liable to pay and it would not be reimbursed by the NDA if, for instance, a contract had to cease and the work was not done. So I accept these amendments but I express some surprise that they were necessary.
3.45 p.m.
Lord Triesman: My Lords, I suspect that those with great experience of the lengthy passage of complex Bills might observe that it was often thus. As Bills go through, the nature of the debate means that complex issues are understood more thoroughly and the amendments that are needed are then set out in a way that meets the objections. I hope your Lordships agree that this is part of the process. On this occasion, I can say that the exploration led to greater illumination and the changes that noble Lords urged in Grand Committee are in amendments today. I hope they are acceptable to the House in that light.
On Question, amendment agreed to.
Lord Triesman Lord Triesman moved Amendments Nos. 40 to 45:
Page 21, line 13, leave out subsection (5) and insert—
"(5) Nothing in so much of this section as—

(a) restricts the extent to which a person is, or may become, liable to meet any costs in relation to a site, installation or facility, or

(b) requires any costs in relation to an installation, site or facility to be reimbursed or otherwise met by the NDA,
is to be construed as restricting the extent to which the person with control of the installation, site or facility may be or become subject, in relation to a person other than the NDA, to the liability or obligation in respect of which the costs arise."

Page 21, line 17, after "NDA" insert "for the purpose of discharging its financial responsibilities"
Page 21, line 20, after "liabilities" insert "to persons other than the NDA"
Page 21, line 22, leave out "and" and insert—
"( ) It shall also be the duty of the NDA to make all such arrangements as it thinks fit for securing"
Page 21, line 27, leave out subsection (7).
Page 21, line 37, leave out subsection (9) and insert—
"( ) The preceding provisions of this section have effect in relation to an installation, site or facility subject to the terms of—

(a) any agreement between the NDA and the person with control of the installation, site or facility or

(b) any agreement between the NDA and a body corporate of which that person is a subsidiary."

On Question, amendments agreed to.
Clause 27 [Tax exemption for NDA activities]:
Baroness Miller of Hendon Baroness Miller of Hendon moved Amendment No. 46:
Page 25, line 40, leave out paragraph (b).
The noble Baroness said: My Lords, I shall move Amendment No. 46 which stands in the names of my noble friends Lady Noakes, Lord Jenkin of Roding and my own. I shall also speak to the other amendments in this group. My noble friend Lady Noakes apologises for being unable to be with us this afternoon because of other commitments. She has asked me to deal with the amendments standing in our names in this group.
In Grand Committee, my noble friend Lady Noakes put a number of detailed questions to the Government in respect of the tax clauses. In response, the Government said that they would table unspecified amendments. It says something about the quality of the drafting of the Bill that the Government had to table 27 amendments to parts of the Bill that should have been routine and technical. As the Minister is aware, these amendments were available very late. We may want to return to them at Third Reading when we have had a chance to consider them in more detail.
For today, I shall just raise a few issues. The Government have tabled a number of amendments to Clause 27, together with three substantial clauses after Clause 27. However, none of these amendments deals with the points raised by my noble friend Lady Noakes in Grand Committee. I shall therefore repeat those questions today in the hope of getting some answers.
Our Amendment No. 46 probes why a company, other than an NDA company, should get a tax exemption from Clause 27. In Grand Committee, the Minister said:
"Where the activities might be carried out on behalf of the NDA by site licensee companies … it might still be appropriate for them to be exempt".—[Official Report, 22/1/04; col. GC 412.]
But the Explanatory Notes were very clear. Paragraph 130 said:
"It is [the] Government's intention that private companies will not be able to realise tax free profits through the tax exemption".
Will the Minister say what the regulations referred to in subsection (5)(f) will contain? Is this a backdoor way of exempting some particular companies from tax? We think that we should be told whom the Government intend to exempt from tax under Clause 27 and why.
We tabled Amendment No. 50 to delete Clause 27 in order to probe what activities would be exempt. The Government's amendments have shed no light on that. We still need to see the regulations under subsection (3) and I hope that the Minister will now commit to making those draft regulations available before we reach Third Reading.
We also tabled two detailed amendments, Amendments Nos. 54 and 55 to Schedule 4. We were very surprised by the Government's responses in Grand Committee and had hoped to see the Government tabling amendments for Report. But these are not matters of great principle and we shall not be moving those amendments today. I beg to move.
Lord Davies of Oldham: My Lords, I am grateful for the manner in which the noble Baroness, Lady Miller, has moved her amendments. I hope to meet her points in full.
As she has indicated, she is not entirely happy with the government amendments that follow this group. In a sense the two groups form part of a total debate and I will, in moving those amendments, hope to reinforce the arguments I shall make in response to her questions on these amendments. But I shall do my best to answer the questions that she has addressed in Amendments Nos. 46, 50, 54 and 55.
As I mentioned during Grand Committee, we intended to return to these tax provisions on Report. We shall discuss the government amendments later. These amendments are the same as those tabled by the noble Baroness, Lady Noakes, in Grand Committee. I realise that they were tabled again before the government amendments were tabled. I am a little concerned that the noble Baroness indicated that they are also there because of dissatisfaction with the government amendments. We will come to that part of the debate in the next group.
The letter of my noble friend Lord Whitty to the noble Baroness, Lady Miller, that was sent on 9 February—a copy of which was placed in the Library of the House—covered some of the issues that we discussed in Grand Committee and explained the rationale for the tax provisions in the Bill. However, it may be necessary to summarise our general aims

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regarding the tax provisions to set the context for the various tax amendments. I will then speak directly to the amendments to which the noble Baroness spoke.
Clause 27 and Schedule 4 introduce the concept of "relevant site licensees" and allow for Treasury regulations to be made to exempt from tax certain trading activities of the NDA. As we explained, the NDA is not itself exempt from tax; activities such as electricity generation by the Magnox power stations will be taxable in the normal way.
However, our intention is to consider making regulations to provide for exemptions in certain narrow circumstances, particularly for the Thorp and SMP activities that are expected to be loss-making for tax. Such regulations will be appropriate only if the detail of contractual arrangements with site licensee companies is such that any losses or profits would in economic terms be the NDA's.
The concept of "relevant site licensee" also applies to some of the tax provisions allowing for nuclear transfer schemes to be tax neutral for the transferor and the transferee. The detail of the transfer tax provisions is in Schedule 9, introduced by Clause 43. These provisions allow for tax neutral transfers of assets and companies between publicly owned companies, such as BNFL, the UKAEA and the NDA. They also allow for the ownership of site licensee companies that are "relevant site licensees" to be transferred in a tax neutral way.
The challenge that we have faced has been to develop the detail of the tax provisions in the light of the detail of the emerging possible contractual and other relationships between the NDA, site licensee companies and parent management companies. We have been working closely with both the Inland Revenue and professional tax advisers to get that extremely important detail right. Allowing for future flexibility has made the tax provisions somewhat complex.
Returning to the precise points raised by these amendments. Amendment No. 46 would remove site licensee companies that are not 100 per cent subsidiaries of the NDA from the scope of limited exemption and from the scope of the transfer provisions in Part 3 of Schedule 9.
Clause 27 allows Treasury regulations to be made that would exempt from tax certain of the NDA's activities. As I mentioned earlier, the activities that we have in mind are those at Thorp and SMP. I repeat that these are expected to be loss-making for tax purposes, yet computing their tax position accurately would be tricky if their activities are bound up with the decommissioning and clean-up activities of the NDA. It therefore makes sense on pragmatic grounds to exclude them from tax where they are carried on by the NDA.
Activities such as operating Thorp and SMP might be carried out on behalf of the NDA by site licensee companies. Depending on the detail of the contractual arrangements between the NDA and the site licensee companies, it might be appropriate to include site licensee companies within the potential scope of the
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exemption; for instance, in cases where the NDA bears the economic responsibility for losses and profits, yet the detail of the contractual arrangements means that any potential tax liability or tax relief for losses falls on the site licensee. That is what subsection (4)(b) of Clause 27 allows. It also allows for relevant site licensees to come under the provisions for transfer schemes in Part 3 of Schedule 9. Amendment No. 54 would remove the ability to disallow charges—in a tax sense—on income to the extent that they are referable to exempt activities.
That would be inequitable as it would allow charges that are linked to the exempt activities to be deducted against other taxable income. If certain activities are to be exempt, then it is right that their associated charges should not qualify as a deduction for tax. As the noble Baroness, Lady Noakes, mentioned in our earlier debates—and we regret that she is not able to aid us with these deliberations today—it is true that for corporation tax many kinds of deductions that were previously treated as charges ceased to be so treated in 2002. However, it is appropriate to cater for charges such as certain annuities and those relating to payments to scientific research associations and to charities, which might include universities commissioned by the NDA to carry out research on its behalf—and that is the purpose of paragraph 3 of Schedule 4.
Amendment No. 55 relates to the provision in Schedule 4 paragraph 4 concerned with the difficult subject of finance leasing. The provision ensures that the NDA and any subsidiaries it forms cannot, viewed together, have their cake and eat it by enjoying the benefit of the exemption on the NDA's income while obtaining tax allowances, available against its non-exempt income, for expenditure on capital equipment used in the exempt activities.
The amendment would take this restriction even further by preventing finance-lessor companies outside the aegis of the NDA making use of those tax allowances. As the noble Baroness, Lady Noakes, said in Committee, there may be a case, as a matter of fiscal logic, for extending this restriction. However, there is at present no across the board restriction on the availability of tax allowances to finance lessors providing assets for use by public sector bodies enjoying a tax exemption. I am not persuaded that it would be appropriate to break new ground with such a restriction here, especially as my colleagues in the Treasury are currently reviewing the tax treatment of finance leasing generally. I should confirm that the NDA—I made this point earlier—is not itself exempt from tax. Activities such as electricity generation by the Magnox power stations that are clearly separable from the Thorp and SMP activities, and from the decommissioning and clean-up activities, will be taxable in the normal way.
I share the concerns expressed by the Opposition that private sector enterprises should not be able to make tax-free profits. Where the activities are effectively not carried on by the NDA, exemption will not be appropriate and regulations will not be made.

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However, depending on the detail of the contractual arrangements between the NDA, site licensee companies and private contractors, it may be appropriate for the activities of some site licensee companies to be exempt. We had in mind the possibility of site licensee companies carrying on some commercial activities where the losses and profits would in economic terms be the NDA's. But because of the contractual arrangements and the application of normal tax law, the commercial activities will be taxed in the site licensee company and not the NDA. For that reason, Clause 27 allows for the exemption to apply to activities that are specified in Treasury regulations and are carried on by relevant site licensees, the definition of which would also be the subject of regulations.
The concept of "relevant site licensees" is also relevant to the transfer tax provisions in Schedule 9. That schedule allows for the tax neutral transfer of shares in relevant site licensees, which will facilitate the transfer of site licensee companies under transfer schemes. In practice, the principal commercial activities that would be considered for exemption are the Thorp and SMP activities. As I have already mentioned, these are expected to be loss-making for tax, yet the commercial activities are intertwined with decommissioning and clean-up work. Whether it is appropriate to make regulations exempting these activities will depend on the detail of the contractual and other arrangements between the NDA and the site licensee company running these activities.
In our discussion in Grand Committee, the noble Lord, Lord Jenkin of Roding, was right to be concerned about some kind of blanket tax exemption for the NDA along the lines that he recalled debating for the British National Oil Corporation. However, what we are proposing here is a very narrow potential exclusion only for trading profits and losses and then only from certain trading activities. The NDA itself will remain a taxable entity—I cannot emphasise that point enough—and, indeed, trading activities such as the Magnox electricity generation will remain taxable in the normal way.
Regulations to allow for exemption will be appropriate only if the detail of contractual arrangements with site licensee companies is such that any losses or profits would in economic terms be the NDA's. The concept of relevant site licensee also applies to some of the tax provisions allowing for nuclear transfer schemes to be tax neutral for the transferor and the transferee. The detail of these provisions is in Schedule 9, introduced by Clause 43. These provisions allow for tax neutral transfers of assets and companies between publicly owned companies such as BNFL, the UKAEA and the NDA. They also allow for the ownership of site licensee companies that are "relevant site licensees" to be transferred in a tax neutral way.
I apologise for speaking at great length but in so doing I hope that I have allayed concerns about the government amendments and perhaps foreshortened debate on them, although that may be a wish and a prayer rather than the reality. For those reasons we
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believe that Clause 27 will facilitate the NDA's primary role of decommissioning and clean-up of Britain's civil public sector nuclear sites. On that basis I am confident that noble Lords will recognise that Clause 27 as drafted should stand part of the Bill.
The noble Baroness asked the obvious and entirely appropriate question whether we shall have the regulations before Third Reading. I am afraid that we shall not be able to provide the regulations by that time. They involve a great deal of detail on the contractual arrangements between the NDA and contractors. I regret to say that we shall not be able to provide the regulations by Third Reading.
The noble Baroness also asked why we should allow non-NDA companies to be exempt. The site licensee companies will be transferred between management contractors as contracts expire and new contractors win competitive tenders to manage the site licensee companies. Although they are vehicles for the NDA to achieve its objectives, they will not always be—indeed, we do not expect them to be—owned by the NDA. Profits and losses on activities from which the NDA gets the economic benefit may arise so far as the site licensee is concerned.
I hope that I have explained the tax philosophy behind the Government's thinking. I regret that I am not able to provide the additional information at this stage although I think the noble Baroness probably realises that she is asking for rather a lot at this point. Nevertheless, I hope that I have helped to sketch out the Government's general position in such a way that the tax provisions in the Bill make sense and are seen to be equitable and fair.
4 p.m.
Lord Jenkin of Roding: My Lords, I think this is the second or third time that the noble Lord or another Minister on the Government Front Bench has used the phrase "emerging problems". If I may say so, one has the impression that they have been making it up as they go along. When one now hears—as the noble Lord, Lord Davies of Oldham, has just said—that it is not until they know the details of the contracts that will exist between the site licensees and the contractors that they will be able to make the regulations—my noble friend asked whether we might have them before Third Reading—one really begins to wonder how on earth all this is put together.
My mind goes back to the time when—I was a junior Treasury Minister at the time—my party came into government in 1970 with a commitment to introduce value added tax. At the first meeting that my then boss, the late Iain Macleod, held with Customs and Excise we said that we would publish a Green Paper and consult widely. "Oh", said the officials, "you do not need to do that. We understand all about value added tax. We can produce a tax for you more or less straight away". However, we replied, "No, we shall consult widely on the matter". A year later the deputy

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chairman of Customs and Excise—I am delighted to see that my noble friend Lord Higgins has entered the Chamber as he was in government at the same time as me—said, "It was a terribly good idea to have a Green Paper because we learnt a tremendous amount that we would never have known at all".
I get the impression that to some extent Ministers have found themselves in the same situation with this Bill. Their officials will have told them that they do not need to worry too much and that they can put down what is in the Bill. Then, lo and behold, along come all the outside interests saying, "You have not got this right at all". One just wonders how a Bill like this reaches the statute book. The Government had to admit straight away that the questions asked by my noble friend Lady Noakes in Grand Committee were very valid questions that would need to be dealt with.
There are two points here. Is it really the case that the regulations will not be made until after some of the contractual agreements have been made? I find that quite astonishing. Will they have retrospective effect in those circumstances? How much consultation was there before the Bill was published, or has it all happened since the Bill was published last November? I find this a very strange business indeed.
Baroness Miller of Hendon: My Lords, I thank my noble friend for making two of the main points that I intended to make. I am delighted that he was able to do so as there is no doubt that he did it much more effectively than I could.
The noble Baroness, Lady Noakes, would have been here if it were possible but unfortunately she lost her father on Friday. Under those circumstances she is not able to be here today. In Grand Committee she seemed to be the only one who could take all of this under her belt and in her stride. It was extremely nice to have present a person who was so efficient and knowledgeable on these matters. The Minister said that he would take away many of these matters and consider them. We shall most definitely read what he has said extremely carefully. The Minister has no reason to apologise for speaking at length as he provided much detail. However, as my noble friend said, with all the detail in the world, we do not know why we find ourselves in such a position.
I understand what the Minister is saying as regards the regulations. He has to wait to see the contracts and what is negotiated. My noble friend asks whether that means that something will happen retrospectively. On this side of the House, we wonder whether the regulations are likely to come into being and whether the contracts will have been sorted out by the time the Bill reaches Third Reading in the other place, never mind in this place. It is extraordinary that this matter has to be left. However, we shall read what has been said very carefully and by Third Reading I am sure that my noble friend Lady Noakes will have had a chance to absorb the issue, and better than I could. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.

Kosovo: Deployment of British Forces
4.10 p.m.
Lord Bach: My Lords, with the leave of the House, I shall now repeat a Statement made in another place earlier this afternoon by my right honourable friend the Minister with responsibility for the Armed Forces. The Statement is as follows:
"Last week we saw an upsurge in violence in Kosovo resulting in deaths within both the ethnic Albanian and Serb communities, as well as hundreds injured, including some KFOR troops. Although Kosovo is now calmer, the potential for renewed violence remains.
"The troops already in Kosovo were heavily committed in dealing with the situation. Commander KFOR therefore took the decision to authorise the deployment of his in-theatre tactical reserves to assist with the situation. NATO also issued instructions to reinforce KFOR with additional SFOR troops from Bosnia, including a UK company of 1st Royal Gurkha Rifles, a US company and a company from the Italian Multinational Support Unit (Carabineri).
"In the early hours of Thursday 18 March, NATO called forward the Operational Reserve Force Ready Battalion. The ready battalion role is one for which the UK has responsibility during the first six months of this year. The lead elements of the Operational Reserve Force Ready Battalion, approximately 150 men, left RAF Brize Norton on Thursday afternoon and landed in Kosovo late that evening. The vast majority of the Operational Reserve Force Ready Battalion of around 660 men has now deployed, with the 1st Battalion the Royal Gloucestershire. Berkshire and Wiltshire Regiment providing the core of the battalion group. There are now around 1,100 UK Armed Forces personnel deployed in Kosovo.
"The purpose of this deployment is to restore calm to the province and prevent unrest spreading to areas outside Kosovo, the type of task for which the Operational Reserve was designed. UK troops will conduct routine patrolling, the guarding of sites (such as the UN mission) and public order duties, as tasked by Commander KFOR.
"Calling upon the in-theatre tactical reserve, followed by the Operational Reserve, then Strategic Reserve, is the correct, graduated, and planned, response to a situation of this sort. Kosovo has been calmer over the weekend, showing that this was the correct decision.
"Further to the deployment of the UK battalion, NATO has requested that an element of the NATO Strategic Reserve Force, provided by a French battalion, also be deployed to Kosovo. NATO has also requested the deployment of the three 'standby' battalions that make up the full Operational Reserve Force. These battalions are provided by the US, Germany and Italy. The German battalion will be deployed to Skopje, Macedonia, in the first instance.

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"lt is for NATO to determine how long reserves will be required, but in terms of an initial estimate, and with the situation changing, we believe a sensible course of action is to plan initially for a deployment period of approximately 30 days. The situation in Kosovo now appears calmer, although it is still tense.
"I would like to inform the House that we have received preliminary reports of an incident involving British troops in Basra this morning. The House will understand that the information remains incomplete. Initial reports indicate that two explosions took place. We have reports of injuries to 13 British soldiers, although none is believed to be life-threatening. The process of informing next of kin is under way. It would be inappropriate to make any further comment at this stage".
My Lords, that concludes the Statement.
4.14 p.m.
Lord Astor of Hever: My Lords, I am grateful to the Minister for repeating the Statement about Kosovo and about the distressing news from Iraq. We on these Benches hope that when the situation there is clarified the news will be a little better.
With regard to Kosovo, once again Britain is called on to provide the manpower to dampen the powder-keg of ethnic tension. We praise the troops for the speed of their deployment. Last week's violence between the Kosovar Serb minority and the dominant ethnic Albanians was surprising, swift and widespread. There is no doubt that that violence represents a major setback in the Kosovo peace process. The importance of the quick and robust deployment in Kosovo should not be underestimated. The stakes are high. The destabilisation of Kosovo would result in further and more serious bloodshed in the province and further instability in south-eastern Europe. That we cannot afford.
I have one or two questions for the Minister. What is the mission of the Operational Reserve Force? Will the Minister confirm that the troops have been issued with a full complement of personal equipment including enhanced combat body armour? Who will replace 1RGBW as the spearhead battalion?
According to the Serbia-Montenegro army chief of general staffs interpretation of the Kumanovo agreement—between NATO and the then Federal Republic of Yugoslavia in 1999—the Serbia-Montenegro army could be allowed to return to Kosovo in exceptional circumstances. Can the Minister clarify whether that is really the case and under what circumstances would that be allowed to happen? Finally, are Her Majesty's Government confident that the security situation in Bosnia is stable enough to allow the temporary reduction in troop numbers there? We are confident that the British
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troops will play a full and, as always, distinguished part in getting Kosovo back to normality. We wish them every success and a safe and prompt return.
4.17 p.m.
Lord Redesdale: My Lords, our thoughts too are with the service personnel injured in Basra and with their families and all those who at present are serving in Iraq. I thank the Minister for repeating the Statement made in another place.
I have no questions to put to the Minister. This is a difficult and evolving situation that is moving at some rapidity. It was started by the reporting of the tragic deaths of the three Albanian boys who drowned outside Mitrovica. It seems that the situation was stoked by the way in which both the local and the international media reported the incident. The Albanians desire independence, a feeling that has been brought to the fore by the continuing unrest—it is probably the root cause of the unrest.
Troops will be needed, particularly NATO forces, in the build-up to the elections in November. Although Kosovo is calmer now, I believe that it is important that a NATO presence is firmly in place and in control of the situation. There is a real likelihood that ethnic cleansing could take place in different parts of Kosovo. The professionalism and the ability of the British troops to calm down the situation is called for and we wish them the best of luck.
4.19 p.m.
Lord Bach: My Lords, I thank both noble Lords for their kind and supportive comments. The noble Lord, Lord Redesdale, is right that the British troops are amazingly good at the tasks that they are undertaking and I agree with the noble Lord, Lord Astor, that the stakes are high and that it is important to act quickly and speedily. The best way that I can answer his question about the purpose of Operational Reserve Force is to repeat what our troops will be doing. Operational Reserve Force could be asked to do a number of things, but, as I understand it, their purpose in Kosovo will be to conduct routine patrolling, the guarding of sites and public order duties, as well as other tasks given to them by the commander of KFOR.
The forces are appropriately equipped and, regarding the noble Lord's last question about Serbia and the comments that have been made, there has to be an invitation by UNMOVIC—the United Nations Mission in Kosovo—which would only be in the most exceptional circumstances. Those circumstances did not prevail either last week or now. My right honourable friend the Secretary of State for Defence spoke to his opposite number in Belgrade, the honourable Boris Tadic, when the incidents last week were at their height, and the subject referred to by the noble Lord was not raised in the conversation.
4.21 p.m.
Lord Biffen: My Lords, I would like to ask a question deriving from the Statement on Kosovo and it would, perhaps, be appropriate for me to mention

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that my stepdaughter is a humanitarian rights worker in Kosovo and, at the moment, is in Pristina. Can the Minister assess the extent to which the local police force that has been recruited over the past couple of years has been able to play an effective part in the recent miserable troubles? Does the Minister agree that there can be no economic development possible in that country until there is at least some evidence of effective law enforcement? What is the current time-scale for future political development in Kosovo and to what extent will that be adjusted in the light of recent events?
Lord Bach: My Lords, I thank the noble Lord for his question and pay tribute to his stepdaughter, and others like her, who are carrying out such fantastic work at such a difficult time in Kosovo. As I understand the situation, there is a Kosovo police service that works under UNMOVIC and does important work, but which would not directly involve it in the type of incidents that we saw last week. The noble Lord is right that it is crucial that law enforcement must prevail if Kosovo is to play a successful part in the world. I cannot tell him much about future political developments, except that they are at a sensitive stage. There are ongoing discussions and talks at the present time, as the noble Lord would expect, but I have no timetable for their completion.
Lord Lea of Crondall: My Lords, we have heard criticisms in the press that a contributory factor in last week's events was that no progress was being made on the final status of Kosovo. However, our experience in Northern Ireland should be enough to show that we must be careful to avoid a premature attempt to define final constitutional status. The key priority must surely be to keep all the states in the region, including Serbia Montenegro, Albania, Macedonia, Bosnia-Herzegovina and Croatia, in dialogue about the economic and wider future of the west Balkans. All have an aspiration to join the European Union. Given that we must not unravel the thread of the states in the former Yugoslavia, will my noble friend welcome the creation in February of a parliamentary forum for the Balkans, which all of those countries have joined? We were told about that last week by the Serbia Montenegran delegation and we must do all we can to encourage that process.
Lord Bach: My Lords, I am grateful to my noble friend. He was kind enough to show me material about the programme to which he referred. Of course, from this Dispatch Box we welcome any coming together of the various groups and countries in that region if the result will be peace and the possibility of people leading ordinary lives. We welcome that particular example of progress and we would like to see much more.
Lord Hannay of Chiswick: My Lords, can the Minister say whether there were any intimations of such problems arising from intelligence? If the answer is that absolutely no one expected them—that is. the United Nations, NATO or the troop-contributing countries—as appears
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to be the case, is that not somewhat worrying given that one cannot be certain that it will be the last occasion that such problems will arise in that province?
Does the Minister not agree that, while it is legitimate and reasonable for the Kosovar Albanians to aspire to independence and to feel impatient that they have not yet made any progress, it would send an appalling signal if upheavals that led to a great deal of ethnic cleansing were also seen as a reason for accelerating talks on independence? The message has to be taken home to the Kosovar Albanians that their hope of advancing their ambitions is by talking to the Serbs at the conference table, not by expelling them from their homes.
Lord Bach: My Lords, I cannot answer the noble Lord's first question regarding intelligence not because I know something and am unable to say, but because I just do not know what notice there was of those impending difficulties. If there was none, then I agree that it is worrying.
I agree with the noble Lord's second point. The international community will not and cannot tolerate inter-ethnic violence in Kosovo. Kosovo Serbs have to be allowed to return to their homes and live without fear. We and the rest of the world will continue to work for a stable, democratic and multi-ethnic Kosovo and we refuse to be deflected from that by recent violence. The timetable will also not be affected by the sort of violence that we saw last week.
Earl Russell: My Lords, while I agree with all of the comments made by the noble Lord, Lord Hannay, will the Minister say what consultations have taken place between his department, the Foreign and Commonwealth Office and the Home Office about whether the classification of Kosovo as a safe country for the return of refugees—and a safe country in general—should be suspended pending a more settled view of the situation? I hope he will remember that errors in this matter may cost lives. Regarding whether it was foreseen, I have previously discussed precisely that possibility with two people. One was a Kosovar waiter who had attempted to return home and found it too dangerous; the other was my noble friend Lord Ashdown before he took up his appointment.
Lord Bach: My Lords, I am afraid that there have so far been no consultations of the sort referred to by the noble Earl. However, such matters are, and will be, discussed by the Government in the usual way.
Earl Attlee: My Lords, many people will be pleased that this task has been given to the UK Spearhead Battalion, a standard high-quality British infantry unit. Too often we have reached for highly specialised units and ignored the Spearhead Battalion that has been at a state of high readiness, and at some personal cost.
Lord Bach: My Lords, I am grateful to the noble Earl. He speaks with a lot of experience and knowledge on these matters. I am grateful for his comment.

Energy Bill [H.L.]
4.30 p.m.
Further consideration of amendments on Report resumed on Clause 27.
Lord Davies of Oldham Lord Davies of Oldham moved Amendment No. 47:
Page 25, line 42, leave out paragraph (a) and insert—
"( ) it is not a company falling within paragraph (a) of that subsection
The noble Lord said: My Lords, I beg to move Amendment No. 47 and speak to the other government amendments in this group. In seeking to advance the discussions that we had on the last amendment with regard to taxation provisions, I want to emphasise the following points. It was suggested during the course of our debate on the previous group of amendments that the Government were drafting legislation on the hoof and had not consulted widely on some significant features of this Bill until late in the day. I want to put the record straight. Noble Lords will recall that the Bill was preceded by a White Paper in the summer of 2002. The draft Bill was published in July 2003. We have been involved in detailed discussions with stakeholders throughout the whole of the drafting and presentation of the Bill.
Through the framework of these amendments I am addressing myself to the general case which the noble Lord, Lord Jenkin of Roding, put with particular force on the last group of amendments. There are some things that are quite impossible to sort out in advance. He will recognise that we are seeking to create a flexible framework that will last over a significant period of time. As we all recognise, we are dealing with an industry with very long timescale operations. We need to allow the NDA to decide how it wishes to operate. We need to give it room to respond to the developing market when it is in place. Therefore, this necessary flexibility and conditionality with regard to specified aspects of the work is bound to take a period of time.
I responded to the noble Baroness, Lady Miller of Hendon, by indicating that she was making a plea for regulations which are frequently requested at this stage of a Bill. I wanted to emphasise to her that this was no general response. I am genuinely not able to deal with detailed regulations until we are further advanced both with the NDA and the nature of the contracts to be established. These will determine the appropriate taxation arrangements.
I make these general points purely in the interests of progress on the Bill. I also want to ensure that the House is fully aware of the Government's argument so that we can address ourselves succinctly to the issues at stake. I particularly refer to this group of amendments that the Government have tabled in response to the debate in Committee and also in response to the developing situation as negotiations take place with important stakeholders.
Amendments Nos. 47, 48 and 49 revise in three ways the definition of relevant site licensee in Clause 27, principally for the purposes of the exemption of
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certain trading profits from corporation tax and also in relation to the transfer tax provisions applying to site licensee companies.
First, Clause 27(5) was drafted on the assumption that site licensee companies would be owned directly or indirectly by the NDA before being transferred to a contractor. Recent detailed discussions as to the likely contractual structure have made it clear that this may not be the case. These changes ensure that site licensee companies that have never been a subsidiary of the NDA may be a relevant site licensee for the purposes of Chapters 1 and 2, if they meet the other conditions, which are relaxed as I shall explain.
Amendment No. 48—the second proposed change—relaxes the condition that a site licensee company can only come within the provisions if there is a management contract in force for the site. The change means that the case where the SLC's responsibilities are set out in NDA directions may come within this provision, which could apply to the AEA and its subsidiaries. The detailed requirements will be the subject of regulations.
Thirdly, Amendment No. 49 relaxes the ownership requirement so that where the management contract is with the parent of the site licensee, the site licensee company need be only a 90 per cent subsidiary, rather than a wholly owned subsidiary. This is to allow for the NDA to retain golden shares in relevant site licensee companies.
Amendment No. 51 introduces a new clause to confirm that the income generating activities of the NDA will be taxed under Case 1 of Schedule D, rather than Case VI of Schedule D (by virtue of Section 18 of the Income and Corporation Taxes Act 1988). This is being introduced in case the contractual relationships between the NDA and site licensee companies are such that the income generating activities of the NDA would be taxable under Case VI under the general tax rules. Taxing significant activities, such as electricity generation, under Case VI would cause difficulties in two ways. First, the tax clauses in the Bill are drafted on the assumption that the NDA would be trading under Case 1. Also, Case VI does not have a comprehensive set of computational rules in the same way that Case I does, so it would not be appropriate to rely on Case VI for a significant activity such as electricity generation. Subsection (2) limits the scope of this provision to sources of income within Case VI, under the general tax rules mentioned above, relating to the functions specified in subsection (1) (a), (d) and (e) of Clause 3.
Amendments Nos. 127 and 129 are consequential amendments that are made necessary by new paragraph 26A introduced by Amendment No. 24. They ensure that paragraph 26A will take precedence over paragraphs 3 and 4 (for the purpose of corporation tax on capital gains) where site licensee companies are transferred as part of a nuclear transfer scheme.
Amendments Nos. 140 to 144 amend paragraph 26 of Schedule 9 and add two new paragraphs, 26A and 26B. They concern transfers of securities in relevant site licensee companies as defined in Clause 27. The amendments allow for transfers of relevant site licensee companies to or from the NDA, or between one

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contracting group and another, to be at such a price that neither a gain nor a loss arises for the purpose of corporation tax on capital gains. The overall effect is that the transfer of ownership of site licensee companies between different owners is tax neutral.
Amendment No. 146 adds a reference to the new Clause 26A at section 35(3)(d) of the Taxation of Chargeable Gains Act 1992, which is concerned with assets held at 31 March 1982 and lists other provisions allowing for disposals at no gain no loss.
Amendment No. 145 is a technical amendment to enable the NDA to be treated as a company for the purposes of the capital gains tax rules applying to groups of companies. Similarly, it enables the NDA to be a company for the purposes of the intangible fixed assets rules. The amendment confirms that the NDA is to be taxed as if it were an ordinary company—subject to the special rules that are in this Bill. I beg to move.
On Question, amendment agreed to.
Lord Davies of Oldham Lord Davies of Oldham moved Amendments Nos. 48 and 49:
Page 26, line 4, leave out paragraphs (c) to (e) and insert—
"(ba) in a case where there is in force a management contract relating to the whole or a part of the site to which that licence relates, or to an installation or facility in or on that site, the parties to the contract include either—

(i) the company in question; or

(ii) a company which owns directly or indirectly at least 90 per cent of the ordinary share capital of that company;"

Page 26, line 16, leave out from "conditions" to end of line 18 and insert "that are required by regulations made by the Treasury to be satisfied have been satisfied."
On Question, amendments agreed to.
[Amendment No. 50 not moved.]
Lord Davies of Oldham Lord Davies of Oldham moved Amendment No. 51:
After Clause 27, insert the following new clause—
"TAXATION OF NDA ACTIVITIES CHARGEABLE UNDER CASE VI OF SCHEDULE D
(1) For the purposes of the Corporation Tax Acts so much of any activity of the NDA as—

(a) is an activity the profits and gains from which would (apart from this section) be chargeable to tax under Case VI of Schedule D, and

(b) is not excluded from the operation of this section by subsection (2),
shall be treated as an activity carried on by it as part of a trade in respect of which it is within the charge to tax under Case I of Schedule D.

(2) Any activity is excluded from the operation of this section if—

(a) it is carried on by the NDA otherwise than in connection with something mentioned in section 3(1)(a), (d) or (e) of this Act; and

(b) the profits and gains from it would, in the NDA's case, be chargeable to tax under Case VI of Schedule D by virtue of an enactment other than just section 18 of the Income and Corporation Taxes Act 1988 (c. 1).

(3) All activities treated under this section as carried on by the NDA as part of a trade—

(a) shall be treated as carried on as part of the same trade; and

(b) may be treated as carried on as part of another trade carried on by the NDA.

(4) Subsection (3) is subject to any other provision made by or under the Corporation Tax Acts that requires an activity to be treated as carried on as part of a separate trade (with or without any other activity).
(5) This section is to be construed as one with the Corporation Tax Acts."
On Question, amendment agreed to.
Lord Davies of Oldham Lord Davies of Oldham moved Amendment No. 52
After Clause 27, insert the following new clause—
"DISREGARD FOR TAX PURPOSES OF CANCELLATION ETC. OF PROVISIONS
(1) This section applies where—

(a) a relevant provision is recognised in the accounts of a relevant company in accordance with generally accepted accounting practice;

(b) that provision relates to decommissioning or cleaning-up which the NDA acquires responsibility for securing by virtue of a direction under section 3; and

(c) that responsibility includes the financial responsibility under section 21.

(2) In computing the profits, gains or losses of the company for the purposes of corporation tax, no amount shall be brought into account in respect of a credit or debit to which subsection (3) applies.
(3) This subsection applies to a credit or debit if—

(a) it arises on the occurrence of an event mentioned in subsection (4); and

(b) it relates to the effect of that event on the relevant provision or the subject matter of the provision.

(4) The events referred to in subsection (3) are—

(a) the coming into force of the direction mentioned in subsection (1)(b); and

(b) a transfer of property, rights or liabilities of the company to the NDA or a subsidiary of the NDA in accordance with a nuclear transfer scheme authorised by section 36.

(5) In this section—

"BNFL company" means BNFL or a wholly-owned subsidiary of BNFL;

"relevant company" means a BNFL company that is publicly owned;

"relevant provision" means a provision for liabilities or charges as defined in paragraph 89 of Schedule 4 to the Companies Act 1985 (c. 6).

(6) This section is to be construed as one with the Corporation Tax Acts."
The noble Lord said: My Lords, in moving Amendment No. 52, I shall speak also to Amendments Nos. 53 and 67. This group is a response to the NDA taking responsibility for decommissioning and clean-up. The provisions have been drafted taking into account the recent clarification of a number of issues that affect the provisions and related assets recognised for accounting purposes in the SLCs and NDA and the consequent likely tax effects. The issues include the likely effect of nuclear transfer schemes, the undertaking of financial responsibility by the NDA and the making of "directions" in relation to sites, installations and facilities.
Amendment No. 52 introduces a new clause that provides that the accounting entries made by a BNFL site licensee company arising from the initial recognition of the NDA's taking responsibility for nuclear clean-up and decommissioning liabilities would not be included in the tax computation; namely, a disregard. This disregard would apply only to the initial recognition of the NDA taking responsibility. This will most likely involve the recognition of an asset representing sums recoverable from the NDA when it first takes responsibility as a result of a direction under Clause 3 of the Bill. This asset would match the nuclear liabilities that had been provided for in the accounts of the BNFL site licensee.
Without this provision, the credit arising in these circumstances would generate a very substantial tax charge on the BNFL group of companies. The disregard would not apply to any subsequent change in the estimated value of the undertaking or the expenditure to which it relates. Subsequent changes would generate a corresponding credit or debit in the site licensee's accounts and so the accounting entries would match one another for tax without the need for a special rule.
Amendment No. 53 introduces a new clause for the NDA that mirrors the effect of the new clause introduced by Amendment No. 52 for BNFL. This disregard in Amendment No. 53 applies to the NDA so that the entries recognised in its accounts immediately for taking responsibility for BNFL's nuclear liabilities would not be brought into account for tax purposes. As for Amendment No. 52, this disregard would not apply to any subsequent change in estimated value of the expenditure to which it relates.
Finally, Amendment No. 67 introduces a new clause after Clause 40 that extinguishes BNFL's losses for tax purposes. This is a quid pro quo for the disregard mentioned earlier. The accumulated losses in BNFL companies that have built up over time largely arise, one way or another, from provisions made in BNFL's accounts for decommissioning and clean-up. The losses will be extinguished when the NDA takes responsibility for decommissioning and clean-up under Section 21 or when assets and liabilities are transferred from BNFL under Section 36, whichever occurs first. I beg to move.
4.45 p.m.
Baroness Miller of Hendon: My Lords, I thank the Minister for explaining this group of amendments. I was grateful that his explanation was somewhat shorter than previously, which made it possible to remember at the end what the Minister began with. I have a couple of small questions in respect of Amendment No. 67.
First, the amendment refers in subsection (4) to,
"a 75 per cent subsidiary of BNFL",
which does not appear to be defined. Could the Minister say precisely what this means? Does it mean that BNFL has to own precisely 75 per cent of the subsidiary for it to
496
be within the clause, which appears to be the literal interpretation, or does it mean a company which is owned to the extent of 75 per cent or more? And can he explain why a different definition, using 100 per cent ownership, is used in Amendment No. 53, which disregards some provisions for tax purposes?
Secondly, subsection (4) also refers to,
"a BNFL parent company",
of which BNFL is a 75 per cent subsidiary. Apart from the same definition point I have raised, will the Minister explain why this is included? What plans do the Government have to place a holding company above BNFL and for what purpose?
Thirdly, could the Minister explain how this clause works if BNFL is only 75 per cent owned or if a BNFL company is 75 per cent owned? As I understand the definition of the trigger point in subsection (4), this will come into play in respect of the Section 21 responsibility if BNFL is a "publicly owned company". That is defined in Clause 34(3) as 100 per cent public ownership. So my simple question is: why have the Government introduced this complication of 75 per cent companies if the tax rules in the clause will operate only if BNFL or its subsidiaries are 100 per cent owned?
That leads me to ask the Minister why the definition of a trigger point in subsection (4) is so complicated as between paragraph (a) and paragraph (b), with (a) applying to 100 per cent ownership and (b) applying to 75 per cent ownership. Will the Minister explain what the practical impact of this convoluted drafting results in?
Lord Davies of Oldham: My Lords, I am extraordinarily grateful to the noble Baroness, Lady Miller, for asking those questions. I shall first answer the straightforward one before getting into the more complex issue. With regard to the 75 per cent, it is simply 75 per cent and above. That figure is meant to be a minimum.
On the possibility of a parent company, looking forward over decades rather than years, we are not in a position to say whether within the Bill it would be wrong to make provision for a precise structure of the industry 10 or 15 years or beyond from now. In setting up the NDA and dealing with the future of the industry, we intend to maximise flexibility and to meet every conceivable development. Therefore, we are merely making provision within the Bill for possible change, although we have no plans or vision on precisely how the structure might develop. The noble Baroness will recognise that we are seeking to create a new framework in which there are a range of possibilities in the relationship between the NDA and the site licensee companies and with regard to BNFL and other companies.
As we see the position, the situation with BNFL will involve the development of the holding company with the consequence of the creation of site licensee companies to hold nuclear site licensees in operate sites. That is what the site licensee company is going to do. The rest of BNFL to which the noble Lady referred will be transferred to the new holding company and

497
will contain non-UK clean-up businesses. It will be a management contractor function that will initially manage site licensees but its future structure in detail will need to have a degree of flexibility against changes in circumstances.
We expect the practical impact to be that BNFL will not incur a tax charge as the NDA takes responsibility, nor will it be able to carry forward its losses. We are seeking to create a tax position that gives some recognition of flexibility with regard to the future development of BNFL. We have a minimum position and, should BNFL fall below it, which is unlikely, it will not fall within the Bill's framework. My answer to the noble Baroness, Lady Miller, is to point out that we recognise that we need within the Bill's framework, and in relation to situations that no one can foresee with total precision, an element of flexibility that takes account of all possibilities.
Baroness Miller of Chilthorne Domer: My Lords, when the Minister refers to flexibility, will that mean more transparency for the public as to the true costs to the public purse of the generation of nuclear power were it to happen in the future? With the regime he envisages, were new nuclear power stations to be built—although I certainly do not support the idea—would the suggested scheme make all the costs that fall on the public purse more transparent, whether the tax is foregone or deferred?
The Minister is frowning, so clearly I am not making myself plain. One of the past difficulties has been that one price was quoted for the generation of nuclear power but the bills that eventually fall on the public purse kick in some years later and the true costs are much higher. Is the Minister confident that the clause as drafted will contribute to making the costs of nuclear clean-up and decommissioning more obvious to the public?
Lord Jenkin of Boding: My Lords, before the Minister replies, will he confirm to the noble Baroness, Lady Miller of Chilthorne Domer, that if—we always stress that word—there were to be a new nuclear build it would be carried out not by the NDA or the Government, but by one of the major private sector companies, which would consider that the market had reached the position where it would find a ready market for its output? That would be a taxable operation and subject to all the normal rules affecting companies. With the greatest respect to the noble Baroness, I am not sure that this issue has much to do with that.
Baroness Miller of Chilthorne Domer: My Lords, I know that we are not in Committee, but with the leave of the House I am not under a misapprehension: the clean-up is part of the cost.
Lord Davies of Oldham: My Lords, I hesitate to put my head above the parapet when two noble Lords are engaged in a most interesting debate. I am grateful to the noble Lord, Lord Jenkin, because he expressed exactly the points I would have sought to make but
498
with greater eloquence and accuracy. These clauses are about the tax liability of NDA and BNFL as public companies. Of course I recognise the point in the longer run about aspects of tax impact on the cost of electricity, but the noble Baroness will recognise that we are seeking to identify how we deal with public companies, not translate them into a major operation in which they are making tax gains and losses that have to be computed in all their activities at enormous cost, when they all effectively come from the same pot.
My answer is that this part of the Bill is not directly concerned with the issues raised by the noble Baroness. The noble Lord, Lord Jenkin, is right that with the future generation of nuclear electricity, should there ever be a new build, that would be in response to the market and wider public considerations.
Baroness Miller of Hendon: My Lords, I thank the Minister for his explanation. He did not answer my fourth point, which was about why the definition of the trigger point seems so complicated in paragraphs (a) and (b), other than perhaps in the general terms that everything has to be flexible because we do not know exactly what it is going to be. We understand all that, but it seems in relation to the other matters that we have gone a long way down the line of the Bill without any detailed answers about anything, even when we were talking earlier about regulations.
Although we accept what the Minister is saying, it seems that the Bill will go through Third Reading without getting any further. Anyway, it is a government amendment. All I was going to say to the Minister at this stage was that I am sure that my noble friend will read his explanation carefully and if she is not happy with it she will no doubt return to the matter at Third Reading.
Lord Davies of Oldham: My Lords, in moving the amendment I have a chance to express my sympathy with the noble Baroness, Lady Noakes. We recognise how sad it is that she is not with us today and the reason for that. We miss her contribution.
As it is a government amendment, when I sat down we had concluded proceedings on that part of the amendment.
On Question, amendment agreed to.
Lord Davies of Oldham Lord Davies of Oldham moved Amendment No. 53
After Clause 27, insert the following new clause—
"DISREGARD FOR TAX PURPOSES OF PROVISIONS RECOGNISED BY NDA
(1) This section applies where—

(a) by virtue of a direction under section 3 the NDA acquires the responsibility for securing the cleaning-up of a site falling within subsection (2), or the decommissioning of an installation or facility in or on such a site;

(b) that responsibility includes the financial responsibility under section 21; and

(c) on the coming into force of the direction mentioned in paragraph (a), the NDA recognises in its accounts, in accordance with generally accepted accounting practice, a relevant provision that relates to that responsibility.

(2) A site falls within this subsection if—

(a) at the time the direction mentioned in subsection (1)(a) comes into force there is a nuclear site licence in force in relation to the site; and

(b) the holder of that licence at that time is a BNFL company that is publicly owned.

(3) In computing the profits, gains or losses of the NDA for the purposes of corporation tax, no amount shall be brought into account in connection with the recognition of the relevant provision in the accounts of the NDA.
(4) But subsection (3) shall not affect the amount (if any) to be brought into account in computing the profits, gains or losses of the NDA in connection with an adjustment at a time after the first recognition of the relevant provision in the accounts of the NDA.
(5) In this section—

"BNFL company" means BNFL or a wholly-owned subsidiary of BNFL;

"relevant provision" means a provision for liabilities or charges as defined in paragraph 89 of Schedule 4 to the Companies Act 1985 (c. 6).

(6) This section is to be construed as one with the Corporation Tax Acts."
On Question, amendment agreed to.
Schedule 4 [Supplemental taxation provisions for exempt activities]
[Amendments Nos. 54 and 55 not moved.]
Clause 32 [Power to modify Chapter 1 of Part 1]:
Baroness Byford Baroness Byford moved Amendment No. 56
Page 29, line 38, leave out paragraph (b).
The noble Baroness said: My Lords, when I raised this issue in Committee in the form of a question as to precisely how the Secretary of State would amend Clause 11 without weakening it, the Minister said:
"The position is that we cannot possibly envisage a situation that would require us to change the constitution of the NDA".[Official Report, 22/1/04; col. GC 419.]
I stress that the Minister used the word "constitution". Yet the Bill contains the measure that would allow for the possibility of a change even though its nature is not presently foreseeable. Clause 11 relates not to the constitution of the NDA but to its strategy.
I repeat my original question: will the Minister explain in what way Clause 11 on the strategy of the NDA can be changed without weakening it? I should also like to quote from his reply five days later to my noble friend Lord Jenkin of Roding, who had sought enlightenment on the transfer of information. The Minister said:
"Officials at our departments have spoken to BNFL and UKAEA and recognise that there is an anxiety in the background, but they can come up with no specific situation where such a claim from a third party is likely to arise in practice. It would be difficult to justify a statutory measure without being clear of the kind of situation in which it could possibly arise". [Official Report, 27/1/04; col. GC 68.]
Surely I am not the only one who feels that those two statements are totally contradictory.
During Grand Committee when I moved the original amendment, the noble Baroness, Lady Miller of Chilthorne Domer, expressed her concerns about this clause. She said:
"I am worried that the clause, with sweeping powers to amend so much of Chapter 1, is included". [Official Report, 22/1/04; col. GC 417.]
I was also supported by my noble friend Lady Noakes, who is not with us for reasons that have already been explained. She said:
"I cannot remember a power which makes such sweeping changes because we cannot think at the moment about what we might want to do in 10 years' time".
Later, when we were talking about the affirmative procedure, the noble Lord, Lord Whitty, said:
"It is less than primary legislation but nevertheless one House has the ability to [consider it]".
But my noble friend Lord Jenkin came back again and said:
"This entire set up requires a more regular scrutiny by Parliament than seems to be currently envisaged".—[Official Report, 22/1/04; cols. GC 419–20.]
Therefore, I do not apologise for returning to this issue because I consider it to be important. As I said, the two statements that I quoted suggest that there are different answers to two different issues—or, rather, to linked issues. I believe that it is difficult to justify a statutory measure without being clear about how the need for it might arise. In those circumstances, I believe that this amendment should succeed. If we leave the subsection in the Bill, we shall grant powers which the Government have accepted are unjustifiable. The Minister knows only too well how much I dislike measures being brought forward in regulations. I beg to move.
5 p.m.
The Deputy Speaker (Viscount Allenby of Megiddo): My Lords, I should inform the House that, if this amendment is agreed to, I shall not be able to call government Amendment No. 57.
Baroness Miller of Chilthorne Domer: My Lords, I supported this amendment in Grand Committee and continue to do so. I believe that if the Opposition were to propose such wording, the Government would say, quite rightly, "This amendment is far too loose. We can't have this sort of wording on the face of the Bill". In the light of that, I offer the noble Baroness, Lady Byford, my continued strong support.
Lord Whitty: My Lords, in a moment I shall move government Amendment No. 57 in this group. Noble Lords will recall that it was the subject of some procedural discussion in Grand Committee. I apologised to the Grand Committee that the Delegated Powers and Regulatory Reform Committee had not had the opportunity to consider the amendment before we tabled it on that occasion. The committee has now had a chance to consider the amendment and has approved it.

501
Amendment No. 57 does not indicate any change of policy but simply makes clear that the powers set out in Clause 32 to modify the provisions extend to both the strategy and the annual work plans, which are covered by Clauses 11 and 12.
The noble Baroness asked why we need this power in relation to Clause 11 of the Bill. The answer is that, although the detail that would be modified is in Schedule 2, Clause 11 introduces Schedule 2. Therefore, in order to provide for delegated powers, which I know the noble Baroness objects to almost in principle, we must mention Clause 11 as well. However, it does not mean that the powers could completely change the whole of Clause 11 as it relates to this provision.
Perhaps I may refer to the government amendment. I know that the noble Baroness is not keen on affirmative resolutions, but such resolutions provide a substantial parliamentary power in allowing some flexibility. At the same time, they provide Parliament with a means of control over the Executive. This provision relates mainly to the NDA's strategy. The Bill sets out in some detail in Schedule 2 the issues which must be covered by the NDA strategy, and that level of detail reflects our determination to provide a framework for the strategy over time.
However, as my noble friend Lord Davies said in respect of another amendment, here we are legislating for a function carried out by the NDA which will last for decades and, indeed, on occasion for at least a century. Over time, the situation is bound to change in ways of which we cannot easily conceive. Therefore, it is sensible to provide flexibility to make amendments in respect of issues where the strategy and annual plan would need to cover a change in circumstances.
In a sense, Amendment No. 57 would make good a gap in the original draft of the plan. The Bill already makes such a provision in respect of the annual plan in Clause 31(1)(c) but not in relation to the NDA's strategy. However, the intention was that the flexibility would apply to both. Before the noble Lord, Lord Jenkin, rises to say that this is muddled legislating, perhaps I may explain the logic behind it. During the course of revising the NDA provisions for introduction as part of the Energy Bill, the clause covering the strategy was divided into two but the consequential change required in Clause 32 was missed.
I apologise for that oversight, but the intention had already been made clear in the White Paper and subsequently. Therefore, I hope it will be recognised that the need to provide some flexibility in the content of the strategy and the annual plan and the provisions relating to parliamentary scrutiny through the affirmative resolution is appropriate. Indeed, it is also true that in future we shall have an additional procedure in relation to the Select Committee on the merits of statutory instruments. That may be of some comfort to the noble Baroness in any future application of this amendment. I hope that I have explained why the noble Baroness's amendment is not necessary and why, in a moment, I shall wish to move my amendment.
Baroness Byford: My Lords, I thank the Minister. He did not answer my first point when I quoted what was said in Grand Committee. We are dealing not with the constitution but with the strategy. If that is the case, why was it a slip of the tongue when the noble Lord referred to the "constitution'. when he was responding to questions of the "strategy"'? I am not enormously happy with what he said and I wish to test the opinion of the House.
5.7 p.m.
On Question, Whether the said amendment (No. 56) shall be agreed to?
Their Lordships divided: Contents, 110; Not-Contents, 127.

Division No. 2

CONTENTS

Addington, L.

Lindsay, E.

Alton of Liverpool, L.

Liverpool, E.

Anelay of St Johns, B.

Livsey of Talgarth, L.

Astor of Hever, L.

Ludford, B.

Attlee, E.

Luke, L.

Avebury, L.

Lyell, L.

Barker, B.

McColl of Dulwich, L.

Bradshaw, L.

Mackie of Benshie, L.

Brooke of Sutton Mandeville, L.

Maclennan of Rogart, L.

Brougham and Vaux, L.

Maginnis of Drumglass, L.

Buscombe, B.

Mancroft, L.

Byford, B.

Marlesford, L.

Caithness, E.

Masham of Ilton, B.

Carlisle of Bucklow, L.

Miller of Chilthorne Domer, B.

Carnegy of Lour, B.

Miller of Hendon, B.

Chorley, L.

Monson, L.

Clement-Jones, L.

Murton of Lindisfarne, L.

Colwyn, L.

Newby, L.

Cope of Berkeley, L. [Teller]

Northesk, E.

Craigavon, V.

Oakeshott of Seagrove Bay, L.

Dholakia, L.

Onslow, E.

Erroll, E.

Palmer, L.

Fearn, L.

Park of Monmouth, B.

Fookes, B.

Phillips of Sudbury, L.

Freeman, L.

Razzall, L.

Freyberg, L.

Rennard, L.

Geddes, L.

Renton, L.

Glenarthur, L.

Roper, L.

Goodhart, L.

St John of Fawsley, L.

Gray of Contin, L.

Scott of Needham Market, B.

Greenway, L.

Seccombe, B. [Teller]

Griffiths of Fforestfach, L.

Selsdon, L.

Higgins, L.

Sharman, L.

Hodgson of Astley Abbotts, L.

Shutt of Greetland, L.

Hooper, B.

Skelmersdale, L.

Hooson, L.

Steel of Aikwood, L.

Howe of Aberavon, L.

Stewartby, L.

Howe of Idlicote, B.

Ullswater, V.

Howell of Guildford, L.

Walmsley, B.

Jopling, L

Walpole, L.

Knight of Collingtree, B.

Williams of Crosby, B.

Lamont of Lerwick, L.

Williamson of Horton, L.

NOT-CONTENTS

Acton, L.

David, B.

Ahmed, L.

Davies of Coity, L.

Andrews, B.

Davies of Oldham, L. [Teller]

Bach, L.

Dean of Thornton-le-Fylde, B.

Barnett, L.

Dixon, L.

Bassam of Brighton, L.

Donoughue, L.

Berkeley, L.

Evans of Parkside, L.

Bernstein of Craigweil L.

Evans of Temple Guiting, L.

Blackstone, B.

Falconer of Thoroton, L. (Lord Chancellor)

Bragg, L.

Brennan, L.

Farrington of Ribbleton, B.

Brooke of Alverthorpe, L.

Faulkner of Worcester, L.

Brookman, L.

Filkin, L.

Brooks of Tremorfa, L.

Gale, B.

Campbell-Savours, L.

Goudie, B.

Carter, L.

Graham of Edmonton, L.

Clark of Windermere, L.

Grantchester, L.

Clarke of Hampstead, L.

Grenfell, L.

Crawley, B.

Grocott, L. [Teller]

542

Harris of Haringey, L.

Pitkeathley, B.

Harrison, L.

Puttnam, L.

Haskel, L.

Ramsay of Cartvale, B.

Hayman, B.

Randall of St. Budeaux, L.

Hilton of Eggardon, B.

Robertson of Port Ellen, L.

Hogg of Cumbernauld, L.

Rogan, L.

Hoyle, L.

Rooker, L.

Hughes of Woodside, L.

Sainsbury of Turville, L.

Hunt of Chesterton, L.

Sawyer, L.

Hunt of Kings Heath, L.

Scotland of Asthal, B.

Jones, L.

Sheppard of Liverpool, L.

Jordan, L.

Simon, V.

King of West Bromwich, L.

Smith of Leigh, L.

Kirkhill, L.

Stoddart of Swindon, L.

Lea of Crondall, L.

Stone of Blackheath, L.

Levy, L.

Strange, B.

Lipsey, L.

Symons of Vernham Dean, B.

Lockwood, B.

Taylor of Blackburn, L.

Lofthouse of Pontefract, L.

Thornton, B.

Macdonald of Tradeston, L.

Triesman, L.

McIntosh of Haringey, L.

Turnberg, L.

MacKenzie of Culkein, L.

Turner of Camden, B.

Mackenzie of Framwellgate, L.

Warner, L.

Mitchell, L.

Warwick of Undercliffe, B.

Morgan, L.

Whitaker, B.

Orme, L.

Whitty, L.

Patel of Blackburn, L.

Winston, L.

Pendry, L.

Woolmer of Leeds, L

On Question, amendment agreed to.

Resolved in the negative, and amendment disagreed to accordingly.
5.17 p.m.
Lord Whitty Lord Whitty moved Amendment No. 57:
Page 29, line 38, leave out "section 11" and insert "sections 11 and 12"
The noble Lord said: My Lords, I have spoken to this amendment in the course of the previous discussion. I beg to move.
On Question, amendment agreed to.
Clause 38 [Recovery of property from private ownership]:
Lord Triesman Lord Triesman moved Amendment No. 58:
Page 36, line 2, after "applies" insert "in the case of a nuclear company ("the transferred company") all the shares in which were transferred for the purposes of a management contract to the contractor or to a subsidiary of the contractor"
The noble Lord said: My Lords, the aim of this group of amendments is to ensure that the recovery powers available to the NDA in Clause 38 are fit for purpose and cover all the situations we want them to cover.
Where a management contractor is in breach of contract, or where the contract is at an end, Clause 38 enables the recovery of shares in a site licensee company that were transferred to the contractor, together with other property, rights and liabilities which were transferred at the time in relation to that contract.
That is necessary because although ownership of the SLCs will be transferred for the duration of the site management contract, the SLCs will remain de facto assets of the NDA. So the NDA needs to be able to recover these assets if, as Clause 38 indicates, a site management contractor breaches its contract, becomes bankrupt or has its contract terminated.
In reviewing Clause 38 it became clear that its powers did not cover two situations in which we would want the NDA to be able to recover its assets. Amendments Nos. 58 to 65 therefore extend Clause 38 to cover these situations. The two situations are as follows: first, recovering any new shares that are issued by an SLC since it was transferred; and, secondly, new property that is acquired by the SLC during the operation of the management contract—for example, to replace property that was originally transferred by the scheme. In practice, such purchases are likely to have been funded by the NDA, and we wish to have powers to recover that property.
I hope I have made the principle behind the powers in Clause 38 clear. The amendments seek to ensure the proper application of this principle in all situations where we want the NDA to be able to recover its assets from site licensee companies. It corrects a gap in the original clause. I beg to move.
Baroness Miller of Hendon: My Lords, I make a brief point about Amendment No. 58. I understand the Minister's explanation, but I must say that I find it quite extraordinary that such an important part of a clause was left out in the first instance.
Lord Triesman: My Lords, the provision should have been inserted in the first instance. The clause

505
needed correcting and the amendment corrects it. I think that the clause is now in proper order and I hope it will now commend itself to your Lordships.
On Question, amendment agreed to.
Lord Triesman Lord Triesman moved Amendments Nos. 59 to 65:
Page 36, line 3, leave out "a contractor under a management contract" and insert "the contractor"
Page 36, line 5, leave out "a management contract" and insert "that contract"
Page 36, line 14, leave out paragraphs (a) to (c) and insert—

"(a) securities of the transferred company (whether transferred as mentioned in subsection (1) or issued afterwards);

(b) property, rights and liabilities to which the transferred company was entitled or subject immediately before the transfer so mentioned;

(c) property, rights and liabilities transferred for the purposes of the management contract, to the contractor, to a subsidiary of the contractor or to the transferred company or a wholly owned subsidiary of the transferred company;

(d) property, rights or liabilities to which the transferred company or a wholly owned subsidiary of the transferred company first became entitled or subject while that contract was in force."

Page 36, line 27, leave out "they" and insert "the property, rights and liabilities or the shares mentioned in subsection (1)"
Page 36, line 28, leave out subsection (5) and insert
"(5) A transfer is authorised by this section notwithstanding that what is transferred has ceased, before the transfer, to be the property or a right or liability—

(a) of a person to whom anything was transferred for the purposes of the management contract mentioned in subsection (1);

(b) of the transferred company or of a wholly owned subsidiary of that company; or

(c) in the case of securities issued after the transfer mentioned in that subsection, of the person to whom they were issued."

Page 36, line 41, leave out "and" Page 36, line 45, at end insert "; and
"transferred", in relation to shares, property, rights or liabilities, means transferred in accordance with a nuclear transfer scheme."
On Question, amendments agreed to.
Clause 40 [Undertakings given by the Secretary State]:
Baroness Byford Baroness Byford moved Amendment No. 66:
Page 38, line 5, at end insert—
"( ) This section will apply to the Magnox undertaking.
( ) Should the Secretary of State consider that the section should be applied to any other undertaking he will lay the proposal before Parliament."
The noble Baroness said: My Lords, on 27 January I rose to move that Clause 40 should not stand part of the Bill. The Minister very kindly and clearly explained:
"Although Clause 40 is drafted in general terms its purpose is to allow the Secretary of State to extinguish what is called the 'Magnox Undertaking"'.—[Official Report, 27/1/04; col. GC 76.]
He went on to state at col. GC 77:
"It is true that the Magnox undertaking is the only significant undertaking that may be caught by the clause, but others may arise in the course of time".
506
Perhaps I may remind your Lordships of the Minister's reply to my noble friend Lord Jenkin earlier that day. He stated:
"It would be difficult to justify a statutory measure without being clear of the kind of situation in which it could possibly arise".—[Official Report, 27/1/04; col. GC 68.]
I believe the amendment admirably covers the situation. It clarifies that Clause 40 deals with Magnox and allows for an unforeseen situation to require its application to something that is not Magnox, while ensuring that Parliament will have the right to approve that application.
During our debates in Grand Committee my noble friend Lady Noakes said:
"I completely understand the Magnox Undertaking and not paying it out when it is no longer necessary because of the restructuring. Why, then, is the clause drafted in this oblique way as though it is trying to catch all kinds of things".—[Official Report, 27/1/04; col. GC 76.]
I do not think we had a satisfactory answer to that. The noble Lord, Lord Whitty, responded at col. GC 77. He said:
"It is true that the Magnox undertaking is the only significant undertaking".
I wanted to bring back the provision because I think that we are dealing with future issues rather than present ones—something we have been saying throughout the various stages of the Bill. Whereas we can all understand what the Magnox undertaking is about, we do not understand the rest; that is, those things that apply in the future. Therefore, I have tabled the amendment again today in the hope of a slightly better response from the Minister. Surely, if we have all agreed that we understand what the Magnox undertaking is, we should not be laying down such great flexibility. In fact, the Bill becomes one of the Bills with so much missing one that is left to the future and greater flexibility. I beg to move.
Lord Jenkin of Roding: My Lords, I have a horrid suspicion about the reason why the Clause is drafted in the way it is, with this extraordinarily wide provision, as my noble friend Lady Byford has said. I suspect it is because of the well-known legislative convention that if you seek to legislate in a public Bill to deal with a private right it is then open to those affected to insist on going through the private Bill procedure, with a committee to examine the Bill, and for it then to be reported back to the House.
However, I think it is being less than frank if the Minister does not actually tell us that that is the reason. It may be a clever wheeze to make the provision apply to any number of undertakings, which might or might not be given in the future in order to avoid that legislative trap. But I think that the principle of openness and transparency, to which Ministers so frequently appeal, requires them to tell the House whether that is the real reason.
Lord Whitty: My Lords, as we indicated in Grand Committee—and I then wrote to noble Lords opposite on 9 February—the purpose of Clause 40 is to allow the Secretary of State to extinguish undertakings given

507
to publicly owned companies. That clearly includes the undertaking that was given to BNFL when it took over responsibility for the Magnox nuclear power stations; the so-called "Magnox undertaking". That is the obvious use of the clause.
There are two key reasons for the clause being drafted in general terms. First, we want to avoid any problems with similar undertakings that might be given in the future. Specifically, we want to avoid the possibility of government paying for nuclear liabilities that are no longer the financial responsibility of the company to which the undertaking was given. I think noble Lords would agree that the Government should not, as a result of passing responsibility for clean up to the NDA, be obliged in effect to pay twice for clean up.
Secondly, we need to allow for the possible renewal or novation of any undertaking with different companies. Restricting the scope of Clause 40 to any one publicly owned company—that is what the Magnox undertaking is—would severely hamper the ability of the Secretary of State to renew or novate the undertaking with a different company. Being too specific in Clause 40 risks the provision being overtaken by future events and being made redundant.
Those two reasons lie behind the formulation of Clause 40. It indeed has the additional benefit to which the noble Lord, Lord Jenkin, refers. Even without that, we need to draft the clause in more general terms than specifically referring to the Magnox undertaking as the noble Baroness's amendment would.
It is worth pointing out that, were the noble Baroness to press the amendment, the wording is probably defective. Its second part does not state what process Parliament would adopt in dealing with any undertaking. It says that the Secretary of State,
"will lay the proposal before Parliament".
There is no clarity on what procedure Parliament would then use. So, I think that there are good and strong arguments for accepting that the clause has to be drafted in general terms. However, the noble Baroness's amendment would not resolve the position even should she be unpersuaded and wish to restrict the provision to the Magnox undertaking full stop.
Baroness Byford: My Lords, I am grateful to the Minister for his response. I am even more confused about the matter. I understand—though I may be wrong—that the provision would be restrictive as far as concerns the Magnox company anyway; and that it would not get a chance to go to Committee. No? Forgive me, I shall leave that point.
The Minister has said clearly that the provision would avoid similar and future liabilities. I obviously accept that. I am not happy if the Minister has said to me that he understands that I do have a point—which I think he has—but that it restricts the issue too much for the future. That is one matter. He went on to say that my amendment was defective. If it is his view that I have a point but my amendment is defective, I would be grateful if the Minister could consider whether the amendment has any merit, before Third Reading. If he
508
says, "No, it hasn't", I am at the end of the line. Either I divide the House or not, and, having just divided the House, that might not benefit me anything at this stage.
I hope that the Minister will think about the amendment.
5.30 p.m.
Lord Whitty: My Lords, I must clarify my point. I said that I did not accept the amendment substantively, for the reason that I gave. It is too tight an amendment. The second part of the amendment would require further amendment to be effective, even if the House were to be convinced of the noble Baroness's argument. Therefore, I oppose the amendment substantively, as well as procedurally.
Baroness Byford: My Lords, I thank the Minister for that clarification. I will read what he said, and, at this stage, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Whitty Lord Whitty moved Amendment No. 67:
After Clause 40, insert the following new clause—
"EXTINGUISHMENT OF BNFL LOSSES FOR TAX PURPOSES
(1) In relation to accounting periods beginning on or after the trigger date, all the relevant losses of every BNFL company arising before that date shall be treated for the purposes of corporation tax as extinguished.
(2) The following are relevant losses of a BNFL company for the purposes of this section—

(a) losses incurred by the company in a trade;

(b) losses incurred by the company in a transaction a profit or gain from which would have been chargeable to tax under Case VI of Schedule D;

(c) excesses to be carried forward in the company's case under section 75(3) of the Income and Corporation Taxes Act 1988 (c. 1);

(d) Schedule A losses (within the meaning of section 392A of that Act) incurred by the company;

(e) losses to be carried forward in the company's case under section 392B(1) of that Act;

(f) any tax loss of the company falling within section 400(2)(d) of that Act;

(g) allowable losses (within the meaning of section 8 of the Taxation of Chargeable Gains Act 1992 (c. 12)) that have accrued to the company;

(h) deficits of the kind mentioned in section 83(1) of the Finance Act 1996 (c.8) to the extent that they are to be carried forward in the company's case under subsection (3A) of that section;

(i) excesses of the kind mentioned in section 260 of the Capital Allowances Act 2001 (c. 2) in relation to the company;

(j) losses of the kind mentioned in paragraph 35(1) of Schedule 29 to the Finance Act 2002 (c. 23) incurred by the company;

(k) unrelieved surplus advance corporation tax of the company (within the meaning of section 32 of the Finance Act 1998 (c. 36)).

(3) This section applies to the relevant losses of a BNFL company only if it is publicly owned on the day before the trigger date.
(4) In this section—
"BNFL company" means—

(a) BNFL;

(b) a company that is a 75 per cent subsidiary of BNFL at a time during the qualifying period; or

(c) a company (other than BNFL) that is a 75 per cent subsidiary of a BNFL parent company at a time during the qualifying period;

"BNFL parent company" means a company of which BNFL is a 75 per cent subsidiary;

"qualifying period" means the period beginning with 16th March 2004 and ending with the trigger date;

"trigger date" means whichever is the earlier of the following—

(a) the date of the first occasion on which section 21 operates so as to confer financial responsibilities on the NDA in relation to an installation, site or facility the person with control of which is a BNFL company that is publicly owned; and

(b) the date of the first occasion on which a transfer takes effect which is a transfer to the NDA or a subsidiary of the NDA in accordance with a nuclear transfer scheme authorised by section 36 of property, rights or liabilities of a BNFL company.

(5) This section shall be construed as one with the Corporation Tax Acts."
On Question, amendment agreed to.
Schedule 7 [Finances and accounts of transferee companies]:
Lord Whitty Lord Whitty moved Amendment No. 68
Page 161, line 21, leave out from "corporate" to end of line 22 and insert "which is—

(a) a body corporate to which a transfer has been made in accordance with a nuclear transfer scheme; but

(b) not a subsidiary of the UKAEA."

The noble Lord said: My Lords, in moving Amendment No. 68, I shall speak to the other amendments in the group.
Essentially, the amendments make two technical changes to the Bill. The first is to clarify the statutory powers on borrowing and issuing guarantees that will apply to UKAEA subsidiaries, such as any site licensee companies that might be created to facilitate the NDA's objective of promoting competition. As with other amendments, in reviewing the mass of past nuclear legislation, we have spotted a potential source of confusion that the amendments will remove.
UKAEA subsidiaries are already subject to the borrowing and guarantee powers in the Atomic Energy Authority Act 1986. Schedule 7 introduces a similar regime for transferee companies. The schedule was principally designed to update such provisions in respect of BNFL companies. As drafted, however, it will have the additional effect of incorporating UKAEA subsidiaries which are transferee companies as well.
On reflection, we considered it appropriate to maintain the existing borrowing and other limits for UKAEA subsidiaries from previous legislation, rather than roll them into the pool applicable to BNFL companies or the pool applicable to other transferee companies that are not UKAEA subsidiaries. To do otherwise would be to lower the overall total that applies to BNFL and UKAEA combined.
The second change made by the amendments is to paragraph 8 of Schedule 7. Paragraph 8 is a technical provision that provides that the vesting of assets and liabilities in accordance with a transfer scheme,
"shall be taken to have been effected immediately after the end of the last accounting year of the transferor".
That paragraph also enables a nuclear transfer scheme to contain valuations of any transferred assets or liabilities. The provisions are drawn from standard privatisation precedents to ensure continuity between the accounts of the transferor and transferee companies.
The amendments will apply the provisions of paragraph 8 to the statutory accounts of transferor companies, as well as those of transferees, thereby facilitating the transfer. We consider that the amendment would assist in the maintenance of continuity between the two sets of accounts. I beg to move.
Lord Higgins: My Lords, I intervene briefly. This is an enormous group of amendments—something like 47 or 48.
Noble Lords: It is not this group.
Lord Higgins: My Lords, I see. I am sorry.
On Question, amendment agreed to.
Lord Whitty Lord Whitty moved Amendments Nos. 69 to 73:
Page 161, line 27, after "if' insert ", without being a subsidiary of the UKAEA,"
Page 164, line 34, leave out "not a designated BNFL company" and insert "neither a designated BNFL company nor a subsidiary of the UKAEA"
Page 166, line 2, leave out "a transferee company" and insert "each of the following—

(a) a transferee company;

(b) a subsidiary of the UKAEA to which a transfer has been made in accordance with a nuclear transfer scheme;

(c) a company that is the transferor in relation to a transfer in accordance with such a scheme to a company falling within paragraph (a) or (b)."

Page 166, line 4, after "company" insert "mentioned in subparagraph (1)(a) or (b)"
Page 166, line 5, leave out "a" and insert "the"
On Question, amendments agreed to.
Schedule 8 [Pensions]
Lord Whitty Lord Whitty moved Amendment No. 74:
Page 166, line 35, at end insert—
""BNFL company" means BNFL or a subsidiary of BNFL;"
The noble Lord said: My Lords, we are now at the enormous group of amendments, for which I apologise. The group has two straightforward aims. It ensures that the coverage of the pension provisions in Part 1 is appropriate, and it ensures that the drafting of Part 1 is consistent. We want to be clear in our drafting and in our definition of those to whom the provisions apply.
Discussions in Grand Committee showed that there was broad support for our approach to protecting the pensions benefits of existing employees who were transferred as a result of the restructuring of the UK

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nuclear clean-up industry. We take workforce conditions and the retention and development of nuclear skills and expertise seriously, and that is what Schedule 8 is about. However, it is important that we achieve appropriate coverage of the pension protections afforded by the Bill.
Probably, the most significant amendments in the first batch are Amendments Nos. 91 and 125, which safeguard the position of employees of the new BNFL—the restructured BNFL—who are currently members of the UKAEA pension scheme. The amendments will enable the UKAEA pension scheme to be extended to designated new BNFL companies while such companies are publicly controlled. Such extensions will enable UKAEA scheme members who are transferred to those companies to remain members of the UKAEA scheme.
With regard to BNFL employees who are members of the BNFL group scheme, Amendments Nos. 80, 83 and 85 clarify the ability of the NDA to modify that scheme. We may wish the NDA to take control of the BNFL group scheme. In particular, we wish the NDA to have powers to modify the scheme rules, so that existing members of the scheme will be able to remain members, even if they are transferred to a different employer or their current employer is no longer eligible, under existing rules, to be a participating employer in the scheme. However, as drafted, the Bill pre-dates the conclusion of the joint BNFL strategy review, so we need the amendments to ensure that the provisions of paragraph 2 of Schedule 8 do their intended job of allowing the NDA to modify the BNFL group scheme.
Those are the two main amendments, but there is a significant number of technical amendments to ensure appropriate coverage of the Bill's provisions and consistency of drafting. I shall go through them.
Amendments Nos. 89, 90 and 92 make it clear that certain pension provisions apply to non-employee officers and directors of a company who might otherwise have been excluded by constant references to "employees". Amendments Nos. 74, 75 and 99 make provision for the application of the pension protections during the early stages of the restructuring of the nuclear clean-up industry. They also make it clear that the protection is afforded only to public sector employees.
Most of the rest of the amendments—Amendments Nos. 76 to 79, 86 to 88, 90 and 95 to 122, I think—deal with a potential loophole in the Bill's pension provisions. There may be one or two gaps in that list. Amendments Nos. 110 and 111 are excluded. Amendment No. 109 deals with the same thing. I am receiving clarification from the noble Baroness from a sedentary position. I am sure that she is right.
Baroness Miller of Hendon: My Lords, I beg the noble Lord's pardon; I was trying to be helpful. It was just that Amendment No. 111 is not in the group, and the noble Lord said that it was. Amendment No. 109, which he thought was definitely in the group, is not his amendment but is in the name of the noble Lord,
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Lord Lea of Crondall. I was trying to be helpful to the noble Lord, but I beg his pardon and that of the House.
Lord Whitty: My Lords, I am clear that Amendment No. 111 is not in this group. Amendment No. 109, which is on my list, probably should not be, so I apologise to noble Lords and in particular to my noble friend Lord Lea.
The rest of the group, which I will not repeat, deals with a potential loophole. There may be instances when an employee is not transferred but his employer—the site licensee company, for example—changes ownership. That could lead to employees having to leave their nuclear pension scheme. As previously drafted, the Bill's protection may not have been triggered in that case, and we want to make sure that it is.
Employees' pensions should be protected when they are transferred, as the Bill says, "for NDA purposes"—that should include such people—and when ownership of their employer is transferred, for example, following a competition for site management. The amendments are also intended to clarify the definition of "for NDA purposes" to ensure that it does not catch transfers which are unrelated to the NDA's own functions.
Finally, Amendments Nos. 151 and 152 simply make minor amendments to the Civil Nuclear Constabulary pension provisions in Schedule 10 to ensure that they, too, mirror the relevant provisions in Schedule 8.
As I have explained, therefore, the amendments are intended to ensure that the provisions of Schedule 8 do exactly what we want them to do—to protect the future pension benefits of staff who are required to transfer for NDA purposes. I beg to move.
Lord Higgins: My Lords, I apologise to your Lordships for intervening too quickly. When I used to be preoccupied with athletics, on the running track it was three false starts and you were out. At present, it is down to two false starts, and the Minister very nearly got himself disqualified. Be that as it may, we are grateful to him for explaining this huge group of amendments. Am I right in thinking that none of them actually arises as a result of the discussions which took place in Committee on 27 January? These are all changes which have resulted either from subsequent reflection by the Government on the loophole the noble Lord mentioned or because the original drafting was wrong. It seems quite extraordinary that at this stage of the Bill, which has been through the Committee stage, these amendments are before us now rather than earlier. Perhaps the Minister could clarify why we did not have a chance of debating them in Committee.
On the loophole, if I understand it correctly, the Government are saying that people who are at present employed by a company may not be protected if the employer moves but the employee remains in his present post. That would certainly seem appropriate.
While we are obviously very keen that the present position of the existing pensioners should be protected, are these largely final salary schemes, are they contributory

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and, in particular, are they index-linked? There is an increasing concern at the burden which public sector pensions are placing on the economy and the fact that they are in a privileged position. We might wish to return to the matter at Third Reading, and it would be helpful if the Minister could tell us whether a final salary scheme is being transferred to this new structure, whether it is contributory and whether it is index-linked.
5.45 p.m.
Lord Whitty: My Lords, on the first point, the amendments arise partly through drafting errors at an earlier stage which clearly needed tidying up, but also because the original form of the Bill pre-dated the review of the so-called BNFL strategy review. Therefore, further changes in Government policy needed to be reflected in how we were treating the current members of BNFL schemes in the context of some being transferred to the NDA and some being left in BNFL companies and what is provisionally being called new BNFL. So it is not so much an error in the original drafting as Government policy becoming clarified on the future of BNFL.
In relation to whether these amendments reflect discussions in Grand Committee, the honest answer is "only tangentially". Concerns were expressed, some of which were covered by subsequent amendments, which dealt with the position of employees who were being transferred at various stages and how far the guarantee continued down the various transferors through the change in the site management position.
As for the nature of the current UKAEA and BNFL schemes, as I understand it, they are final salary schemes and they are contributory. However, I think I should set out in a letter the rest of the detail that the noble Lord wants.
New starters in these schemes will have three choices. They can enter a final salary scheme within the overall nuclear clean-up pension scheme which would effectively reflect the previous schemes; they can enter a defined contribution—stakeholder—benefit within the nuclear clean-up pension scheme; and the new employer, or the employer entering the situation, could offer a good quality employer scheme which was the equivalent benefit. So a number of schemes could result from these various transfers, and a number of options could be available to companies and employees in the future. However, I shall set out in correspondence the nature of the existing schemes, beyond what I have already said.
Lord Higgins: My Lords, I would be grateful if the Minister would write. He will be aware that in the private sector, many companies are closing their final salary schemes to new entrants and some of them are closing them for existing potential pensioners. Will the guarantees that are now being given ensure that such a change cannot be made by the companies concerned under this Bill?
Lord Whitty: My Lords, as long as they are public companies, the Government's general commitment in relation to public pension schemes continues to apply.
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Therefore, the continued guarantees to the individuals through the system would continue to apply. New starters would have a choice and their employer could offer them a different scheme, which was a good quality scheme. However, the guarantees would reflect the Government's current commitments to existing staff regarding the existing guarantees on their BNFL or UKAEA pension.
On Question, amendment agreed to.
Baroness Byford Baroness Byford moved Amendment No. 81:
Page 168, line 29, leave out "to any extent."
The noble Baroness said: My Lords, we return to an issue that I raised in Committee. This amendment was discussed at great length in Committee, when a number of your Lordships indicated that its use was not calculated to inspire the average ex-BNFL employee with confidence that his or her pension rights would be fully protected. After some discussion, the Minister stated that,
"on the question of the words 'to any extent', I shall take further advice".—[Official Report, 27/1/04; col. GC 82.]
Would he now tell us what that advice is, and whether he is prepared to drop the phrase from the Bill? If he is not prepared to do so, how does he propose to ensure that it does not,
"dilute the commitment in any way, and no less favourable treatment will be given to those employees"?—[Official Report, 27/1/04; col. GC 82.]
In Committee, I was supported by the noble Lord, Lord Gray of Contin, the noble Lord, Lord Ezra, who expressed his concern about the threatening tone of this section, and by my noble friend Lady Carnegy of Lour. I beg to move.
Lord Whitty: My Lords, the noble Baroness and others made this point in the course of the previous debate in Grand Committee. I have taken further advice on this, and the conclusion is that the lawyers would take the opposite interpretation of 'to any extent', in the sense that deleting the phrase would dilute the provision. It could be held to deprive the scheme members of the absolute guarantee we are trying to give, that the NDA could not deprive the scheme members of pension rights that had accrued to them. Our advice is that, without these words, there would be a risk that an employee whose pension rights were reduced, but not utterly extinguished, could not be protected. Deleting the phrase would actually make the employees more vulnerable, rather than less. I can understand that in common parlance there is a certain ambiguity in the words 'to any extent', but nevertheless I have the firm opinion from parliamentary counsel that the inclusion of the phrase is a greater protection than its deletion. I therefore hope the noble Baroness will not pursue this amendment.
Baroness Byford: To be honest, my Lords, I find the Minister's response surprising. If he thinks that removing the phrase 'to any extent' would weaken the thrust behind my amendment, then I would question whether the words were necessary in the first place. Why do they have to be included? Could it not just have read straight through? The Minister has given his response to that, and obviously I will have a look at it

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in the light of his response. It is a pity that he or his legal colleagues did not write to me to give me some indication, having said they would do so at Committee stage. I will look carefully at their response and seek advice myself. At this stage, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Lea of Crondall Lord Lea of Crondall moved Amendment No. 82:
Page 168, line 30, after "him" insert "whether by virtue of service rendered, contributions paid or any other things done"
The noble Lord said: My Lords, the purpose of this group of amendments is to try to secure protection for transfer of accrued rights. In July 2002, the White Paper, Managing the Nuclear Legacy—A Strategy for Action, recognised that, on transfer to a contractor, employees,
"who opted to transfer their accrued pension would be protected by way of a Bulk Transfer Agreement. This would be a contractual condition for any potential site licensee company and would allow staff who chose to do so to preserve the link between their final salary and their past service".
This is of course government policy, as set out in the Fair Deal paper from the Treasury, in respect of all staff who are transferred from the public to the private sector. However, it is a matter of policy rather than a legal requirement, and experience demonstrates that this policy is not always achieved in respect of second-generation transfers. Given that it is a statement of policy, we believe that the proposed amendments are necessary to make the provision of bulk transfer terms a legal requirement.
Lord Whitty: My Lords, these three amendments relate to the protection of pension rights accrued by staff who are required to transfer their employment for NDA purposes. I want to stress at the outset that, as I said in Grand Committee, the Government do not intend to use employees' terms, conditions or pensions as a means of driving down costs. Instead, we intend to protect the existing employees and their future benefits in circumstances where, as a result of a decision by the NDA, they are required to transfer either to new employers, for example the newly created site licensee companies, or to the private sector, for example if a private sector contractor won a contract to manage an NDA site.
Amendment No. 82 seeks to qualify the way in which members of a pension scheme can accrue pension rights under that scheme. I can assure my noble friend that the first two qualifications suggested, "accrual by service rendered" and "contributions paid", are not needed, because the concept of accruing pension rights by its nature includes those means of accrual. That does not need to be stated on the Bill.
The third qualification that my noble friend puts forward suggests accrual by "other things done". That is, frankly, a bit open-ended. I am not entirely sure what "other things done" would be in these circumstances, and this could lead, for example, to an argument that a statement of intent on the future of a pension scheme of
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itself creates an accrued right, because it is another thing done. However, it is not normal to include anything that is not formally part of the pension scheme in terms of the accrued rights, and therefore I do not think I can accept that third part of his Amendment No. 82.
The other two amendments, Amendment No. 109 and what is now Amendment No. 118A, seek to extend statutory protection of pension benefits under the Bill to accrued benefits of existing pensions that are required to be transferred for NDA purposes. As I said a moment ago, we intend to protect the future pension benefits of existing employees during this restructuring, and that essentially means employees of AEA and BNFL who are required to transfer to a new employer by the NDA. This policy is applied to a whole host of comparable systems where public sector workers have been required to transfer to a new employer, or to the private sector. There is well established documented guidance on that.
However, because the Government recognise how important are the skills of the people who make up the NDA workforce, we have taken the rather exceptional step of underpinning in statute the policy to protect the future pensions benefits of transferred staff, with careful drafting of the Bill. This is based on experience of previous examples of transfers within the nuclear industry, and does not of itself impose an excessive regulatory burden. In my view, it is not appropriate to go further than the terms now in the Bill, and to extend the protection offered under the Bill to the accrued benefits of staff transfer for NDA purposes. We simply cannot attempt to pin down in statute the whole range of complexities involved in bulk transfer agreements relating to accrued benefits. I am told by the experts in the Government Actuary's Department that each bulk transfer is unique, and that they need the flexibility to deal with that.
As my noble friend said, there is an existing and well established government policy in this area, published in 1999, in the document, Fair Deal for Staff Pensions. For transferred staff who are required to be early leavers of a public sector scheme, the policy is that there should be an agreement between that scheme and the new employers' scheme, giving staff the option to transfer their past service into the new scheme on preferential terms. Such a bulk transfer agreement should allow transferred staff,
"to secure credit for their past service in the new pension scheme on a day-for basis (or the actuarial equivalent if the differences between the schemes are significant".
That remains government policy. Given that we have made the exceptional step of protecting in statute future benefits provisions of existing employees in the nuclear clean-up industry, which we have not done for other situations, and given the longstanding government policy protecting accrued benefits for transferred public sector staff, I cannot accept the amendments. They would need to be spelt out far more than they are in any case, and would result in great complexity, because almost every accrued benefit package is a unique package to that particular employee. Therefore, the policy stands, but I cannot accept my noble friend's amendment.
6 p.m.
Lord Lea of Crondall: My Lords, I thank my noble friend for putting on record that useful clarification. My noble friends and I will wish to study carefully what the Minister said, but I believe that we have made progress on the matter, and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Whitty Lord Whitty moved Amendment No. 83:
Page 168, line 32, after "modification" insert "of a pension scheme".
On Question, amendment agreed to.
Lord Lea of Crondall Lord Lea of Crondall moved Amendment No. 84:
Page 168, line 33, leave out "the trustee of the scheme" and insert—

"(a) the trustee of the scheme; and

(b) such persons as appear to the NDA to represent the employees likely to be affected by the modification"

The noble Lord said: My Lords, given that pension provision in this industry, as in many others, is by common consent of key concern to the staff who work in it, this group of amendments would secure a statutory right to consultation with regard to any actions taken under the Act in respect of pensions schemes. While certain provisions in the Bill relating to pensions place on the NDA and/or the Secretary of State the duty to consult employee representatives in respect of pensions issues, that is not consistently the case.
For example, Part 4 of Schedule 8 gives the Secretary of State the power to modify an NDA pension scheme. We consider that, before exercising that power, there should be a statutory duty to consult the representatives of the employees who would be affected. Writing into the Bill a statutory duty to consult employees on all such matters would not only make the Bill internally consistent but bring it into line with the Pensions Bill, which is expected to include a statutory duty on an employer to consult trade unions or other elected workplace representatives in respect of changes to pension schemes. While amendments to that effect clearly do not provide any guarantees in respect of the outcomes—the substance of the matter that is being consulted about—they at least provide an assurance to staff and their representatives that the due processes will be followed and that there will always be a route through which concerns can be properly considered. I beg to move.
Lord Whitty: My Lords, I assure my noble friend that the Government have no intention of taking any steps that would significantly impact on employees without there being a full engagement with their representatives, especially the trade unions. On a wide range of issues, we shall develop a stakeholder engagement framework that will set that aspect, together with others, into a standing procedure for consultation. It is not possible to lay down in statute every particular instance in which consultation should arise.
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However, I accept that on pensions issues, especially with modifications to pension schemes, it is important that we ensure that the trade unions and employees are kept informed and are fully consulted. The Bill already requires the Secretary of State and the NDA to consult extensively before making modifications to the UKAEA pension scheme and before making a transfer scheme or transfer arrangement for NDA purposes, which would require employees to leave their current scheme.
The amendments before us seek to create similar consultation requirements for any modification made under paragraph 2 of Schedule 8, which relates primarily to the BNFL group scheme. The modifications envisaged by those paragraphs are expected to be made as a result of the transfer scheme—for example, when staff are transferred to the site licensee companies. They would be caught by the requirement in paragraphs 9 and 11 of Schedule 8 to consult on transfer schemes and arrangements made for NDA purposes that force employees to leave their current nuclear pension scheme.
There are provisions already in the Bill that would cover most of the areas on which my noble friend is expressing his concern in moving the amendment. However, in order to absolutely clear that employees and their trade unions will be consulted before anything is done and to reinforce the commitment that we have made generally in protecting pension rights, I will consider his amendments further and see whether there are any minor changes that the Government might introduce to make clear the position in relation to the circumstances in which he expresses his concerns in the amendments.
Lord Lea of Crondall: My Lords, employees in the industry will be very glad to hear the remarks just made by my noble friend. I am sure that there is no great point of policy at issue here, but to have the provision in the Bill will be a very great reassurance. At this stage, therefore, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Whitty Lord Whitty moved Amendments Nos. 85 to 108:
Page 168, line 39, leave out paragraph (b) and insert—
"(b) a nuclear pension scheme designated as a relevant pension scheme for the purposes of this paragraph by an order made by the Secretary of State."
Page 169, line 2, at and insert—
"Transfers of employment for NDA purposes
2A For the purposes of this Part of this Schedule a transfer of a person's employment is made for NDA purposes if his employment immediately after the transfer takes effect is—

(a) employment with the NDA or a subsidiary of the NDA; or

(b) other employment the duties of which consist wholly or mainly of duties relating to matters connected with the carrying out by the NDA of its functions."

Page 169, line 22, leave out paragraph (a) and insert—
"(a) the transfer is made for NDA purposes; or"
Page 171, line 13, leave out from "or' to end of line 16 and insert—

"(a) a transfer of his employment in accordance with a nuclear transfer scheme or transfer arrangements; or

(b) a transfer, in accordance with such a scheme or such arrangements, of securities of, or voting rights in, a company by which he is employed or a company of which such a company is a subsidiary."

Page 171, line 28, after "employees" insert ", or directors or other officers,"
Page 171, line 31, leave out "officers or employees" and insert "employees, or directors or other officers,"
Page 171, line 36, after "under" insert "paragraph 12 of this Schedule,"
Page 171, leave out lines 40 to 44 and insert "Where employees, or directors or other officers, of a relevant public sector employer to whom employees are transferred in accordance with a nuclear transfer scheme or transfer arrangements participate in a UKAEA pension scheme by virtue of paragraph 3 or 4, the employer must pay to the UKAEA such amounts in respect of that participation as are—"
Page 172, line 8, leave out sub-paragraphs (1) and (2) and insert—
"( ) For the purposes of this Part of this Schedule a person is entitled to pension protection in relation to a nuclear transfer scheme or any transfer arrangements if—

(a) sub-paragraph (3) applies to him; and

(b) he is a person falling within sub-paragraph (4)."

Page 172, line 17, leave out paragraphs (a) and (b) and insert—

"(a) in accordance with the scheme or arrangements, a transfer mentioned in sub-paragraph (3A) occurs; and

(b) immediately after the time at which that transfer takes effect, the person's employment is for NDA purposes.

(3A) The transfers referred to in sub-paragraph (3) are—

(a) a transfer of the person's employment to the UKAEA, the NDA, a publicly controlled company or a private sector employer;

(b) where his employment is not so transferred, a transfer of securities of, or voting rights in, a company by which he is employed or a company of which such a company is a subsidiary.

(3B) For the purposes of sub-paragraph (3) a person's employment is for NDA purposes if it is—

(a) employment with the NDA or a subsidiary of the NDA; or

(b) other employment the duties of which consist wholly or mainly of duties relating to matters connected with the carrying out by the NDA of its functions."

Page 172, line 31, after "arrangements" insert—
"(i)"
Page 172, line 35, at end insert "; or
(ii) his employer will be entitled to do something the effect of which will be so to preclude him."
Page 172, line 46, leave out from second "if to end of line 3 on page 173 and insert ", his employment throughout the relevant period has been for NDA purposes (within the meaning of paragraph 8(3B))."
Page 173, line 4, leave out "the transfer of a person's employment" and insert "a person to whom sub-paragraph (3) applies"
Page 173, line 7, leave out paragraph (b) and insert—
"(b) the period up to the relevant time since the last occasion prior to the present case on which sub-paragraph (3) applied to him.
(8A) For the purpose of a person being entitled to pension protection in relation to a nuclear transfer scheme or any transfer arrangements on the first occasion on which sub-paragraph (3) applies to him, this paragraph shall have effect with the omission of sub-paragraph (4)(c).
(8B) A person is not entitled to pension protection in relation to a nuclear transfer scheme or any transfer arrangements—

(a) at a time before the designated date unless he is a public sector employee at that time; or

(b) at a time on or after the designated date unless he was a public sector employee at the time immediately before that date."

Page 173, line 10, leave out "the time when"
Page 173, line 11, at beginning insert "the time when,"
Page 173, line 11, leave out "he becomes an employee or and insert "the transfer of his employment to"
Page 173, line 13, after "employer" insert "takes effect"
Page 173, line 14, leave out paragraph (b) and insert—
"(b) in relation to a person whose employment is not so transferred, the time when, in accordance with the scheme or arrangements, the transfer of securities of, or voting rights in, the company by which he is employed or the company of which it is a subsidiary takes effect."
Page 173, line 18, leave out "to which this paragraph applies" and insert "in relation to which persons are entitled to pension protection"
Page 173, line 22, leave out from second "persons" to end of line 23 and insert "who are entitled to pension protection in relation to the scheme."
Page 173, line 25, leave out from "person" to "will" in line 26 and insert "who is entitled to pension protection in relation to the scheme"
Page 173, line 30, leave out "applies" and insert "will apply immediately before the relevant time"
On Question, amendments agreed to.
[Amendment No. 109 not moved.]
Lord Whitty Lord Whitty moved Amendments No. 110:
Page 173, line 32, at end insert—
"( ) The Secretary of State's duty under sub-paragraph (2) is owed to every person who is entitled to pension protection in relation to the transfer scheme.
( ) In the case of a person to whom paragraph 8(4)(d)(ii) applies, the references in sub-paragraph (2) to a person being entitled to exercise an option are to be construed as references to a person being entitled to exercise an option if his employer exercises the entitlement mentioned in paragraph 8(4)(d)(ii)."
On Question, amendment agreed to.
[Amendment No. 111 had been re-tabled as Amendment No. 118A].
Lord Whitty Lord Whitty moved Amendments Nos. 112 to 118:
Page 173, line 46, leave out from second "to" to end of line 6 on page 174 and insert—

"(a) in the case of a person who has not previously been owed a duty under either sub-paragraph (2) or paragraph 10(3), the scheme by reference to which paragraph 8(6) will apply to him immediately before the relevant time; and

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(b) in other cases, the scheme by reference to which paragraph 8(6) applied to him immediately before the time that was the relevant time in relation to him on the first occasion on which he was owed such a duty;"

Page 174, line 9, leave out from "time" to end of line 12 and insert "specified in sub-paragraph (4A).
(4A) That time is—

(a) in a case falling within sub-paragraph (4)(a), the relevant time; or

(b) in a case falling within sub-paragraph (4)(b), the relevant time in relation to the person on the first occasion on which he was owed a duty under either sub-paragraph (2) or paragraph 10(3)."

Page 174, line 23, at end insert—
"( ) Sub-paragraph (6) does not apply in relation to a person to whom paragraph 8(4)(d)(ii) applied when the Secretary of State discharged his duty to that person under sub-paragraph (2) unless the person's employer exercises the entitlement mentioned in paragraph 8(4)(d)(ii)."
Page 174, line 28, leave out "to which this paragraph applies" and insert "in relation to which persons are entitled to pension protection"
Page 174, line 34, leave out from second "persons" to end of line 35 and insert "who are entitled to pension protection in relation to the arrangements."
Page 174, line 37, leave out from "person" to "will" in line 38 and insert "who is entitled to pension protection in relation to the arrangements"
Page 174, line 42, leave out "applies" and insert "will apply immediately before the relevant time".
On Question, amendments agreed to
[Amendment No. 118A not moved.]
Lord Whitty Lord Whitty moved Amendments Nos. 119 to 122:
Page 174, line 44, at end insert—
"( ) The NDA's duty under sub-paragraph (3) is owed to every person who is entitled to pension protection in relation to the transfer arrangements.
( ) In the case of a person to whom paragraph 8(4)(d)(ii) applies, the references in sub-paragraph (3) to a person being entitled to exercise an option are to be construed as references to a person being entitled to exercise an option if his employer exercises the entitlement mentioned in paragraph 8(4)(d)(ii)."
Page 175, line 8, leave out from second "to" to end of line 17 and insert—

"(a) in the case of a person who has not previously been owed a duty under either sub-paragraph (3) or paragraph 9(2), the scheme by reference to which paragraph 8(6) will apply to him immediately before the relevant time; and

(b) in other cases, the scheme by reference to which paragraph 8(6) applied to him immediately before the time that was the relevant time in relation to him on the first occasion on which he was owed such a duty;"

Page 175, line 20, leave out from "time" to end of line 23 and insert "specified in sub-paragraph (5A).
(5A) That time is—

(a) in a case falling within sub-paragraph (5)(a), the relevant time; or

(b) in a case falling within sub-paragraph (5)(b), the relevant time in relation to the person on the first occasion on which he was owed a duty under either sub-paragraph (d) (3) or paragraph 9(2)."

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Page 175, line 33, at end insert—
"( ) Sub-paragraph (6) does not apply in relation to a person to whom paragraph 8(4)(d)(ii) applied when the NDA discharged its duty to that person under sub-paragraph (3) unless the person's employer exercises the entitlement mentioned in paragraph 8(4)(d)(ii)."
On Question, amendments agreed to.
[Amendments Nos. 123 and 124 not moved.]
Lord Whitty Lord Whitty moved Amendment No. 125:
Page 176, line 4, at end insert—
"PART 5
UKAEA PENSIONS FOR EMPLOYEES OF DESIGNATED BNFL COMPANIES
12 (1) A pension scheme maintained by the UKAEA under paragraph 7(2)(b) of Schedule 1 to the Atomic Energy Authority Act 1954 (c. 32) ("a UKAEA pension scheme") may apply to employees of a designated BNFL company which is publicly controlled as it applies to persons to whom it applies apart from this paragraph.
(2) The Secretary of State may, by direction, require the UKAEA to make such modifications of a UKAEA pension scheme as the Secretary of State considers appropriate in respect of the participation in such a scheme of employees of a designated BNFL company which is publicly controlled.
(3) The Secretary of State may also, by direction, require the UKAEA to make such modifications of a UKAEA pension scheme as the Secretary of State considers appropriate for applying the provisions of such a scheme to persons—

(a) who are directors, or other officers, of a designated BNFL company which is publicly controlled; and

(b) who are not employees of that company.

(4) A direction under this paragraph may require the UKAEA to make such supplemental, consequential and transitional provision modifying a UKAEA pension scheme as the Secretary of State considers appropriate.
(5) Before giving a direction under this paragraph, the Secretary of State must consult—

(a) the UKAEA;

(b) the designated BNFL company in question;

(c) the Treasury; and

(d) such persons as appear to him to represent the employees, or directors or other officers, likely to be affected by the direction.

(6) The power of the Secretary of State to give directions under this paragraph—

(a) is in addition to the powers of the Secretary of State to give directions to the UKAEA under paragraphs 4 and 5 of this Schedule or section 3 of the Atomic Energy Authority Act 1954 (c. 32); and

is to be disregarded in construing those powers.

(7) A designated BNFL company must pay such amounts to the UKAEA in respect of the participation in a pension scheme by virtue of this paragraph of employees of the company, or of any of its directors or other officers, as are—

(a) agreed between the company and the UKAEA; or

(b) in the absence of such agreement, determined by the Secretary of State.

(8) In this paragraph "designated BNFL company" has the same meaning as in Schedule 7."
On Question, amendment agreed to.
Schedule 8 [Pensions]:
Lord Jenkin of Roding Lord Jenkin of Roding moved Amendment No. 125A:
Leave out Schedule 8.
The noble Lord said: My Lords, I beg to move the amendment standing in my name but I make it clear that I shall not press this to a Division. I tabled the amendment because I am appalled by the way that this schedule has had to be amended by the Government in order to effect its intentions.
I am not the least surprised that the noble Lord, Lord Whitty, from time to time became confused about which amendment he was moving and had to be corrected by this side of the House. My mind went back to an occasion that my noble friend Lord Higgins will remember when in a Finance Bill Standing Committee in another place the same thing happened and the Minster got totally confused about which amendments he was replying to. The Daily Mail, which was then quite a sensible paper, wrote a leading article headed, "Laughter in Committee Room 10". It was shaming to find that the press had recognised the incompetence in the way that that Bill was being dealt with by the then-Ministers. I cannot help feeling that Ministers must be inordinately pleased that there are never any members of the press here to listen to our affairs. Otherwise, I suspect that we would have had more leaders about laughter in this House. But there is a serious point to this. I shall be very short.
I believe that there is a culture in Whitehall that Ministers inherit and appear to be quite happy to adopt. In that culture, officials say that it does not matter how many amendments are tabled in the House of Lords because nobody notices and nobody makes much of a fuss. They say that a Bill can be introduced and then, if necessary, literally hundreds of amendments can be tabled in the House of Lords. I believe that it is something that Ministers should say is unacceptable. They should say that they are not prepared to put themselves forward in the House of Lords and have to apologise again and again for what appears to be very sloppy drafting of Bills.
I invite noble Lords to look at Part 4 of this schedule. I have the pages here. I always mark each amendment on the page. Where it is a government amendment I put a dot in the side of a ring. For page after page there are dozens and dozens of amendments to one single part of this schedule. It is not good enough. I hope that Ministers will go back to their departments and say that they are not going to subject themselves to this kind of criticism and that these matters must be got right. Ministers must lay down the law. It is not good enough to bring legislation before this House that has subsequently to be corrected in this way. There are one or two amendments made to reflect the points made by my noble friends Lord Higgins and Lady Byford but most of them are simply to correct sloppy drafting. That is not good enough. I believe
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that I am justified in taking two or three minutes of your Lordships' time to say so unequivocally and strongly; and I mean it. I beg to move.
Lord Brooke of Alverthorpe: My Lords, I shall intervene quickly. I was pleased to hear the noble Lord, Lord Jenkin, say that he does not intend to press this to a Division. We wish to place on record that we hope that there will be no Divisions whatever on Schedule 8 because it contains a great deal of protection for people working in the industry. We would not wish to see anything moved that might interfere with that, while we accept that there is some justification for criticism about the great number of changes that have had to be tabled late.
En passant, I did not say anything on government Amendments Nos. 88 and 104 but we were very pleased that the Government have reflected on the terms that had been offered for pension protection. They have wisely extended the protection and it will be to the benefit of employees. So while there may be grounds for criticism, I want to place on record that some useful advances have been made that will be to the benefit of the workforces and help provide for the better operation of the NDA in the future.
Baroness Carnegy of Lour: My Lords, I am sure that my noble friend Lord Jenkin was not criticising the content of the schedule. He was talking about the timing and what the House is confronted with as a result. Both this schedule and the changes in the taxation of the NDA have been amended today in the most extraordinary way. It is very difficult for noble Lords to understand what is happening. The hurrying makes one suspect that there may be further changes that have to be made. I would not be in the least surprised. One has little confidence in the control that Ministers have over this piece of legislation when they are legislating on the hoof in this way. But I am sure that I am right in saying that my noble friend was not implying that everything was wrong with the schedule. He was simply talking about the way in which it is being presented to the House.
6.15 p.m.
Lord Whitty: My Lords, I think that the House accepts that the substance of Schedule 8 is desirable for the protection of employees and the skills that they represent in the nuclear sector. Therefore in moving this amendment—although he has indicated that he does not intend to pursue it—the noble Lord was not criticising the substance but raising a point of process.
It would be extremely efficient and desirable if all drafts were 100 per cent correct. But Ministers are fallible and even—dare I say so?—parliamentary counsel is fallible. There is no more important area of law to get right in its detail than pensions and taxation law, to which the bulk of the amendments that are before noble Lords at this Report stage are directed.
I remind noble Lords that we are dealing with a Bill that was introduced in the House of Lords. If the Government do spot mistakes, it is surely important that they draw those to the attention of Parliament at

525
the earliest possible point. For the most part, this House is dealing with legislation that has been started in the Commons and has gone through a lengthy procedure there. I have some sympathy with noble Lords opposite who ask why we are introducing government amendments so late in the process of a Bill when we are dealing with them in the House of Lords. That is not the position in this case.
This is a complicated Bill and it is particularly complicated in what are not its main provisions—that is, those that relate to tax and pensions. It is important that we get the Bill right. It would be wrong if we had left these amendments to Third Reading, which I think we would have hesitated to do, or to the Commons, so that the Bill would have to be brought back to your Lordships at a much later stage. Therefore, the Government are right to bring such amendments before the House at the earliest possible opportunity. In some cases that opportunity was at Committee stage. In other cases, because of discussion in Committee, because of other developments, or because parliamentary counsel was still drafting the amending clauses, it was not. Nevertheless, we have brought amendments before the House at every stage at the point when they are available to Ministers. I think that that is the correct procedure.
It is slightly irritating to Ministers, and hugely irritating to the House, to see a large number of clarifying government amendments. But it is better than allowing the stages of the Bill to go through without having made those amendments. As for this schedule, we hope to produce an amended draft of Schedule 8, which will be available to noble Lords, so that by Third Reading it will be clear how all the amendments that have been adopted by that stage stand together. I hope that the House will appreciate that that is something that will help noble Lords to see where all these amendments pan out in the schedule.
I make that point because if we are to start Bills of this complexity in this Chamber—and I hope to see more of such Bills starting in the House of Lords then some of the consequences have to be accepted by noble Lords. I take back every time to my department in this case, other departments; and, in some cases, not even the main department dealing with the Bill—the request that we should minimise such changes. Nevertheless, there will always be cases where changes have to be brought forward by the Government. As I say, we try to do so at the earliest possible opportunity.
Lord Higgins: My Lords, I agree with my noble friend who moved this amendment. As regards these amendments on pensions, nothing has really changed since Committee, but they suddenly appeared on the Marshalled List. Officials simply did not check them early enough. We could have debated them in Committee and discussed them back and forth, from one side of the House to the other. The trouble is that if the Government do what they are doing now, we only have one chance to intervene, and with complexity of this kind you simply cannot sort it out on Report. It ought to be put right and the amendments ought to have been tabled in Committee.
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On the other point that the Minister has Just made, it is true that Bills very often come to this House from the other place and have already been considered. It used to be true that they had been looked at properly on previous occasions. That is no longer the case. Because of the way Bills are programmed in the other place, we get Bill after Bill coming here large chunks of which—sometimes a third of the Bill—have not been looked at properly in the other place because of the way in which the proceedings have been curtailed.
Finally, I want to make a constructive suggestion, because we are discussing pensions in these clauses. The pension credits Bill arrived from the other place in a totally unworkable state. The back half of the Bill had absolutely nothing to do with the front half. The Minister in another place clearly had not understood it at all. I had discussions with the Minister responsible for pensions in this place, and we adjourned the Committee. The Government then produced a whole series of amendments to put things right, but they also provided the Opposition with explanatory notes as to what the amendments were about.
I do not ask the Minister to respond now—I merely put forward this constructive suggestion—but we found that that enabled us to sort out the Bill in a way which simply is not true if all one has is a single speech from the Government Bench and then only a single speech from this side, and so on. I ask the Minister to consider generally whether on matters of this complexity there might be a case for providing explanatory notes to the Opposition, because on these clauses the explanatory notes which were formerly provided have been totally overtaken by events.
Lord Jenkin of Roding: My Lords, I am grateful to those who have joined in this short debate and I have no wish to prolong it. I do not know whether the noble Lord, Lord Whitty, realises, but what he is proposing is called a Keeling schedule. I am glad that he nods assent. That will be welcome, because Schedule 8 as it now stands after the amendments have been made is totally unintelligible and will need to be completely rewritten, as he promised. I welcome that.
On the substance of the matter, the noble Lord, Lord Whitty, made the best of a very bad case. We recognise that he is in a particular difficulty as a Minister for one department being responsible for legislation which is the responsibility of another. Many of the problems that we have had to deal with have stemmed from that curious division of responsibility. Nevertheless, having said that—he is waving at me, but I will not give way because I will withdraw the amendment—I hope that Ministers will take note that this House will not put up with shoddy legislation which then needs to have literally hundreds of amendments tabled by the Government on Report. It is not good enough. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 9 [Taxation provisions relating to nuclear transfer schemes]
The Deputy Speaker (Baroness Fookes): My Lords, we turn now to Schedule 9 and Amendment No. 126. I point out that if Amendment No. 126 is agreed to, I cannot call Amendment No. 127 by reason of pre-emption.
Baroness Miller of Hendon Baroness Miller of Hendon moved Amendment No. 126:
Page 177, line 4, leave out paragraph 3.
The noble Baroness said: My Lords, Amendment No. 126 repeats a probing amendment tabled for Grand Committee by my noble friend Lady Noakes. One purpose of that amendment was to ask whether the Government intended this provision to exempt from tax rolled-over or held-over gains, which may well have arisen in connection with activities that had nothing to do with the activities which are being transferred to the NDA.
In Grand Committee the Minister did not answer that point, and so we have tabled the amendment again in the hope that we will get a straight answer. Will the Minister confirm whether it is the Government's policy to allow a rolled-over or held-over gain to escape tax as a consequence of Schedule 9? Will he explain why it is that BNFL or the UKAEA, which are basically taxable entities, should not pay tax in respect of gains on assets not related to NDA transfers?
The equivalent of Amendment No. 128 was also tabled in Grand Committee. The Minister partly explained paragraph 4 of Schedule 9, to which the amendment relates, along the lines that keeping tax records is too onerous for the NDA. We shall not challenge that today though we find it an odd proposition. We would, however, like the Minister to explain the logic of sub-paragraph (3). Why is it that the Bill has gone to great lengths to exempt the trading activities of the NDA but imposes a capital gains liability on 100 per cent of the proceeds of assets acquired under a transfer scheme even if those assets are connected with the tax-exempt activities? What is the policy intent behind that? I beg to move.
Lord Davies of Oldham: My Lords, we have had extensive—even intensive—discussions on the tax provisions in Clause 27 and Schedule 4. With these two amendments we now turn to Schedule 9, which contains the detail of the transfer tax provisions. The provisions allow for tax neutral transfers of assets and companies between publicly owned companies—I emphasise that point—such as BNFL, the UKAEA and the NDA. They also allow for the ownership of site licensee companies that are relevant site licensees to be transferred in a tax neutral way.
The amendments tabled by the noble Baroness are specifically concerned with the provisions in the Bill that deal with the tax consequence of nuclear transfer schemes. The broad aim of Clause 43 and Schedule 9 is to ensure that tax charges or tax reliefs are not
528
triggered by a transfer. In other words, we want transfers under nuclear transfer schemes to be tax neutral so that both transferee and recipient are not penalised, nor receive a windfall gain in tax terms. The detail of Schedule 9 is necessarily complex because it attempts to cater for the flexibility of the various transfer scheme arrangements.
Amendment No. 126 would remove the provision that allows for assets to be transferred at value for tax purposes that would give no gain and no loss. The provision ensures that the transferor would not face a tax charge on any chargeable gains as a result of the transfer. That is a standard tax provision in Bills that are concerned with public reorganisation and transfers. We are legislating simply to provide for the public sector the equivalent facility that exists under the normal tax rules for groups of companies. Under the normal tax rules intra-group transfers are deemed to take place at a value that gives no gain and no loss, and that is what we are replicating here. The intra-group tax rules cannot apply to the publicly owned companies because there is no head. A publicly owned group comes under the Crown. Therefore, BNFL and its subsidiaries form a group but BNFL and the NDA do not, even though they are both effectively owned by the Crown. That is why we need the tax provisions in Schedule 9 to allow for tax neutral transfers.
Amendment No. 128 would remove a pragmatic computational provision concerning the calculation of any tax on chargeable gains for the NDA. This provision is included to reduce the disproportionate effort and cost that the NDA would otherwise incur. Without this provision it would be necessary for the NDA to maintain registers and associated base costs of publicly owned assets through potentially numerous transfer schemes and over lengthy periods of time. That seems to be unnecessary given the overall intent behind the provisions in the clause and in the schedule. I refer in that connection to the government amendments, some of which we have already discussed. The next group is also germane to this matter. We hope that the noble Baroness will consider that that is a watertight explanation and will feel able to withdraw the amendment.
6.30 p.m.
Baroness Miller of Hendon: My Lords, I thank the Minister for his explanation. I think that it is a little clearer than the explanation that we received in Committee. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Whitty Lord Whitty moved Amendment No. 127:
Page 177, line 10, at end insert—
"( ) This paragraph does not apply in relation to a transfer to the NDA or to a subsidiary of the NDA in accordance with a nuclear transfer scheme of securities of a company, in consequence of which that company ceases to be a relevant site licensee.

529
( ) In this paragraph "relevant site licensee" has the same meaning as in subsection (4) of section 27 (see subsection (5))."
On Question, amendment agreed to.
[Amendment No. 128 not moved.]
Lord Whitty Lord Whitty moved Amendment No. 129:
Page 177, line 26, at end insert—
"( ) This paragraph does not apply in the case of a disposal which under paragraph 26A is to be treated as a disposal on which neither a gain nor a loss accrues to the NDA or a subsidiary of the NDA.
On Question, amendment agreed to.
Lord Davies of Oldham Lord Davies of Oldham moved Amendment No. 130:
Page 178, line 17, at end insert—
"( ) For the purposes of the allowances and charges provided for by the 2001 Act, the trade is not to be treated as permanently discontinued, nor a new trade as set up; but sub-paragraphs (2) and (3) of this paragraph are to apply."
The noble Lord said: My Lords, in moving Amendment No. 130, I wish to speak also to Amendments Nos. 131 to 139 and Amendment No. 147 with which it is grouped.
These amendments relate to the transfer provisions in Schedule 9. They include extending Part 2 of Schedule 9 to cover UKAEA and other technical amendments. They take into account recent discussions and clarifications on the proposed contractual structure.
Amendment No. 130 is a technical amendment to put beyond doubt that for capital allowance purposes no balancing adjustments or recognition of disposal proceeds arise to a company that transfers its whole trade, or part of its trade, to the NDA. Together with the rest of paragraph 7 of Schedule 9 this ensures that transfers, for instance from BNFL and UKAEA, are neutral for capital allowance purposes.
Amendment No. 131 amends paragraph 9 of Schedule 9 so that for capital allowance purposes assets are transferred to the NDA at their book value for accounts purposes, rather than treated as a gift at a market value which might have been difficult to ascertain. The transfers to which this applies are those under a Section 36 scheme where property is transferred other than as part of a transfer of a trade or part trade.
Amendment No. 132 introduces a new paragraph 14A. This ensures that where a trade or part of a trade is transferred from a BNFL company to the NDA there is tax neutrality and the transferee effectively stands in the shoes of the transferor for tax purposes. This will ensure that there will be no tax consequences where the transferor writes off sums in its books as part of the detailed transfer arrangements. The rule will apply to trading items, such as trade debtors or sums received in advance for the supply of goods or services by the transferor, or trade creditors and sums paid in advance for the provision of services to the company.
Amendments Nos. 133 to 137 extend Part 2 of Schedule 9 to wholly-owned subsidiaries of BNFL and to 1JKAEA and its wholly-owned subsidiaries. As drafted, Part 2 currently applies only to BNFL. This
530
allows the provisions in Part 2 of Schedule 9, that generally allow for tax neutral transfers to publicly owned bodies other than the NDA, to apply more widely to cater for possible future transfers from BNFL and UKAEA companies. For instance, transfers as a consequence of any reorganisation of the publicly owned BNFL and UKAEA groups would be covered by this extension.
Amendment No. 138 amends paragraph 20 of Schedule 9 in a similar way to Amendment No. 131 for paragraph 9. For capital allowance purposes assets will be transferred from BNFL or the UKAEA to another publicly owned company at their book value, rather than treated as a gift at a market value, which, as I indicated earlier, could be difficult to ascertain.
Amendment No. 139, mirroring Amendment No. 132, introduces a new paragraph 25A. This ensures that where a trade or part of a trade is transferred from a BNFL company or a UKAEA company to another publicly owned company that is not the NDA, there is tax neutrality and the transferee effectively stands in the shoes of the transferor for tax purposes. This will potentially apply to trading items such as trade debtors or sums received in advance for the supply of goods or services by the transferor, or trade creditors and sums paid in advance for the provision of services to the company.
Amendment No. 147 introduces a definition of "transferee" to the list of definitions in paragraph 32 of Schedule 9. In relation to a nuclear transfer scheme, the transferee means the person to whom the transfer is made. I beg to move.
On Question, amendment agreed to.
Lord Davies of Oldham Lord Davies of Oldham moved Amendments Nos. 131 to 139:
Page 179, line 14, leave out sub-paragraph (2) and insert—
"(2) For the purposes of Part 2 of the 2001 Act (capital allowances for plant and machinery), the NDA or its subsidiary is to be treated—

(a) as having incurred capital expenditure on the provision of the plant or machinery at the time of the transfer; and

(b) as having owned the plant or machinery as a result of having incurred that expenditure.

(3) The amount of that expenditure is to be treated as being the book value of the plant or machinery.
(4) For the purposes of the application of section 61 of I hat Act in relation to the transferor the disposal value of the plant or machinery is to be treated as being the book value of the plant or machinery.
(5) The references in this paragraph to the book value of the plant or machinery are references to the amount which, in accordance with generally accepted accounting practice (within the meaning of the Tax Acts)—

(a) was recognised as its value in the accounts of the transferor at the time of the transfer; or

(b) should have been so recognised at that time.

(6) Expressions used in this paragraph and in Part 2 of the 2001 Act have the same meanings in this paragraph as in that Part."

531
Page 181, line 3, at end insert—
"Computation of profits and losses in respect of transfer of trade
14A (1) This paragraph applies where, in consequence of a section 36 scheme—

(a) a BNFL company ceases to carry on a trade or a part of a trade; and

(b) an NDA group member begins to carry on the trade or that part of it.

(2) For the purpose of computing, in relation to the time when the scheme comes into force and subsequent times, the relevant trading profits or losses of the BNFL company and the NDA group member—

(a) the trade or part is to be treated as having been a separate trade at the time of its commencement and as having been carried on by the NDA group member at all times since its commencement as a separate trade; and

(b) the trade carried on by the NDA group member after the time when the section 36 scheme comes into force is to be treated as the same trade as that which it is treated by virtue of paragraph (a) as having carried on as a separate trade before that time.

(3) This paragraph is subject to paragraph 11.
(4) In this paragraph—

"BNFL company" means BNFL or a subsidiary of BNFL;

"NDA group member" means the NDA or a subsidiary of the NDA;

"relevant trading profits and losses" means profits or losses under Case I of Schedule Din respect of the trade or part of a trade in question."

Page 181, line 7, leave out "it is"
Page 181, line 8, at beginning insert "it is"
Page 181, leave out line 9 and insert "a BNFL company or of property, rights or liabilities of a BNFL company; and"
Page 181, line 10, leave out from beginning to second "is" and insert "the transferee"
Page 181, line 11, at end insert—
"(2) This Part of this Schedule also applies to a transfer if it is a transfer in accordance with a section 36 scheme to a transferee falling within sub-paragraph (3) of—

(a) property, rights or liabilities of the UKAEA;

(b) securities of a wholly-owned subsidiary of the UKAEA; or

(c) property, rights or liabilities of such a subsidiary.

(3) The transferee falls within this sub-paragraph if it is—

(a) a publicly owned company which is not a subsidiary of the NDA; or

(b) the UKAEA.

(4) In this paragraph "BNFL company" means BNFL or a wholly-owned subsidiary of BNFL."
(4) Page 182, line 16, leave out sub-paragraph (2) and insert—
"(2) For the purposes of Part 2 of the 2001 Act (capital allowances for plant and machinery), the transferee is to be treated—

(a) as having incurred capital expenditure on the provision of the plant or machinery at the time of the transfer; and

(b) as having owned the plant or machinery as a result of having incurred that expenditure.

(3) The amount of that expenditure is to be treated as being the book value of the plant or machinery.
(4) For the purposes of the application of section 61 of that Act in relation to the transferor the disposal value of the plant or machinery is to be treated as being the book value of the plant or machinery.
(5) The references in this paragraph to the book value of the plant or machinery are references to the amount which, in accordance with generally accepted accounting practice (within the meaning of the Tax Acts)—

(a) was recognised as its value in the accounts of the transferor at the time of the transfer; or

(b) should have been so recognised at that time.

(6) Expressions used in this paragraph and in Part 2 of the 2001 Act have the same meanings in this paragraph as in that Part."
Page 184, line 3, at end insert—
"Computation of profits and losses: transfer of trade
25A (1) This paragraph applies where, in consequence of the section 36 scheme—

(a) a BNFL company ceases to carry on a trade or a part of a trade; and

(b) a publicly owned company that is not a subsidiary of the NDA (the "transferee company") begins to carry on the trade or that part.

(2) For the purpose of computing, in relation to the time when the scheme comes into force and subsequent times, the relevant trading profits or losses of the BNFL company and the transferee company—

(a) the trade or part is to be treated as having been a separate trade at the time of its commencement and as having been carried on by the transferee company at all times since its commencement as a separate trade; and

(b) the trade carried on by the transferee company after the time when the section 36 scheme comes into force is to be treated as the same trade as that which it is treated by virtue of paragraph (a) as having carried on as a separate trade before that time.

(3) This paragraph is subject to paragraph 22.
(4) In this paragraph—

"BNFL company" means BNFL or a wholly-owned subsidiary of BNFL; and

"relevant trading profits and losses" means profits or losses under Case I of Schedule Din respect of the trade or part of a trade in question."

On Question, amendments agreed to.
Lord Whitty Lord Whitty moved Amendment No. 140:
Page 184, leave out lines 9 and 10 and insert "the application of the enactments mentioned in sub-paragraph (2A) to the assets of"
On Question, amendment agreed to.
Lord Whitty Lord Whitty moved Amendments Nos. 141 to 146:
Page 184, line 11, after "licensee" insert ", that company"
Page 184, line 14, at end insert—
"(2A) Those enactments are—

(a) the 1992 Act;

(b) Schedule 29 to the Finance Act 2002 (c. 23);

(c) paragraphs 5, 14, 18 and 25 of this Schedule."

Page 184, line 21, leave out sub-paragraph (4).
Page 184, line 22, at end insert—
"26A (1) This paragraph applies where—

(a) as a consequence of a transfer in accordance with a nuclear transfer scheme of securities of a subsidiary of the NDA, that subsidiary becomes a relevant site licensee;

(b) as a consequence of a transfer to the NDA or to a subsidiary of the NDA in accordance with such a scheme of securities of a company, that company ceases to be a relevant site licensee; or

533

(c) there is a transfer in accordance with such a scheme of securities of a company that is a relevant site licensee from one person to another person for purposes connected with securing that the condition in section 27(5)(ba) continues to be satisfied in relation to the company.

(2) For the purposes of the 1992 Act, the securities shall be treated as disposed of to the transferee for a consideration of such amount as would secure that, on the disposal, neither a gain nor a loss accrues to the transferor.
26B In this Part of this Schedule "relevant site licensee" has the same meaning as in subsection (4) of section 27 (see subsection (5))."
Page 185, line 33, at end insert—
"Groups of companies
30A References to a company in the following enactments shall apply to the NDA—

(a) sections 170 to 181 of the 1992 Act;

(b) Part 8 of Schedule 29 to the Finance Act 2002 (c. 23).

"Page 185, line 37, after "17" insert ", 26A"
On Question, amendments agreed to.
Lord Davies of Oldham Lord Davies of Oldham moved Amendment No. 147:
Page 186, line 11, at end insert—
""transferee", in relation to a transfer in accordance with a nuclear transfer scheme, means the person to whom the transfer is made;"
The noble Lord said: My Lords, this amendment has already been spoken to. I beg to move.
On Question, amendment agreed to.
Schedule 10 [The Civil Nuclear Police Authority]:
Baroness Anelay of St Johns Baroness Anelay of St Johns moved Amendment No. 148:
Page 186, line 29, at end insert "at least one of whom shall have specialised policing knowledge"
The noble Baroness said: My Lords, in moving Amendment No. 148, I wish to speak also to Amendments Nos. 149 and 150 that stand in my name and appear to be supported by the noble Lord, Lord Bradshaw. However, in his defence I should point out that his name appears in error against Amendment No. 150. In Grand Committee the noble Lord made it clear that he did not support that amendment although some accord has broken out between us on all other matters in this part of the Bill.
We now reach the part of the Bill that creates a new nuclear civil police authority to oversee a reconstituted nuclear constabulary which will be directly accountable to the Secretary of State. On Second Reading we made it clear that we believed it would be more appropriate for the Secretary of State concerned to be the Home Secretary who is accountable to Parliament for the vast majority of police forces in the UK. But that aside, we support the thrust of the provisions for setting up the new police authority.
I was intrigued to receive a letter from the Minister stating that the Government now accept that in certain cases Home Office Ministers have a role with regard to the ministerial confirmation of authorisations given under Section 44 of the Terrorism Act 2000. As the Minister reminds us in that letter, Clause 53 of the Bill extends the powers in Section 44 to senior officers of the Civil Nuclear Constabulary so that they can
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authorise the stop and search of persons or vehicles without grounds of suspicion. That is similar to other police forces. Under this Bill, as with other police forces, Ministers must confirm an authorisation within 48 hours for it to apply for more than 48 hours. Can the Minister confirm that the DTI has now had further discussions with Home Office colleagues and that the Government have now concluded that Home Office Ministers—not DTI Ministers—will have that responsibility?
My amendment to this part has been tabled for the following three reasons. If I outline them now I shall save time later. The first reason is to follow up answers given in Grand Committee by the Minister and in ministerial letters to me following Committee stage. The second reason is to probe more extensively the issues that I raised in Grand Committee, as I believe that the Government have not yet provided a satisfactory answer. Thirdly, I have some new material. I shall put forward some issues raised by the UKAEA Police Federation since the end of the Grand Committee stage. I am grateful to the federation for coming to the House of Lords to brief me and my noble friend Lady Byford.
All the amendments in this group refer to Schedule 10 which sets out the rules governing the appointment of the members of the authority and the good governance provisions for its operation. Paragraph 172 of the Explanatory Notes states:
"The Government intends that the rules on appointment set out by the Office of the Commissioner for Public Appointments (OCPA) will be followed",
and that,
"membership will consist of independent members and representatives of the civil nuclear industry".
Amendment No. 148 has been tabled specifically at the request of the atomic energy police federation. It would ensure that at least one member of the new police authority would have specialised policing knowledge. The police federation explains that it will be important for the new authority to have at its disposal the expertise of at least one person who can advise on policing techniques and the way in which they can most effectively and efficiently be delivered. That seems eminently sensible to me.
Do the Government agree with the police federation that given the particular nature of this police authority, with some members appointed from the industry that is funding the constabulary, this would be an important safeguard and one that would help the authority to fulfil any statutory functions? What are the Government's plans in that respect?
Amendment No. 149 has been tabled to follow up on the discussion about the nature of Scottish representation and consultation. That is reported at col. 106 in Grand Committee on 27 January. I would be grateful if the Minister could tell the House what discussions the DTI have had with the Secretary of State for Scotland on such matters since Grand Committee.
Finally, Amendment No. 150 is an old friend. It comes back from Grand Committee and follows questions that I asked then about good governance at col. 103 on 27 January. The amendment provides that the chairman of the police authority should not be able to serve in office for more than 10 years as chairman. That proposal did not find favour with the noble Lord, Lord Bradshaw, who said that it takes about three years to understand how an authority works before one becomes an effective member. I have considered his view, but I remain concerned about the importance of ensuring that the chairmanship should not remain in one pair of hands for more than 10 years. After all, my amendment would allow the chairman to serve first as a member to obtain experience and then to be appointed as a chairman and to serve a maximum of 10 years from the date of his or her appointment.
I was also encouraged to return to this proposal as the Government have tabled an amendment in the Domestic Violence, Crime and Victims Bill at Report stage. In response to amendments that I had tabled on good governance, the Home Office tabled its own amendment which states in Schedule 2, subparagraph (4) that a person who is appointed as either a commissioner for victims or a deputy commissioner,
"must not hold office for more than 10 years in total".
I believe that it is important to get good governance right from the beginning. In Grand Committee the Minister, the noble Lord, Lord Whitty, said that the chairman would be able to serve for more than 10 years only if the Commissioner for Public Appointments gave her agreement. Why is an exception to good governance required here? The Home Office was prepared to follow good practice in the domestic violence Bill and I am simply asking that the DTI should follow suit. I shall say that very quietly so that Home Office Ministers do not hear me praising them. Let us have joined-up thinking on good governance. I beg to move.
6.45 p.m.
Lord Bradshaw: My Lords, I support the noble Baroness, Lady Anelay of St Johns. There is certainly a need for some police expertise in what I feel would be a somewhat closed and probably fairly secretive organisation. Some knowledge of how the police work will be valuable to the new police authority. Scottish Ministers should be consulted.
On whether someone should serve as chairman for more than 10 years, I recollect that when I referred to the matter in Grand Committee, I probably did not take into account the years that someone should have served as a member of the authority before aspiring to chairmanship. I would think it very unlikely that anyone's term of office, in almost any public office, should exceed 10 years. In a matter that is not open to public scrutiny, the chances of complacency,
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connivance or slightly corrupt procedures may grow if someone holds a seat for many more than 10 years. In the authorities with which I have been concerned, the practice is for the chairmanship to rotate about every two or three years. I broadly support the amendment.
Lord Gray of Contin: My Lords, I support the amendment, particularly the suggestion that someone with police knowledge should be a member of the board. That is very important because this matter has assumed a completely new aspect in recent times due to the dangers with which we now live and the complete irresponsibility of people who are prepared to commit the most vile crimes to kill others. It is important that police forces, especially this particular police force which has such an important responsibility throughout the country, should have the very best experience available to it.
The policing issue is of special importance. All British police forces are extremely competent and able to look after their own areas very well indeed. But there is so much specialisation in the nuclear industry that it is very important that that police force, as well as those who operate those vitally important installations, should have the best knowledge available to them and the best instruction in how to cope with the awful situations that they are liable to encounter. I support my noble friend in moving the amendment and I trust that we shall have some co-operation from the Government when the Minister answers.
Baroness Carnegy of Lour: My Lords, I, too, rise to support my noble friend. It is important that this police force should be acceptable to local police forces and the public because the very nature of their responsibilities and what they will be up to will require the confidence of people. If one member of the board has specialised policing knowledge that will help local chief constables and police have confidence that that force is being led from the top in a knowledgeable manner. That may be a small point and we have talked often in this House about representation, but sometimes it matters more than at other times; and that is the case now. So Amendment No. 148 is important.
As for Amendment No. 149, can the Minister reveal the outcome of his discussions regarding consultation with Scottish Ministers or the Secretary of State? It is important for the constabulary in Scotland to be accepted as a United Kingdom matter—which, of course, includes the Scottish element.
Regarding the position of the chairman of the authority, the noble Lord, Lord Bradshaw, slightly changed his position when he said that the person might not be completely new to the authority. A term of 10 years as chairman is a long time by any measure, particularly for a public body, so it would be a good amendment. I hope that the Government will look sympathetically at all three amendments.
Lord Triesman: My Lords, I thank noble Lords who have contributed to the debate. After a period of dealing with tax and other matters, this has been closer to matters that I can understand and to sets of arguments whose power is evident to me. This group brings together a number of amendments concerning appointments to the Civil Nuclear Police Authority.
Amendment No. 148, as noble Lords, including the noble Baroness, Lady Anelay, have said, would require at least one member of the Civil Nuclear Police Authority to have specialised policing knowledge. The current UKAEA constabulary police authority includes a member with senior level experience of policing and the constabulary has probably benefited considerably from that expertise—that may be what is in everyone's minds.
The Managing the Nuclear Legacy White Paper also gave a clear commitment that it was the Government intention that one of the independent members appointed to the Civil Nuclear Police Authority should continue to have a background in senior level policing. I can confirm that commitment.
The Bill does not specify the detailed composition of the police authority for reasons that were touched on in Grand Committee, when an amendment was considered seeking a minimum number of industry representatives to be appointed to the police authority. I cannot envisage circumstances at this time where the Government would not think it sensible to appoint an independent member with police experience. But circumstances change. We believe it is important that the Bill should allow sufficient flexibility for the Secretary of State to vary the composition of the police authority so that it always has available to it the skills it needs, both now and in the future. Limiting that flexibility in legislation would potentially be restrictive.
Could I conceive of circumstances in which it might not be appropriate to have a policing expert on the authority? Indeed, it is difficult to think of any specific reason at this stage. The built-in flexibility is about the future and in our debate today there has been considerable discussion about the length of time over which this legislation would have an impact and circumstances unquestionably would change over that period. In responding to some of the points made by the noble Lord, Lord Gray, in particular, there are good reasons why other people would say, "If we are going to construct an authority of this kind and it is useful to have expertise of a one kind, why not reserve places for other kinds of expertise in that authority?" That would be to the detriment of constructing the sort of' authority that, as the guidance notes that were just quoted say, needs a degree of flexibility.
I shall put the matter in the following terms—almost any senior police officer with an area of expertise will have a specialised knowledge in that area. But it does not necessarily follow that that would be the most critical area of expertise needed if, for example, issues of terrorism or security emerged. They may have expertise in the guarding of sites and making sure that they are secure, or in making sure that there is no leakage of material—for bad reasons—from sites,
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particularly the types of material with which we are dealing. It is not necessarily the case that the expertise will be of precisely the kind that is needed.
I suggest that, like most bodies which have to take on diverse and complex issues, this body must always take advice, whether in confidence or not. I refer to the potential for secrecy mentioned by the noble Lord, Lord Bradshaw. It would be bound to take detailed advice needed in any specialised area. That is not an argument for not having a senior police officer or a person with expertise, but other kinds of specialist—for example, with anti-terrorism knowledge—may equally be useful in other circumstances. I understand why the UKAEA Police Federation has made its comments. I do not disparage it by saying that I have yet to serve on any body that has not thought its expertise was absolutely essential to one authority or another. They are the sort of comments that people are likely to make.
Regarding the question asked by the noble Baroness, Lady Anelay, about which government department would have authority, the Home Office will have all authority in respect of terrorism: the DTI will have authority in respect of the nuclear matters contained in the legislation. I hope that that clarifies matters. So I ask your Lordships not to press the amendment, because I do not believe that it necessarily accomplishes the objectives that your Lordships have described. Of course the expertise needs to be available. It is important that the authority can call on that expertise from whichever source it feels is most useful, but the authority might be limited if it was compelled to call on that expertise in the way suggested by the amendment. Having said all of that, at present it is extremely unlikely that that kind of expertise would not be available on the authority when it is established.
I shall answer the question put regarding Amendment No. 149—the Scottish Executive has discussed the matter and has agreed to the propositions. We touched on the role of Scottish Ministers in Grand Committee, when my noble friend Lord Whitty made it clear that, while we would expect to take account of Scottish Ministers' views, appointments to the Civil Nuclear Police Authority were a reserved matter. The Scottish Executive is content with that interpretation. That is because the authority will be part of nuclear security and not of public policing and the arrangements will be those for a reserved body. I understand that the constabulary clauses were also not a matter of concern in the Scottish Parliament when it debated the Energy Bill. I hope for those reasons that noble Lords will feel that their concerns have been satisfied and that the amendment will be withdrawn.
Amendment No. 150 was also discussed in Grand Committee and concerns the period of membership of members of the authority. At that time the noble Lord, Lord Whitty, said that the Government's intention in making appointments, including that of the chair, was to follow the letter and the spirit of the Commissioner for Public Appointments' code of practice.

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It is perfectly correct to say that the maximum period in office must not normally exceed 10 years. The code of practice allows that this will be exceeded only in exceptional circumstances provided there is full and open competition. There is no obvious reason why this flexibility should not also be available to the Government in appointing members to the Civil Nuclear Police Authority—including its chair.
It does not mean that, in general, people will serve for more than 10 years but it does mean that the same degree of flexibility, common in all public appointments conducted under the code of practice, would apply to this post. I understand the point made by the noble Baroness, Lady Anelay of St Johns, in relation to the domestic violence legislation. However, as noble Lords made clear in an earlier amendment, we may be talking about appointments of people in some highly specialised areas. It may well be that one of those areas is of signal importance when this changeover might otherwise take place. I would like to think that the Secretary of State would take account of those circumstances and make the judgment whether it was sufficiently unusual and would decide in that light. Accordingly, I ask that this amendment also be withdrawn.
7 p.m.
Baroness Anelay of St Johns: My Lords, I am grateful for the support I have received from my noble friends Lord Gray of Contin and Lady Carnegy of Lour. I also thank the noble Lord, Lord Bradshaw. The point he made at the beginning of this debate is absolutely right. One has to be wary when one is thinking about the appointment of people to this authority because they will have to perform a very specialised task. They may be drawn from a very closed group of people, not because they are secretive but because they are carrying out secret work.
My noble friend Lord Gray was right to point out that the writ of this police authority is nation-wide. It will be a very important organisation. We need to get right, from the beginning, the rules that govern it. I listened to what the Minister said about Scotland. He said that the Scottish Parliament did not find the Energy Bill a problem. I was simply asking whether the Government had taken seriously what we said at Grand Committee and whether they had consulted with the Secretary of State for Scotland. The Government appear to have taken the view that it was unnecessary to talk to the Secretary of State because the Scottish Parliament had not raised the issue. That is a matter for the Government not for me. Obviously it is something I shall consider further with my colleagues who have far greater knowledge of Scotland than I ever could.
The Minister rebutted my argument that there was a need to have one person on the authority who has specialised policing expertise. The Minister seemed to say that it was what the Government want but they do not want it in the Bill. He wants that old friend flexibility so the Government can change things in the future if they think it appropriate. I was a little more unpersuaded here
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than is normal. I try to be reasonable on flexibility, especially since the Minister specifically said that he could not envisage circumstances where the Government would want to avoid having one person with police experience on the authority.
He posed the question, "Could I conceive of circumstances? Well, it's difficult at this stage. It's all about the future." Sometimes that is true. But we are talking about policing. Policing is policing is policing. It was in Peel's day. It was even prior to that, before there was such a thing as a police force. The actual activity of policing remains constant and I do not believe that our language will change so much that we will not know what we mean in 100 years' time—if this Bill is still going. I do not believe that we will not know what we mean if we say we want someone who has specialised policing knowledge.
The Minister said that, if adopted, this argument could limit the kind of people appointed. It may be that at some stage it would be necessary to find someone who knows about guarding site perimeters. You might want someone to advise on spills or on terrorism. Well, I specifically left my definition of this person to be appointed broad enough so that the Government would be able to appoint someone knowledgeable without having a specifically targeted knowledge. Just because there is someone with specialised policing knowledge on the authority, it does not mean the authority cannot bring in additional advisers as various tasks arise. I want to build this into the authority from the word go, something that the Minister himself recognises. This was put to me very strongly by the UKAEA police. We need to build a level of expertise into the authority to enable it to deliver its particular task properly.
The Minister also referred to my good practice issues. He referred to the appointment of a chairman and repeated the Government's commitment that they would wish to follow the code of practice. This states that a chairman would not serve more than 10 years except in exceptional circumstances. We are back to flexibility again. The Government want the Secretary of State to be able to appoint someone beyond 10 years, subject to the post being advertised. But they say that in general they would not wish people to serve more than 10 years. On that one I am flogging a very dead horse at the DTI. They obviously do not wish to come into the fold as the Home Office has done. I would argue that there are occasions when it is absolutely right to get the rules correct from the beginning. However, I can see that the Government will not move on that.
I feel I have a responsibility with regard to the request from the UKAEA police. They say that what has worked well so far in the authority should continue. There should be someone on the authority with a senior level of experience in policing. It is important to put the will of the Government to the test. In response to the request from the police, I wish to test the opinion of the House on Amendment No. 148.
7.7 p.m.
On Question, Whether the said amendment (No. 148) shall be agreed to?
Their Lordships divided: Contents, 84; Not- Contents, 93.
7.17 p.m.
[Amendments Nos. 149 and 150 not moved.]
Lord Whitty Lord Whitty moved Amendments Nos. 151 and 152:
Page 188, line 28, leave out "amending" and insert "modifying"
Page 189, line 3, at end insert—
"( ) References in this paragraph to the modification of a UKAEA pension scheme include references to the modification of any one or more of the following—

(a) the trust deed of the scheme, if there is one;

(b) rules of the scheme; or

(c) any other instrument relating to the constitution, management or operation of the scheme."

Baroness Anelay of St Johns Baroness Anelay of St Johns moved Amendment No. 153:
Page 41, line 19, at end insert—
"( ) The secondary functions of the Constabulary may include—

(a) training other national and overseas police forces; and

(b) establishing and developing liaison with overseas police forces."

The noble Baroness said: My Lords, after the recent excitement, I want to make it clear that Amendment No. 153 is only a probing amendment.
In Grand Committee, I asked how the provision in Clause 48(6) differed from Section 6 of the Police Act 1996. Since then, noble Lord, Lord Whitty, wrote to me a helpful letter setting out the effect of Clause 48 as a whole. During that response, the Minister referred to the secondary functions of the constabulary and I have

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tabled this amendment to probe further the extent of those functions and, more importantly, how they will be funded.
Amendment No. 153 makes it clear that the secondary functions of the constabulary can include training other police forces, both in the United Kingdom and overseas, and establishing liaison with those police forces. That is based on the guidance in the Explanatory Notes and in the Minister's letter.
The Minister, in his letter, said that the circumstances in which the constabulary performs such functions will be fairly limited. But, presumably, that is only a guess because, as we heard from the Government in the previous group of amendments, they hope that this Bill will deal with future circumstances and are therefore trying to cover all eventualities. We do not know how the authority will develop.
That will be the case unless the Government plan to use the powers that they have given themselves in Clause 48(5) to prevent the development of secondary functions beyond what they consider to be an acceptable limit. What on earth will they consider to be "an acceptable limit"? What will govern that decision?
Secondly, who funds the carrying out of the secondary functions? The police authority and the police working for it will have highly specialised knowledge. They are experts in their field. They will have an expertise that is valued overseas; we know that from the existing experience of the police who worked for the UKAEA, so we assume that that will continue.
It is vital that we make it as straightforward as possible for the expertise possessed by the new civil nuclear police to be of benefit to other police forces. I do not want to end up in a position where our own civil nuclear police, in developing the expertise of other police forces by sending their people to a system find, themselves out of pocket. My commercial attitude asks why they should not also make some money out of it for their own purposes. It seems good practice that they should be able to make some income for themselves out of what will be a worthwhile activity.
Can the new police authority make a commercial charge for its services and keep control of those funds? I beg to move.
Lord Bradshaw: My Lords, I support the amendment. It is a matter of fact that the police authority will be kept short of funds. Every other police authority is and they are enjoined by the Government to trade and train people and do everything in their power to raise funds. The police force will also have levels of expertise that, despite the fact that we are not now developing new nuclear power stations, will be of great value to countries overseas. I foresee that many will seek to avail themselves of the training and education opportunities available in the force.
The secondary functions described in the amendment are likely to be important functions which, while they do not serve the principal function of the constabulary, will be necessary, especially to raise funds. I know from my
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experience that when new equipment comes into use it is the contribution of other police forces that makes it possible not only to afford one's own training facilities but often to afford the capital cost of equipping oneself. I am happy to support the amendment.
Earl Attlee: My Lords, I am grateful to my noble friend for introducing the amendment. I have one or possibly two questions. Will the civil nuclear police force be sending contingents to international police task forces such as those in Bosnia and Kosovo? It is important for the experience of senior officers in their earlier career to have done different things and worked with international police task forces. If they will be so dispatched, who will pay for it?
Lord Triesman: My Lords, it is always intriguing to try to anticipate the questions one is likely to be asked. I must confess that having spent a good deal of the day thinking about Kosovo I had not anticipated that question.
Amendment No. 153 specifies possible secondary functions for the civil nuclear constabulary, including training and liasing with overseas forces. In a moment I shall pay special attention to the questions asked by the noble Baroness, Lady Anelay, and the noble Lord, Lord Bradshaw, about that matter. The present UKAEA constabulary already occasionally undertakes some activities of training and liasing with overseas forces. The intention is that the new constabulary will continue to do so where there is a need in relation to its core function or where it is part of a wider UK co-operation programme.
I am not aware at the moment—and if I am wrong I shall certainly write to the noble Earl, Lord Attlee—that there is an intention that we would be taking part in international policing operations of the kind that he described, although I want to go back to the sorts of things we have done and are likely to continue to do, which are slightly different.
Earl Attlee: My Lords, if we do not allow them to go off on international police task forces, is there not a danger that officers from the civil nuclear police authority will be less experienced than others and therefore will not be able to compete for promotion in other forces?
Lord Triesman: My Lords, the definitive answer which I was giving to the noble Earl's first question is no. I wanted to be direct and use one word. I understand the argument that a variety of experience in different police forces would give rise to more varied career opportunities, but our task in setting up this police force must be that it focuses specifically on the tasks of protecting the nuclear decommissioning work and the sites on which it happens. That has to be the principal focus of our work.
The functions, which include training of and liasing with overseas police forces, would not be an end in themselves. I imagine that if it were conceived as a major distraction, the Secretary of State should have a right to veto those activities if, for example, the

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director for civil nuclear security, who is the regulator, had concerns about the effects of carrying out such activities on the ability of the constabulary to undertake its principal tasks, which is my general point.
The amendment would restrict the Secretary of State's ability to intervene in such circumstances. But I know that the UKAEA constabulary has liased with overseas police forces as part of the discussions to agree arrangements for the handover of security responsibility for sensitive nuclear material when they have been escorted by the constabulary and when it is delivered, for example, to overseas ports by ships. Such movements have not been particularly frequent, but they have occurred.
A recent initiative may lead the constabulary to be involved in the training of guard force commanders responsible for the protection of Russian nuclear sites utilising the limited spare capacity of its training centre; obviously an area of major international importance where we might from the UK make an extremely valuable contribution to the security of the world.
In such cases the constabulary's costs will be reimbursed fully by the Department of Trade and Industry. It will not find itself out of pocket, which was one of the concerns that arose. I hope that the amendment can be withdrawn. It restricts the Secretary of State's ability to intervene, but it will not restrict us from doing some of the sensible things that noble Lords have described in this brief debate.
Baroness Anelay of St Johns: My Lords, I am grateful to the Minister for his response. To take the last point first, he gave an assurance that he has given in the past, although not quite so clearly, with regard to the reimbursement of costs by the DTI to the civil nuclear police when it is carrying out its secondary functions.
I was trying to go a little further in my probing of the Government's intentions in asking whether they can foresee a situation where the civil nuclear police authority could make a commercial charge which it could keep. Will the Minister consider that further and write to me between now and Third Reading? As the Government keep saying, we are considering a Bill that is intended to remain in place for some time. We need to respond to different circumstances.
In response to my noble friend Lord Attlee the Minister narrowed down the circumstances in which the Government foresee a role for the police forces outwith this country in international circumstances. I am grateful to him for the way in which, on the hoof, he tried to narrow that down.
As I cover the Home Office brief, what immediately came to the forefront of my mind when my noble friend was speaking was the fact that this weekend the Home Secretary has been in discussions with his European colleagues about how the Government might take forward with the rest of Europe some form of supranational force to deal with terrorist incidents. I raise that now simply because I believe that between
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now and Third Reading it may be worth considering the role that the civil nuclear police might play in such a force if it were to come about.
Of course, as the Minister rightly said, the force's expertise is in the area of nuclear decommissioning. However, it is very much an expertise that could be used to counteract terrorism and any attempts to gain access to such material. It may well be that the force will have a role in future discussions about how we can all try to counteract what is a very real terrorist menace. I began by saying that this was very much a probing amendment and therefore I beg leave to withdraw it.
Amendment, by leave, withdrawn.
Lord Davies of Oldham: My Lords, I beg to move that further consideration on Report be now adjourned. In moving the Motion, perhaps I may suggest that Report stage begin again not before 8.31 p.m.
Moved accordingly, and, on Question, Motion agreed to.

National Health Service Staff
7.31 p.m.
Baroness Knight of Collingtree Baroness Knight of Collingtree rose to ask Her Majesty's Government what is their response to the recent report from the National Audit Office on the suspension of National Health Service staff.
The noble Baroness said: My Lords, I have lost count of the number of times that I have raised in Parliament the disgraceful way in which Britain deals with suspended hospital doctors, but I have been doing so for some 16 years. Successive governments have failed to listen but one must never give up trying to right a wrong. Where there is rank injustice and a way to end it, one must just keep on trying.
We treat criminals who have committed the worst crimes in the calendar—murder, rape, violent assault, robbery, child abuse; any crime one cares to mention—with more justice, compassion and mercy than we treat suspended hospital doctors. I hold no brief for incompetent doctors or those who break the law but, of all doctors accused and suspended, about 92 per cent are subsequently found to be innocent.
Suspension comes like a bolt from the blue. The doctor is instantly sent home in disgrace and barred from re-entering his hospital. He is not told what he is alleged to have done. He receives no legal aid; he has no lawyer or friend to help him; there is no appeal. He or she has no idea how long that situation will continue. I know of one case where a woman doctor remained suspended for 11 years.
Since then, a rule has been made that suspension can continue only for what is termed a "binding time". But it does not seem very binding to me. Out of 350 suspensions, hospital trusts have adhered to it only twice. Even being suspended for a year or 18 months—the average is two-and-a-quarter years—can mean the end of a career. Medical advance is too fast for gap years.
It is true that there is now some attempt at retraining but that is by no means always effective, and the cost is not small. In scores of cases, suspension destroys both one's career and one's reputation. Whole families suffer grievously. I know of five suicides and eight deaths from heart attacks which are directly attributable to doctors' suspensions. It is no compensation that the doctor is paid his full salary during suspension. His patients, of course, lose his care and skill, and the NHS is not blessed with such a surplus of doctors that that does not matter.
Last year, the National Audit Office studied this situation, and that led to this debate. The NAO reported last November. I immediately tried for an Unstarred Question and asked for it weekly since then. The report shows that the annual cost of suspension, including clinical staff, is £29 million. The average cost per doctor is £188,000, while clinicians obviously cost less—some £21,400. Therefore, doctors account for three-quarters of all costs. However, that is not all. The NAO total includes neither golden handshakes, which often have to be paid, nor the costs of retraining. Those costs are substantial. We are not talking peanuts here. My case is partly that this is a scandalous waste of scarce resources and partly that we should not treat dedicated, trained professionals so cruelly and unjustly.
In July 2000, I received support from all sides of your Lordships' House for a Bill which would have stopped both the waste and the unfairness. That Bill was a good six months in preparation. I worked with the BMA and the bodies which protect hospital doctors to have the Bill correctly framed, arranged and agreed. The Bill got through this House but the Government ignored it. Instead, they set up the National Clinical Assessment Authority, which was supposed to put everything right. I hoped; I waited; I gave it time. Alas, after three years, it has proved to be an abysmal failure. In its first two years, it dealt with just five cases. I found it rather difficult to drum up much sympathy for the excuse that it needed time to bed down. My theory was that it never got up.
The ruling that trusts "could", not "must", refer cases to the NCAA, together with the fact that trusts are allowed to ignore NCAA recommendations, has rendered this body both weak and toothless. It has an annual budget of almost £8 million but it has neither reduced the number of suspensions nor lessened the time that doctors are kept waiting. In fact, it has tended to increase that time.
Had my Bill, instead of the NCAA, come into being, researchers tell me that, by now, £100 million more would have been available to the NHS. I am bound to say that that figure staggers me. I do not believe that anyone will disagree that it is a lot of money.
Scotland adopted very similar regulations to those in my Bill and they have proved to be most successful. I claim, without blushing, that, had my Bill been permitted to go through and become law, equally we should have seen success in this very distressing matter.
When I tabled this Question, there had been no government response to the report. One emerged very quickly, in December, announcing new regulations. I have read them: immediate suspensions are allowed but they should last for only two weeks; doctors should be told what they are alleged to have done; and alternatives to suspension should be considered. Again, it is the use of the word "should" instead of "must" which worries me.
Only this morning, we heard that a hospital trust, which must have been sent those new rules and has certainly had time to read them, suspended a top brain surgeon who took an extra helping of croutons in his soup. Oh, vile crime! Had he been prepared, perhaps, to be a little less keen on croutons, he would have continued in his job. I find that incredible. In my Daily Mail this morning I read that he has been sitting at home fully paid since last week, no doubt thinking about croutons. Heaven knows how much suffering that has caused and will cause to his patients. Once a doctor is suspended, his return is neither quick and easy nor inevitable.
When I heard of this case this morning I found it incredible. I found it so impossible to believe that I telephoned the BMA, which checked it. I have to tell noble Lords that every word in the Daily Mail report is true. If that can happen when the Government have produced their new guidelines and the hospital trust has read and absorbed them, surely the guidelines are useless.
I have a dreadful feeling that I shall have to go on for another 16 years pleading the case for doctors who have been suspended, the suffering they are forced to endure and the amount of money that that costs the NHS. Obviously, what the Government have tried to do, no doubt with every good intention, has been utterly useless. Words fail me.
7.41 p.m.
Lord Clement-Jones: My Lords, as a veteran of debates involving the noble Baroness and this very important area, I pay tribute to her tenacity in raising this issue once again in response to an extremely interesting report from the National Audit Office.
The noble Baroness quoted figures from that report which are hair-raising. That affirms—the point has been made by her and a few others on a consistent basis—that such cases are extremely costly to the NHS, particularly when agency or locum doctors or nurses have to be hired in order to replace doctors and nurses who have been suspended. That may be on a temporary basis but, if the suspension is not quickly resolved, that temporary hiring seems to be almost semi-permanent. Not only is that costly for trusts in those terms, but the money spent on dealing with suspensions cannot go where it should, that is, on treating patients.
The NAO arrive at the figure of some £14 million per year spent as a result of inappropriate suspensions which could otherwise have been spent on NHS services. However, there is some light. I was interested in the comments of the noble Baroness on the

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December guidance, which was published shortly after the NAO report on maintaining high professional standards in the modern NHS. That makes clear that there are options which go far short of suspension but can restrict practice according to certain conditions and can provide an alternative to suspension.
Doctors and nurses can be selectively restricted from carrying out certain procedures or from working with certain patient types while problems are investigated as quickly as they can be. That then saves trusts from paying for extra or replacement staff and keeps clinicians from losing their skills because of long periods away from work.
Obviously, unnecessary suspensions cause huge detriment. If options exist, a trust should be compelled to explore them before suspension becomes the immediate option. The guidance issued in December wisely keeps patient safety as a priority, but it also emphasises the importance of reducing suspensions that are not necessary. In that sense it must be welcomed.
Suspension is meant to be a neutral procedure, which gives investigators time to examine a particular situation, not a disciplinary action. For physicians and surgeons, whose expertise depends on regular practice of complex and technical procedures, long suspensions can lead to deterioration of skills, potentially causing an even more risky situation. Clearly, suspensions should not be treated lightly or used too liberally. The new guidance, which I welcome, includes many factors that, if they can be implemented and monitored properly, will address some of those problems, especially by putting time limits on immediate exclusions and limiting further exclusions to four-week periods with active reviews.
Programmes that allow doctors, dentists and nurses to return to work as soon as possible and with full support are necessary to ensure that clinicians who are suspended do not drop out of the NHS workforce entirely. These programmes need to be as strong, comprehensive and consistent as possible. In view of the lack of current capacity in the NHS, we cannot afford to lose qualified staff, especially if they have been suspended unnecessarily or for spurious reasons.
Even for those who are eventually cleared of any wrongdoing, the personal stress, possible depression and loss of reputation caused by a suspension may keep them from returning to work even when they are perfectly qualified to do so. So suspension is an issue not just about cost but also about sustaining a strong workforce and being able to provide services for patients at as high a level as possible. If patient safety and patient care are priorities, getting qualified, safe medical staff back to work quickly and efficiently has also to be a priority.
I welcome the very clear statement in the guidance that clear reasons are now needed to suspend doctors. But, as the noble Baroness mentioned, that is all very well and, in a sense, so far so good until one looks at the practice. Like the noble Baroness, I am fairly accustomed—it is one of my rules of life—to questioning what the Daily Mail has to say. I, too, was in contact with the BMA and
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I, too, was told that the facts of the matter are as stated on the front page of today's Daily Mail. Clearly, the guidance issued in December has not passed the radar of a number of trusts, as we have seen. Surely, that is a matter of considerable concern. I hope the Minister will address that in his remarks.
What interested me about the guidance issued in December was the fact that it was joint guidance. It refers to,
"the full integration of the work of the National Clinical Assessment Authority (NCAA) in providing advice I o NHS employers on the handling of cases".
I do not know whether I misread it, but it did not seem that the NCAA was integral to that guidance; it seemed to have been issued by others involved. Why has not the NCAA been fully integrated in the NHS process for suspensions? Was not that the key reason for setting up the NCAA at the start?
The NCAA's website states that it provides advice about the local handling of cases and where necessary carries out clinical performance assessments to clarify areas of concern and make recommendations on how difficulties may be resolved. That seems to me to be a curiously limited remit.
When we debated the effects of the NCAA on suspensions last March, the NCAA had been in place for only 18 months. One year later, do we know with any more certainty whether the NCAA provides good value for money in its work, or, indeed, in fulfilling the objectives for which it was set up? Many of us felt that it should be an integral part of the National Patient Safety Agency or should be integrated into other regulatory bodies in a more secure way. I wonder whether this is the right model going forward?
Is the NCAA really sufficiently involved? Is it a proactive player in resolving the problems with the suspension process? As a special health authority does it have the necessary powers to deal with hospital trusts in such circumstances? If not, should not the Government propose that it should have such strengthened powers?
The misgivings on these Benches are similar to those expressed by the noble Baroness, Lady Knight. I know that the Minister will say that we are now fully devolved and that I simply want to take control of hospitals. But, in these circumstances, it seems to me that, at the very least, the NCAA should have much greater powers to influence the behaviour of trusts.
I am sure that we are all agreed that, with the NHS already suffering from long-standing staff shortages, the emphasis should be on helping clinicians to develop their skills and practise at their highest levels and providing support at an early stage for staff with performance problems. Hiding problems or waiting until they threaten patients' safety is not the way to proceed.
Many of the questions revolve around the NCAA. I believe that the guidance issued by the Government in December goes in the right direction. What we now need is a much firmer platform and programme for implementing that guidance.
7.50 p.m.
Lord Skelmersdale: My Lords, as my noble friend said, she has been pursuing the subject of suspension of clinical staff for many years now, both in your Lordships' House and in another place. It must have been like a red rag to a bull to be told by successive Ministers to "go away and don't fuss". But fuss she has continued to do and now her activities have been vindicated by the very recent National Audit Office report of 6 November last.
One has only to read the introduction to see that this report makes quite appalling reading. At a time when NHS resources are under such strain, it really cannot be right that cases often drag on for months and sometimes years with highly trained staff left kicking their heels at home rather than doing the skilled job for which they are being paid. To that extent I go along with the noble Lord, Lord Clement-Jones.
It is in everyone's interest—patients, clinicians and the taxpayer—for cases of suspension to be settled quickly and openly. But I am the first to admit that the solution is not easy, although the report makes some commonsense recommendations that bear very careful scrutiny.
Noble Lords know better than I do, but as a newcomer to this difficult subject I can see that there are three sides to it. The protection of patients is clearly one; the protection of the reputation of the hospital trust or PCT is another; and the proper treatment of clinicians is a third. These three sides—a triangle if you like—add up to waste in the health service and often worse—slower treatment for the patients themselves.
As the report makes clear—and virtually all noble Lords have referred to this—the costs of exclusion are high and growing. Between April 2001 and July 2002—the period covered by the report—the annual additional costs of exclusion are £29 million. It is additional because the excluded clinicians are still on the payroll to the tune of some £11 million.
I get the impression from reading the report that suspension is management's first rather than last course of action. My noble friend has in the past told us that sometimes clinicians are not even told they are being investigated. Does the Minister believe that this is still happening?
We hear a lot about patients' rights from the Government, but doctors have rights too. Some years ago a Conservative government, of which I was a member, went to great lengths to persuade the medical profession that clinical audit was in its own best interests. We succeeded and increasing clinical competence is the result; and less competent clinicians have been given extra training, transferred to other duties, or weeded out altogether. That has been a major plank in the NHS management armoury, but can one say that it is working as well as it should?
There are still problems: problems of personality, called in the report "professional conduct", where there are concerns about the clinicians' professional relations with patients; and of course personal conduct
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unrelated to patients. Perhaps the case my noble friend mentioned would be covered under that. More than half all suspensions are because of these two things.
An investigation should be the first step with a nominated investigator. The clinician should be told immediately that he or she is being investigated and by whom. If the investigator finds that the accusation is justified, can he find a way not to suspend? If suspension is the only option, then management should be at the right level at which to do it. Once suspension is in place, the report recommends steps that should be taken. For example, not only should trust boards be informed immediately, but they should know of the likely duration and forecast cost, updated as necessary, with, it is suggested, a non-executive director to scrutinise exclusions and encourage expeditious management and resolution of cases—something of course we all want.
Two weeks should be long enough to decide whether a clinician has a case to answer. The department has fairly recently, as has been referred to, set up the National Clinical Assessment Authority. The royal colleges have their own clinical assessment teams. Both bodies should be turned to for advice when suspension seems the only option. Is it the norm—to coin a phrase—to consult these bodies when a suspension is imminent? It certainly should be.
It is in nobody's interest that the resolution of the case should take long. There is a problem, though. Even when trusts have completed their investigations and decided to reinstate the clinician, it can take a considerable time to achieve it—a point mentioned by the noble Lord, Lord Clement-Jones. Retraining in the same or another trust may be necessary. Obviously, the more specialist the retraining, the more difficult it is to achieve. I doubt that this is soluble.
So, what is soluble? From what the noble Lord, Lord Hunt, said last time your Lordships discussed the matter, the initial investigation should be speeded up. Of course, we can all agree with that. But, has it? Has today's Minister any information on this? In the 23 months that have elapsed, he should have received some up-to-date figures. What is the current average length of a suspension? Has the length gone down as a result of the internal review by the department, as it badly needs to?
Notwithstanding all this, suspension remains; it has to in serious cases. I am sure that the seriousness of a case should in the first instance be determined by the hospital trust or the PCT in question, with ultimately the help of the royal colleges and the National Clinical Assessment Authority. The message from the department should be—and here I agree with my noble friend—"You must use them; they're there". I think this is part of the trouble: trusts do not actually go to the National Clinical Assessment Authority, which would certainly be a very good reason why, as my noble friend has said, it has conducted so few cases.
I am sure that it is in the best interests of patients that this bottom-up approach is used. After all, it is they who suffer from the inevitable longer waiting lists, or have to find another doctor or dentist, often remaining in pain for longer than is necessary.

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We all know that the Government have a commitment to reduce all waiting lists to three months by two years' time; and with 29,000 still waiting more than nine months for treatment, it is not a very good prognosis.
In passing, is the article in today's Times correct in asserting that some NHS trusts are block booking beds in private hospitals to get waiting lists down?
The report says that if, during the period it covered, exclusions had been completed in six months, there would have been a saving of £14 million a year. Using the department's own national average unit costs, this means that an extra 2,215 planned coronary heart bypasses, or a mammoth 19,200 inguinal, umbilical or femoral hernia repairs could be done every year. I repeat—extra. My noble friend believes that if her Bill had become law the figure would be at least double. Surely, these savings would fit the Government's ethos better than farming out?
But, to be serious, it was somewhat of a surprise to me to see that only one month after the NAO report was published, the Government published new guidance to trusts on this subject, Maintaining High Professional Standards in the Modern NHS: A Framework for the initial handling of concerns about doctors and dentists in the NHS. The department, the NHS Confederation, the BMA and the British Dental Association signed up to this guidance. No doubt the Minister will use it extensively in his response in a few minutes.
However, I hope he will not be too gung ho. My noble friend and I found it—I suppose I would not misrepresent her if I said—wishy-washy and full of possibilities not instructions. Even one of what the noble Lord, Lord Warner, would doubtless call by the horrible word "stakeholders", namely the BMA, could only say of it that it was a significant "initial" step along the way to addressing its concerns about the current misuse of suspensions. It is clear to me that, if today's Daily Mail article about a consultant being immutably suspended for having a double helping of croutons, about which we have heard, is even half true, the BMA's use of the word "significant" is erroneous, to say the least.
With that sort of behaviour, trusts are cutting their own financial throats. I am sure that a quiet word in the consultant's ear would have saved the trust what will assuredly turn out to be thousands of pounds. The noble Lord's predecessor would be foaming at the mouth about it.
The key to all this is better management in the health service—not only over this issue, but over M RSA and a host of other subjects. I even read today a story that revolved around telling a nurse off for not washing her hands between patients. "That", said one manager to another, "would be harassment".
Those problems will not go away until the Government take a firm grip. I await with eagerness to hear what sort of a grip the Minister has in mind.
8 p.m.
The Parliamentary Under-Secretary of State, Department of Health (Lord Warner): My Lords, I am grateful to the noble Baroness for bringing to our attention today the National Audit Office report into the management of suspensions of clinical staff in NHS hospital and ambulance trusts in England, published on 6 November last year. I must say that I am full of admiration for her persistence on this subject. I hope that some of what I shall say will be of some comfort—and possibly even some reward for her persistence.
The noble Baroness has asked the Government to respond to the NAO report. I should explain that the NHS chief executive, the Chief Medical Officer and the Department of Health's director of human resources gave evidence at a hearing of the Public Accounts Committee on the NAO report on 28 January. A report from the committee containing its conclusions and recommendations is expected shortly, and the Government's formal response will appear as a Treasury minute following its publication.
As several noble Lords have said, a major development since the publication of the NAO report has been the launch on 29 December last year of the framework document Maintaining High Professional Standards in the Modern NHS: a framework for dealing with the initial concerns about a doctor or dentist. I must say that that was the result of several years' negotiations with the professions. Several noble Lords have chided the Government for not cracking on and dealing with the issue, but I would gently say to them that they would be the first to criticise the Government if we did not negotiate those matters with the professions and their representatives. As noble Lords will know, sometimes these things take a little longer than all of us would like.
The framework has been issued to the NHS under a Secretary of State direction and compliance is mandatory. It represents an entirely new way of dealing with concerns about poor performance of doctors and dentists. It has been agreed with the BMA and the British Dental Association.
The first of the NAO's recommendations is that the Department of Health should review its guidance on the exclusion process to take account of the work of the NCAA and the NAO report findings. I am glad to say that the recommendations contained in the NAO report concerning the management of exclusions have been largely addressed in the new framework. I do not accept the remarks of the noble Lord, Lord Skelmersdale, that the document is wishy-washy.
It is important to acknowledge that the NAO report shows all too clearly the costs of failing to manage the exclusion process effectively in both the effect on the individual clinician and the diversion of resources from patient care. However, it is worth bearing in mind that the £29 million annual cost of suspensions reported by the NAO and mentioned by several noble Lords is a fraction of the NHS payroll of £55 billion. It must be considered in that context. Some of that is the price that we must pay to ensure patient safety.

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That said, we agree that there are still too many suspensions and that too many still last more than six months, but we believe that we are beginning to see the end of very long suspensions.
The work of the National Clinical Assessment Authority and the Chief Medical Officer's special adviser have made significant inroads into the problem. Despite what the noble Baroness said, we believe that the establishment of the NCAA in 2001 to provide support and advice to NHS employers on the management of poor performance has had a significant impact. In the first two and three-quarter years of operation, the NCAA received more than 900 requests for help. Many of those cases were dealt with through advice and continuing support and did not require the authority to undertake a detailed assessment of the doctor. So there was an attempt, using prevention rather than cure, to stop problems occurring.
Baroness Knight of Collingtree: My Lords, I am grateful to the Minister. Would it not have been more efficacious to have given the NCAA the power to say, "You must do this", instead of, "You should"? When we consider the history, so often trusts have not done what the NCAA would have liked them to have done. Indeed, they do not have to report a case to the NCAA at all; they can go on suspending people. If they had to report a case, would that not be more helpful?
Lord Warner: My Lords, my response to the noble Baroness is to ask her to let me develop the rest of the Government's case. I would further say that the new framework document was issued only on 29 December and it is not mandatory until 1 April, so there is still time for us to see how the new arrangements work. I shall try to deal with her question in some of my responses.
There are three key strands of the NCAA's work that are aimed at tackling suspension. The first, and our priority, is preventing inappropriate suspension in individual cases. It is not true to suggest that the NCAA is doing nothing. An analysis of cases between April and September 2003 showed that the NCAA was able to recommend an alternative to suspension in 85 per cent of cases where suspension had been considered—that is before the new framework comes into effect. If I may say so, that does not suggest that trusts are not listening to the advice given to them by the NCAA.
Lord Skelmersdale: Yes, my Lords, but how many of its suggestions to the various trusts and organisations in those 85 per cent of cases achieved results? Two.
Lord Warner: My Lords, noble Lords opposite are eager to ask me questions. If they could just contain their eagerness, I could deploy my case, as I listened patiently to them. They may get the answer to some of their questions, if I could be allowed to continue what I was going to say.
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The second key strand of the NCAA's work is aimed at tackling ongoing, long-term suspension. Through the intervention of the Chief Medical Officer's special adviser, a significant number of those long-term cases have been resolved. Finally, there is the identification and sharing of good practice throughout the NHS. It is not just an issue of short-term suspensions; it is a more comprehensive approach by the NCAA to the problem.
The authority predicts steady growth in referrals to it resulting from the key role that it will play in the new procedures for managing exclusion. It is not true, as was suggested, that trusts do not go to the NCAA. About 75 per cent of NHS employers have made use of its services so far. I acknowledge that that is not 100 per cent, but not all have doctors suspended. As the new framework becomes embedded in local procedures, the number is bound to increase.
The National Audit Office fully supports our view that NHS employers should seek the advice of the NCAA in all cases concerning doctors. That is implemented by the new framework, which states that the NCAA should be consulted and contacted at an early stage, when action on clinical concerns is considered, and that the NCAA must—a word that the noble Baroness is keen on be consulted, where formal exclusion is being considered. We have provided an element of dirigisme in our approach.
I shall use two short case studies to demonstrate how the NCAA has contributed to public protection and worked in the interests of doctors to help to prevent an unnecessary suspension taking root. They are real cases, not hypothetical. In the first, it had been agreed that the NCAA should undertake a full clinical performance assessment of a doctor about whom there were performance concerns. The NCAA fast-tracked the assessment due to the nature of the concerns. During the part of the assessment where the doctor's clinical practice was observed, it became apparent to the assessors that there were serious deficiencies in the doctor's clinical capability that compromised patient safety. The assessment was immediately halted, and the referring body was advised to suspend the doctor and refer the doctor to the GMC. The advice was taken, and the doctor was suspended and referred to the GMC within five days. So, the public were protected. They are not all cases involving doctors who need not be suspended. Action needed to be taken, and that example shows how the NCAA went through the process, observed that patients were at risk and worked with the employer to deal with the situation satisfactorily.
In the second case study, a referring body contacted the NCAA because it had been led to believe that a doctor working for it had a criminal record and that the nature of the alleged criminal activities might jeopardise patient safety. However, it had no way of substantiating the concern. The NCAA, working with

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the referring body and using its contacts with the police and others, was able to establish robustly and within three days that the allegations were unfounded, completely clearing the doctor's name. In that way, the NCAA was able to prevent the injustice that would have occurred had the doctor been suspended.
There are examples of how other NAO recommendations have been reflected in the framework that we have been discussing. They include a requirement for strategic health authorities to scrutinise the length and cost of exclusions; ensuring that exclusion is used only if there is a threat to patient safety; considering, as alternatives to suspension, restrictions on practice and retraining; and ensuring that trust boards are kept in touch with the duration and costs of exclusion and that they review progress. For the first time, the new exclusion framework will provide for an initial immediate exclusion of no more than two weeks; formal exclusion for up to four weeks; notification of the NCAA before formal exclusion; active review to decide renewal or cessation of each exclusion; a right to return to work, if a review is not carried out; and, significantly, a maximum period of exclusion of six months, except for cases involving a criminal investigation.
It is clear that exclusion or suspension should be used in only the most exceptional circumstances and that the NCAA is fully integrated into the system. It has been fully consulted on the work of drawing up the framework, and it has key roles to play at different stages of the process.
I understand the views of those who say that it has taken far too long to get to this stage. It has been due to a number of things. It has taken time to accept the need for a fundamental shift in thinking about the way in which poor performance is managed in the medical profession. The work was led by the work of the Chief Medical Officer in his consultation document Supporting Doctors—Protecting Patients, which was published in 1999. It was here that the NCAA was conceived. However, such fundamental changes take time for professions to accept. The hearts and minds of the profession and its leaders had to be gained. I am glad to be able to say that the integrated approach of support and assessment that the NCAA has established is, I am reliably informed, a world leader and, to an increasing extent, accepted by the medical profession.
The noble Lord, Lord Clement-Jones, asked whether the NCAA was right in this context. He knows that there is a review of arm's-length bodies, and this review includes the NCAA. There is no more significance in my remarks than that.
At the same time, lengthy negotiations have continued with the profession to reform the investigation of cases and to replace the guidance on suspension. This is now in place. There is still the disciplinary strand of the framework to complete. Future progress requires co- operation from the profession, and I hope that we will be able to complete the package in the near future, but it takes two to tango.
The noble Baroness referred to the story in the Daily Mail about a brain surgeon allegedly suspended for consuming a bowl of soup—with or without croûtons, I
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am not altogether sure, but without paying. I am not sure that I share her confidence that the report was quite as full as she suggests. I do not recall it, for example, mentioning anything about actions caught on CCTV. This is, of course, a matter for the Nottingham University Hospital NHS Trust. The NCAA is not a disciplinary body. It may be helpful if I tell the House that the NCAA has offered its help, but it is of course for the trust to decide whether it wishes to accept.
The NAO has produced an important report. It highlights serious issues facing not only individual clinicians, for whom suspension can cause great difficulties, both professionally and personally—here I agree with the noble Baroness, Lady Knight—but also the NHS as a whole and, of course, patients.
The new framework which, I am pleased to say, embodies many of the recommendations contained in the NAO report, has its focus on helping doctors and dentists to keep up to date and practise safely and not to punish them for any problems arising from clinical performance.
I am confident that the innovative work of the National Clinical Assessment Authority, underpinned by the new framework document, will help the NHS to manage poor performance more constructively, and see an end to the suspension culture of the past. But I am sure we can rely on the noble Baroness to keep us on our toes on this issue.
Baroness Knight of Collingtree: My Lords, before the Minister sits down, I ask him very seriously not to brush aside the case that was reported today and to imagine that there has been a misreporting. As I explained, I took the trouble to ring the BMA—as did others, as we have heard—which confirmed that every word of that report was true. Surely we cannot regard lightly such a case, which has denied some very needy people some very expert care, at least for the time being.
Lord Warner: My Lords, on that last point, I am reliably informed that there will be no detriment to patients because the work that that doctor was due to perform will be covered by his colleagues. On that particular point, I can set the noble Baroness's mind at rest.
I was not trying to brush this aside, but the employer of this doctor is neither the Department of Health nor me—it is the local trust. It is the trust's responsibility to deal with this issue and, as I have said, I know that the NCAA has offered its help to the trust. I have also made it clear that it is for the trust to decide whether to accept that help.
Lord Skelmersdale: My Lords, before the Minister finally sits down, I asked him a question arising from something he said about the percentage of the number of cases referred to the NCAA where it did not recommend suspension. Will he be good enough to

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write to me, telling me in how many cases—I mean actual numbers rather than percentages—was the NCAA's advice ignored?
Lord Warner: My Lords, I will certainly let the noble Lord know, if we have the information, in how many cases the NCAA's advice was accepted, and ignored.
Baroness Farrington of Ribbleton: My Lords, I beg to move that the House do now adjourn during pleasure.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 8.18 to 8.31 p.m.]

Energy Bill [H.L.]
8.31 p.m.
Further consideration of amendments on Report resumed.
Clause 52 [Jurisdiction of Constabulary]:
Baroness Anelay of St Johns Baroness Anelay of St Johns moved Amendment No. 154:
Page 43, line 21, at end insert "(irrespective of how far that is from a civil licensed nuclear site)"
The noble Baroness said: My Lords, I beg to move Amendment No. 154. In doing so, I shall speak also to Amendments Nos. 155, 157, 159 and 160, all of which are in my name and are supported by the noble Lord, Lord Bradshaw.
In a sense, these are two slightly different groups. The amendments all refer to jurisdiction, but have a slightly different objective. Amendments Nos. 154, 155 and 157 are, as a whole, a sub-group. They cover the same ground as amendments that I tabled in Grand Committee, and they are brought back to invite the Government to clarify further the jurisdiction of the constabulary as described on the Bill. There was some confusion on this matter in Grand Committee, and the Minister kindly wrote to me afterwards. In his letter he signalled that the Government acknowledged that there had been some confusion about jurisdiction. He then tried to clarify the matter further; but he did so within the confines of the Bill, as it is currently drafted, and within the confines of the Government's intentions. These amendments are about clarification.
I then go on to new ground in my two new clauses within Amendments Nos. 159 and 160. They have been tabled at the direct request of the UKAEA Police Federation. The purpose is to ask the Government to put on the record their reasons for treating the Civil Nuclear Police Authority differently from the British Transport Police and the Ministry of Defence Police in relation to the powers introduced into the Antiterrorism, Crime and Security Act 2001, covering both jurisdiction and collaborative agreements. I thought it would be convenient for the House if I put those two clauses together. Since they were tabled the wrong way
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round, which is entirely my fault, I think it might be more helpful if I spoke first to Amendment No. 160, because that continues the theme of the first sub-group of amendments with regard directly to jurisdiction.
I have read the debates of the Anti-Terrorism, Crime and Security Act in full over the past couple of weeks, because we have had two debates on these matters within the Home Office brief on successive Thursdays. The Part 4 powers of that Act were renewed last week, on 15 March. As a result of reading the record carefully—because I was not in my brief at that stage and did not take part in the debates on that Act—I discovered for the first time the position taken by the Government and the other parties at that stage. Therefore, I am fully aware that the Government's proposals had a rocky passage through this House, since it was considered that they were going beyond what was strictly necessary to respond to the new terrorist threats. There was a feeling that the Government were trying to enlarge police powers and response beyond what was demanded by that particular threat. The noble Lord, Lord Wallace of Saltaire, said at col. 956 on 6 December 2001 that it was,
"not only an anti-terrorism Bill but a convenient vehicle for putting through a number of other measures".—[Official Report, 6/12/01; col. 956.]
I fully recognise that there was resistance to the idea of extending the jurisdiction of police forces beyond what was specifically related to a response to terrorist offences. But the Government got their Act, which left the United Kingdom Atomic Energy Authority police authority out of the loop; it was not included, as others were. I noted that the noble Lord, Lord Bradshaw, made some very telling points about the need for the British Transport Police to be covered—and indeed, they were, and it is right that they were. I hope that he will contribute to this debate, too.
The Minister will be aware that there was a strong feeling in the Atomic Energy Police Federation that the Government have got this matter wrong. Indeed, it is supported by other police federations in the matter—by those police federations that are within the purlieu of the Home Office, which support the request by the United Kingdom Atomic Energy Authority police that they should be within the family of those who have wider jurisdiction.
The constabulary are responsible people; they want to be able to respond to emergencies in the proper way, so they want to be able to go to the assistance of other people immediately that help is needed in an emergency, and not to have to be in the same position as any other private citizen in any action that they take to assist. On the face of it, there seems no good reason for members of the constabulary to be prevented from acting with the full powers of other Home Office police forces in an emergency, particularly when they come across something in an area where they would not normally have constabulary powers. We have to take into account that this Bill, rightly, transforms the special constables into full constables.
The federation advises me that it has examined case studies and scenarios in which the absence of such emergency powers could have dire implications and consequences for national security. It also makes the very practical point that, apart from those considerations, emergency powers are required for the plain and simple reason that members of the public expect all police officers, especially those in uniform, to act in an emergency and protect the public interest. They are concerned that the public see them as being a source of assistance when it is an assistance that they are not able to give.
On collaborative agreements, will the Minister confirm that in the DTI's original consultation, the Government suggested the power to enable the constabulary to enter into formal collaborative arrangements with other forces, mirroring Section 23 of the Police Act 1996? That seems to have been proposed by the Government but has not apparently made its way into the Bill. Will the Minister explain the Government's reasoning for not taking that forward? Surely, the omission of collaborative agreements might seriously undermine all necessary future joint initiatives with other police bodies.
In summary, I am asking for a clarification of the Government's earlier position on jurisdiction with regard to the Civil Nuclear Police Authority and asking what consideration the Government have given, not only since Grand Committee but before that, to the proposal that is so strongly supported by the United Kingdom Atomic Energy Authority police that they should be brought into line with the British Transport Police and the MoD with regard to both jurisdiction and collaborative agreements. Will the Government explain why they have decided to turn against that proposal? I beg to move.
Lord Bradshaw: My Lords, I support the sentiments of the noble Baroness, Lady Anelay of St John. On these Benches, we expect every police force to adhere to the same standards in respect of jurisdiction, training, uniform and equipment as any other police force. The noble Baroness made a very good point when she said that when people see a constable in a uniform that is the same apart from cap badges and buttons, which people in a fracas probably do not study in great detail, they will expect the same service. To the extent that the Government are sheltering behind the fact that these people are not properly trained, equipped or uniformed, the regulations need to be changed. I believe we should seek absolute uniformity so that the public can expect a uniform service. I accept that the UKAEA Constabulary and the British Transport Police are specialised police forces, but nonetheless, when they are off their sites or are dealing with matters adjacent to their sites, people will expect them to behave in the same way as any other police force.
Baroness Byford: My Lords, I rise to support my noble friend's amendment. I was lucky enough to be with her when we met the UKAEA Police Federation, which feels strongly that the Government have got it
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wrong. I shall be interested to hear the Minister's answers to some of the questions posed by my noble friend.
I shall give one or two examples of matters that we would like clarified. My understanding from the UKAEA Police Federation was that the UK AEA Constabulary operates on UKAEA sites and has full control of what goes on within them. But what happens if UKAEA police are escorting somebody from one point to another, which takes them outside their boundary, and they come across a road accident? Are they supposed to go by that road accident without stopping and helping? Members of the general public would be appalled if there was somebody in uniform who they expected could give some help but who, under the Bill, was not allowed to do so. The UKAEA Police Federation gave other examples but that is one I would like the Minister to address. There is a difference between the role of the UK AEA Constabulary within its area and outside it and it is the role outside it that raises questions.
I also wish to underline what my noble friend said and ask when it was decided not to treat the UKAEA Constabulary in the same way as the other examples that have been given tonight: MoD Police, the British Transport Police, the Civil Nuclear Constabulary and the ordinary police forces? At some stage somebody must have made a conscious decision. If not, is it an oversight? It could be. That is something about this stage of a Bill. We can pose questions and often the Government say that something was an oversight, that they had not thought in that way.
My next question then follows: if the UKAEA Constabulary are not to be included, does the Minister accept that UKAEA police might find themselves restrained from giving help to the general public when it would be in everybody's interest that they should be allowed to do so? I suspect that they would refrain from helping because they would not be covered by insurance because they were technically beyond their boundaries. It is something that it is important to understand.
The noble Lord, Lord Bradshaw, raised the question of why we should not have the same standards for all these forces. It is hugely important. Members of the general public do not have regard for whether a policeman is in the MoD Police or the British Transport Police. Certainly, when I have travelled on trains there have been British Transport Police constables and I have been truly thankful that they were there. I have never doubted that they were not in their jurisdiction. Yet with the Bill, the situation is different: the UKAEA Constabulary cannot be included.
I pose those four specific questions but the one I have tried to make a little wider than my noble friend did in her introduction is what happens when U KA EA police are doing escort work or work that takes them outside their perimeters. What is their legal liability if they go to help somebody? I am sure that in some cases they would be asked to do so. It seems to us to be

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slightly strange that this decision has been arrived at without any explanation being given either to this House or to the UKAEA Constabulary.
Baroness Carnegy of Lour: My Lords, I hope that when the Minister replies he will not spend all his time criticising the wording of these amendments, because what is really important is what they say. He looks very hurt at that suggestion, but sometimes that happens and it is a way out for Ministers sometimes.
What matters is what these amendments suggest—from two points of view: first, because the police want to be able to do the job properly—both the ordinary local police forces and the future constabulary; secondly, because of the public perception which is extremely important in this instance. All the points have been made about why the police feel that they would do the job better if they could have collaborative agreements and jurisdiction that overlaps. The point has also been made about public perception. Whatever the reason for trying to create this separateness—and there is of course a distinction of function—it is probably counter-balanced by the disadvantages; and that is what we want to hear about.
I am sorry that we are doing this on Report because it would be nice to pick up on what the Minister says—once we have heard it. I do not know what he will say. This stage is a very bad way of legislating, but we cannot help that—those are our rules. I hope that the Minister will tell us why the Government take the position they do, whatever it is; and I hope that perhaps they are sympathetic to these amendments.
Lord Triesman: My Lords, I think that it is probably a very normal way of legislating. As I read the reports of debates on legislation and Committee stages in the other place, I frequently see processes which probably bear some reflection on this and probably reflect the fact that this legislation started in this House.
I will start with some general points rather than being tempted into criticising the wording of the amendments, which had not occurred to me until the suggestion was just made. The points made by the noble Baronesses, Lady Carnegy and Lady Byford, about the reasons why the legislation is framed in rather different terms here than happened with the Ministry of Defence Police and British Transport Police need immediate scene setting.
Legislation is very much a creature of its times. To be candid, when the legislation that established the MoD Police and the British Transport Police was drawn up, these questions were not raised. The legislation that created those forces was brought into law and no one raised the issue about whether there should be a very specific separation of functions and powers. That was not the way in which the debate was conducted at that time. This legislation, I suppose, has been constructed looking through the telescope from the other end, if I can put it that way. We started with the question: what should these functions be? and then tried to make sure we focused very precisely on that in order to make sure that the functions were
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precisely those that were required by this legislation. Therein lies the difference: it is more a matter of history than of anything else.
This group of amendments brings together a number of different themes in amendments concerning the jurisdiction and powers of the Civil Nuclear Constabulary. As I hope I tried to make as clear as I could in the debate in Grand Committee, the objective of the Government here is very precise: it is to create a civil nuclear constabulary which has the powers that it needs, and precisely the powers that it needs, to ensure that civil nuclear sites and materials are effectively safeguarded. That is the purpose; there is no other. I am sure that that objective at least has the support of the whole House. I shall come back to whether, in the course of their duties, people come across other kinds of incidents, but let us at least start by seeing whether we are agreed that that objective most certainly must be fulfilled.
I shall not take the amendments in the precise order that they were put to me. I should like to try to get a whole picture by taking your Lordships through the amendments in an order that seems rational to me.
Amendment No. 159 duplicates provisions already in Schedule 14 (paragraphs 1 and 5) to the Bill, which will enable the constabulary to enter into collaborative agreements with other police forces, both in England and Wales and in Scotland—right across the whole of Great Britain. I believe that was one of the first assurances that I was asked to give—that the collaborative arrangements would certainly be in place. There are, of course, at present a number of similar operational arrangements between the constabulary serving the UKAEA and other police forces. There is a close relationship with local forces with which that specialist force needs to interact. Formal relationships are set out in the national policing protocol that forms the basis of the detailed operational memorandum of understanding between the relevant local forces. I assure noble Lords that those agreements and those arrangements will continue. The national policing protocol sets out the overall approach to policing and the responsibilities and obligations of the constabulary and the regional forces supplemented by detailed agreements between chief constables in the regions where the constabulary polices nuclear sites. In that sense we see this provision as carrying real continuity into the future arrangements.
As I have said, there are a number of detailed provisions regarding entering into collaborative agreements. The provisions achieve this effect by making appropriate amendments to Section 23 of the Police Act 1996 and to Section 12 of the Police (Scotland) Act 1967, both of which deal with collaboration agreements, to ensure that the constabulary is also covered by those provisions. For those reasons I suggest that the amendment is not necessary.
Let me dwell for a moment on the jurisdiction and powers of the constabulary. Given its role in protecting civil nuclear sites and material, it is obviously vitally important that we get the jurisdiction and powers available to officers of the Civil Nuclear Constabulary absolutely right for that task. I therefore very much

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welcome the attention that is being given to this part of the Bill. The jurisdiction in the Bill is based on that of the present UKAEA Constabulary (set out in Section 76 of the Anti-terrorism, Crime and Security Act 2001), and the Government believe that this core jurisdiction, as set out in Clause 52, is what is required to allow the constabulary to undertake its nuclear security function.
For clarity and to make sure that we get the issues of jurisdiction powers absolutely right, the provisions cover the following places in Great Britain: civil licensed nuclear sites and the area within five kilometres of those sites—the reason for the five kilometres was discussed in considerable detail in Committee—any transhipment site at which the constabulary needs to protect nuclear material while it is al the site—that adds to the diversity and the scope—and anywhere the constabulary needs to be in order to protect nuclear material in transit which, of course, could cover very wide areas of Great Britain—and to pursue or detain a person reasonably believed to have unlawfully removed or interfered with nuclear material being safeguarded by the constabulary, or to have attempted to do so. That could take a constable in this domain anywhere. These provisions are broad in scope.
Amendments Nos. 154, 155 and 157 seek to clarify that further by making it more apparent that those categories—the protection of nuclear material in transit and the pursuit or detention of people who are believed to have removed material, or attempted to do so—apply irrespective of how far those places are from a licensed nuclear site. The advice that I have received is that the Bill is already sufficiently clear on that point and the addition of the words in these amendments would have no substantive effect on those points in terms of the scope of the jurisdiction of the constabulary. For those reasons I hope that they will be withdrawn.
I turn briefly to one or two points that have been made, understandably, about what a constable in uniform will do when he appears at a non-nuclear incident and where the public may reasonably expect that he could intervene to helpful effect. I suppose it goes without saying that any constable, just like any other citizen in those circumstances, would be entitled to intervene using citizens' powers. I suspect some authority would be conveyed by the appearance of constables in those circumstances. In considering the exercise of powers across Great Britain, and allowing for the fact that people would be able to pursue and detain anyone who stole or interfered with materials that are being safeguarded, there is no doubt in our minds that such occasions may occur. We see no reason why people should not be able to intervene. We would expect any citizen to be able to intervene because, as citizens, people are in a position to do so. The Bill provides for that and for the mobility point that I have already made.
These amendments extend the jurisdiction to anywhere in Great Britain as long as the exercise of the police powers is outside the constabulary's core jurisdiction which is in connection with the safeguarding of nuclear materials. I know that the UKAEA Police
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Federation has been arguing strongly for the same emergency and assistance powers available to the MoD Police and British Transport Police. They are subject to Amendment No. 160 and allow officers of those forces to intervene in certain circumstances with police powers outside their usual jurisdictions. The Government, together with the Home Office, have considered that very carefully. The extension of those powers to the Civil Nuclear Constabulary—especially as we expect there to be very few incidents and a relatively limited role for the constabulary in policing the public—suggest to us that such a clause would not be justified on the face of the Bill.
While we know that there has been support in some circles for the proposition, there is not widespread support for the proposition from the Association of Chief Police Officers. It is not at all clear that such a proposition would be welcomed by all bodies involved in public policing. A full consultation would be required. That situation is bound to be kept under review while those with authoritative voices conclude that these powers are not adequate. However we should not draw the conclusion that there is widespread support for such a change.
I now turn to Amendments Nos. 156 and 158. It has become apparent that the constabulary may occasionally have to exercise police powers or privileges outside its core jurisdiction in order to exercise police powers within that core jurisdiction—that is the point to which I have referred—or for purposes connected with that core jurisdiction. An example might be an application for a search warrant for a place within the core jurisdiction that has to be made at a place outside the core jurisdiction, or where the constabulary is escorting someone it has arrested within its core jurisdiction to a police station located outside its core jurisdiction.
Amendment No. 158 and the consequential Amendment No. 156 address that problem. They would also allow constabulary officers to pursue throughout Great Britain anyone who commits a crime within their core jurisdiction. This would allow, for example, a member of the constabulary who, while undertaking his nuclear security duties comes across a general crime incident occurring within his core jurisdiction, to pursue the offender until such time as control can pass to the local force. But it must be desirable and we would normally expect those requirements to go to the local force so that it could do the work for which it is best trained and is most expert.
While there may be occasions when the constabulary's role in protecting civil nuclear sites and materials in transit means that it might become involved in public policing, that is not the constabulary's role and it is not resourced to become involved in such matters except on an exceptional basis. Amendments Nos. 156 and 158 allow for such exceptions.
Amendment No. 160 would take that flexibility further. It would allow the constabulary to exercise police powers outside its Clause 52 jurisdiction, for the purpose of providing assistance to other police forces which they have requested or required in certain emergency situations. As noble Lords may be aware, such powers are available to officers of the Ministry of Defence Police and the British Transport Police.

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The BTP and the MoD police have such powers for two reasons. First, they are regularly policing the general public and have developed a level of expertise in dealing with the public across a wide range of incidents and circumstances. Secondly, it has been established that the number of situations that have arisen which would require the use of those extended powers justifies their being available in those circumstances, and none of that is true of the UKAEA Constabulary. The operational duties of the constabulary mean it will have much less experience in public policing than either of those other forces.
The Government are concerned that the constabulary should not have powers until there is an established operational need—that is the criterion—and constabulary officers will not be in a position regularly to exercise such powers. It is a small constabulary and reacting to circumstances and demands from other forces might also divert it from the core tasks of protecting civil nuclear sites and materials. Any significant level of assistance would seriously weaken its ability to carry out its nuclear security role and that would be unacceptable.
The Government are prepared to keep the matter under review, but at this stage they are not prepared to accept the extensions that have been suggested and I trust that the amendment will be withdrawn.
9 p.m.
Baroness Byford: My Lords, I seek clarification from the Minister before he sits down. He said that he could not imagine many instances when the new police force might come into contact with the public or might be needed. He has said that the force would have the same powers as any civil person. I do not believe that my noble friend Lady Anelay and I did not accept that. I asked him about liability. For example, if the force helps at an incident and something goes wrong—as can happen—is it covered under its own existing framework, or, because it is acting outside that framework, is there a liability if anything goes wrong and who bears it? If the force is not covered in those circumstances, surely it is much less likely to be willing to become involved in something that is beyond its brief?
Lord Triesman: My Lords, I wish I could give a simple answer. I cannot do that—not because I wish to evade the question, but because the number of possible circumstances is huge and the extent of liability would reflect those circumstances. It is the case with police forces now that there are some areas where there are outcomes of actions that are covered and some that are not, depending on the level of responsibility in any situation. But I am willing to ensure that I can answer her question as precisely as I can, despite the diversity of such circumstances and I shall write to the noble Baroness with further indications. I hope that it will not be an overly long and complex letter when it arrives, but we can imagine many such circumstances. They potentially range from the police making a simple mistake to driving so fast and recklessly in
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pursuit of someone, that any injuries would carry a liability, because no reasonable person would have done that. I use those examples purely for illustration.
Baroness Anelay of St Johns: My Lords, I am grateful to the Minister for the care and attention he has taken in answering questions on this complex issue. It is very dear to the heart of the Police Federation both in its current form and when translated into the new one and is an issue I take extremely seriously. This is a body that is trying its very best to act in the best interests of the public, not just for the businesses it is protecting.
I am grateful for the Minister's further clarification on the three amendments I brought back from Grand Committee. He has made the Government's current position clearer. I accept the government amendments. They improve the Government's position, but not enough. However, they are still stuck in the same mindset. The Government's overall approach to my amendments seems to be, "Yes, we know we've done this to other police, MoD and British Transport Police, but we don't want to start from there." Well, we are there. We have now got a police force that will have to continue to deal with emergencies.
I certainly shall not refer to every point, but there are a couple of issues that really jump out of the page. First, the Government are saying the responsible constables in the new civil nuclear police can act as any other responsible citizen may do when faced with an emergency. Indeed they may. The constables are saying that they not only want to react, they want to have the authority to be able to react in a proper capacity as the public expect. They are faced with the difficulty of a private citizen making a citizen's arrest. That is not the same as a police arrest. If you are a policeman carrying out an arrest acting in your capacity as a constable and you are assaulted by the person whom you attempt to detain, that person could be charged with assault on a police officer. As the Minister will know, according to magistrates' guidelines that offence carries a higher starting point in sentencing terms. It is seen as a more serious crime. That is taken seriously by those who think to take a swing at a police officer. Those people may not have the same reserve when it comes to someone they think is not a police officer.
There is the other issue that my noble friend Lady Byford raised. If these constables act in a way that they consider to be proper and responsible, they might find themselves faced with a claim for compensation for any assault they carry out. They are acting in a private capacity, which puts a heavy responsibility on them when they are seen by everyone around them as being the person in authority.
The other issue that jumps out of the page is that of the Government saying that it is not needed because it will not happen. We need to consider this further. The Minister said that he will keep this matter under review. This is the Government saying, "Don't do it now, but we'll think about it." Well, that may never come to pass. Accidents may happen in the mean time. We are being told that there will be few incidents and therefore it is not justified and we need consultation

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first. But the Government have had the chance to carry out consultation. They knew that this was of particular concern to this constabulary. The Government say that there will be few incidents but we simply do not know what the future may hold.
The Minister's parting shot is to tell me that this constabulary is different from the British Transport Police and the MoD because those two forces are regularly policing the public. Well, this member of the public has not been regularly policed by the MoD in 50-something years. I shall say no more than that. I do not accept the force of the argument that the Minister has sought valiantly to make today. I do not mean to be condescending but he has tried to throw every missile at me he could. However, I can tell him that with the support of the United Kingdom Atomic Energy Authority Police behind me, he has missed every single time.
On this occasion, I give notice that although I shall beg leave to withdraw the first amendment in the group, when Amendment No. 160 is called I shall seek to test the opinion of the House.
Amendment, by leave, withdrawn.
[Amendment No. 155 not moved.]
Lord Triesman Lord Triesman moved Amendment No. 156:
Page 43, line 25, leave out "also"
[Amendment No. 157 not moved.]
Lord Triesman Lord Triesman moved Amendment No. 158:
Page 43, line 30, at end insert—
"( ) A member of the Constabulary shall have the powers and privileges of a constable throughout Great Britain for purposes connected with—

(a) a place mentioned in subsections (1) to (4);

(b) anything that he or another member of the Constabulary is proposing to do, or has done, at such a place; or

(c) anything which he reasonably believes to have been done, or to be likely to be done, by another person at or in relation to such a place."

[Amendment No. 159 not moved.]
Baroness Anelay of St Johns Baroness Anelay of St Johns moved Amendment No. 160:
After Clause 52, insert the following new clause—
"JURISDICTION OF CONSTABULARY IN ASSISTING OTHER FORCES
(1) Where a member of the Constabulary has been requested by a constable of—

(a) the police force for any police area,

(b) the Ministry of Defence Police, or

(c) the British Transport Police Force,

("the requesting force") to assist him in the execution of his duties in relation to a particular incident, investigation or operation, members of the Constabulary have for the purposes of that incident, investigation or operation the same powers and privileges as constables of the requesting force.
(2) Members of the Constabulary have in any police area the same powers and privileges as constables of the police force for that police area—
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(a) in relation to persons whom they suspect on reasonable grounds of having committed, being in the course of committing or being about to commit an offence; or

(b) if they believe on reasonable grounds that they need those powers and privileges in order to save life or to prevent or minimise personal injury.

(3) But members of the Constabulary have powers and privileges by virtue of subsection (2) only if—

(a) they are in uniform or have with them documentary evidence that they are members of that Constabulary, and

(b) they believe on reasonable grounds that a power of a constable which they would not have apart from that subsection ought to be exercised and that, if it cannot be exercised until they secure the attendance of or a request under subsection (1) by a constable who has it, the purpose for which they believe it ought to be exercised will be frustrated or seriously prejudiced.

(4) In this section—
"British Transport Police Force" means the constables appointed under section 53 of the British Transport Commission Act 1949 (c.xxix) (as to appointment of constables)."
The noble Baroness said: My Lords, I beg to move Amendment No. 160 and I wish to test the opinion of the House.
9.11 p.m.
On Question, Whether the said amendment (No. 160) shall be agreed to?
Their Lordships divided: Contents, 35: Not-Contents, 43.

Division No. 3

CONTENTS

Addington, L.

Hooson, L.

Anelay of St Johns, B.

Jenkin of Roding, L.

Astor of Hever, L.

Jopling, L.

Attlee, E.[Teller]

Knight of Collingtree, B.

Barker, B.

Lamont of Lerwick, L.

Bradshaw, L.

Livsey of Talgarth, L

Bridgeman, V.

Lyell, L.

Mackie of Benshie, L.

Brooke of Sutton Mandeville, L.

Maddock, B.

Brougham and Vaux, L.

Masham of Ilton, B.

Byford, B.

Miller of Chilthorne Domer, B.

Caithness, E.

Miller of Hendon, B.

Carnegy of Lour, B.

Palmer, L.

Courtown, E. [Teller]

Park of Monmouth, B.

Fookes, B.

Rennard, L.

Gray of Contin, L.

Roper, L.

Greenway, L.

Shutt of Greetland, L.

Higgins, L.

Windlesham, L.

NOT-CONTENTS

Ahmed, L.

Dixon, L.

Andrews, B.

Evans of Parkside, L.

Bassam of Brighton, L.

Evans of Temple Guiting, L.

Bernstein of Craigweil, L.

Farrington of Ribbleton, B.

Brooke of Alverthorpe, L.

Gale, B.

Campbell-Savours, L.

Graham of Edmonton, L.

Carter, L.

Grocott, L. [Teller]

Chandos, V.

Hollis of Heigham, B.

Clark of Windermere, L.

Hughes of Woodside, L.

Crawley, B.

Hunt of Kings Heath, L.

Davies of Coity, L.

Jones, L.

Davies of Oldham, L. [Teller]

Jordan, L.

Dean of Thornton-le-Fylde, B.

Levy, L.

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Lockwood, B.

Sawyer, L.

Lofthouse of Pontefract, L.

Smith of Leigh, L.

Macdonald of Tradeston, L.

Stone of Blackheath, L.

McIntosh of Hudnall, B.

MacKenzie of Culkein, L.

Triesman, L.

Morgan, L.

Warner, L.

Ramsay of Cartvale, B.

Warwick of Undercliffe, B.

Rogan, L.

Whitty, L.

Rooker, L.

Winston, L.

Resolved in the negative, and amendment disagreed to accordingly.

9.21 p.m.
Clause 54 [Government, administration and conditions of service]:
Baroness Anelay of St Johns Baroness Anelay of St Johns moved Amendment No. 161:
Page 45, line 7, at end insert—
"(d) such other persons as appear to the Authority to represent the employees of the Authority"
The noble Baroness said: My Lords, in moving Amendment No. 161, I shall speak also to Amendment No. 162, both of which are in my name and are supported by the noble Lord, Lord Bradshaw.
I can deal briefly with the subject matter of this small group of amendments. Their purpose is to ask the Government to place on the record their view of the pay and conditions that should be enjoyed by the Civil Nuclear Constabulary. By that, I do not mean only the uniformed constabulary; here, I am asking specifically about the civilians—that is, the non-constable staff. The UKAEA Police asked me to make that point. Will there be comparability with the MoD? Also, will the Minister explain what the pay and conditions will be during the transitional period and how they will be determined? I beg to move.
Lord Triesman: My Lords, this group concerns the conditions of service of members of the constabulary and the civilian support staff. Clause 54 places a statutory obligation on the new police authority to ensure that, where it makes provision about conditions of service of the constabulary and the provision relates to matters dealt with by regulations made under Section 50 of the Police Act 1996, the provision made by the police authority will differ from the regulations only in so far as it is necessary to reflect the circumstances and structure of the constabulary.
That obligation applies only in relation to the police officers of the constabulary and not to the civilian employees, as civilians are not subject to the Section 50 regulations of the Police Act 1996. The clause therefore contains an obligation on the police authority to consult the Police Federation and any relevant rank-related association approved under Clause 61 before making provision about the conditions of service of the police officers of the constabulary. I believe that that was broadly the statement that I made in Grand Committee. That is the full extent of the bodies that will be able to represent the officers of the constabulary.
The effect of Amendment No. 161 would be to extend the obligation to consult other representative bodies; namely, those representing civilian employees
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of the police authority, whose members could not be affected by the provision that the police authority was proposing to make in connection with the underlying Police Act regulations.
The Government have also given a clear commitment that staff terms and conditions will be fully protected on the transfer of members of the UKAEA Constabulary and the civilian support staff from UKAEA to the Civil Nuclear Police Authority in accordance with the requirements of TUPE. I repeat that commitment here and do so unequivocally.
The transferred employees will also continue to be eligible for membership of the UKAEA pension scheme. The transfer arrangements that will apply to the constabulary are set out in Clause 66 and Chapter 2 of Part 1 of the Bill. Paragraph 10 of Schedule 5 gives legal effect to the TUPE undertaking, which I have just given your Lordships.
I hope that that explanation demonstrates that the Bill already deals adequately with the intent behind the amendments and that the noble Baroness will feel that the amendment can safely be withdrawn.
Baroness Anelay of St Johns: My Lords, I am grateful to the Minister. There is a difference in approach between how civilian staff in the constabulary are to be treated. He is right to trace that back to the different source in legislation for that treatment. I am grateful for the explanation he has further put on the record today. I shall go back to the UKAEA police and ask whether they are satisfied with the commitments the Minister gave today and whether they feel that they have properly covered their concerns. If I am requested by them to bring the matter back, that may be by way of correspondence rather than by amendment. At this stage, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 162 not moved.]
Clause 58 [Inspection]:
Baroness Anelay of St Johns Baroness Anelay of St Johns moved Amendment No. 163:
Page 46, line 15, leave out "from time to time" and insert "at least once every three years"
The noble Baroness said: My Lords, we now turn to the issue of the inspection of the new constabulary. We discussed this matter in Grand Committee on 27 January at cols. 125 to 128, so I shall be relatively brief.
At present the UKAEA Constabulary is subject to a voluntary inspection by Her Majesty's Inspectors of Constabulary. Clause 58 puts that on a mandatory statutory basis. Subsection (1) provides that HMIC,
"must inspect the Constabulary from time to time".
My amendment would introduce a minimum requirement of an inspection at least every three years. I think that that is advisable from the point of view of good practice. It does not prevent HMIC carrying out an inspection more frequently—that could be its decision. However, it does prevent it going outwith the three years.
The amendment does not prevent HMIC doing what the Minister claimed in Grand Committee at col. 126 it would do; that is, move to a system of baseline assessments. I do not think my amendment stops HMIC doing that. It can still have a system of baseline assessments within the required three years for a statutory full inspection.
My amendment would not prevent the new constabulary establishing its own programme and using its own professional judgment in setting up systems that prepare it effectively and efficiently in readiness for an HMIC inspection. I do not think that my amendment is overly restrictive; it simply provides the legislative backstop for good practice. I know that earlier the Government did not like my move to good practice being required in the Bill. However, I hope on this occasion they might have changed their mind. I beg to move.
Lord Bradshaw: My Lords, I believe that the amendment is particularly important. To some extent it is unfortunate that we live in times which are changing very rapidly and when the Government are heaping legislation on police authorities, setting up new bodies and a new independent complaints authority, and when new targets, new best-value regimes and new training regimes are being imposed on them. I cannot envisage a period of longer than three years passing without the need for a full inspection. I am sure that this police authority, which is well hidden from public view, merits as does any other police authority, regular, thematic inspection. The amendment has great validity. I almost defy the Minister to tell us why it should go longer than three years without being subjected to an HMIC inspection.
9.30 p.m.
Baroness Byford: My Lords, I rise to support my noble friend's amendment. I think that, as the noble Lord, Lord Bradshaw, has just said, this is a very important amendment. I should like to press the Minister a little more. Perhaps he would like to have a go at describing the phrase "from time to time". It is rather like "shortly" or "very soon". However, we shall listen with interest to what the noble Lord has to say.
The Government have used the phrase "from time to time". Have they considered and dismissed any other time period, or have they not considered in the first instance giving some guidance as to what that time lag might be? My noble friend has spoken to her amendment so I shall not enlarge upon it, but I wanted to seek greater clarification on those two issues.
Lord Triesman: My Lords, I am the first to agree that this is an important area. The noble Baronesses, Lady Anelay and Lady Byford, and the noble Lord, Lord Bradshaw, made that point with great force. I can assure noble Lords that I accept it. Inspection is plainly important and a good inspection regime in the Civil Nuclear Constabulary is certainly in the forefront of importance.
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I do not know that I shall have a huge amount to add to what was said in the discussion about the identical amendment tabled by the noble Baroness, Lady Anelay, in Grand Committee. But I hope I can say with some clarity what I believe the inspection regime will be like.
The UKAEA constabulary is currently the subject of voluntary inspections by Her Majesty's Inspector of Constabulary, as several noble Lords have pointed out. This takes place about every three years. I repeat that: it takes place about every three years. Clause 58 rightly puts these inspection arrangements on a mandatory, statutory footing for the first time. In doing so, it follows the precedent of the Police Act 1996, the Ministry of Defence Police Act 1987 and the Railways and Transport Safety Act 2003, which established the British Transport Police. None of these Acts sought to constrain Her Majesty's Inspector of Constabulary in deciding the frequency of its inspections of a particular force. Specifying a minimum period in legislation for the Civil Nuclear Constabulary, which does not apply to any of the other 43 police forces inspected by HMIC, seems probably rather restrictive by comparison with them.
If it were true, as was argued during Committee, that this amendment would help ensure the new constabulary got off to the best possible start, it would be hard not to have sympathy for the amendment. But it is at odds with the actual circumstances where the constabulary, whose functions and role is not changing significantly as a result of the Bill, has already been subject to regular HMIC inspections over many years. That brings us to how inspections are likely to take place in the future and what might be meant by "from time to time" in these particular circumstances—words which, it is quite true, probably defy any kind of dictionary definition. If that is the point the noble Baroness, Lady Byford, was making, I shall of course agree with her.
I understand—and I can see great strength in this—that Her Majesty's inspectors are currently in the process of moving, and with some vigour, to a system of assessments which are based on risk. These are the thematic kinds of inspection that we want. There are some activities probably in every police force which do not change dramatically or pose any very considerable risk, and probably can be looked at so long as you are convinced of a strong audit system within that force periodically without much fear of consequences. There are some activities which I would venture to suggest go very much beyond that and where everyone would want to be certain, because of the nature of the risks involved, that inspection was more frequent, went into matters more thoroughly and did not rely, for example, entirely on there being an appropriate internal audit system, much as that would be desired.
So, in these cases where the risks are higher, where the assessment based on risk is more telling, the inspections of these forces' performance need attention far more frequently than those which do not. In that sense, the noble Baroness, Lady Anelay of St Johns, is right: her amendment is not incompatible with the change that I described, and I do not suggest that it is.

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None the less, there is a need to give Her Majesty's inspectors flexibility in the approach that they take to the task that they have been given. That will be a significant encouragement to them. In short, we are looking for something that is highly effective, which is why this is an important area to debate; but it must also be proportionate, must not become an end in itself and must not distract everybody from their other duties. It must be done properly and be relevant. Doing the inspections in terms of an assessment of risks is a relevant process.
Clause 58(2) also gives the Secretary of State the power to require an inspection. It provides the necessary fallback, should it be necessary to require an inspection to be undertaken at any time. The Secretary of State would have to pay close attention to whether it was desirable or necessary and take the right action, should the judgment be made that it was necessary.
It is on that basis that I ask that the amendment be withdrawn. That is not to diminish the importance of the issue, but the arguments about the assessment of risk, proportionality and relevance should give the best guidance to all of us.
The Earl of Caithness: My Lords, having listened to what the Minister said, I feel that his arguments on the amendment are exactly the same as those adduced by my noble friends Lady Anelay of St Johns and Lady Byford on Amendment No. 160. The noble Lord has just said that he was using the precedents of the Ministry of Defence Police Act 1987 and the Railways and Transport Safety Act 2003 and that he wanted a flexibility of approach. That is exactly what my noble friends argued on Amendment No. 160, when the noble Lord said, "No. We're not going to have it".
Lord Triesman: My Lords, I am delighted that the noble Earl has given me the opportunity to respond to that. The inspectorate is entirely different: it is an independent body, not one of the police forces. It inspects the police forces, and its independence is cardinal to the process in which it engages. That is why it is important to be supportive of its general judgment about frequency, assessment of risk—noble Lords will forgive me for repeating the point—and the processes that should be used. We have a first-class, independent system at work, and it would be as well to let it do its work and make those judgments.
Lord Bradshaw: My Lords, that was a poor answer. We need assurance that the force will be inspected. It is hidden away in the sort of place that may not get the full light of the public inspection that police authorities receive. If that is the best answer that the Minister can give—I shall study his reply closely—I may return to the issue at Third Reading.
Baroness Anelay of St Johns: My Lords, the Minister has clarified what he said previously but has not diverted from his position. He said that HMIC could carry out a thematic review or risk calculation.
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He acknowledged that that system was not incompatible with what I propose. Indeed, I do not see how it could be. One can have a thematic review or risk assessment when one needs to carry out an investigation, but it can be done more often than every three years. Three years is not a straitjacket that does not fit; the assessment can be done more often than every three years. I do not think that there is a problem there.
The Minister responded to the question raised by my noble friend Lord Caithness about how the Government seemed to want to have it both ways. They would not accept Amendment No. 160, but they are adducing the same arguments now. The Minister said that it was different—different legislation, different organisation and an independent body. But the principle is the same. My noble friend is right. The Minister is saying that the Government cannot accept three years as the minimum period for an inspection because it does not apply to the other 43 police forces. He says that we must treat them all the same. The trouble is that, in other cases, the Government do not try to treat all forces the same. I do not think that the Minister is right.
The Government cannot have it both ways. It is right to have an inspection at least every three years in the interests of good practice. I wish to test the opinion of the House.
9.40 p.m.
On Question, Whether the said amendment (No. 163) shall be agreed to?
Their Lordships divided: Contents, 27; Not-Contents, 42.

Division No. 4

CONTENTS

Anelay of St Johns, B.

Higgins, L.

Astor of Hever, L.

Hooson, L.

Attlee, E. [Teller]

Jenkin of Roding, L.

Bradshaw, L.

Knight of Collingtree, B.

Bridgeman, V.

Liverpool, E.

Lyell, L.

Brooke of Sutton Mandeville, L.

Mackie of Benshie, L.

Byford, B.

Maddock, B.

Caithness, E.

Miller of Chilthorne Domer, B.

Carnegy of Lour, B.

Miller of Hendon, B.

Cope of Berkeley, L. [Teller]

Palmer, L.

Courtown, E.

Roper, L.

Gray of Contin, L.

Shutt of Greetland, L.

Greenway, L.

Steel of Aikwood, L.

NOT-CONTENTS

Ahmed, L.

Dean of Thornton-le-Fylde, B.

Andrews, B.

Dixon, L.

Bassam of Brighton, L.

Evans of Parkside, L.

Bernstein of Craigweil, L.

Evans of Temple Guiting, L.

Brooke of Alverthorpe, L.

Farrington of Ribbleton, B.

Campbell-Savours, L.

Gale, B.

Carter, L.

Graham of Edmonton, L.

Chandos, V.

Grocott, L. [Teller]

Clark of Windermere, L.

Hollis of Heigham, B.

Crawley, B.

Hughes of Woodside, L.

Davies of Coity, L.

Hunt of Kings Heath, L.

Davies of Oldham, L. [Teller]

Jones, L.

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Jordan, L.

Rooker, L.

Levy, L.

Sawyer, L.

Lockwood. B.

Smith of Leigh, L.

Lofthouse of Pontefract, L.

Stone of Blackheath, L.

Macdonald of Tradeston, L.

Triesman, L.

McIntosh of Hudnall, B.

Turnberg, L.

MacKenzie of Culkein, L.

Warner, L.

Morgan, L.

Warwick of Undercliffe, B.

Ramsay of Cartvale, B.

Whitty, L.

On Question, Amendment No. 171 agreed to.

9.49 p.m.
Clause 59 [Supervision by Secretary of State]:
Baroness Anelay of St Johns Baroness Anelay of St Johns moved Amendment No. 164:
Page 47, line 13, at end insert—
"(2A) Before exercising his powers under this Chapter, in Scotland the Secretary of State shall consult the Lord Advocate."
The noble Baroness said: My Lords, in moving Amendment No. 164, I shall speak to Amendments Nos. 165 to 167. I have tabled the amendment to invite the Minister to put on record the progress made by the Government since Grand Committee on a matter raised at Clause 59 stand part, at col. GC 128, by my noble friend Lady Carnegy of Lour. It may be that the Minister has written to the noble Baroness on this point, but since I have not received a copy of such a letter, and knowing that the DTI tries to keep all noble Lords who take part in debates informed of further progress, I assume that there is no copy in the Library of the House. Therefore, I thought it was right to ask the Government to put the response on the record.
My noble friend asked the Minister whether he was content that Clause 59, which relates to the Secretary of State's supervision of the nuclear police, should not include the consultation or involvement of the Lord Advocate, to whom the police answer in Scotland. In the case of the inspectorate, Her Majesty's Inspector will consult Scottish inspectors before undertaking any inspections related to Scotland.
Clause 59 lists the ways in which the Secretary of State will supervise the nuclear police. The Minister said at Grand Committee that there would be some interaction with local police and local people. However, the Secretary of State for Trade and Industry will direct the police in Scotland without reference to the person who has responsibility for them—the Lord Advocate. My noble friend pointed out that there could be an occasion when the Scottish Parliament might have a different political complexion from the Westminster Government. The Minister undertook to consider whether the Government needed to do anything to ensure that the Scottish authorities were informed. What progress has he made in that undertaking?
Amendments Nos. 165 to 167 are probing amendments to ask the Minister to clarify the Secretary of State's intention with regard to setting
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guidelines and procedures and to explain how the process is complemented by the role of the Office for Civil Nuclear Security. I beg to move.
Baroness Carnegy of Lour: My Lords, it will be very interesting to hear what the Minister has to say about this matter. He said earlier that the Scots Parliament had been consulted and had been quite happy about the Bill. That was when the Parliament considered originally whether it was happy that the part of the Bill relating to the relevant functions should be taken at Westminster, and that it should have a Sewel Motion. In doing that, the Parliament does not consider the detail of the Bill but gets a general picture, and agrees on it.
The amendment is important. I do not know whether, if the amendment was made, the Lord Advocate or the Scottish Ministers or both would be involved. The Scottish police are answerable for their operations to the Lord Advocate, but their pay and conditions of service are a matter for Scottish Ministers. It might be both—but my noble friend's point is to ask the Minister where we are on this matter.
Lord Triesman: My Lords, I stress, as my noble friend Lord Whitty did during Committee stage, that the intention as far as possible is for the Civil Nuclear Police Authority to operate at an arm's length from government. Much as now, Ministers would not expect to interfere in the detailed affairs of the authority. That is precisely how we anticipate the process continuing. However, the Bill needs to provide for the intervention of Ministers, should circumstances require it.
Amendment No. 164 requires the Secretary of State to consult the Lord Advocate before exercising her constabulary-related powers, such as issuing a direction to the Civil Nuclear Police Authority in relation to Scotland. As my noble friend Lord Whitty explained in responding to the noble Baroness, Lady Carnegy of Lour, when she raised the point during Grand Committee, the role of the Scottish Ministers here is very limited. The Civil Nuclear Constabulary and its police authority is part of the arrangements for ensuring the security of civil nuclear sites and materials, while the constabulary's jurisdiction extends of necessity into public areas. We discussed that only a short while ago in your Lordship's House. The constabulary has no general role in public policing.
The general proposition has been discussed with Scottish Ministers, and in my earlier answer I said that discussions had taken place with both Ministers and the Scottish Parliament. There are no objections: they are fully aware of the arrangements set out here, and are satisfied, if the Bill becomes law, that all the powers required are contained in it.
I said earlier, and I shall not make the point at any length, that nuclear security is a matter reserved to this Parliament and it is not appropriate for the Lord Advocate or other Scottish Ministers to be consulted formally about directions given to the Civil Nuclear Police Authority on such matters. In debating the Sewel Motion on the Energy Bill, the Scottish

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Parliament raised no concerns on the devolved parts. This reflects the fact that, even if it is not a matter for its jurisdiction, thorough conversation on such matters is prudent.
Amendments Nos. 165 and 166 together preclude the Secretary of State from issuing directions to the police authority under Paragraph 2(1) of Schedule 13 that would require the authority to reduce the quality of the services and tasks performed by the members of the constabulary. The Secretary of State is accountable to Parliament for the security of the civil nuclear industry. It is very unlikely that she would wish to do anything that interfered with the efficiency or the effectiveness of the constabulary. In any event, Clause 59(2) already places an obligation on the Secretary of State to exercise her powers to give such directions in a manner and to such extent as appears to her best calculated to promote the efficiency and effectiveness of the constabulary. With great respect, the amendment of the noble Baroness, Lady Anelay, does not add significantly to this general duty. Of course, if the Secretary of State were to exercise her powers in an unreasonable manner she would vulnerable to a judicial review challenge. I hope that noble Lords opposite will agree that in these circumstances the amendment is not necessary.
I turn to Amendment No. 167. Paragraph 2 of Schedule 13 provides for the Secretary of State to be able to direct the police authority on a wide range of matters relating to the activities of the constabulary. It is required principally to preserve the existing arrangements whereby the director of civil nuclear security, acting on the Secretary of State's behalf, specifies, and inspects compliance with, the security standards, guidelines and procedures to be followed by the UKAEA Constabulary. These are currently specified by the Secretary of State in directions made under Section 3 of the Atomic Energy Act 1954. The constabulary is a core component of defence-in-depth security arrangements regulated by the security professionals in the Office for Civil Nuclear Security responding to intelligence threat information.
It is not the intention to change these regulatory arrangements for what I hope noble Lords will agree are obvious reasons. The direction-making powers in this part of the Bill are therefore required to preserve the existing regulatory function. The Bill describes the scope of these powers comprehensively in Paragraph 2(1) of Schedule 13, but it is simply not possible, certainly not in this day and age, to anticipate every possible occasion when the director of civil nuclear security, acting on behalf of the Secretary of State, may have to take steps to ensure the efficient and effective operation of the constabulary.
The general power of paragraph 2(2) is required to give the Government sufficient leeway to act should such circumstances arise. I recognise that this is a fallback power. In this day and age, we need fallback powers because it is always difficult to see the full extent of what some of these risks may be. I know that your Lordships' House has been sensitive to these issues in a number of regards, particularly so in the
580
recent past. I hope, therefore, that the amendment can be withdrawn and it is felt that the arrangements that are currently in the legislation meet the absolutely proper concerns that have been expressed.
Baroness Anelay of St Johns: My Lords, I am grateful to the Minster for his reference to the Scottish issue and for making it clear that when these matters were discussed on the Sewel Motion there were no objections. I looked very carefully at my noble friend Lady Carnegy and I saw that she is content for that matter not to be pursued. I am also grateful to the Minister for his words with regard to the role of the Office for Civil Nuclear Security that clarified matters further. The final issue is that of Amendment No. 166, which was only a probing amendment, that tried to look at precautions to ensure that a government could not reduce the quality of service provided by the constabulary. I accept entirely what the Minister said. He pointed out that if the Secretary of State tried to do such a thing—tried to reduce the level of services—she might be subject to judicial review. No government like that, particularly not the Home Secretary when the Court of Appeal finds against him. But that is another matter.
I am reminded yet again of the domestic violence Bill and the fact that the Home Office was prepared to look more kindly on proposals to ensure that there were enshrined in that Bill commitments that services could not be reduced, but I entirely take the good will that was expressed by the Minister that this particular Secretary of State would not wish to reduce services. Of course, government reshuffles can happen during the summer months—we hope that any successor to the present Secretary of State would pursue the same good practice. But at this late stage, at this time of night, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
10 p.m.
Schedule 13 [Directions by Secretary of State about Constabulary]:
[Amendments Nos. 165 to 167 not moved.]
Schedule 14 [Minor amendments relating to Constabulary]:
Lord Whitty Lord Whitty moved Amendment No. 168:
Page 201, line 24, at end insert—
"Public Records Act 1958
A1 In paragraph 3 of Schedule 1 to the Public Records Act 1958 (c. 51) (administrative and departmental records of certain bodies to be public records), in Part 2 of the Table, at the appropriate place, insert—
"Civil Nuclear Police Authority.""
The noble Lord said: My Lords, this group of amendments is to ensure that relevant legislation that currently applies to the UKAEA will apply to the civil nuclear constabulary once it is formed. Amendments Nos. 168 and 169 deal with the Public Records Act and the Race Relations Act. Amendment No. 170 ensures that the civil nuclear constabulary is a public authority in the same way that the UKAEA is, and that

581
individuals designated are able to authorise directed surveillance on the use and conduct of covert human intelligence sources under Sections 28 and 29 of the Regulation of Investigatory Powers Act 2000. We recognise why that might be necessary in the nuclear field. The other two amendments are consequential. I beg to move.
Lord Whitty Lord Whitty moved Amendments Nos. 169 and 170:
Page 202, line 11, at end insert—
"Race Relations Act 1976
2A In Part 2 of Schedule 1A to the Race Relations Act 1976 (c. 74) (persons subjected after commencement of duties to general duties with respect to discrimination and equality), after the entry relating to the chief constable of the Ministry of Defence Police insert—
"The Civil Nuclear Police Authority.
The chief constable of the Civil Nuclear Constabulary.""
Page 203, line 7, at end insert—
"Regulation of Investigatory Powers Act 2000
5A (1) In section 46(3) of the Regulation of Investigatory Powers Act 2000 (c. 23) (persons in relation to whom authorisations may apply to any place in the United Kingdom), after paragraph (d) insert—
"(dza) the Civil Nuclear Constabulary;".
(2) In Part 1 of Schedule 1 to that Act (relevant authorities for the purposes of sections 28 and 29), for paragraph 1A substitute—
"1A The Civil Nuclear Constabulary.""
Lord Whitty Lord Whitty moved Amendment No. 171:
After Clause 75, insert the following new clause—
"ADDITIONAL FUNCTIONS OF UKAEA
(1) The functions of the UKAEA shall include—

(a) power to carry on such activities as they consider appropriate in connection with anything that the NDA has a responsibility for securing under this Part;

(b) power to enter into such arrangements with the NDA or any other person as they consider appropriate for that purpose; and

(c) power for that purpose to develop and commercially to exploit an expertise in relation to things in which the NDA requires an expertise for the purpose of carrying out its functions.

(2) In the case of responsibilities of the NDA in relation to an installation, site or facility it is immaterial for the purposes of subsection (1) that the UKAEA is not, for the purposes of Chapter 1 of this Part, the person with control of it.
(3) The functions of the UKAEA shall also include—

(a) power to manage and commercially to exploit any land or other property of theirs that is no longer required by them for or in connection with the carrying out of their other functions; and

(b) power to carry on a business of providing services for the administration of nuclear pension schemes.

(4) The UKAEA has power, for the purpose of carrying out its functions (whether conferred by this section or otherwise) to do all such things as appear to them to be likely to facilitate the exercise or performance of their powers and duties, or to be incidental to doing so.
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(5) The ways in which the UKAEA may carry out those functions include (by virtue of subsection (4)) carrying them out through subsidiaries and carrying them out in association with, or through arrangements with, other persons.
(6) Subsection (5) of section 7 (things in which the NDA requires an expertise) has effect for the purposes of this section as it has effect for the purposes of subsection (4) of that section.
(7) In this section "nuclear pension scheme" means a scheme that is a nuclear pension scheme for the purposes of Schedule 8."
The noble Lord said: My Lords, this group of amendments is to ensure that the UKAEA is properly equipped to operate in the post-NDA world of nuclear clean-up. Essentially the amendments do three things. First, they ensure that the UKAEA has the necessary powers to establish site licensee companies at all its sites, which includes the ability to set up contracts in relation to non-UKAEA sites. Secondly, they ensure that UKAEA is able to administer nuclear pension schemes other than its own UKAEA pensions scheme—that is partly to recognise the excellent reputation of the UKAEA's Thurso pensions office. Thirdly, they clarify the extent to which the UKAEA has powers to manage property that it owns. It needs to continue the excellent work of diversification on those sites which has already taken place.
Taken as a whole I am sure that the amendments will ensure that the UKAEA has the necessary statutory powers it needs to operate in the post-NDA situation. I beg to move.
Baroness Miller of Chilthorne Domer Baroness Miller of Chilthorne Domer moved, as an amendment to Amendment No. 171, Amendment No. 171A:
Line 20, leave out "pension schemes" and insert "or public sector pension schemes as may be directed by Ministers"
The noble Baroness said: My Lords, I speak to Amendment No. 171A in the name of the noble Lord, Lord Maclennan of Rogart. This is an amendment to find out from the Government whether the public sector pension schemes would be covered by the wording of those functions of the UKAEA in its power to carry on the business of providing services to the administration of nuclear pension schemes. I would be grateful if the Minister would say whether that would incorporate the public sector schemes mentioned in the amendment. I beg to move.
Lord Whitty: My Lords, in my earlier remarks I referred to the excellence of the UKAEA's Thurso pensions office. Clearly, the noble Lord, Lord Maclennan, is already well aware of that.
The amendment would take matters beyond what is currently provided in the Bill and perhaps would go beyond the strict provenance of the Bill itself. Nevertheless, in view of what I believe both the noble Lord, Lord Maclennan, and I recognise regarding the matter that we are discussing, we shall take away the measure to see whether we can amend the Bill to allow flexibility to consider other public sector schemes. Without giving an absolute commitment on that other than a commitment of intent, I hope that the noble

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Baroness will be prepared to withdraw the amendment. We shall probably return to the matter at Third Reading.
Baroness Miller of Chilthorne Domer: My Lords, on behalf of my noble friend Lord Maclennan, I am very grateful to the Minister. I beg leave to withdraw the amendment.
Amendment No. 171A, as an amendment to Amendment No. 171, by leave, withdrawn.
Lord Davies of Oldham: My Lords, I beg to move that further consideration on Report be now adjourned.
Moved accordingly, and, on Question, Motion agreed to.
House adjourned at six minutes past ten o'clock.