Sitting of 15 March 1993

Preamble
The House met at half-past Two o'clock
PRAYERS
[MADAM SPEAKER in the Chair]
Oral Answers to Questions
  SOCIAL SECURITY

    Private Pensions
    Mr. Dunn:To ask the Secretary of State for Social Security what were the number and percentage of individuals over official retirement age in receipt of one or more occupational or private pensions as at (a) 1 January 1978 and (b) 1 January 1993; and if he will make a statement.
    The Secretary of State for Social Security (Mr. Peter Lilley): The number of people receiving occupational pensions increased from approximately 3 million in 1979 to 4·5 million in 1989. That represents an increase, from a third to nearly one half of that age group in 10 years.
    Mr. Dunn: Will the Secretary of State please confirm that pensioners' average income from occupational pensions has nearly doubled since 1979? Is not that strong evidence of the Conservative party's determination to continue to improve the living standards of those who are retired?
    Mr. Lilley: My hon. Friend makes a powerful point. We have increased the number of people receiving occupational pensions and the size of the occupational
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    pensions that they receive. Overall, during the past decade or so in which we have been in power, we have increased the living standards of pensioners on average every year by more than they increased in the entire five years under the previous Labour Government.
    Mrs. Golding: The Minister is, as ever, concerned to speak about the haves, not the have nots. How many times does he need to be asked before he much gives needed help to the pensioners who are refused additional benefits because they receive only tiny occupational pensions? When will he speak about helping them? Would it not have been better to have used the £2,600 that it cost to install a satellite television in benefit offices in Nottingham to show golden oldie films to claimants, to help those pensioners who are in such desperate need?
    Mr. Lilley: My reference to the improvement in living standards of pensioners covered all categories of pensioners, not only those in receipt of an occupational pension, welcome though it is that now; among those reaching retirement, two thirds have occupational pensions. However, in addition, we have increased provision for the least well-off pensioners as I was able to confirm in the uprating statement last autumn. I confirmed that an £½billion was to be channelled to pensioners through the pensioners' premium on income support, which was additional to the increase to compensate for inflation.
    The hon. Lady may not want appropriate facilities in our benefit offices, but I believe that they should be good and appropriate to the needs of claimants.
    Mr. Jenkin: Does my right hon. Friend agree that the worst possible pensions policy, which seems to be advoated or toyed with by the Labour party's social justice commission, would be to means-test the state pension while at the same time do nothing to encourage—or perhaps even discouraging—the alternative methods of private pensions provision?
    Mr. Lilley: My hon. Friend is correct. There is an extraordinary new twist to the Labour party's policy. In the past, it undermined pensions by allowing inflation to

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    be rampant and now it appears that it is to consider means-testing pensions while, at the same time, discouraging private provision. One wonders whether it wants to help pensioners or to harm them.

    Water and Sewerage Charges
    Mr. Madden: To ask the Secretary of State for Social Security if he will make it his policy to increase that proportion of income support paid to contribute towards water and sewerage charges.
    The Parliamentary Under-Secretary for Social Security (Mr. Alistair Burt): Water and sewerage charges are treated similarly to electricity and gas in that there is no separate identifiable proportion of income support.
    Mr. Madden: Is it not about time that there was a specific, and substantial, amount? Is not the Minister worried that water disconnections are now running at the rate of 400 a week nationally, 50 a week in Yorkshire and 40 a week in the Minister's area? Is he not aware that, as water charges rocket, a large number of people on income support are having deductions made from their benefit to pay those charges? Is it not time for a ban on water disconnections in homes and an end to compulsory water metering?
    Mr. Burt: In fact, the number of deductions made is about 3 per cent. of the total income support load, which shows that the vast majority of people are able to manage water charges. Water charges are analogous to electiricity and gas charges rather than to anything else. It is up to the water companies to make provision for low-income customers. Over the years, the electricity and gas companies have developed a variety of methods—often frequent payment methods—to help those on low incomes who might otherwise get into difficulties. The best way to prevent disconnections is for the water companies to follow that lead.
    Mr. Jacques Arnold: Is not the important point the overall amount available to low-income families? Is not it a fact that income support for low-income families has gone well ahead of inflation in recent years?
    Mr. Burt: Yes. The changes to income support made in the late 1980s enabled extra money to be channelled to low-income families. An extra £1 billion will have been spent by the end of the current year. The income support system, by providing premiums for disability and for families, tries to ensure that those who use more of a particular commodity, such as water, receive more money.
    Mr. Kirkwood: The improvements made by the Government are welcome, as far as they go. However, does the Minister accept that water charges in the year to January 1993 went up by 10 per cent.compared with a 1·7 per cent. increase in the retail prices index? That position is set to worsen in the next 10 to 15 years as water authorities and local authorities in Scotland plan future capital investment in the water industry. Will the Minister at least consider the possibility of a formula or mechanism to take account of the drastic increases so that people who can hardly afford to buy food can at least afford water?
    Mr. Burt: I am not sure that I can help the hon. Gentleman. As he knows, income support is not based on specific amounts for particular goods, simply because
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    people on low incomes want the opportunity that everyone else has to spend what they want on different commodities. A change to that system would be a massive administrative change and I am not convinced that it would work to the benefit of low-income families. The national proportion of deductions for water charges remains at about 3 per cent. which suggests that the majority can manage.
    The difficulties that the hon. Gentleman mentioned with the increasing investment in water must be covered by the water companies and by their charging policies. The electricity and gas companies do that far better than the water companies. The Office of Water Services has recommended that all water companies should provide at least one frequent payment method. That would go some way towards alleviating the concern, which I share, expressed by the hon. Gentleman and others about disconnections.
    Mr. John Marshall: Can my hon. Friend confirm that those on income support can look forward to an increase in their living standards in April because income support rates will rise by more than the rate of inflation? Can he also confirm that the introduction of the council tax will benefit those who are on community charge benefit and in receipt of income support?
    Mr. Burt: Yes. The amount that was previously in income support to cover the 20 per cent. payment of community charge has not been clawed back. It will provide £750 million for low-income families—[Interruption.] Opposition Members may scoff; it shows what they think about amounts such as £750 million. Once again, large amounts are like water to them.
    Mr. Spearing: In so far as there is support for the rapidly rising water charges, is not the Minister aware that those charges cover potential losses incurred by the water companies in any business in virtually any part of the world? Will he look into the matter and will he confirm, or otherwise, that those charges and public money will defray the possible losses incurred by the companies virtually anywhere?
    Mr. Burt: The hon. Gentleman is straying somewhat from my responsibilities. As I said, responsibility for water charges rests with the water companies. There are different ways in which the companies can help low-income customers.

    Unemployment
    Mr. Bayley: To ask the Secretary of State for Social Security what percentage of his Department's budget in 1992–93 can be accounted for by unemployment.
    Mr. Wicks: To ask the Secretary of State for Social Security what is the total amount spent in the course of a year on benefits for those who have been unemployed for more than 12 months.
    Mr. Burt: The estimated cost of unemployment benefit, housing benefit and social fund payments to unemployed people represents some 12 per cent. of my Department's budget. It is not possible to provide separate figures for benefit expenditure in respect of people who have been unemployed for more than 12 months.
    Mr. Bayley: Does the Minister accept that that amounts to billions and billions of pounds a year, and that

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    that goes a long way to explain why the proportion of national wealth taken in taxation by the Conservative Government now is higher than the proportion taken by the Labour Government in 1979? Will he guarantee that the Government will try to cut that sum—[HON. MEMBERS: "Oh!"]—by reducing the number of unemployed and not by cutting the scope or value of benefits for the unemployed?
    Mr. Burt: The hon. Gentleman almost dug a trap for himself but tried to extricate himself from it. The Government share the view of everyone that the best way to deal with unemployment benefit costs is to reduce the number of unemployed. The Government intend to provide practical help for those who are unemployed and we are, indeed, providing more practical help and advice than ever before for those who are looking for work.
    It should also be recognised that the employment market is never static. In January, there were 180,000 vacancies in Jobcentres—the highest figure for two years—and the Department of Employment and the Employment Service are constantly working to put people back into work. Last year they placed 1·3 million people and this year they hope to place 1·5 million people. I persist in saying that the best way to ensure that more people are employed is to ensure that interest rates and inflation are low. Those are precisely the policies which the Government are pursuing, and we shall see more jobs as a result.
    Mr. Wicks: Does the Minister agree that his answers—and I am being generous—further illustrate the substantial impact that mass unemployment is making on his Department's budget and priorities and the fact that it is distorting the way in which we meet need? Does he agree that that is further evidence that Britain cannot afford unemployment, and that what the unemployed need is not income support but jobs—not workfare but fair work?
    Mr. Burt: I do not disagree with the sentiment behind the hon. Gentleman's question; I am happy to agree with it. Despite the recession, Britain has the highest percentage of people in work of any country in the European Community apart from Luxembourg and Denmark. Vacancies at jobcentres are at a two-year high and confidence among the business community has increased. The hon. Gentleman and his colleagues may have a vested interest in reducing confidence, but he should remember that he does not speak for the nation. We are determined to come through a very deep world recession with confidence, and to emerge from it with jobs, industry, dignity and success.
    Mr. Evennett: Can my hon. Friend confirm that,, since the Government came to office in 1979, social security expenditure has increased by two thirds in real terms? Will he reaffirm the Conservative party's, and the Government's, belief in channelling benefits to those in the greatest need and confirm that we will continue to do that until we ensure that everyone has a decent standard of living?
    Mr. Burt: My hon. Friend is quite correct. The Government place the highest priority on ensuring that benefits go to those most in need, while making sure that the economy works so that there are fewer unemployed in future. What the unemployed need, more than benefit, is jobs.
    Mr. Congdon: Will my hon. Friend confirm that now that base rates are down to 6 per cent., they are the lowest in Europe and that that provides the best basis for future growth and hence a reduction in unemployment?
    Mr. Burt: My hon. Friend is quite right. Such statistics provide the basis for jobs in the future to which I referred.
    Mr. Dewar: But will the Minister confirm that the 12 per cent. of his budget that goes on unemployment amounts to the frightening figure of £10·4 billion in the coming year? Is not that a condemnation of the destructive policies that the Government are following? If the Minister recognises that the real cure is to reduce the number in the dole queues, does not he have a duty to back policies designed to achieve that end, rather than holding to the rather primitive view of the Secretary of State that Governments should do nothing? Specifically, does he agree with his colleagues in the Department of Employment that the principle of workfare must be rejected because it would lead to
    "a low wage, low productivity economy"?
    Mr. Burt: The Government have no intention of introducing a workfare model in the manner described by the hon. Gentleman. The Government have been providing as much practical help for the unemployed as possible and the Department of Employment is doing just that. At the start of the hon. Gentleman's comments, he persisted in trying to suggest that unemployment and the recession are purely British phenomena. I suggest that the hon. Gentleman spends some of his spare time visiting his socialist friends in France who will very shortly be spending rather more time with their families because they are about to be thrown out of office. The hon. Gentleman and his colleagues do not have the distinction of being thrown out of office—simply because they were too awful to gain office in the first place.

    Pensioners
    Mr. Hawkins: To ask the Secretary of State for Social Security what extra help has been directed to lower income pensioners in the last three years.
    The Parliamentary Under-Secretary of State for Social Security (Miss Ann Widdecombe): Poorer pensioners received extra help worth £70 million in April 1991,£60 million in April 1992, £315 million in October 1992 and they will gain a further £260 million this year because although income support recipients will no longer have to pay local taxes, their benefit will not be reduced.
    Mr. Hawkins: Does my hon. Friend agree that pensioners' average income from savings has more than doubled since 1979 while between 1974 and 1979 pensioners' average income from savings in real terms fell by 16 per cent? Does my hon. Friend agree that that is powerful evidence of the poverty that socialism brings for those on fixed incomes in comparison with the success of Conservative polices?
    Miss Widdecombe: Indeed. My hon. Friend put it extremely well.
    Mr. Olner: The Minister could not have put it better herself.
    Miss Widdecombe: I could hardly have put it better, but I will now supplement my hon. Friend's comments by

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    saying that inflation is the single biggest evil facing pensioners in their endeavours to save for their od age. The Labour Government managed so successfully to wipe out pensioners' savings in the inflation years of the 1970s that the net result was that many of the older pensioners who can no longer rely on their savings have had instead to be rescued by our package of help for poorer pensioners. We have much to be proud of and Opposition Members should hang their heads in shame.
    Mr. Winnick: If anyone should hang their heads in shame Government Ministers should. Do they not realise that millions of pensioners, especially pensioners who rely on the state pension and supplementary benefit or who perhaps have a small occupational pension, are in a desperate state because of low incomes? Why do so many pensioners ask Members of Parliament—they have certainly asked me this and I am sure that they have asked Conservative Members the same question—who won the last war? They ask that when they compare their plight with that of people in other European countries like Germany.
    Miss Widdecombe: What they do know is that the pensioners won the last election. Our policies are such that pensioners are very much better off than they would have been if we had had a resurgence of Labour's policies which is all that Labour promised at the last election. As for pensioners having to rely on the state pension, very few people in this country have to manage on the state pension alone. It should not be forgotten that those who receive income support to supplement their state pensions can have 100 per cent. of their rent paid; 100 per cent. of their council tax paid and, in many cases, they can double the value of their state pensions.
    Mr. Ward: Does my hon. Friend agree that on average, pensioners' income increased by 30 per cent. between 1979 and 1993? My hon. Friend might like to contrast that with what happened under the Labour Government. Is it not important to continue to ensure that any funds available from the taxpayer go to those in greatest need rather than to increases across the board?
    Miss Widdecombe: Yes, indeed. That is why our support plan for pensioners in the greatest need is worth about £1 billion a year. It is quite true that pensioners' incomes from all sources have risen by 30 per cent. since the Government have been in power. That is because, among other things, of our policy of encouraging occupational pensions, which was so deeply scorned by the Opposition, and of creating personal pensions. The Opposition fought against the incentives that enabled people to take up those pensions.
    The Government are wholly committed to the pensioner and to pensioners' incomes. We are not blinkered in believing that the only source of income is the state pension. [HON. MEMBERS: "Boring."] As Opposition Members are shouting, "Boring", they obviously find the problems of pensioners boring because they do nothing about them.
    Mr. Skinner: Will the Minister confirm that the pension is now equivalent to about 15 per cent. of the average weekly wage and that it has fallen dramatically in the past 14 years? Widows of retired miners in my constituency get £10 or £11 from British Coal, as a result of which they are disqualified from many of the benefits that the Minister
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    mentioned. Pensioners in many other countries throughout the world, including some in the so-called Common Market countries, receive pensions that equate to 50 or 60 per cent. of average weekly earnings. Those retired miners' widows get nowhere near that, and if they surrender their coal allowance and take money for gas in lieu they lose every penny of housing benefit that they receive.
    Miss Widdecombe: The hon. Member for Bolsover (Mr. Skinner) was most unwise to mention other countries in the Common Market, because we do better by pensioners on half average earnings than do most of our European neighbours. The hon. Gentleman is quite wrong, because in, for example, Germany and France there is no basic pension. The pensions that he mentioned are for higher earners and are earnings related, whereas Britain has a flat basic-rate pension available to all who have paid national insurance contributions. The value of the state pension has been more than maintained since 1979, and those whose entitlement to coal takes them slightly above the income support level can still, in certain circumstances, get help with other income-related benefits.

    Family Credit
    Mr. Lidington: To ask the Secretary of State for Social Security what is the current size of the family credit caseload.
    Mr. Lilley: At the end of October 1992, there were 450,000 families receiving family credit.
    Mr. Lidington: Will my right hon. Friend confirm that his Department expects to spend more than £850 million on family credit in the forthcoming financial year? Does he agree that that is a sensible way of channelling Government resources to ensure that people are better off in work than out of it and are not caught in a poverty trap when they take on employment?
    Mr. Lilley: I confirm my hon. Friend's point. We expect to spend £864 million in 1992–93—13 times the real value of expenditure on family income supplement, which this benefit replaced. It does an excellent job in enabling people to return to work without loss of income.
    Mr. Rooney: Does the Secretary of State accept that, in many ways, family credit is a taxpayers' subsidy to the bad employer, and does he recognise the poverty trap in which people on family credit find themselves, with a claw-back rate of 93 per cent?
    Mr. Lilley: I do not accept that, because pay levels are set according to a range of people who are in and are seeking employment, not just those with families. It is not surprising that the Opposition try to snipe at this benefit because it was introduced by this Government. The Labour party has never done anything to deal with the problem and it should turn its mind constructively to doing so, not destructively.
    Mrs. Angela Knight: Will my right hon. Friend confirm that the number of hours that have to be worked to be eligible for the benefit have recently been reduced from 24 a week to 16? Is not the impact of this change that more families will be eligible and helped by the benefit?
    Mr. Lilley: Yes, my hon. Friend points to an important development. As a result of this change in the hours rule,

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    60,000 extra families are already in receipt of this benefit and it is open to a wider number of people. I am sure that improvement in benefit will be widely welcomed by Conservative Members, even though Opposition Members do not seem to welcome it.
    Mr. Bradley: Does the Secretary of State acknowledge that a large proportion of the increase in family credit claimants is due to the change in the definition for income support of full-time work? Is he aware that many people who would have been entitled to income support from April 1992 onwards are now worse off because they cannot get help with their mortgage costs? Will he give an estimate of the number of people who have lost their entitlement to help with their mortgage interest charges as a result of the change in the hours rule, and will he urgently consider helping people on low incomes with their mortgage costs to ensure that no one is disadvantaged from taking up a job because they cannot afford to do so following the change in the hours rule?
    Mr. Lilley: The number of people on this benefit has increased by 100,000 over the past year. As I said, about 60,000 of that is due to the improvement of the hours rule in respect of eligibility for the benefit.
    I shall look into the hon. Gentleman's question to see whether I can give him figures for the impact on income support and I shall write to him.

    Pensioners (Telephones)
    Mrs. Roe: To ask the Secretary of State for Social Security how many pensioner households had a telephone in 1979 and in 1990.
    Miss Widdecombe: Only half all pensioner households had a telephone in 1979. This had risen to 87 per cent. in 1990 and 89 per cent. in 1991. This of course reflects the general improvement in pensioners' living standards since we took office in 1979.
    Mrs. Roe: I am grateful to my hon. Friend for that reply. Will she confirm that there has been not only an enormous increase in telephone ownership among pensioners, but a vast increase in the number of pensioner households with central heating? Does she agree that that is striking evidence of how the Government's economic policies have enormously benefited millions of pensioners?
    Miss Widdecombe: Yes, indeed, I am pleased to confirm that, whereas in 1979, when we got rid of the Opposition, about 43 per cent. of pensioners had central heating, today 76 per cent.—[Interruption.]
    Madam Speaker: Order. This has been remiss of me. The question relates to telephones and I should be glad if questioners and those who answer would relate their remarks directly to the question on the Order Paper.
    Miss Widdecombe: I am sorry, Madam Speaker, if I am out of order. A telephone is a consumable durable, as is central heating—
    Madam Speaker: Order. In my book, there are two lines to this question, which asks
    "how many pensioner households had a telephone in 1979 and in 1990."
    That is the question to answer.
    Mrs. Helen Jackson: Given the Minister's reply, will she acknowledge that any suggestion tomorrow that VAT should be added to the cost of public utilities, such as telephone charges and other public utility charges, would have an extremely detrimental effect on pensioners' living standards?
    Miss Widdecombe: The hon. Lady does not seem to understand what VAT is already charged on.
    Mr. Thurnham: Is my hon. Friend aware that many pensioners in Bolton are using their telephones to ring the hotline run by Bolton hospital to seek counselling and advice on the problem of the doctor who had AIDS? Will she ask the Department of Health to give the hotline a little more information—
    Madam Speaker: Order. The hon. Gentleman is now trying my patience. The question relates to the number of telephones. It has nothing to do with passing on information to Health Ministers. Does the hon. Gentleman have a direct question related to the question on the Order Paper? [HON. MEMBERS: "No."] Leave it to me.

    Young People (Benefits)
    Miss Lestor: To ask the Secretary of State for Social Security how many people between the ages of 16 and 21 years are in receipt of benefits.
    Mr. Lilley: It is not possible to give a single figure since some young people receive more than one benefit. But in 1991 there were 490,000 claiming income support, 143,000 claiming either housing benefit or community charge benefit, 49,000 claiming unemployment benefit, 34,200 on severe disablement allowance and 9,200 receiving family credit, plus small numbers on other benefits.
    Miss Lestor: When does the Minister intend to do something about what amounts to a penalty on education and training for the large number of young people who are trying to continue in some form of education? They cannot find a job, yet they are penalised because they cannot get benefits. I remind him of the case in my constituency—I am sure that it has been repeated all over the country—of two young men serving apprenticeships who, when their firm went bust, tried to continue a college course to gain qualifications over a period of a year or two. They were denied benefits and thus became a burden on their families. Surely that is a penalty on education and training.
    Mr. Lilley: As the hon. Lady knows, there is an allowance for those aged 16 to 17 on training schemes, but benefit has never been paid to those in school or further education. If there is a choice between spending money on maintenance or on increasing and improving education, we have opted for the latter. I am pleased to say that the number of people staying on at school and going on to further and higher education has increased enormously. If the hon. Lady thinks that there is a penalty, happily the vast majority of people are ignoring it and recognise the benefits of education, which is the important thing to get across.
    Mr. Willetts: Does my right hon. Friend accept that since 1979 the number of people in the 16 to 21-year-old age group going into higher education has more than doubled and that there has been an enormous expansion in

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    the number of training places? Was not the story of the 1980s a significant extension of public responsibility for people in that age group?
    Mr. Lilley: My hon. Friend puts it clearly and that is the case. On training alone, nearly 300,000 people are on youth training courses provided by the Government, compared with only 7,000 in 1978 when the Labour Government were in power.
    Mr. Frank Field: As the Government's cuts in benefits for young people have directly resulted in large numbers of them sleeping rough on the streets, what are the Government going to do about it?
    Mr. Lilley: I do not accept the premise of the hon. Gentleman's question. Far from cutting expenditure on that age group, we have substantially increased it through our increased spending on youth training. It was right to move away from a system in which people automatically had access to income support on leaving school and to replace it with the opportunity to stay on at school or to go to further or higher education or on a youth training course. The important thing is to activate and implement the guarantee. My right hon. Friend the Secretary of State for Employment has seen to it that every training and enterprise council has the money to implement that guarantee and see is vigorously ensuring that they do so. If young people do not have a place on a guaranteed training scheme, income support is available, even though they are aged only 16 or 17.
    Mr. Brazier: Does my right hon. Friend agree that millions of taxpayers think that it is absolutely right that 16 and 17-year-olds who are not at school or in a job should be required to do youth training if they want to get assistance from the state? It is right that benefits are available only in the most exceptional circumstances to people in that age group.
    Mr. Lilley: I am sure that that is the widely held view of the majority of people, especially of parents and young people, who want to make productive use of their lives rather than go straight on to benefit. I believe that 7,000 people are having to wait more than eight weeks for a place on a youth training scheme and that 3,000 have been offered a place, but it was not satisfactory.

    Disability Allowances
    Mr. Flynn: To ask the Secretary of State for Social Security what was the cost of advertising the disability living allowance and disability working allowance in 1991–92; and what is his estimate of the total expenditure on such advertising for 1992–93.
    The Minister for Social Security and Disabled People (Mr. Nicholas Scott): The answer is £6·4 million and £1·9 million respectively.
    Mr. Flynn: Was the £2·5 million spent at this time last year on advertising those benefits an act of incompetence or something worse, as 94 per cent. of applicants for disability working allowance did not qualify because they were cruelly misled by Government advertising, which was targeted on winning the election for the Tories? Will the Government repay that £2·5 million in taxpayers' money and tell us where the £17 million donated anonymously to
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    the Tory party's election chest by foreign millionaires came from? The Italians have confessed that their electoral—
    Madam Speaker: Order. The hon. Gentleman is straying a long way from the question. He was perfectly in order at the beginning.
    Mr. Scott: Our advertising for disability living allowance, which formed part of the hon. Gentleman's question, was spectacularly successful in attracting claimants for that allowance and has resulted in more than 400,000 awards in the intervening period. I, too, am disappointed in the take-up of disability working allowance, but it is a new concept and many people confused the two allowances and claimed for the wrong one. I am anxious to ensure that as many people as possible can take advantage of disability working allowance, which, for the first time and almost uniquely in the world, will provide disabled people who wish to work and who are able to do so with the option of having their earnings topped up by a Government benefit.
    Mr. Clifton-Brown: Can my right hon. Friend quantify the total increase in expenditure on the disabled since 1979?
    Mr. Scott: In broad terms and in real terms, expenditure has trebled since the Labour Government left office and we assumed responsibility for such matters.
    Ms Eagle: If the disability working allowance is such a success, how many people are receiving it?
    Mr. Scott: Perhaps the hon. Lady was rehearsing her supplementary question rather than listening to what I said. I said that I was disappointed with the take-up of disability working allowance and was anxious to see—[HON. MEMBERS: "How many?"] About 2,500 people receive disability working allowance and I am anxious that that is increased as quickly as possible. A little bit of help, instead of those sort of remarks from Opposition Members, would help us to spread knowledge of this benefit. They could help in that way.

    Pensioners
    Mr. Harris: To ask the Secretary of State for Social Security what is the total value of extra help which has been directed to less well-off pensioners since 1989.
    Miss Widdecombe: My hon. Friend will be pleased to hear that, by April, the total extra help given to pensioners on income-related benefits since October 1989 will be worth around £1 billion a year.
    Mr. Harris: I thank my hon. Friend for that answer and congratulate her on it. However, does she accept that difficulties arise increasingly among people who are just above the general benefit level? For example, someone in my constituency wrote to me only last week to say that he was facing a bill of £500 from South West Water, on an income of just under £6,000. Can anything be done to help such people, who qualify for no benefit at all?
    Miss Widdecombe: Those who do not qualify for income support can qualify for housing benefit or council tax benefit and to be eliminated from receiving those, people must have savings of £16,000 a year or an income that is substantially above the income support rate.

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    Although we always have those limits under review and although we have raised them each year and more than in line with inflation recently, as has been pointed out, we believe that the system strikes a fair balance between those who have resources and savings and those who do not.

  CHURCH COMMISSIONERS

    Investment Policy
    Mr. Tony Banks: To ask the right hon. Member for Selby, representing the Church Commissioners, what discussions they have had with their counterparts in the Roman Catholic Church on investment policy.
    Mr. Michael Alison (Second Church Estates Commissioner, representing the Church Commissioners): Although the Commissioners have no exactly comparable counterpart in the Roman Catholic Church, they discuss a wide range of investment issues with representatives from other denominations, including the Roman Catholics, at regular Church investors' meetings.
    Mr. Banks: I am delighted to hear it. May I suggest that next time that the Church Commissioners meet representatives of the Roman Catholic Church, they discuss investment possibilities in child care facilities in Bosnia, in view of the grotesque advice offered by the Pope to Bosnian women who have been raped by sub-human Serbian scum that they should have the babies? If the Pope has no better advice to offer women who have been subjected to rape, I suggest that he stays inside the Vatican and contemplates the evils being perpetrated on women in this world.
    Mr. Alison: As a fellow Church Commissioner, Madam Speaker, no doubt you appreciate the significance of the church-state link, as demonstrated by the hon. Gentleman, but I am afraid that his observations lie somewhat outside the scope of the Church Commissioners, whose finances are regulated and controlled by statute and have to be directed according to certain specific conditions. I am sure that the hon. Gentleman will appreciate that a large number of lay people in all the Churches dip into their pockets privately to contribute towards the relief of the Bosnian crisis.

    Archbishop of York (Palace)
    Mr. Bates: To ask the right hon. Member for Selby, representing the Church Commissioners, what are the annual running costs of the Archbishop of York's palace at Bishopsthorpe; what the accommodation comprises; and what is its latest valuation.
    Mr. Alison: In 1992, maintenance costs at Bishopsthorpe were £20,600. The accommodation includes domestic living quarters, state rooms—hall and drawing room—a chapel and offices. The value of such a piece of our historic heritage is incalculable. The Commissioners have it insured for £4·6 million.
    Mr. Bates: I am grateful for that answer. Does my right hon. Friend agree that it may be of some considerable interest to my constituents who heard His Grace the Archbishop recently on BBC television taking the Government to task for the measures that they were taking for alleviating poverty and homelessness? Given that the
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    Church Commissioners administer a portfolio of equities to the value of £0·8 billion and a property portfolio worth £1·2 billion, may not the message from my constituents to their Archbishop in future be that Archbishops in expensive glass palaces should not throw stones?
    Mr. Alison: My hon. Friend criticises the attacks made by the Archbishop of York, from his palace, on the Government. If the Commissioners or the Government were to make the Archbishop homeless, I fear that his attacks would be likely to be exacerbated and not moderated.
    Mr. Frank Field: When is the report of the inquiry into the Commissioners' assets expected and will it be published?
    Mr. Alison: It will be published. I cannot give the exact date when it will be available.

    Marriages (Fees)
    Mr. Madden: To ask the right hon. Member for Selby, representing the Church Commissioners, what assessment the Church Commissioners have made of the level of clergy income from fees for performing marriages.
    Mr. Alison: In the year to 31 March 1992, church and churchyard fees received by clergy totalled about £5 million, but no central records are held of the amount specifically attributable to marriage services.
    Mr. Madden: I am most grateful to the right hon. Gentleman for that reply. Does he accept that any cleric who was dependent on fees from marriages performed in the Chapel would have an extremely lean time? Will he do what he can, with the Church Commissioners and perhaps the Archbishop of Canterbury, to have discussions with the Lord Great Chamberlain, the Lord Chancellor and Madam Speaker to see whether the Chapel can be registered for marriages so that a wider range of marriages than hitherto could be conducted in the Crypt?
    Mr. Alison: I shall make representations—
    Madam Speaker: Order.

    Ordination of Women
    Mr. John Marshall: To ask the right hon. Member for Selby, representing the Church Commissioners, what is the estimated financial effect on the Church Commissioners of the introduction of women priests.
    Mr. Alison: Any direct additional stipends' costs will be met by dioceses rather than the Commissioners. However, the cost of financial provision for those who leave on conscience grounds will be a statutory charge upon the Commissioners' general fund and will reduce the amount available for other purposes. The gross cost per 100 men is estimated to total £4·6 million of income spread over a period of up to 20 years.
    Mr. Marshall: Does my right hon. Friend accept that while we are pleased to serve under the first woman Speaker, we are looking forward to women priests and the first woman bishop in the Church of England and many of us would regard the sum to which my hon. Friend referred as a price worth paying to get women as fully fledged priests and bishops?
    Mr. Alison: I voted in the General Synod for the ordination of women measure and I shall be responsible for piloting the measure through the House. I echo the views expressed by my hon. Friend. I hope that he will be prepared to stay up late and, if necessary, vote on the issue when the measure is debated on the Floor of the House.

  LORD CHANCELLOR'S DEPARTMENT

    Commercial Court
    Mr. Ottaway: To ask the Parliamentary Secretary, Lord Chancellor's Department what steps he is taking to reduce delays in the commercial court.
    The Parliamentary Secretary, Lord Chancellor's Department (Mr. John M. Taylor): Plans to appoint 10 additional High Court judges were announced recently, together with plans to establish management information systems to enable long-term decisions on the size of the judiciary to be based on proper management information about workload and throughput and on consideration of other ways of handling the load.
    The Lord Chancellor and the Lord Chief Justice have agreed that some of the additional judge power will be available to address any continuing problems in the commercial court.
    Mr. Ottaway: May I congratulate my hon. Friend on his response to the matter, which I first raised in my recent Adjournment debate? Will he accept the congratulations of the business community, which has been most concerned about delays in the commercial court? Does he agree that a further way of taking pressure off the judicial system would be to give some support to an alternative disputes resolution service, which, again, would be warmly welcomed by the business community?
    Mr. Taylor: I am grateful to my hon. Friend for his gracious remarks. The Lord Chancellor welcomes initiatives in alternative disputes resolution services in the widest sense. I have no doubt that some of my hon. Friend's professional connections will have helpful contributions to make, based on their considerable experience.

    Courts (Dress)
    Mr. David Martin: To ask the Parliamentary Secretary, Lord Chancellor's Department if he will make a statement on standards of dress in courts of justice.
    Mr. John M. Taylor: The Lord Chancellor and the Lord Chief Justice issued a consultation paper on court dress last summer, inviting the views of the public, the judiciary and the professions. The period for submission of responses ended on 31 December 1992 and an analysis of them is now under way. It is hoped that the outcome of the analysis will be available next month.
    Mr. Martin: May I thank my hon. Friend for his reply. As for the wearing of wigs, I would not wish to suggest to my hon. Friend in particular that lack of hair on the head implies any less competence or wisdom. Will he confirm that he will not give any undue encouragement to those who wish to prevent barristers, both male and female, from wearing wigs in courts where it is now customary to do so?
    Mr. Taylor: I think that my hon. Friend seeks to imply that I am bald, which is fine and also true. However, had he even hinted that I was follicly challenged, I would have had something to say about it. I am not disposed to tell others not to wear wigs, but I certainly will not be wearing one myself.
    Mr. Enright: Is the Parliamentary Secretary aware that the wearing of hats even funnier than those worn in the House and the putting on of what appear to be nighties outrages the sensibilities of many people in Yorkshire?
    Mr. Taylor: I did not know that this was a specifically Yorkshire question, but I defer to the hon. Gentleman's knowledge of Yorkshire. No doubt he speaks heartily for all his constituents.

    Women Judges
    Mrs. Gorman: To ask the Parliamentary Secretary, Lord Chancellor's Department what steps he is taking to increase the number of women judges.
    Mr. John M. Taylor: The Lord Chancellor's policy is to appoint to judicial office those best qualified, regardless of gender, ethnic origin, political affiliation or religion. Without prejudice to that overriding principle, the Lord Chancellor has repeatedly stressed that he would like to see more suitably qualified female legal practitioners appointed to the judiciary.
    Mrs. Gorman: I am sure that my hon. Friend is aware of the massive imbalance between men and women judges. Of about 1,000 judges in Britain, only 61 are women. There is not a single woman out of 10 Lords of Appeal; only two women out of 13 judges in the family division; and only 24 women out of 463 circuit judges.
    Does my hon. Friend agree that, as women are very good when put on the bench as magistrates, it is time to reconsider the criteria for appointing judges? Is not it terribly important, as so many elderly gentlemen judges hand out wholly inadequate sentences in cases of abuse of women, especially rape—judgments which I think would be different if the judge were a woman?
    Mr. Taylor: I sympathise with a great deal of what my hon. Friend has said—
    Mr. Corbyn: What is the Parliamentary Secretary going to do about it?
    Mr. Taylor: As I have said previously, the Lord Chancellor can appoint only from the recruiting ground, by age and experience—
    Mr. Corbyn: Change the recruiting ground.
    Hon. Members: Hear, hear.
    Mr. Taylor: The recruiting ground is, to a degree, self selecting because it is necessary for members of the professions to offer themselves for part-time judicial office. [Interruption.] Quite clearly, the mood of the House is not sympathetic to my answer.
    Hon. Members might be more sympathetic if I point out that the number of women joining the professions has increased greatly during recent times. Therefore, when they have a little more experience and are of a suitable age for judicial appointment, a great number of them will be available for appointment. The House should be aware

    17
    that that is already beginning to show through. At the lower rungs of the ladder, women assistant recorders represent 12 per cent. of the judicial community and, among assistant recorders in training, 14 per cent. are women. I am quite prepared to admit that there should be more, but the trend is in the right direction.
    Mrs. Dunwoody: Is the Parliamentary Secretary aware that as the average woman has had to deal with male children and a male husband, she is perfectly capable of judging the behaviour of even the strangest of people who come before her? Will the hon. Gentleman be more positive in his efforts? Frankly, although we are delighted by the number of women now entering the profession, to wait another 30 years for the millenium would be simply to repeat the position in the House, where all the men tell us that if we wait long enough, something will happen.
    Mr. Taylor: I am asked to say what, perhaps, has already taken place. The Lord Chancellor has operated age limits flexibly in respect of women candidates. He has asked that women be included wherever possible in the list of those under consideration for appointment. Specific reviews of female candidates are carried out from time to time. The Lord Chancellor has co-operated with the bar in research into sex equality at the bar and in the judiciary and he is considering the findings of that research.
    In 1992, two more women were appointed to the High Court Bench and both assigned to the Queen's Bench division—the first women to be so assigned.

    Lay Magistrates
    Mr. Hawkins: To ask the Parliamentary Secretary, Lord Chancellor's Department if he will give the figures for the number of lay magistrates in office in England and Wales in 1992.
    Mr. John M. Taylor: At 31 December 1992 the number of active justices in office in England and Wales, including those within the area of responsibility of the Chancellor of the Duchy of Lancaster, was 29,686. This compares with 29,441 for the previous year and 27,926 at the end of 1987. In short, the number of magistrates is going up.
    Mr. Hawkins: My hon. Friend will be aware that considerable concern has been expressed publicly among the magistracy about the effects of the Criminal Justice Act 1991. What is his response?
    Mr. Taylor: I am endeavouring to travel widely throughout the country to talk to magistrates, not least about the White Paper, "A New Framework for Local Justice". They tell me of their concerns, which I pass on to the Government. I remind my hon. Friend that questions of changing criminal law are for the Home Office.
    Mr. Corbyn: Will the Minister give consideration to the low numbers of black and women lay magistrates appointed? Will he also examine carefully the problem that too many magistrates do not in any way reflect the communities over which they are asked to make judgments?
    Mr. Taylor: The number of women magistrates is rising and is now 46 per cent. of all magistrates. The number of ethnic minority representatives varies between 4 and 5·4 per cent., which reflects their numbers in our society generally. As to the policial orientation of magistrates, I
    18
    remind the hon. Gentleman and the House that they are drawn from among those who apply. One cannot appoint people who do not apply.
    Mr. Boateng: We know that lay magistrates and their clerks spend time informing the Minister and the Lord Chancellor of their concerns in relation to the administration of justice. Will the Minister and the Lord Chancellor show some indication that they are listening? Lay magistrates throughout the country are sick and tired of receiving diktats from the Lord Chancellor's Department which show it to be much more informed and influenced by market policy and the Government's obsession with their own ideology than it is with the interests of justice.
    Mr. Taylor: That criticism lies unfairly on the head of my noble and learned Friend the Lord Chancellor, who has been an exceptional supporter and proponent of the lay magistracy. He supports it on all occasions and I seek to do the same. I do not know a man to whom applying the word "diktat" would be less appropriate than my noble and learned Friend.

    Female Magistrates
    Mr. Barry Jones: To ask the Parliamentary Secretary, Lord Chancellor's Department what efforts his Department are making to obtain the appointment of more female magistrates.
    Mr. John M. Taylor: The Lord Chancellor, through his advisory committees, seeks to achieve a balance in the appointment of men and women. At 31 December 1992, 46 per cent. of magistrates were women, compared with 43 per cent. at the end of 1987 and 34 per cent. at the end of 1970. The Lord Chancellor also aims to achieve equality of sittings and he is very near achieving that. The percentage of women on the bench is rising consistently.
    Mr. Jones: Is not it true that many working women find it hard to get time off and that many employers are paring back to the point where females who could serve as magistrates cannot entertain the prospect? In many homes in which the male partner is unemployed, the female partner must go out to work. That is certainly the case in Wales. Many people feel that the junior Minister should do more to emphasise the need for female magis trates—and that if he did, he would have far better courts with which to work.
    Mr. Taylor: I am glad to hear the hon. Gentleman challenge me in his customary friendly way. My next magistrates visit will be to Cardiff and I shall bear the hon. Gentleman's remarks very much in mind when I am there.
    Mr. Burns: Does my hon. Friend agree that although more female magistrates and judges would be welcome, provided that they are appointed on merit, he should not be tempted positively to discriminate in favour of women if that is done simply for the sake of appointing more women, when they might not be as well qualified as men? That would be dangerous for the cause of women and for the judiciary.
    Mr. Taylor: I understand my hon. Friend's warning.

    Land Registry Offices (Staff)
    Mr. Ian Bruce: To ask the Parliamentary Secretary, Lord Chancellor's Department if he will make a statement of staffing levels at Land Registry offices; and what increase in work he expects in the medium term.
    Mr. John M. Taylor: A contracting workload has meant that, since 1989, staffing levels have been reduced by over 2,300 posts, but the registry retains the capacity to respond to recovery in the property market. The registry is planning for a workload increase of 20 per cent. between 1993 and 1998.
    Mr. Bruce: I thank my hon. Friend for that answer. I wonder whether he will be able to fit into his busy schedule a visit to Weymouth Land Registry office, where I am sure that he will have a warm welcome from the very efficient staff there. I know that they are very keen to see the Chancellor's Budget tomorrow, which I am sure will increase the number of houses being bought and therefore registered and hence the number of jobs in Weymouth in my constituency.
    Mr. Taylor: I am pleased to accept my hon. Friend's invitation. It is my intention to go to Weymouth to see the Land Registry and I hope that for some part of that visit my hon. Friend will be able to join me.

Hong Kong
3.30 pm
The Secretary of State for Foreign and Commonwealth Affairs (Mr. Douglas Hurd): With permission, Madam Speaker, I should like to make a statement about political development in Hong Kong.
There is widespread support in the House and elsewhere for the proposals put forward by the Governor last October. We sought to respond to the wish of the Hong Kong people for a greater say in their own affairs while staying within the terms of the Sino-British joint declaration, the Basic Law and other relevant exchanges with the Chinese side.
The Governor's proposals represent our judgment of the right way forward for Hong Kong, but we have said from the start that we are open to alternative idea, from the people of Hong Kong or from the Chinese side. We have had a wide range of suggestions from people in Hong Kong. The Chinese side have opposed the proposals without offering anything in their place. Since last October, we and the Governor have been urging the Chinese side to discuss these electoral issues with us in order to reach an understanding. We are ready to enter such discussions without preconditions. We want to see as much continuity as possible in Hong Kong's electoral arrangements before and after 1997.
Some two months ago, we renewed our efforts to get talks under way with China, and since then there have been intensive diplomatic contacts in Peking. It may be useful for the House if I set out briefly the basis on which we were prepared to hold discussions.
First, we accepted that the talks should be on the basis of the joint declaration—which I have mentioned—the principle of convergence with the Basic Law and the relevant understandings and agreements reached between Britain and China. The Governor's proposals are wholly compatible with those.
Second, as I made plain to the House on 10 March, we told the Chinese side that the British team in these discussions would include representatives of the Hong Kong Government on the same basis as other officials taking part in the talks. Hong Kong officials have joined over the past 10 years in discussions with the Chinese side as members of the British team, including during the negotiations on the joint declaration and later as members of the Joint Liaison Group. We cannot and do not accept what some Chinese officials have said in the past few days—that the role of people from Hong Kong in discussions about Hong Kong's future should be downgraded.
We received a positive response on the principle of talks from the Chinese side in early February. To help get the talks started, we and the Governor therefore decided, with the advice of the Executive Council in Hong Kong, to postpone the original plan to publish the draft electoral legislation in Hong Kong's Official Gazette on 12 February. As the diplomatic contacts proceeded, we held up publication for four further weeks; but we told the Chinese that it was not possible to delay indefinitely, given the need to pass legislation before the Legislative Council rose for its summer recess in July.
It is disappointing that, despite all those efforts, the Chinese side were still not able to agree by 12 March to a date for talks—or even to a date on which an announcement of talks could be made. As we had
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forewarned them, the Governor therefore published his proposals on that day, 12 March. A copy has been placed in the Library of the House.
Publication in the Official Gazette is only the first step in the legislative process. Introduction of the Bill into the Legislative Council would be a separate step. As the Governor has said, we will have to judge, in the light of developments, when to take that step. Thereafter, I am sure that Members of the Legislative Council would want to discuss the draft legislation in great detail, in the light of the various alternatives put forward, before they reached a decision.
Publication of the legislation therefore should not make it more difficult to begin talks with China. The Bill sets out the Governor's proposals, which have been public since October, in legislative form. This does not affect the basis for talks with China, the need for such talks, or our wish to hold them. We have said that if we reached an understanding with the Chinese side we would recommend this to the Legislative Council.
So we remain ready for talks at any time and I hope that the Chinese side will be prepared to settle quickly on arrangements for such talks. We in Britain have responsibility for the administration of Hong Kong until 1997, and part of that responsibility is to maintain steady progress towards democracy in Hong Kong. We are open to discussion about how to achieve that, but the key point is that the electoral arrangements in Hong Kong should be fair, open and acceptable to the people of Hong Kong.
The Chinese side also have responsibilities and interests as the future sovereign power. Britain and China have every incentive to work together to ensure the future success of Hong Kong. We will continue to the greatest extent possible to pursue steadily the path of co-operation with China, and we look to the Chinese side to do the same.
Dr. John Cunningham: I welcome the right hon. Gentleman's decision to make a statement about the circumstances in Hong Kong and on relations between the People's Republic of China and Her Majesty's Government. We had asked for such a statement, and I think that the whole House will be grateful to the right hon. Gentleman for making one. There is much in the statement with which to agree. It is conciliatory in tone and continues to offer open discussions without preconditions to the Government of the People's Republic of China. That, too, is welcome. It safeguards the legitimate interests and the right to make final decisions of the people of Hong Kong themselves whose future is the most important aspect of all in these matters. I congratulate the right hon. Gentleman on all those issues.
However, the central question remains unanswered. Why is it that, in the face of long discussions over many months with the apparent openness and willingness of Her Majesty's Government to meet without preconditions, the talks have broken down? Why is progress not being made? Is the right hon. Gentleman aware that in my meetings with Vice Premier Zhu Rongji and in several discussions with the ambassador of the People's Republic of China in London I have made it clear that we would always support proposals to extend democracy to the people of Hong Kong?
Is the right hon. Gentleman also aware that we urged the representatives of the People's Republic of China to return to the negotiating table with counter proposals, if

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they have any? It is regrettable that they have failed either in private discussions or apparently in public to present any counter proposals as a basis for discussions to resolve this deadlock.
The deadlock is serious for a number of reasons. For example, why are the Chinese now apparently objecting—I say "apparently objecting"—to the involvement of representatives of the people of Hong Kong when those representatives have taken part over many years in discussions about the future of Hong Kong? What has caused that apparent change of mind in Beijing? Will the right hon. Gentleman assure us and the people of Hong Kong that their legitimate right to be represented in any talks about their future will not be given away but will be safeguarded by Her Majesty's Government and the Governor? For example, what is to happen to the very important economic development of the new airport for Hong Kong? How will those proposals be affected by this continuing breakdown in the talks?
Will the right hon. Gentleman make it clear that he will continue, in line with the Governor, to make it clear to the Government of the People's Republic of China that delay cannot be endured indefinitely: that if legislation is to pass through Legco—I say "if legislation is to pass through Legco", because it remains for the members of Legco themselves to decide whether the proposals are acceptable to them, which will be a debate that we shall all watch with interest—that legislation cannot be delayed indefinitely, even though, and I agree with the right hon. Gentleman on this point, he insists that it is not too late for talks on alternative proposals to develop.
May I say to the right hon. Gentleman and, through him, to the people of Hong Kong and, for that matter, to the Governor that proposals to widen and deepen democracy in Hong Kong have had and retain our complete support, without any equivocation at all, but we want to see a resumption of talks between Her Majesty's Government and the Governor and the People's Republic of China in the interests, above all, of the future well-being of the people of Hong Kong.
Mr. Hurd: I am grateful to the right hon. Gentleman for his support. That is a great help. He questioned me in particular on two points. His first question—why the talks about talks did not succeed—is one which he must address to the Chinese Government. I was reasonably hopeful a week ago, even a shorter time ago, that the different procedural obstacles that had come up were being resolved and that we would be able to start substantial talks. At the end, the difficulty focused on something that I mentioned in my statement. Representatives of the Hong Kong Government have taken part in this kind of discussion often before, without any difficulty. There was a suggestion from the Chinese side that their role and their designation should be, in some way, lessened or degraded. The implications of that are not ones which we could accept. It was really on that point that the talks about talks stalled.
On the right hon. Gentleman's second point, it is agreed between us and the Chinese and virtually everybody in Hong Kong that Hong Kong needs a new airport if it is to remain a first class international trade and financial centre. We went out of our way last year, as the House will recall, to take account of Chinese problems over the financing of
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these arrangements. The result is the memorandum of understanding which the Prime Minister entered into. I believe that agreement could be reached quickly on these airport matters if the financial issues, in which the Chinese have a legitimate interest, were tackled on their merits. We shall seek to do that.
Mr. Robert Adley: Is not the answer to the question of the right hon. Member for Copeland (Dr. Cunningham) about why the Chinese are not responding as, I am sure, we would all hope, that the Governor produced his October proposals, which were supposed to be the basis of negotiation, unilaterally? That is what has caused offence in Beijing. Can my right hon. Friend confirm, lest there be any doubt, that the 1984 agreement remains the basis of our policy towards Hong Kong? In order to find a way in which both sides, or all three sides, can get themselves off the hook, would it not at least be worth while contemplating the proposition that an independent panel of lawyers should look at the simple, central question whether the Governor's proposals, made unilaterally last October, did or did not break both the 1984 agreement and, more importantly, the 1990 and 1991 discussions?
Mr. Hurd: I am not sure what my hon. Friend meant when he said that the Governor put forward unilateral proposals. As Governor, it is his duty—a duty that he does not share with anyone else at present—to put forward proposals for the conduct of the legislative elections in Hong Kong in 1995.
On 25 September, some time before the Governor published his proposals, I gave the Chinese Foreign Minister the text of what the Governor proposed to say. At all times, before and after the Governor announced his proposals, he, I and everyone made it clear that they were proposals and that we were perfectly ready to discuss them with the Chinese, just as they are open for discussion in Hong Kong.
As for my hon. Friend's suggestion, it is of course the Chinese who have most strongly opposed any internationalisation of the discussion on these issues. On the legal points, the documents are in the Library and hon. Members can make their own decisions and conclusions, but we are perfectly clear that we are justified in saying, as I did, that the Governor's proposals are entirely compatible with the joint declaration—I confirm that that remains the basis of our policy—and that they are compatible with the Basic Law and with understandings reached in the context of the last Legislative Council elections. We are confident about that, but the talks that we seek should concentrate on the arrangements for the future, and I hope that they can be arranged on that basis.
Sir David Steel: Is the Foreign Secretary aware that the Chinese Premier's statement this morning that the Government's proposals appear to be designed to create disorder—if that is the correct translation—in the colony are viewed with total astonishment by members of all parties as it is perfectly obvious that the interest of Britain, as well as that of China and the people of Hong Kong, is to secure a smooth transition in 1997? Will he reaffirm that the Government of China still have some way to go to regain the confidence of the people of Hong Kong, which it lost in the events of two or three years ago?

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If China is so convinced that the Governor's proposals in some way as yet unexplained transgress the joint declaration or the Basic Law, will he not rule out the possibility of asking whether it would agree to refer the matter for an advisory opinion to the International Court of Justice?
Mr. Hurd: I think that I have already answered the latter point. It is important to have sensible arrangements for the future which meet the criteria set out in my statement but which could be continued after 1997 in what is called the through-train. That should be the objective, but it has not yet been possible to reach it.
As for what the right hon. Gentleman said about the Chinese Prime Minister's statement this morning, it follows the line that has been taken before. There is nothing especially dramatic or unexpected in it, but it represents the continuation of a stalemate on a matter which it is in the practical interests of Britain, China and Hong Kong for the stalemate to be broken. That is the essence of the matter, and I hope that after gazetting, as before gazetting, it will be possible to start, continue and succeed in a dialogue that reflects those real interests.
Sir Cranley Onslow: As my right hon. Friend has confirmed, contrary to what my hon. Friend the Member for Christchurch (Mr. Adley) suggested, that he gave the Chinese Government advance notice of the Governor's proposals in good time, and as he emphasised the fact that they were consistent with the Basic Law and the joint declaration, will he say whether the Chinese have given any indication of why they appear to want to seek confrontation?
Mr. Hurd: No; the Chinese have not given us any alternatives to the Governor's proposals. They said for a long time that they were not prepared to discuss the matter until the proposals were withdrawn. Recently that has not been their position. That is one reason why, as I told the House a few minutes ago, I was reasonably hopeful until quite recently about managing to get into talks. In the end, for the reasons I have given, that was not possible. My right hon. Friend is right. During the almost six months in which the Chinese Government have had the Governor's proposals, we have had no alternatives to the proposals from the Chinese side.
Mr. Gerald Kaufman: Is not this deplorable situation the direct consequence of the Government's spinelessness on the whole issue of democracy in Hong Kong? Is not it a fact that the consensus from the Office of the Members of the Legislative and Executive Councils should have been confirmed by the Government long ago? Is not it a fact that the Patten proposals, inadequate and belated though they certainly are, are the minimum that should now be introduced? The Foreign Secretary is now saying that these inadequate and belated proposals, only four years before China takes over in Hong Kong, can be subject to further whittling away and further reduction. What kind of democracy will be handed over to the Chinese in 1997 if the Government do a Munich on Hong Kong?
Mr. Hurd: The right hon. Gentleman is back in his old form. I do not think that he recognises the realities of the situation any more than he did when he was a Front-Bench spokesman. Most right hon. and hon. Members, including the right hon. Gentleman in calmer moments, know that
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the political demand for democracy in Hong Kong is of reasonably recent date. It is now strong—[HON. MEMBERS: "Oh come on!"] That is true. When I first knew Hong Kong many years ago, it would have been hard for anybody to say that there was a demand in Hong Kong for political democracy. It simply was not so. Recent events, which I need not specify, have created that demand out of anxiety. It is now a real demand. It is no longer possible to treat or to handle Hong Kong as if it were simply a commercial city. The political demand is there and the political community is now there. The Governor, the British Government and the Chinese Government must take account of that reality.
We can argue, as the right hon. Gentleman and I did at the time, about the OMELCO consensus, although I do not agree with his conclusion. The conclusion we reached last time was about right and worked. I always said that we would go back to the Chinese to see whether we could improve on it. I was thinking of an increase in the number of directly elected seats. What the Governor has done is not that. He has sought to improve democracy by other means compatible with the Basic Law. The Governor has made a shrewd set of proposals.
Mr. David Howell: Will my right hon. Friend accept that the principle of more democracy in Hong Kong is not really at issue? That principle was accepted long ago by the Chinese in the 1984 accord and is enshrined in the basic agreement, in which the Chinese also talked about the need for a high degree of local autonomy. All that the Governor and my right hon. Friend are trying to do now is to bring forward proposals to make a reality of those earlier demands, agreed to by the Chinese, that there should be a high degree of autonomy.
Will my right hon. Friend accept that it is entirely right that we should persist with these modest proposals to make a reality of points to which the Chinese have already agreed? Will my right hon. Friend also bear in mind that the whole of Asia, including Hong Kong, is now in transition and that there is quite a degree of transition in Beijing as well? It may well be right to persist with our line and not to abandon ourselves to passing pressures.
Mr. Hurd: I am grateful to my right hon. Friend; he is right. The phrase "two systems in one country" is not a British phrase. It is a Chinese phrase to embody the principles of the 1984 joint declaration. That is right. The principle of two systems in one country after 1997 is the only practical principle under which Hong Kong can be successful after the change of sovereignty. It is, therefore, in the practical interests of Britain, of China and of Hong Kong that that principle should be turned into reality. The Governor's proposals are one way in which to do that.
Dr. Jeremy Bray: Will the Foreign Secretary confirm that, apart from the usual gyrations in the stock exchange casinos, trade and business in Hong Kong with China are proceeding perfectly normally? Will he also confirm that nothing in the constitutional proposals and in the democratic principles underlying them undermines the continued prosperity and expansion of the Hong Kong economy? Will he consider taking the Chancellor of the Exchequer out there for a much-needed holiday to see what an expanding economy really looks like?
Mr. Hurd: I do not think that one has to be Chancellor of the Exchequer to derive a certain amount of inspiration from a visit to Hong Kong. It is a remarkably successful economy, precisely because of that combination of British administration and Chinese entrepreneurship. British administration will be replaced in 1997, but it is most important that the other quality—Chinese entrepreneurship—should continue under free institutions.
I can confirm the hon. Gentleman's first point. Opportunities for trade with China are substantial and have been continuing. I hope that that will continue to be the case.
Mr. Bowen Wells: Does my right hon. Friend believe that the current Chinese attitude suggests a certain amount of bad faith on the part of the Chinese? As my right hon. Friend said, they agreed to the principle of two systems, one country, and the second system—democracy—will not be properly developed even under the Governor's proposals.
Mr. Hurd: I do not want to trade accusations of bad faith because co-operation with China between now and 1997 is very much in the interests of the people of Hong Kong, who are our main responsibility and our main interest in this matter. I do not want to engage in that kind of recrimination. It is crucial that the principle, which is a Chinese principle, should be respected. The Governor's proposals are very much in line with that principle and with the joint declaration and are compatible with the Basic Law and with the understandings reached before the last legislative elections.
Mr. Jeremy Corbyn: Does the Foreign Secretary accept that lack of democracy in Hong Kong has always been a problem, and that that has not been put right by the Basic Law or by any other accords with the People's Republic of China? Will he now tell us what guarantees he can offer of freedom of speech in Hong Kong and of political asylum for those who have been critical of the People's Republic of China and who may be subject to prison sentences as and when China takes over?
Mr. Hurđ: Many of these matters are discussed in the Joint Liaison Group with the Chinese—for example, the question of the convention on human rights. The hon. Gentleman was present when we discussed the British Nationality (Hong Kong) Act 1990, which the House agreed and whose provisions have worked well.
Mr. James Couchman: As my right hon. Friend the Member for Guildford (Mr. Howell) said, these are days of change in Beijing. The Vice-President of China died over the weekend, and there are likely to be changes of personnel during the present congress in the People's Republic of China. Will my right hon. Friend undertake, in conjunction with the Governor, not to allow the legislative process for putting the Governor's proposals into law to progress too far before those changes become apparent so that any discussions with the People's Republic take place after such changes have occurred?
Mr. Hurd: It would be a little rash to base policy on possible changes in Peking in the next few weeks and months. It is hard to put that on any sure foundation. The Legislative Council in Hong Kong needs to take decisions on the legislation fairly soon—before the end of July, when the Council rises for its recess. That allows plenty of time
28
both for discussion in the Legislative Council and for discussion with the Chinese—if, as I hope, they are ready to undertake such discussion.
Mr. Michael Jopling: Will the Foreign Secretary point out to the Chinese Government in a delicate way that the increased expectations for democracy in Hong Kong have been in part caused by the Chinese Government's own statements? Does my right hon. Friend recall that, after the Select Committee on Foreign Affairs visited Peking in 1989, it reported that the Chinese Government had said that they had no objection to faster progress towards democracy and that the introduction of representative government was a matter for Hong Kong. In its report, written after the Tiananmen square incident, the Committee reported unanimously to the House that we believed that full democracy must be introduced before 1997. That was on the basis of advice that we were given by the Chinese Government in Peking. It would be helpful if my right hon. Friend the Foreign Secretary would remind them of that.
Mr. Hurd: I am grateful to my right hon. Friend; and I recall that report. It is in the interests of China, and is possible for China without sacrificing anything that it regards as essential, to have somewhat more confidence in the process of democracy in Hong Kong. The Chinese are committed to that in the Basic Law, as my right hon. Friend pointed out. What is needed is a little more confidence in that commitment.
Mr. Ted Rowlands: Is there not already a very large, enthusiastic and well-educated younger generation in Hong Kong who have every right to take part in the full democratic processes and democratic institutions of their society? Is the Foreign Secretary aware that Mr. Patten's proposals are sensible, cautious and, in my view, the minimum required for democracy? Therefore, they deserve support and not sniping, especially sniping from the powerful business interests in Hong Kong itself. Will the right hon. Gentleman make it clear to those interests that he and the House support the process of democracy that has been proposed?
Mr. Hurd: We certainly do that, and almost the whole House has given its support since the proposals were published. Certainly the right hon. Member for Copeland (Dr. Cunningham) has given that support. There is now a political city alongside a commercial city in Hong Kong. Both are now part of the reality. That is one reason why, in Hong Kong itself, the Governor's proposals have continued, despite sniping from inside and outside the colony, to receive very strong support.
Mr. David Winnick: Would it not have been far more difficult for the Chinese to adopt their present attitude if the reforms in Hong Kong had been implemented much earlier, as advocated by my right hon. Friend the Member for Manchester, Gorton (Mr. Kaufman)? Is it not ironic that the obstruction is coming from a Government who have never been genuinely elected by anyone and who, in 1989, were responsible for massacres of students whose only demand was for elementary democratic reform in China itself?
Mr. Hurd: The Government and the House have expressed themselves in respect of what happened in

29
Tiananmen square. One can argue about the right pace of progress towards democracy in Hong Kong. The pace which we, the former Governor and the present Governor have set in hand is about right. The principle is endorsed by the Chinese Government themselves. We are asking them to discuss with us the way in which that principle, which they accept, is put into practice between now and 1997 so that in 1997 the arrangements in place should continue.
Mr. Roger Sims: As one who has known Hong Kong for 30 years, may I endorse the view of my right hon. Friend the Foreign Secretary that the pressure for democratic reform in Hong Kong is relatively recent but is now quite strong? Is he aware that the position that he and the Governor have taken on this matter has the support of hon. Members on both sides of the House who believe that the people of Hong Kong are entitled to be represented in any talks that take place and who find it wholly unreasonable that the People's Republic of China should object to talks simply because it cannot dictate who should represent the British side?
Mr. Hurd:I am grateful to my hon. Friend. Those are exactly the points. I hope that those of us who share those points can, during the next few weeks which may in some respects be difficult, hold to those points and make them clear to Chinese friends with whom we speak and to people in Hong Kong. It is very important that there should be the minimum of misunderstanding and confusion in Hong Kong or Peking about the part of this country and this House. I hope that today's exchanges will make that clear.
Mr. Geoffrey Hoon: What does the Foreign Secretary make of the Chinese Government's insistence that Governor Patten's proposals are in direct conflict with the Basic Law?
Mr. Hurd: The Governor's proposals are designed to take account of two points of view which the Chinese Government have put to me and to many others with great emphasis. First, they were not prepared to see an increase in the number of directly elected seats beyond 20 as provided for in the Basic Law. The Governor's proposals respect that. Secondly, the Legislative Council should not be changed in nature, and the Governor's proposals respect that. We therefore took into account both the main points that the Chinese had quite legitimately impressed on us as their view. The Governor found a way, while respecting those points, modestly but clearly of advancing democracy. The Chinese should accept the effort that has been made as a basis for discussion—as something that should be discussed. That is what we have proposed, but so far they have not accepted it.
Sir Fergus Montgomery: Does my right hon. Friend agree that the proposals for democracy in Hong Kong up to the year 1997 are in the interests of China because they would underpin inward investment? Will he pass on to the Governor the good wishes of all hon. Members, irrespective of which party they belong to, who are very concerned about the future of the people in Hong Kong?
Mr. Hurd: I am grateful to my hon. Friend. The Governor has a difficult position. In some ways, it is bound
30
to be a difficult position and, in the present circumstances, more difficult than usual. He will be very grateful for what has been said in the House, and in particular for my hon. Friend's personal good wishes.
Mr. Robert N. Wareing: Were not Baroness Thatcher's Government taken for a ride when they signed the joint declaration? Are not the Government being naive in thinking that the perpetrators of what happened in Tiananmen square will support democracy in Hong Kong any more than they did in Beijing? As the joint declaration was underwritten by the United Nations, at what point might the Foreign Secretary consider taking the matter back to the United Nations?
Mr. Hurd: The hon. Gentleman may be mistaken. The best agreements are those that rest on self-interest, and it is in the self-interest of China that it should take over in 1997 and be able to sustain a promising, prosperous city. That depends, in turn, on keeping alive in Hong Kong the entrepreneurial spirit, which rests on a degree of freedom of speech and on the growing institutions of democracy. This is not something theoretical for China: properly considered, it is in its self-interest. We will do what we can—I am not sure that the hon. Gentleman's tactic would be the right one—to bring that point home as often as we can.
Mr. Cyril D. Townsend: Does my right hon. Friend appreciate that many hon. Members in all parts of the House have noticed the contrast between the reasonable tones that are being adopted by himself and his fellow Ministers and those of the Chinese Government, and in particular of its ambassador in London? Such hectoring comments hardly help to achieve the settlement that we all desire.
Does my right hon. Friend agree that it is essential, at this sensitive time in the history of Hong Kong, that the people of Hong Kong are properly represented in the talks and that deals are not done behind their backs because it is their future that we are talking about?
Mr. Hurd: I agree with my hon. Friend's second point. On his first point, I would not like to point a finger at any individual, but the tactic of attempting to hector or dissuade by argument British individuals or firms from taking a particular line misfires, and I hope that, if it has been practised, it will be discontinued.
Mr. Clive Soley: Does the Foreign Secretary share my concern that there is a growing coincidence of view between some very rich and powerful business men in Hong Kong and the Chinese communist party on having capitalism but not democracy against which the opposition in Hong Kong seems to be most effectively orchestrated? Is not it time that we said, loudly and clearly, that that coincidence of views is not shared by the British people?
Mr. Hurd: I am impressed by the degree of support which the Governor's proposals have continued to hold in most parts of Hong Kong. That is because sensible, shrewd people in Hong Kong, in the business community and elsewhere, realise that Hong Kong is now a political community as well as a business community—both have to be taken into account.
Mr. Iain Duncan-Smith: I welcome my right hon. Friend's statement and I agree that these moderate proposals are such that we hope that the Chinese

31
authorities will come to the table further to discuss them. Does my right hon. Friend agree that two other elements are part and parcel of bringing those authorities to the table? One is the attitude of Taiwan to their behaviour over the proposals; the second is the attitude of the United States Government to the special trading relationship with China. Will my right hon. Friend explain in a little more detail what he thinks of those two attitudes?
Mr. Hurd: I do not think I want to comment on the Taiwan dimension. Hong Kong is increasingly, as my hon. Friend knows, the funnel through which China's trade passes to the west, to the great benefit of both Hong Kong and China, so it is certainly in the interests of Hong Kong that the most-favoured-nation arrangements should be renewed.
Mr. Dennis Skinner: Will the Foreign Secretary admit that it is a bit late in the day to come here with all this diplomatic waffle, given that the decision was made in 1984 by the Tory Government of which he was a member? Why did they not deal with the fine print then instead of allowing matters to reach this stage, when China is holding every ace?
There would perhaps be a little more credibility in the opt-out clause that the right hon. Gentleman is talking about were it not for the fact that those in China may ask who this Tory Government are to be talking about democracy when they do not allow a referendum in Britain.
Mr. Hurd: I think that I have already answered the points in the hon. Gentleman's question——
Mr. Skinner: Not that one.
Mr. Hurd: —those parts of the question that are relevant.
Mr. Ian Taylor: Will my right hon. Friend reassure the Chinese that this House has never urged an increase in democracy in Hong Kong in an irresponsible way? Indeed, the Foreign Affairs Select Committee report specifically rejected the views of the right hon. Member for Manchester, Gorton (Mr. Kaufman). What the House wants is a sensible, structured approach both to democracy and to judicial matters which will enable this country to maintain its other commitment in the joint declaration—to economic and social stability in Hong Kong. It is therefore in China's interest and in the interests of the people of Hong Kong that we proceed as the Governor has suggested.
Mr. Hurd: My hon. Friend is right. The more people can impress that point in the sort of terms that he has used, the better.
Mr. Mike Gapes: What plans does the Foreign Secretary have to deal with what seems to be the continuing Chinese intransigence over and opposition to democracy? What steps will he take to get the support of the European Community, the United Nations and other international bodies for democratic change and stability in Hong Kong? Contrary to the weasel words of some Conservative Members, will he make it absolutely clear
32
that there is no question of going back on democracy or on the moves towards it, both for Hong Kong and, in the long term, for China itself?
Mr. Hurd: The views of the House on this matter are fairly clear. It is the responsibility of the British Government, between now and 30 June 1997, to take whatever decisions for the administration of Hong Kong we think are in the interests of Hong Kong. That is laid down in the joint declaration and agreement of 1984, and that agreement we will discharge. We want to do that, to the greatest feasible extent, in co-operation with China—for the reasons that I have stated—but the responsibility until that time is ours.
Mr. John Marshall: Does my right hon. Friend agree that it is in China's interests that the traditional economy and character of Hong Kong be maintained? Does he also agree that if China breaks her word to Hong Kong the whole world will not trust China, and the inward investment for which she yearns will not take place?
Mr. Hurd: There are many considerations in the mind of the Chinese Government. I do not think that we need to make those points to them. They can see the world; they know what is being said and done; they know the realities. I hope that the principal reality will gradually be borne in on them—that it is in their interests, as well as forming part of their commitments, that Hong Kong should make steady progress towards fuller democracy.
Mr. D. N. Campbell-Savours: The House will accept the laudable objectives that the Government have set with regard to the future organisation of Hong Kong and its relationship with China. Is not the Foreign Secretary sensitive to the Chinese leadership's criticism that Mr. Patten might have gone about those matters in a different way in the autumn of last year? Could he not have been more sensitive in the discussions, and perhaps not have held them in such an open forum—that is to say, in the international press? If he had adopted such a process, might we not have been in a far healthier position in terms of the potential for discussions to resolve the present difficulties?
Mr. Hurd: I do not know how the hon. Member can sustain that. No journalists were present when I gave the plans to the Chinese Foreign Minister on 25 November last year, and I made no statement. I made no effort to score points. I gave the plans to the Chinese in confidence so that they had an opportunity to comment in the weeks that followed, before the Governor announced the proposals. They refused to take that opportunity. I do not think that it would be reasonable to expect that the Governor should hold up publication of the proposals in October or their gazetting on 12 March this year indefinitely or until the Chinese agreed. Those are not reasonable proposals for the House or for Hong Kong.
Before publication of the proposals, we gave the Chinese an opportunity, and we offered them another between publication last October and gazetting in March. Neither of those opportunities was taken. A third opportunity exists now, when the proposals are gazetted. But the Legislative Council has not started discussions, let alone taken any decisions. We are not pillorying anyone.

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I have deliberately chosen my words very carefully. We want to enter into discussions, and I hope that the opportunity can now be taken.
Several hon. Members rose——
Madam Speaker: Order. We must now move on.

Points of Order
4.16 pm
Mr. Norman Hogg: On a point of order, Madam Speaker. I seek your advice on an important matter for the House. It is certainly a proper point of order, and I shall be brief.
At the weekend the Scottish National party national executive met and passed a vote of confidence in the three Scottish Nationalist Members of Parliament, who are popularly known in Scotland as the "Wee Three". They had to vote for themselves, otherwise the motion of confidence would have been lost. What is really worrying is that three members of the cabinet have resigned over the matter—that is, the cabinet of the hon. Member for Banff and Buchan (Mr. Salmond). You may not be aware that he has a cabinet, Madam Speaker. The national executive has said that it will seek the development of emergency procedures for "greater consultation" between Members of Parliament and the national executive. Clearly it is intent on influencing, confining and coercing three Members of this House.
"Erskine May", chapter 5, states on page 69, among other things, that
"the House cannot perform its functions without unimpeded use of the services of its Members."
I believe that the national executive of the SNP is in breach of privilege, and that that is a matter on which I should write to you, Madam Speaker.
Madam Speaker: Order. I remind the hon. Gentleman and the House that, according to our procedures, as that matter concerns other hon. Members, he should have informed them of his concern.
Mr. Hogg: You know me very well, Madam Speaker. You can be assured that I wrote to the parliamentary leader of the Scottish National party——
Madam Speaker: Order. I am not seeking to enter into a debate; I made a comment. I take it that the hon. Member has advised the hon. Members concerned. I remind him——
Mr. Dennis Skinner: On a point of order, Madam Speaker.
Madam Speaker: Order. I have not finished; I am on my feet.
As the hon. Member for Cumbernauld and Kilsyth (Mr. Hogg) said, it may well be a matter of contempt or privilege, and that being the case the hon. Gentleman should write to me about it.
Mr. Skinner rose——
Mr. Jeremy Corbyn rose——
Madam Speaker: That is the end of the matter. There can be no further points of order on it. I have dealt with it.
Mr. Skinner: On a point of order, Madam Speaker.
Madam Speaker: Is it a different point of order?
Mr. Skinner: Yes, it is.
Madam Speaker: In that case, I shall take it.
Mr. Skinner: On a point of order, Madam Speaker. As you know, Opposition parties get what is colloquially known as Short money. There is a point here that applies to the House as a whole, and in which you are bound to have an interest. Now that this debacle has taken place in the Scottish National party, who will receive the money? We are talking about taxpayers' money. Who will it be handed over to—the executive body or the leader of the SNP?
Madam Speaker: I put the hon. Gentleman on his honour when I asked whether his point of order related to the former point of order. I should have known better.
Mr. Corbyn: On a point of order, Madam Speaker.
Madam Speaker: I put the hon. Gentleman on his honour. He must not usurp the time of the House to ask about a matter that I have already dealt with. He may proceed if it is on a totally different matter.
Mr. Corbyn: It could not be a more different point of order, Madam Speaker. I am sure that you read the newspapers at the weekend, as many of us did, and saw the disturbing reports that the Prime Minister managed to raise £17 million for the Conservative party by holding private dinners at 10 Downing street. By what means can we question the Prime Minister about his use of Downing street as a fund-raising agency for the Conservative party and about what undertakings were given in return for the secret donations made to the Tory party election machine so that we may know how Government policy has been influenced?
Madam Speaker: The hon. Gentleman assumes quite a lot. I have much more to do at the weekends than read the national press. The hon. Gentleman should not expect answers on procedural matters of that nature to be given by the Chair across the Floor of the House. We must now move on.

Orders of the Day

  Disability (Grants) Bill
  Order for Second Reading read.
  4.21 pm
  The Minister for Social Security and Disabled People (Mr. Nicholas Scott): I beg to move, That the Bill be now read a Second time.
  This is a short Bill for the House to consider, but it is an important one for severely disabled people. Before I deal with the contents of the Bill and the independent living fund in detail, I should like to place the concept of independent living within the wider context of care in the community. As we all know, policy on care in the community developed as a concept in the 1980s. Against the background, the aim was that, wherever feasible and sensible, people should be assisted to live as independently as possible in the community.
  The final phase in the implementation of that concept will take place in April, when social security funds—that is to say, income support—hitherto used to pay independent sector home fees will be transferred to local authorities to enable them to purchase care from a range of providers, according to the needs that have been assessed for each individual. The future of the independent living fund, with which the Bill deals, has to be set in that context. The background against which ILF has hitherto been operating will be changed from April and I shall say something about that later.
  The Bill fully meets our manifesto commitment to continue to support people with severe disabilities and consolidates the excellent work that the independent living fund has done over the past five years. It is the next step in the development of support to enable disabled people to live independently in the community.
  Dame Elaine Kellett-Bowman: What would be the position of somebody who was so severely disabled that he could not remain at home, even with the assistance of the council and the fund, admittedly at the large amount of £500? Would such a person have to go into a home?
  Mr. Scott: I am not sure whether my hon. Friend is talking about the present situation or about what will happen after the Bill has become law and the new funds have been set up. I shall explain in detail how the new arrangements will work for people who need support from both a local authority and the independent living fund and who have exceptionally high costs.
  As we all recall, the ILF was announced as an interim measure in 1988, pending the introduction of the community care arrangements along the lines that were recommended by Sir Roy Griffiths. Those arrangements are now in place and will be implemented from 1 April, but as the ILF has been so successful the Government have decided to continue support for the main concepts behind it, which are giving cash to disabled people and recognising that by doing so we give them independence and the power to determine how best to meet their own care needs. I believe that that is right and fitting. It is sensible that this should be carried forward into the new arrangements, where the fund will operate in partnership with local authorities, which will no longer be merely

  37
  providers of services but facilitators of a wide variety of care provisions. I hope that that will become increasingly true of the role of local authorities in the future.
  I suspect that our debate will be mainly about the ILF. The House will have noted, however, that we have also taken the opportunity in the Bill to put the funding for notability on a new statutory basis. I shall return to that towards the end of my remarks.
  So we embark on the establishment of two new funds. Before I go any further, I wish to place on record my warmest thanks to the trustees and staff of the existing ILF. I am sure that during the Bill's passage, and especially today on Second Reading, right hon. and hon. Members on both sides of the House will want to take the opportunity to place on record their gratitude to all those associated with the fund. I know, because of my close contact with them over the years since the fund came into existence, that their work has not always been easy. They have had to develop a new way of working with disabled people under the sometimes critical eyes of the disability lobby and various arms of government. The trustees, under the chairmanship first of Winifred Tumim and then of Trevan Hingston, faced many difficult decisions over the five-year life of the trust.
  Mr. Frank Field: I am sure that we all want to underline what the Minister has said about thanking the trustees for the work that they have done. As he is complimenting them on the way in which they developed the task that was presented to them by the Government, will he say whether they were all happy about being wound up?
  Mr. Scott: I think that the trustees understood that the ILF was, as constituted, an interim measure to see us through the gap before the introduction of care in the community in April this year. I shall come on to that——
  Mr. Field rose—
  Mr. Scott: I shall give way to the hon. Gentleman, but he might wish to listen to the next few sentences of my speech.
  Mr. Field: I shall listen to what the Minister has to say, but I ask him now whether he is not rewriting history. When the fund was established, it had nothing to do with a measure to fill the gap between what then existed and of community care. It was introduced because the Government had introduced income support, under which those who were very disabled would have received less money than previously. They introduced the ILF to ensure that those people were not worse off and we congratulated them on that. The fund developed into a success which the Government did not believe possible. It is rather sad that we are mourning the loss of the ILF while welcoming a rather smaller initiative to follow in its wake.
  Mr. Scott: Perhaps it would have been better if the hon. Gentleman had waited to hear what I was about to say about the proper transition from supplementary benefit through to income support, as a result of which we thought it necessary to fill the gap between that change and the move to care in the community, which was already in preparation. It is—[Interruption.] The hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) might like to undermine the tribute that I have been paying to the trustees—well, I know he would not. I shall move on to the
  38
  new arrangements that are being made. If the hon. Gentleman wants to make a proper intervention in due course I shall be only too happy to gve way to him, as he well knows.
  I pay tribute to the two chairmen, Winifred Tumim and Trevan Hingston, who faced many difficult decisions over the lifetime of the trust. No decision was more difficult than that of winding up the trust and bringing about its closure in November 1992—that is to say, its closure to new applications at that juncture.
  It has been quite clear for a long time that to make proper provision for the ILF to hand over its caseload to the two new funds that will come into force on 1 April 1993 there would have to come a time when the ILF could not accept new applications. I well understand—it has been impressed on me by a number of the trustees—that there has been some misunderstanding about the discretion of the trustees in whether the fund could have stayed open in the particular circumstances of the delays in dealing with disability living allowance cases. Some people have had to wait several months to have their DLA claims processed.
  It has been said, and technically it is correct, that trustees of charitable funds have discretion. However, I have always recognised that the need for an orderly handover prevented the trustees from being able to exercise their discretion in those circumstances. I want to make plain my regrets and apologies if any of the trustees feel that the excellent work that they have done for disabled people over the five-year life of the fund was in any way undermined by that misunderstanding.
  Having paid tribute to the two chairmen of the ILF trustees, I want now to pay a particular tribute to the director of the fund, Judith Hoyle. She is on secondment from the Department of Social Security and has been with the fund since its inception five years ago. She has played a major part in its success. Through her, I also pay tribute to all the staff who have worked so conscientiously to ensure the fund's success. I am aware of their immense contribution to its work. With them, I bracket the social workers who have visited the potential beneficiaries of the fund and done great work in assessing their needs and making provision for them.
  Ms Liz Lynne: The Minister said that he is grateful to the trustees. Will they be able to continue with the successor bodies? If not, is not it strange that he is saying how great they are when, in effect, they are virtually being sacked?
  Mr. Scott: I understand the hon. Lady's point. In essence, the two new funds—the independent living (extension) fund and the independent living (1993) fund—will have a wholly different role from that of the ILF over the past five years. The ILF made total provision, on a charitable basis, for a trust where direct application was, in effect, made to the trustees. In the new circumstances——
  Mr. Malcolm Wicks: Will the Minister give way?
  Mr. Scott: No, not in the middle of a reply to another intervention. I shall give way to the hon. Gentleman in due course.
  The main thrust of new cases being provided for by the 1993 fund will come to the trustees after an application has been made to a local authority and the local authority has

  39
  begun an assessment of the needs of the disabled person. Then, the 1993 fund will have the job of deciding whether to top up the help that is already being given by the local authority. The work of the new bodies, whether the one that provides for new cases or the one that manages the existing caseload and decides whether cases need to be reviewed because of extra need, will be wholly different from the work of the existing fund.
  Mr. Wicks: I apologise to the Minister for having tried to intervene at the wrong time. I am interested in what he has said about there being a wholly new role for the new funds. If that is so, why call them by the same name as the existing fund? Is not that confusing?
  Mr. Scott: No—[Laughter.] This is obviously a matter of great humour for the Opposition Front-Bench spokesmen, who have little enough to laugh at these days.
  It is important to recognise that, although the two new funds have a wholly different role, disabled people whose needs have previously been met by the ILF may feel that the use of the same name gives a sense of continuity. I deliberately decided to incorporate the title of the old fund into the new funds, but with the caveat that one fund deals with new applications and the other deals with the existing caseload.
  I acknowledge the important role and contribution of the Disablement Income Group and DIG (Scotland) in launching the fund five years ago. The ILF was established jointly by DIG and the Department and, without the group's support, it would have been difficult to launch the fund in the first instance.
  It may be hard to recall what a courageous step that was for the Disablement Income Group at a time when many disability organisations wanted nothing to do with a discretionary fund but wanted a statutory, regulated system continued. To those critical of that decision I would only say—addressing my remarks to DIG and with apologies to Sir Christopher Wren—that if one wants to see the monument to that courageous decision by DIG, one need only look at the lives of the 21,000 people now receiving help from the fund.
  Mr. Frank Field: I, too, congratulate DIG on being courageous enough to put its head above the parapet when everyone else, lacking in courage, kept their heads firmly below it—and were most unpleasant to DIG in the process. Is DIG happy with the fund's winding up?
  Mr. Scott: I cannot speak for DIG, but no doubt the hon. Gentleman has access to its views. I had an extremely pleasant meeting with the ILF's outgoing trustees. Many of them perhaps felt some disappointment at not being able to contribute to the work, but they all took great pride in their achievements over the fund's lifetime.
  Although it may be invidious to mention individual trustees, we owe a particular debt to Peter Large and Pauline Thompson of the DIG. If I may mention two more names without in any way diminishing my respect and praise for others, Jack McGregor of DIG (Scotland) and Eilis Gallacher from County Derry played a major part in ensuring that the needs of Scotland and Northern Ireland were fully met through the fund's operation. I pay particular tribute to them.
  Mr. Keith Bradley: As the Minister if praising DIG so lavishly, and rightly, may I ask whether any DIG representative will be among the five trustees who have yet to be appointed by the Government?
  Mr. Scott: The hon. Gentleman must control his impatience until he sees the names—but I do not anticipate that DIG will be represented on the new body of trustees. The hon. Gentleman should await the outcome, because final decisions have to be made on the new trust fund's composition.
  I will recap—as this was mentioned in an intervention—on why the ILF was first introduced in 1988, at the time that we reformed the supplementary benefit system and introduced income support. Although I was engaged elsewhere during much of the lifetime of the supplementary benefit scheme, we can all, as constituency Members of Parliament, remember many of its complexities. A number of the weekly additions rules were not well targeted and were too complex for many customers to understand.
  Local authorities long had responsibility for providing care, but the arrangements made for the disabled had precious little flexibility. The traditional response to the most severely disabled in particular was the offer of a place in a residential or nursing home. Between the abolition of the supplementary benefit additions and the introduction of community care, the ILF was introduced to bridge the gap.
  The fund's purpose was to allow those severely disabled people who did not want to go into residential care but who needed substantial levels of care and domiciliary support to remain in their own homes.
  Mr. Barry Jones: As to the Minister's decision to exclude those over working age, I must inform him of the great disappointment of the Alzheimer's Disease Society, which feels that an element of discrimination is at work—bearing in mind that older people suffer dementia and that those who look after them suffer physical and financial hardship. Will the Minister reconsider that decision? It has been badly received in my constituency and has caused great anguish nationally.
  Mr. Scott: I entirely understand the point that the hon. Gentleman has raised, but let me make two more points. He will acknowledge, I hope, that any scheme of this sort must be introduced within the available resources. Substantial extra resources are being provided for independent living as a result of this legislation and I forecast even more expenditure over the years to come.
  We must determine the priorities. I thought it right, and the Government feel it right, that the available resources should be concentrated in particular on those who have become disabled earlier in life. They are likely to have substantially higher care costs than older people and they will not have been able to build up savings or acquire pension rights which are frequently available to such people. As was shown by the Office of Population Censuses and Surveys report examining the difference in income levels between younger disabled people and able-bodied young people, and between older disabled people and older people who are not disabled, the gap is greater at the younger level than at the older. I therefore think it right to concentrate help on the younger disabled and I am prepared to defend that decision. I understand

  41
  the feelings that the hon. Gentleman has expressed., but, within the resources available, I believe that it is right to concentrate them in the way that I have suggested.
  The ILF had a small beginning, spending only £1 million of the £5 million provided in its first year of existence—1988–89—but since then it has grown to be a respected organisation in the disability world, currently administering a budget of nearly £100 million and making payments to some 21,000 people. One reason for the growth in the caseload is that the fund was more effective in delivering help to where it is really needed than the system that it replaced. It should be borne in mind that that system gave regulated, statutory help with the costs of domestic assistance. The hon. Member for Birkenhead (Mr. Field) will recall that there were never more than 6,000 people receiving those supplementary benefit additions and that average individual payments amounted to less than £30 a week. Today, we have some 21,000 cases on the ILF with payments averaging about £114 a week.
  I believe that, in a flexible and individually tailored way, the ILF has been a considerable success throughout its lifetime. We all know that by far the most popular aspect of the ILF is the flexibility and freedom of choice that cash payments bring. Dignity and independence are as important to disabled people as they are to everyone else in society. Disabled people have come to value the ability to select and employ their own carers. The new 1993 fund will ensure that disabled people continue to maintain that dignity and independence in two ways. First, it will ensure that the package of care put together for their needs involves a partnership between the disabled person, the professionals from the local authority and the ILF; secondly, it will continue to provide at least an element of cash payments to support the services provided by local authorities.
  Mr. Archy Kirkwood: Unless the deed says so, I do not see any procedure in anything that the Minister has said to enable the people whom the Bill is supposed to serve to have an adverse decision reviewed, either by the local authority or the trustees of the fund. If there is no process of review or appeal, would decisions of that kind be subject to judiciable statements in the courts by way of judicial review?
  Mr. Scott: I suppose that almost anything may be subject to judicial review nowadays, but, in essence, the hon. Gentleman is wrong. If someone is dissatisfied with a judgment made about the fund's role in topping up local authority care, the trustees will be able to ask for their case to be reviewed, and, if necessary, two or more trustees will be able to look individually at the provision that has been made. Clearly, in a partnership between local authorities and trustees, there will be some constraints in regard to the exercise of that judgment, but there is nothing to say that, if the trustees feel that a mistake has been made about the assessment of their need in excess of the fund, the position cannot be re-examined—as long as the amount does not exceed the maximum.
  Mr. Donald Dewar: Obviously, this is a matter of some concern. The fund is to provide a top-up payment, which may often be quite modest. The majority of help will come in the local authority package. The Minister has talked rather generally about the arrangements being a partnership, and of course we all
  42
  hope that individuals will be consulted; but will the right hon. Gentleman say a little about the rights of the individual in cases of disagreement between local authority and recipient? If the local authority wishes to make a financial payment, as distinct from providing services, can it do that?
  Mr. Scott: The hon. Gentleman knows as well as I do that there is currently no provision for local authorities to provide cash. They can provide services. Whatever may happen in the future, at a time when local authorities are taking on so many extra responsibilities in relation to community care, it is surely a mistake to add to those responsibilities a duty to manage cash. I do not know what the future may hold, but at present authorities have no power to provide cash.
  What authorities have, however—under the terms of the introduction of community care—is a responsibility to consult and involve disabled people in the decision-making process about the package of care with which they will be provided. If that exceeds the £200 limit that the authority must provide in terms of services, a social worker from the ILF will become involved in discussions with local authority social workers to decide what extra cash payment may be necessary in the circumstances. Anyone who is dissatisfied at that point can return to the fund's trustees and ask for the matter to be reconsidered—as, indeed, the local authority can be asked at any time to assess whether the package of services should be re-examined. Circumstances may have changed, or it may be felt that the assessment has gone wrong.
  Of course, the introduction of community care has taken us into new territory. No doubt we shall have to monitor carefully how it all works in practice and, in particular, the workings of the partnership between local authorities and the new 1993 ILF.
  Mr. Dewar: I believe that there are guidelines on the pricing of the local authority contribution, but how exactly will it work in practice? Presumably, the local authority is the only arbiter when £200 worth of services have been offered. After that it will be up to the ILF, but I assume that there will be some disagreement between the fund and the local authority—and, possibly, the recipient—about precisely how the services should be priced and costed.
  Mr. Scott: As I said in response to an earlier intervention, I do not suggest for a moment that there will not be a certain amount of constructive discussion about such matters as the system is launched.
  Mr. Kirkwood: It is due to start in a fortnight.
  Mr. Scott: Applications are already being made to local authorities and they, in a sense, will be the gateway to the cash that the 1993 fund may be able to provide for disabled people. I believe that authorities are approaching the provision of community care positively. I also believe that the trustees of the new fund will approach their role positively. I am not saying that there will not be the odd hiccup, but I, too, have adopted a positive attitude to the partnership that is evolving. I believe that it will meet the needs of disabled people.
  The hon. Member for Roxburgh and Berwickshire knows how much I respect him and I know that it is the Opposition's job to be critical of anything that Governments do. I do not ask him exactly to rejoice in the current developments, but I ask him at least to be pleased

  43
  that it is possible to continue providing cash for the most severely disabled people in our society, when that has proved so important to them.
  Mr. Kirkwood: The Minister of State is provoking me. He is, of course, dealing with difficult and complex questions. What concerns me is that we have only about a fortnight before the procedure comes into operation. We do not know the names of the trustees and we have not seen the guidelines, the regulations or the statutory instruments, but the Minister expects everything to be sorted out in the wash. The matter is too important to be left to the vagaries of such a timetable.
  Mr. Scott: The hon. Gentleman may not have caught up with everything that has happened. The staff of the ILF is already preparing for the new fund, two new trustees are in place and operating the system, and others will be appointed in the near future.[Interruption.] All seven trustees will be appointed before the fund comes into existence. They will be in place in the next two weeks. The staff members of the independent living fund are already in discussion with local authorities.
  As we launch the new arrangements, the first job is for local authorities to receive applications from the most severely disabled people and from disabled people generally within their curtilage. The authorities will then assess their needs. First, they will assess needs against the level of services that are likely to be needed. Where they feel that the £200 limit will be exceeded they will want to have discussions with the staff and trustees of the independent living (1993) fund. There is nothing very complicated about that, although the hon. Member for Roxburgh and Berwickshire may feel that there is. Apart from the odd hiccup, the system will operate sensibly and sensitively.
  Mr. Barry Sheerman: The Minister does not seem to understand the point. We have been entirely helpful. Given the background of chaos and the problems caused to many people over the DLA, we are trying to help the Minister to avoid another administrative cock-up that will damage his reputation and that of the Government. The people connected to the present independent living fund are extremely concerned that they were not consulted about the new body although they have a wealth of experience. The team for a system that will be operating in two weeks has not been set up. We are genuinely concerned for the recipients and for the Minister's reputation.
  Mr. Scott: Before I spoke I was tempted to take a bet on how long it would be before the hon. Gentleman mentioned the disability living allowance. The problems of the DLA were the problems of success. I do not think that there will be problems with the independent living fund. The gate-keepers in the operation of the new ILF will be the local authorities. Sensible discussions are already taking place between local authorities and ILF staff about how matters will be handled.
  Local authorities are now in the driving seat for community care for disabled and severely disabled people. They will be the facilitators of care whether it is provided at home or in a residential setting. That is why the time has come to make some changes in the concept of the
  44
  independent living fund and how it will operate in the future. The aim is to extend the good work of designing and providing packages of care, which may well turn out to be a mix of services and cash for the most severely disabled people.
  Mr. Frank Field: The House should not be fooled too much by the Minister's skill in convincing us that all is well. Those of us who think that, where possible, we should give people the money to do their own thing rather than adopt a paternalistic attitude have been defeated. Whatever the Government's reasons for introducing the measure, it is a defeat for that principle. We are moving from extending people's freedom by giving them cash to local authorities being generous gate-keepers, the Minister hopes, for the new benefit.
  Mr. Scott: Local authorities have a statutory duty to provide care packages for the elderly, the disabled and other vulnerable people. When the community care arrangements of Sir Roy Griffiths were seen as the most sensible way forward, cash provision was not envisaged. There is now such provision through the continuation of the independent living (1993) fund and that is a great prize for severely disabled people. I note the hon. Gentleman's scepticism. We shall have to see. I shall certainly do my best and I know that the trustees and staff will do their best to continue in the tradition of the foregoing independent living fund in providing sensitive, sensible and generous packages of help for disabled people to enable them to live in their own homes where that is feasible.
  Mr. Frank Field: I intervene again on this important issue. I shall not do so at any other stage in the debate. There is all the difference in the world between giving people cash and hoping that local authorities will deliver care packages. Local authorities currently operate under restraints. The packages will be designed largely in line with what local authorities can currently provide using the people that they employ. There is a great difference between a person having the money to design his own package and having discussions with a local authority which then fits that person into the scheme which it thinks that he needs and in line with the number of workers that the authority employs.
  Mr. Scott: I understand the hon. Gentleman's point. The Government's aim and that of many local authorities is that authorities will not simply provide services using the people that they employ, but will co-operate with voluntary organisations and private sector providers. The local authority will be the facilitator for the care packages which will be delivered by other organisations and individuals. Increasingly, local authorities will take a much more flexible approach to providing or facilitating the necessary care packages. The independent living fund will be an important top-up to those arrangements for the most severely disabled people.
  Mr. David Willetts: Does my right hon. Friend accept that the extra money for local authorities for community care will be ring fenced and that the Government have made it clear that 85 per cent. of those funds are to be spent on private provision of services? Does he agree that one of the arguments for precisely such an arrangement is that it will deal with the anxieties of the

  45
  hon. Member for Birkenhead (Mr. Field) by ensuring that local authorities' care plans are not determined by the services that they themselves provide?
  Mr. Scott: My hon. Friend makes the point well. I hope that the arrangements will lead to a great deal more flexibility—[Interruption.] Perhaps the Opposition do not understand these matters. They are so locked into the tramlines of former provision that they do not know the extent of the potential in the new arrangements which my colleagues in the Department of Health and local authorities will be enabled to introduce.
  I shall briefly describe the character of the two new funds. The independent living (extension) fund applies to existing cases. The partnership arrangements, with which I shall shortly deal, apply to new cases. Nearly two years ago I first announced that there would be no disruption of the arrangements for existing independent living fund beneficiaries. It would not be fair to individual disabled people to unmake the successful care packages that were devised for them, nor would it have been fair to expect local authorities at a stroke to take on and manage agreements that had been entered into by others.
  The independent living (extension) fund has been set up as an independent charitable trust to continue to make payments on the same basis as now to all people who are currently receiving money from the independent living fund or who have temporarily had their payments suspended from 1 April. It would be possible for someone who had entered a short-term care provision and was therefore not receiving a weekly payment from the ILF still to be part of the existing caseload taken on by the extension fund on 1 April.
  In practice, the only difference that any recipient of independent living fund support should notice on 1 April is a change of name on the cheque at the time of takeover. The extension fund will continue to have review powers, just as the independent living fund does. Resources for the extension fund in 1993–94 will be of the order of £120 million for the United Kingdom. That is rather more than a 20 per cent. increase on the provision that has been made for this year and should enable adequate provision to be made for any upward reviews, in terms of the care that is needed by disabled people.
  I turn now to the independent living (1993) fund. The independent living fund was the pioneer in allowing people with disabilities to take a proactive role in determining how best their care needs could be met. We all welcome that.
  Mr. Peter Thurnham: My right hon. Friend has just said that we all welcome the work of the ILF, but is it not a fact that when it was introduced it was attacked by the Labour party and described as an abdication of the Government's responsibilities?
  Mr. Scott: I believe that the Opposition have now been convinced and are among the stoutest defenders of the independent living fund. There is joy in heaven on these occasions.
  Mr. Frank Field: And there will be again.
  Mr. Scott: Yes, but the Opposition will have to go through the whole process all over again.
  The ILF was the pioneer in allowing people with disabilities to play that role, with support and professional back-up which is an important element in the package.
  46
  That is why, in establishing the 1993 fund, we have built on the case work approach. From April this year, the vast majority of disabled people, including the bulk of those who would have looked to the ILF for help in the past, will, in the first instance, look to their local authority. For the most severely disabled people, whose care needs are so great that without additional help they would have to go into residential or nursing care, the 1993 fund will provide an additional option for social workers in planning packages of care with their disabled clients.
  We expect that each year around 1,500 people will get a cash payment from the new fund, as well as help from their local authority. The budget for the first year of this fund will be just over £4 million for the United Kingdom. One has to reflect on the fact that the budget for the larger-scale ILF was £5 million in its first year, only £ 1 million of which was taken up. For a much more restricted caseload, I believe that £4 million is an even more generous provision to meet the demands that are likely to be put upon the fund in its first year.
  I have already mentioned that the 1993 fund will work as a partnership between itself—the trustees—and the local authority. All the most severely disabled people who are likely to come within the purview of the fund will already, overwhelmingly, be likely to be in touch with their local authority social services departments because of existing needs. As with the current ILF, the new fund will be restricted to people on low incomes and to those who live alone or with someone who is unable to supply all the care that they need. Eligibility will also be limited, as I think I have already stated, to those of working age—those between 16 and 65.
  Where it is clear that the cost of care in the community will be above the national threshold—which, as I have already stated, we have set at £200 a week—the social worker will want to consider whether the client might be eligible for help from the new fund. The fund would then be able to make a topping-up cash payment of up to a further £300, making a total of £500 a week.
  I believe, in essence, that the new system will ensure that a significant group of disabled people will be able to look to the primary facilitators of community care, the local authorities, for their community services without losing the extra flexibility of an element of cash payments.
  Mr. Dewar: Presumably the qualifying criteria will be a matter for the trustees of the new fund which is to take over new cases. They will, I presume, start on the same higher payment component care, the disability living allowance, basis, but in future they will have to keep within a budget, which will be cash limited. If they cannot do so, the criteria may have to be altered as happened in the past.
  Mr. Scott: Manifestly, the new fund, as with the existing fund, will be run on a cash-limited basis. It will be up to the trustees to deploy their resources as necessary. It has been broadly true over the life of the existing independent living fund that there has been an underspend of the cash limit, perhaps because of the trustees' prudence. Nevertheless, we believe that the provision that has been made for both the new fund and the existing cases fund will be adequate to cope with needs for the foreseeable future.
  Motability is the organisation that enables people to use the top rate mobility component of their DLA to buy or lease a vehicle specially adapted to their needs.

  47
  Motability was launched by the Labour Government and, I believe, by the right hon. Member for Manchester, Wythenshawe (Mr. Morris). It has always had strong all-party support in the House. Governments of both parties have funded it consistently throughout the years.
  I intend to mention three Government grants that are made to support the mobility component and facilitate the purchase or lease of vehicles. The Government pay for the administration of Motability which, in the coming years, will be over £2 million. The equipment fund was set up in 1991. It provided £1 million a year for more sophisticated adaptations to meet the needs of the most severely disabled people. From April this year we are doubling that contribution from £1 million to £2 million. The tenth anniversary trust, which was set up in 1988 with £5 million from the Government and £5 million from the clearing banks, provides extra help for the charitable work of Motability—that is, for those people who cannot afford the full cost of leasing, hiring or adapting a car.
  Motability has been an immense success story from its very inception by the right hon. Member for Wythenshawe and others, such as Lord Goodman, who were in at the start and developed the scheme. I am delighted to say that very shortly my right hon. Friend the Prime Minister is to present the keys of the 350,000th Motability vehicle which has been provided under the scheme.
  In recent years we have seen many improvements in the spread and coverage of help for disabled people. That has happened under Governments of both parties. In the years since I have been Minister for Social Security and Disabled People I have been proud and happy to play my part in that continuing development. I wholeheartedly welcome the community care changes. I am pleased that the system of support that the independent living fund offers to people with disabilities has survived and is to be developed and taken forward, to take advantage of the wider developments in community care that are being put in place.
  In my view, the Bill represents a constructive way forward, building on the foundations set by the ILF and the experience gained from the workings of that body. I am happy that the Government are continuing to fund these organisations, which offer flexibility, independence and a sense of dignity and self worth for many disabled people in our society.
  The Government have expanded and developed the range and scope of help for people with disabilities. This Bill, in my view, marks another step in the movement towards a more caring society which offers additional opportunities for all its members, not just those who happen, for the time being, to be able bodied. I believe that the whole House should welcome these improvements.
  5.7 pm
  Mr. Barry Sheerman: The Bill is important not only in the most general sense; for thousands of severely disabled persons and their families it is crucial and goes to the very core of their existence. However, the Opposition have serious reservations about it, which I shall explain in due course. The Second Reading of the Bill is not, however, the time or the place for ritualistic parliamentary disagreement. It is a unique opportunity to examine the manner in which we provide
  48
  services for disabled people in our society towards the end of the 20th century. It is also a convenient time to assess the contribution of the soon to be dismantled independent living fund which the Bill seeks to replace.
  The Minister will, I believe, be told by those who sit on this side of the House and by his hon. Friends of serious misgivings, worries and criticisms regarding the new arrangements that are encapsulated in the Bill. I can assure the Minister that we shall be making those points, but constructively and positively.
  My task is to examine the extent to which the Bill meets the needs, hopes and aspirations of disabled people and the extent to which it is in tune with the growing desire of disabled people and their families for a sensible system under which they can be in control of their destiny, based in their own homes with as much independence as they wish. The Bill must be judged on the extent to which it empowers and liberates—indeed, satisfies—those whom it is designed to help.
  To understand the development of services provided for disabled people, one has to go back at least to Lord Beveridge, the subsequent National Assistance Act 1948 and to the dramatic change in the climate of service provision which emerged with the Chronically Sick and Disabled Persons Act 1970, introduced by my right hon. Friend the Member for Manchester, Wythenshawe (Mr. Morris). Those Acts have to be judged fairly in the context of their time. They were based not only on the best available expert opinion but on the fullest understanding that existed then of the needs of the people being helped.
  Times have changed. The tradition of service incorporated in those Acts tended to have three salient characteristics or features. The first was a strong emphasis on the ethic of professionalism, the view that the care professionals' perceptions of disabled people's needs and of the priorities in allocating resources were paramount and, in any case, should be considered more valid than disabled persons' perceptions of their own needs.
  Secondly, there was a mixture of provision by central Government benefits agencies, such as the Department of Social Security, and local authorities through their social services departments. Thirdly, in the case of local authority provision, there was a lack of statutory backing and an emphasis on discretionary provision. It is still the case that the only statutory provision that seems to exist for disabled people is that local authorities should keep a register and give information on available services, although very few authorities fulfil even that minimal task.
  The consequences of the approach that I have just described can be summed up by saying that some good work was carried out in those years by statutory agencies and the newly emerging organisations of disabled people, but that, as times changed and demands altered, the deficiencies became increasingly obvious. One expert, Professor Michael Oliver of the University of Greenwich, said:
  "Numerous studies over the years show that clients are very unhappy about the way professional assessments have distorted or denied their needs".
  Some care professionals are equally unhappy about a system that has forced them to tailor their needs assessment to available resources and currently available provision. In many cases, that goes against their best professional judgment.
  The drawback of such a system was that, too often, disabled people were, and still are, forced into a position

  49
  of dependency, causing the inevitable feelings of powerlessness, resentment, cynicism and mistrust which a dependency culture entails. In addition, the lack of statutory duties placed on local authorities is mirrored by the lack of statutory rights for disabled people. I shall not unearth the disagreement that I had with the Minister only a couple of Fridays ago about the Disabled Persons (Civil Rights) Bill. Too often, a patchy and inconsistent pattern of provision nationwide results from different local authorities having distinct attitudes to their discretionary powers or distinct levels of resources with which to implement them. Nothing that the Minister has said today fills us with confidence that we are not going back to the bad old days.
  Overall, a system of provision did exist—and still exists—which is not only problematic and unsatisfactory in many ways but which many argue is more expensive than the alternatives and, therefore, hardly good value for money. It could be argued that the independent living fund came about partly because of the qualitatively very different attitude towards provision which emerged in the 1970s. We must be clear about where it came from.
  I am something of a historian and it is important to get the history as right as we can. The fund clearly stemmed from disabled persons and their families. They were clear about their aspirations: they wanted full integration and participation in the community rather than being left in isolated residential establishments, and they increasingly wanted to control the resources that could make their lives more fulfilled.
  Professionals, intellectuals, and even political parties and Governments gradually became aware of, if not fully convinced of, those aspirations. The introduction of care in the community was therefore, in many ways, a missed opportunity to take those aspirations fully on board and to deliver them. It perhaps points in the right direction but is still a missed opportunity.
  However, the independent living fund was a successful example of the introduction of a system much in line with the new ideas. Again, the historian in me suspects that, in part, the birth was unexpected and the development uncharted. I agree with my hon. Friend the Member for Birkenhead (Mr. Field) who knows that there was a crisis, that the Government met it and, almost by accident, produced something that grew into a rather nice child from a rather unexpected baby, if I can mix metaphors. The birth was unexpected and the development uncharted, but we would be very foolish to underrate its innovative character and the value of its existence in the past five years. We pay tribute to the Minister for any hand that he had in it. We do not deny its importance, and any hon. Members who believe that good, healthy pragmatism is useful when considering how to solve social problems will join me in that tribute.
  Even the Minister would have been surprised to learn what was going to happen to his creation in five years. The fund was very different, set up by the Minister in 1988 in partnership with the Disablement Income Group as a Government-backed independent discretionary trust—I freely admit that we had many apprehensions about that—largely as a result of the gaping hole in the benefit system which resulted from the change from supplementary benefit to income support, with the consequent abolition of the domestic assistance additional requirement.
  The new scheme had two purposes. The first was to assist severely disabled people who need paid domestic
  50
  help or personal care if they are to live in their own homes. The second, as Peter Large said—no one has ever put it better—was to make
  "the difference between a life in which most of your choices are made by others and a life in which you can mostly choose for oneself"
  Those words will come back to haunt the Minister, and I shall explain the fear of many people who work in social provision.
  The fund was empowered to make grants of up to £560 a week in London, £520 a week in the south-east and £450 a week elsewhere. As I have said, it was a runaway success. The number of individuals helped with grants has risen from an estimated 850 at the scheme's inception to the figure of 21,000, which the Minister gave. I got the figure of 22,500 from the fund, so we roughly agree. In any case, both figures give the measure of the fund's growth. By the time applications closed in November 1992, it had proved extremely popular and cost effective. Why?
  It was so popular because it enabled people to obtain precisely the personal assistance that they needed, which has practical advantages. A private contract allows a disabled person to specify exactly with what his personal assistant is to help, which gives a flexibility that local authority job descriptions may not. For example, district nurses are clearly not supposed to help to clean the floor, but the definition of what they are allowed to do might not fit well with the disabled person's priorities. In any case, district nurses are unlikely to have any say in defining the job description. In addition, there are immense emotional benefits to the disabled. One person who was interviewed said:
  "Employing my own personal assistant has given me the freedom to fulfil the type of lifestyle I wish to follow… I am in total control of making all the choices in my own life."
  Examples of the liberating and empowering effect of the independent living fund abound in all the research.
  The Minister will be well aware of the Greenwich survey for which he kindly provided a foreword. The survey shows clear examples of cost-effectiveness. Empowering people saves money; it does not cost more money. Mike Oliver and Garry Zarb surveyed a variety of cases in Greenwich and found that in all the savings were considerable—as much as 50 per cent. The figure given by directors of social services with whom I have talked in the past few days was 20 per cent. to 50 per cent. No one said that the costs were higher; everyone said that the costs were appreciably less.
  Oliver and Zarb say:
  "Giving disabled people what they say they want is cheaper than giving them what the authorities think they need."
  That comment goes to the heart of the matter. Oliver and Zarb also say:
  "Our work in Greenwich suggests that providing disabled people with the services they demand may be cheaper than continuing to fund, inflexible dependency-creating ones."
  The empowering approach exemplified by the independent living fund is well summed up in recent research by Jenny Morris, who carried out a study for the Rowntree trust entitled "Community Care or Independent Living", which came out a couple of months ago. In tracing the approach to the independent living movement which emerged among organisations representing and controlled by disabled people in the 1970s and the 1980s, she draws a sharp distinction between the conventional view of independence—that people need to be able to do everything for themselves if they are not to be treated as

  51
  dependent and subordinate—and the more positive and pragmatic view of independence as the ability to achieve goals.
  Jenny Morris also sees independent living as a civil liberties issue. People have not only the right to have control over basic living tasks, such as when they get up, when they go to bed, when they go to the toilet and what and when they eat, but the right to have a personal relationship, to seek employment and to engage in leisure and political activities. If those rights are to be more than mere verbiage, measures must be taken to make them effective.
  Despite its record of success, the fund is to be abolished. We have given bouquets to the Minister and we have shown a little bit of humility in recognising that we did not understand how good the fund would become. We now come to the hard question. As the fund is so successful, why is it to be wound up and replaced by something far inferior? Despite the fund's record of success, it is to be abolished and its work is to be taken over by two new bodies. The independent living (extension) fund is intended to take over the existing caseload of the independent living fund and the independent living (1993) fund is intended to take on new cases. I was amused when the Minister explained that it was an entirely new body with the same name. I am not sure whether this is a case of changing names to protect the innocent or a case of keeping the same name to protect the guilty. The changes are rather confusing.
  There is another confusing point on which I seek to draw the Minister. He paid some nice tributes to the trustees of the fund. He said that the 10 trustees, five of whom were appointed by the Secretary of State and five of whom were from the Disablement Income Group, had done a wonderful job. I hope that the Minister will throw a reception for them and will ask them in to the Department for champagne, or whatever is appropriate. As I understand it, the Minister has not thanked them personally and has not explained to them face to face why good and honest servants who have done a darned good job for five years and who have made the fund the jewel in the crown——
  Mr. Scott: I am afraid that we did not run to champagne. However, the trustees have been in for lunch and I have thanked them warmly and personally.
  Mr. Sheerman: That must have happened since I talked to the trustees; it was a rapid invitation. I am glad that the Minister has done that.
  The trustees with whom I have talked are concerned. They have run the fund extremely successfully for five years. They have a wealth of knowledge that they could impart to the Minister to help the two new bodies, but the Minister has not asked them. Some of them feel frustration and bitterness. They feel that they have done a remarkably successful job, yet their experience is for nothing. Why on earth has the Minister not taken counsel from them and taken their advice in setting up the two new bodies? It is not good enough to say that the new bodies are entirely separate new projects which have little to do with the old one. The trustees have expertise and good will. The Minister has a reputation for listening to and acting on
  52
  opinions expressed by people who know what they are talking about, but that reputation will suffer. I do not intend to go further on that point.
  The funding of the independent living (extension) fund will be limited. I understand that the figure was originally to be £170 million, but that it is now to be £120 million in 1993–94. We are still a bit concerned about that, and I hope that we can talk about that later. The best estimate is that, by the end of March 1993, 22,000 people will have benefited from the fund. From simple sums on the back of an envelope, assuming a minimum average of £110 a week, a total of £124 million is necessary. The figure of £120 million looks close to a shortfall. That is worrying, especially when one considers new needs and the increased needs of some of the people who already draw from the fund. Perhaps the Minister will give us a little more detail on that later. I do not intend to make a great issue of it now, as I am sure that my hon. Friends will say more about it later.
  There is a further matter of great importance and great principle. Those over 65 are to be excluded from the new arrangements. In November 1992, 34 per cent. of the independent living fund's caseload comprised people over 65. It is not good enough to say, as the Minister says regularly, that the Government have decided to put the emphasis on people in the younger, working age group, especially as the independent living fund has been enormously successful for people over 65 as well as for those between 16 and 65. To cut off that percentage of the population from a scheme that has been so highly valued seems mean-spirited. We are not talking about a lot of money from the Exchequer. It seems that the change is Exchequer-driven rather than driven by the Minister
  The administrative arrangements for making an application to the independent living (1993) fund are clumsy and complicated. The beauty of the independent living fund has been its simplicity, which disabled people have admired. The Minister made us even more worried when he talked about gateways and gatekeepers, and about local authorities being in the driving seat. Surely we should now put the disabled person in the driving seat. That is what the independent living fund did. We do not want a committee of local authorities and Government Departments having to make decisions for the disabled person.
  Mr. Scott: I was at pains on more than one occasion to make it clear that the whole thrust of the care in the community policy was to involve disabled people in the decision-making process about the package of services provided for them. No longer will local authorities tell people what they get. They will ask people what they want and they will seek to provide it.
  The hon. Gentleman talked about the attitudes of professionals. I meet many professionals and I believe that their attitudes have changed radically over the past two or three years. They do not simply tell people what they will get. They are moving into a new culture of listening and seeking to provide.
  Mr. Sheerman: I am not much mollified by that intervention. The Minister has referred to gateways and gatekeepers, and to local authorities being in the driving seat. If he looks at Hansard tomorrow, he will see that that was the language that he used. The Association of Directors of Social Services, the Association of

  53
  Metropolitan Authorities and the Association of County Councils are all worried about the bureaucratic nature of the new arrangements and about the loss of the close direct relationship with the fund that existed under the old ILF arrangements.
  Mr. Willetts: I confess that I am becoming increasingly confused as to what the Opposition's policy on provision for severely disabled people is. If the Opposition support the principle of community care, how can they wish to keep the old arrangements for the independent living fund, which are manifestly incompatible with the principle of giving local authorities legal responsibility for community care?
  Mr. Sheerman: The hon. Gentleman is anticipating my remarks somewhat. We strongly believe that policy in these matters should be driven by what disabled people want. Had the hon. Gentleman listened to the earlier part of my speech, he would know that that is exactly what drives the Opposition's policy. I hope to show that it is possible to achieve a proper synthesis between the ILF and care in the community.
  Previously, applications could be made directly to the ILF. That was one of its strengths. The new procedures involved what the Minister described in the debate on 25 February as
  "a tripartite settlement, as it were, between the customer, the local authority social worker and the social worker for the independent living fund."—[Official Report, 25 February 1993; Vol. 219, c. 1126.]
  What is supposed to happen is that the local authority provides the first £200, then, if it seems appropriate, an application can be made to the fund up to a ceiling of£500 in total. Last week, I telephoned a number of directors of social services. I said earlier that we were concerned about whether the new arrangements—like them or not—would be up and running by 1 April. The Minister must realise that there is an enormous amount of confusion even among people of the professional excellence of directors of social services. Directors place totally different interpretations on the£500 limit. A senior member of the Association of Directors of Social Services believed that if the total sum of an application was more than£:500, the person would automatically end up with no independent living fund money and would have to go into residential care. Other directors of social services interpret the£500 ceiling quite differently. Enormous confusion exists among the professionals who, from 1 April—and even now in terms of applications—are supposed to be making the arrangements work.
  Moreover, applications are eligible only if the applicant is on the highest level of disability living allowance. Three official bodies—local authority social services departments, the Department of Social Security and the fund—will be involved. That seems unsatisfactory on several counts. First, it involves a clumsy system of divided responsibilities—a recipe for administrative confusion and delay. As I said earlier, the AMA, the ACC and the Association of Directors of Social Services have all picked up on that point and have described the new arrangements as likely to lead to
  "muddled personal assistance provision for the severely disabled".
  That last quotation is from a press release issued by the Spinal Injuries Association.
  Secondly, circular LASSL (93) makes it plain that people are supposed to apply for money from the new fund
  54
  only if they have received at least £200 from the local authority—£210 with the extra £10—and with the approval and assistance of their local authority social services department. The Minister talked about gateways and gatekeepers. What if the local authority department is unsympathetic to the individual? What recourse will there be in such circumstances? What if the authority chooses not to exercise its powers to assist disabled people? We must remember that most of the powers are discretionary rather than statutory. What if the local authority simply does not have the money to supply the first £200? That is possible because, although the £539 million is ring-fenced as a transitional grant for community care in local authority budgets, the money allocated for services to disabled people is not ring-fenced within that ring fence. We know what will happen in some local authorities when that budget is under pressure: the money allocated to services for disabled persons could be diverted.
  Mr. Willetts: A moment ago the hon. Gentleman was complaining about excessive bureaucracy in the arrangements. Is he now saying that he wants not just a ring fence in respect of the central Government contribution to community care cases but a ring fence within that ring fence? That would be a nightmare.
  Mr. Sheerman: Not at all. There are plenty of examples of money in local authority budgets being ring-fenced for specific purposes. I ask the hon. Gentleman to be a little patient, as I shall return to his question in due course.
  The effect of the changes will be to cast doubt on the effectiveness of the new scheme, to introduce a large measure of uncertainty, to disempower disabled people and to move a large measure of control back into the hands of local authority social services departments.
  Thirdly, the circular does not make it at all clear what happens if the total application exceeds £500. The phrasing in the explanatory notes to the circular can be interpreted in two ways—either help can be provided up to a ceiling of £500 a week or applications in excess of £500 will simply be ineligible for help. We seek guidance on that, in the interests not of making a paltry point but of trying to help people.
  In any case, the £500 limit does not make sense economically as, in many areas, residential care is more expensive than that—as my right hon. Friend the Member for Wythenshawe pointed out the other evening. The Greater London Association for the Disabled did some research on residential care costs and came up with a sample of figures—£510, £605,£800 and £925 a week. Similarly, the British Council of Organisations of Disabled People found that residential charges at the Royal hospital Putney, not far from the Minister's constituency, varied between £605 and £807 a week—again, significantly higher than the £500 ceiling. As a means of saving public money, that ceiling is frankly bizarre and, in our view, will lead to more money being spent rather than less.
  Jenny Morris's research for the Rowntree trust highlights another important issue. In many cases, suitable residential care facilities simply do not exist. The alternatives to being empowered to live in one's own home may be a geriatric ward or the nightmare of being forced to remain in an abusive family situation. The Spinal Injuries Association, which has expressed deep and well-argued disquiet over the new proposals, has aptly described the possibilities under the Bill as "imprisonment

  55
  without crime". The BCODP has made a strong statement to the effect that forced institutionalisation is a breach of human rights, and is prepared to refer the proposals in the Bill to the European Commission on Human Rights in Geneva and the European Court of Human Rights.
  In the debate of 25 February 1993, the Minister, referring to the old independent living fund, said:
  "a system based upon individual assessment, and on the discretion…of individual trustees, has been a considerable success, and has been able to respond much more flexibly to the needs of individual disabled people than any regulated system might have done."—[Official Report, 25 February 1993; Vol. 219, c. 1125.]
  Well said, sir. The important question is why, having established a proven success in the ILF, the Government now seem determined to move backwards to a far more regulated and less satisfactory system. Is their commitment to individual freedom of choice more apparent than real?
  We do not say everything about the independent living fund is sacrosanct and cannot be changed and improved. The Minister is an expert on Puccini, and on his opera "Turandot" in particular. He will remember the princess's lovely line to Calar, "Do not touch me, it is sacrilege". We are not saying that. We are saying that there could be modifications but that the essence of the ILF should be carried on.
  The manner in which the changes have been introduced is also disquieting. The old fund closed its list for applications at short notice in November last year leaving existing applicants to rush their applications to completion and causing a hiatus in funding until the new arrangements came into force. I have received many letters from people who missed out because of that and the injustices that occurred
  It is not clear at this late stage who will administer the new arrangements. There seems likely to be little continuity of personnel or expertise. The staff of the Disablement Income Group are extremely demoralised because, despite making approaches to the Government and civil service during the preparation of the Bill, their views were not sought or listened to. Five years of expertise in this difficult and sensitive area have been discarded.
  Nor does there seem to have been any real consultation with bodies representing disabled people. The Spinal Injuries Association and others have complained about that. When the ILF is decommissioned on 31 March, it is not clear whether the new arrangements will be set up in time to ensure an orderly continuity to cover existing clients. That is a very real worry. The 21,000 or 22,000 people concerned are very dependent on the effective working of the fund. Although the Minister said that there would just be a different name on the cheque, the important point is whether the cheque arrives in time on the day. That is vital.
  The timing is doubly unfortunate. The Government's community care initiative was intended, ostensibly at least, to increase consumer choice. However, just as it is coming into force, the ILF, which has successfully promoted consumer choice for five years for a consumer group whose choices were previously extremely limited, is being quietly strangled. We are not even given the option of leaving the ILF in place in its proven and successful form, at least until community care has bedded down. That
  56
  would seem to be another enlightened, pragmatic approach in respect of the changeover! Disruption will be piled on disruption and the clients will suffer.
  I do not go as far as Professor Oliver, who said:
  "So successful has one scheme been in giving users control over their own services that the Government have abolished it. It was called the Independent Living Fund."
  That is quite strong language, but very perceptive.
  If the abolition of the ILF and its replacement by an alternative and more clumsy scheme makes little sense in terms of service provision, there must be another reason for the change. I suggest that there is a hidden agenda. In a sense, the ILF has been too successful. Its growth from an envisaged total of about 800 clients to some 21,000 or 22,000 has led to a much higher level of expenditure than originally expected, even bearing in mind the lower cost per head. Expenditure rose from £1 million in 1988–89 to £97 million in 1992–93.
  If a good grant scheme like the old ILF is available, people tend to use it. That can reveal a higher level of need than was originally anticipated. The Government's response has been to replace a good grant scheme with a bad one. I contend that it is the Treasury's desire to control expenditure that is the real hand behind the present changes, not a desire to improve services. That is the root of the new measures incorporated in the Bill.
  The trouble that the Government find with a direct payment scheme is that it tends to make the true level of need very obvious indeed. Under the traditional system of funding services and then setting cash limits on them, that need could be concealed. For example, service constraints could mean that if too many people needed a home help, the home help would come once a fortnight instead of once a week. That disguises the true position. While that may conceal the scale of need, it is totally unacceptable. The proposal amounts to pushing disabled people back into a grey limbo.
  In the words of a member of the ILF's trustees, the new arrangements have taken the
  "spiritual essence of the Fund"
  right out of the centre.
  The Opposition believe that the Bill represents a real missed opportunity. I do not say that in a spirit of party debate. I say it in terms of what I have called enlightened pragmatism. The Minister had a great success on his hands. Instead of using it as a springboard and an opportunity to change the lives of disabled people, he has drawn short. He has either gone into reverse or stopped.
  As I said earlier, fundamental changes are occurring in our society which the Minister is underrating. Disabled people will no longer accept the definitions of status or situations that were considered appropriate even a few years ago. There is an unstoppable movement for empowerment. In a real sense, the Minister significantly encouraged that movement. He set up the ILF.
  The challenge before us today is to listen to the groundswell and the change in ideas and beliefs in the disabled community. We should learn from the experience of the past five years. Those changing ideas were reflected in a report by the Select Committee on Social Services which stated:
  "We recommend that the ILF should continue to exist, not only for an interim period, but also after the implementation of community care legislation, and should be provided with sufficient resources to meet the claims of those who meet the present criteria for help from the Fund, and whose needs have not been met through the eventual implementation of community care policy."

  57
  Some hon. Members have seen and understood the changes in ideas and know how we must learn from recent experience. I am sorry that the hon. Member for Mid-Kent (Mr. Rowe) is not in the Chamber. I believe that he has seen the future and knows that it works. He understands better than most in the House how the empowerment of disabled people comes from giving them resources directly, by giving them the cash and leaving them to make their own decisions.
  It may not be too late to improve the Bill or to do something in parallel which could save it. If the ideas of the hon. Member for Mid-Kent were incorporated in the Bill and if local social services departments were able to give direct cash payments to individuals, the result could be a dramatic improvement for disabled people in our society.
  The sensible way ahead is always for legislators to listen to the people and to act accordingly. The people affected by the Bill want to be able to empower themselves and the best way to do that is to improve the existing ILF both in statutory rights and in rights of appeal.
  The Opposition take no hard ideological line on the question. Sensible people believe in markets and market mechanisms when they work and reject them when they are inappropriate and do not work for people. In this case, we believe that they work. At the end of the day, giving disabled people what they say they want is better and cheaper than giving them what we think they want. We believe that the future priority of all Governments must be to assist the empowerment of disabled people and an early introduction of personal assistance schemes are a right that cannot be resisted much longer.
  5.47 pm
  Mrs. Marion Roe: In spite of the very heavy programme in the Chamber involving debate on the European Communities (Amendment) Bill, I am pleased that the Government have at last found time for the Second Reading of this important Bill, thus fulfilling the Conservative party manifesto pledge at the last general election.
  The final stage of the Government's community care reforms will take effect from 1 April. It is vital that financial support will continue to be given to the most severely disabled people in the community to ensure that they can live in their own homes and exercise the independence which so many of them deeply cherish.
  I am sure that I am right in saying that the principles of community care are supported by all parties in the House. The most important aspects of the reforms are choice and the flexibility that the reforms provide for care to be tailored to individual needs and the fact that individuals should be consulted on how their needs should be met.
  As president of the Broxbourne organisation for the disabled, which represents disabled people and their carers in my constituency, I have been made well aware of the enormous benefit that disabled people have derived from the independent living fund.
  I should like to stress to my right hon. Friend the Member for Chelsea (Mr. Scott) that, under the new independent living (1993) fund, the fact that disabled people are consulted about their needs must be a key factor in the package of care that is proposed. I accept his assurances that that will be so.
  I learned the importance of such co-operation the hard way through personal experience. A couple of years ago,
  58
  I was challenged by members of the Broxbourne organisation for the disabled to spend a day in a wheelchair. It felt that I should discover for myself that when getting around the constituency grave mobility difficulties must be overcome and that local authorities' good intentions are not enough to encourage disabled people to get out and about and to give them the support and help that they need. I accepted the challenge and realised very quickly that life for those who are wheelchair-bound would have been made much easier if they had had a say in the provision of facilities for disabled people.
  My first engagement was to visit a canal barge that I had launched some months before to test the wheelchair lift that was installed to ensure that disabled people, like everybody else, could enjoy the delights of sailing on the River Lee. To reach the barge, my husband, who was acting as my carer, had to push me over a large area of deep cobblestones on the quay. The result was that by the time I reached the barge I felt that I had been given a series of electric shocks. It was the most uncomfortable ride that I have ever undertaken. If only local authorities had thought to consult the users of the facility before designing it.
  At the end of my day in the wheelchair I visited the local library, which prided itself on providing good access to the building for wheelchair users. When I arrived, I was advised to attempt to enter the building on my own without my husband's help. I turned the wheels of the chair up the ramp towards the spring doors, only to discover that they opened towards me. As I tried to pull the doors open, my wheelchair started to run backwards down the ramp, much to the amusement of onlookers. Although I have strong arms, it took me about 10 minutes to get inside the library; a weaker person would not have made it. All the good intentions of the architect and local authority were lost because the users of the service had not been consulted first.
  I give full credit to Hertfordshire county council, because following this incident it changed the doors to the sliding variety to overcome the problem. There is no doubt that the consultation process is paramount in assessing the needs of disabled people. Their voice should be heard as well as that of their carer, if appropriate.
  Severely disabled people value the independence that the independent living fund has given them and I therefore welcome the Bill because it will ensure that that vital support will continue.
  The Health Select Committee, of which I am Chairman, is conducting an inquiry into community care. We intend to publish the first part of our report next Thursday. I cannot, of course, reveal our findings or our recommendations, but I have no doubt that hon. Members will find our report extremely helpful and interesting.
  5.54 pm
  Mr. Alfred Morris: The reverse side of this one-page Bill bears the legend:
  "Presented by Mr. Secretary Lilley, supported by Mr. Chancellor of the Exchequer, Mr. Secretary Hunt, Mr. Secretary Lang, Secretary Sir Patrick Mayhew, Mrs. Secretary Bottomley, Mr. Nicholas Scott…"
  To be fair to the Secretary of State for Social Security, I prefer to think, for reasons that I shall explain, that the real presenter of this Bill is the Chancellor of the Exchequer.

  59
  This is in truth a Treasury Bill. The other Ministers named are but camp followers supporting a measure that severely disabled people feel could deprive them of their independence. They fear that sooner or later, unless there is an urgent change of policy, they will be forced into institutions, at far greater cost to the taxpayer than that of enabling the independent living fund to help them.
  For severely disabled people, that is what this debate is all about. They see what they regard as their incontestable right to live in their own homes, instead of being shut away in long-stay institutions, being challenged by the new arrangements the right hon. Member for Chelsea (Mr. Scott) announced last November.
  In my Adjournment debate on the ILF on 25 February, I posed a series of questions about the future of the fund of enormous importance to all severely disabled people. Some were answered by the Minister, others were not. Since then, I have had further answers, but there are still unresolved questions which I want now briefly to raise again. One of them is whether the Minister can give me a categorical assurance that no existing beneficiaries will have to wait for payment after 31 March, when the shutters finally come down on the old ILF.
  That question was put to me before my Adjournment debate by Peter Large of the Disablement Income Group, than whom no one knows more about the work and value of the ILF, and he raised it again in a letter I had from him last Friday. His concern is that payment mechanisms—accounts, cheques, authorisation slips and so on—will not be ready in time. Very charitably, he says that the DSS has been
  "delayed by the Treasury's reluctance to allow a new Fund."
  On 25 February, I quoted from Peter Large's earlier letter to me about the fund:
  "You can imagine our distress",
  he said,
  "to see the threat of the ILF being throttled to death".
  Recalling that statement, he says in his further letter of 11 March:
  "I have to write now to tell you that the ILF as we have known it is dead. The two new funds are but pale ghosts of the original ILF. The assassins from the Treasury have done their work.
  From a Fund that will have spent some £117 million helping over 22,000 disabled people last year, we move to a Fund spending in its first year a mere £4 million on an estimated 1,500 people. All pretence of allowing discretion on the part of the Trustees has been ended."
  He goes on to say:
  "The Trust Deed and the Agreement in respect of both funds effectively stifle all initiative and ensure that all goes according to the demands of the Treasury. Anyone who knows anything about severely disabled people will be horrified to read the four documents."
  Thus, Peter Large is in no doubt that this is a Treasury Bill, nor should any of us be in any doubt that, much apart from being a mere supporter of the Bill, the Chancellor of the Exchequer is its real author.
  In future, disabled people will have to face questioning by two vetting authorities: the local authority social services department and the assessment officer of the independent living (1993) fund. Both the local authority and the fund will have the power to refuse, reduce or stop help. The disabled person has no right of appeal to anyone. Moreover, an upper cash limit is imposed on payments to keep a severely disabled person out of an
  60
  institution. Existing beneficiaries and those of the new fund will face intrusive questioning about their private habits and needs.
  In regard to the upper limit on payments, the right hon. Gentleman said in reply to my speech on 25 February:
  "I do not believe…there is anything offensive in our setting an upper limit beyond which it is not unreasonable that people who need help should…decide, sometimes reluctantly, that the time has come for them to go into residential care."—[Official Report, 25 February 1993; Vol. 219, c. 1126.]
  The Spinal Injuries Association describes this as "a most shocking statement". It asks
  "whether £500 is now the going price of freedom in this country?"
  The association quotes the case of a severely disabled young doctor, living in the community, who needs more than £500 a week in personal assistance services, and poses the question, "Has his time come?" As my hon. Friend the Member for Huddersfield (Mr. Sheerman) recalled, the association sees the upper limit on payments as "imprisonment without crime" and an infringement of that young doctor's civil rights. Whenever before did a Government so explicitly impose a price on personal freedom?
  I asked on 25 February for details of the trust deeds for the new funds. Their publication since then confirms the worst fears of the organisations for which I sought my Adjournment debate. As we have heard, Peter Large says that anyone who knows anything about severely disabled people will be "horrified" by the documents the Minister has now published.
  There are, however, still two important questions that remain unanswered. The first is what happens to severely disabled people who ask the ILF for help between now and 1 April? The answer, say the organisations that represent them, is that no help is available and that there are even worries about future payments to existing beneficiaries now receiving direct payments from local authorities. The second unanswered question is what happens to existing beneficiaries now receiving direct payments from their local councils? Some councils make direct payments to severely disabled people to enable them to buy in personal help and so remain living in their own homes. Will they be able to continue them?
  The independent living (1993) fund has a number of most unsatisfactory features. For example, the upper payment limit includes the local authority contribution in kind of £200. Thus effectively there has been a twofold cut in help: first, more stringent criteria of eligibility have been introduced; and, secondly, the maximum limit for individual payments has been reduced.
  As no one will be able to insist that a local authority makes its due contribution, both the council and the trustees of the new fund will have a power of veto. Again, and very unfortunately, the director of the fund's job specification suggests that he
  "will decide whether its help is the most appropriate"
  How will this be decided? Will some existing beneficiaries be referred to their local authorities when they seek more help? The old ILF enjoyed some flexibility in its operation. This has now gone.
  The independent living (1993) fund cannot alter the age groups of beneficiaries. The age limits of 16 to 65 are set down in the deed, which also specifies priorities in saying that
  "Any applicant who is young and in work should be given priority for receiving financial assistance."

  61
  The Minister is aware that, over and above the withering criticisms there have been of the upper limit on payments, there is profound concern about his decision to impose an upper age limit for help. In a statement on its reaction to the Minister's reply to my speech of 25 February, the Alzheimer's Disease Society, of which I am an honorary officer, says:
  "We believe the age limit for applications to the successor bodies to the ILF penalises people for being old as well as ill.
  Such age discrimination is a crude example of a Government minimising public expenditure at the expense of an extremely needful group of people."
  Jane Lakey, of the Policy Studies Institute, gave details of an instructive case in an article in The Guardian:
  "Mary is 75 and lives with her sister. They manage to stay in their own home with help from the ILF…Mary and her sister use their ILF money to employ an assistant to help with shopping, washing and cleaning, which they can no longer manage themselves. Their assistant has become a friend."
  Mary is quoted as saying that if they did not have access to the ILF
  "They would try to put both of us in a home. And we are happy here, with good neighbours and friends".
  I ask the Minister urgently to meet the Alzheimer's Disease Society to hear at first hand about the very disturbing effect of his decision to impose an age limit which, in the case that I have quoted, would most certainly have involved higher public spending and the loss for disabled people of their homes and friends.
  The Bill gives powers to make grants to Motability, as the Minister said, as well as to the ILF's successor bodies. As many right hon. and hon. Members will know, I was centrally involved, as the then first-ever Minister for the Disabled in this or any other country, in the creation of Motability; and I have been a patron since its inception 16 years ago. The idea of creating Motability came to me when I was introducing the mobility allowance and we created a wholly unique partnership, one between the Government, voluntary effort, the banks, insurance companies, motor manufacturers and dealers, that has made it possible for hundreds of thousands of disabled people to secure cars. Without it the great majority of beneficiaries would not have a car at all.
  Nobody then imagined that Motability would turn out to be such an outstanding success, with a total now of some 350,000 new vehicles supplied since we launched the scheme in the 1970s, If account is taken of the number of people in the families of disabled people who benefit from Motability's work, its beneficiaries must now have reached a total approaching the size of the Chinese army! My hon. Friend the Member for Huddersfield said that the Minister had a big success on his hands with the old ILF. What kind of success, then, has Motability been?
  The success of the contract hire scheme is shown by the fact that well over 85 per cent. of people coming to the end of a three-year agreement choose to have another Motability car. Our promise of financial support for Motability in the original memorandum in 1977 has been honoured by successive Governments over all the years since it was set up; and I am sure that this will continue.
  Enormous demands are now being made on Motability's own resources to help where the mobility component of the disability living allowance is insufficient to pay for the car the disabled person needs. The amount spent on grants has risen from £366,000 in 1988–89 to nearly £2,500,000 in 1991–92. These demands make the
  62
  Government's grant for administrative costs essential. Without it Motability would be unable to continue its work.
  I know from my own experience what a huge difference a Motability car can make to many families. Without the scheme often the disabled member would be literally housebound. It was gratifying to learn that Motability's own surveys show that, besides describing the beneficial effects on their own lives, new customers say that for the first time ever they are now able to help others.
  I pay warm tribute to the staff of Motability and Motability Finance Ltd., to the enthusiastic co-operation of officials of the Department and to the governors of the charity, who selflessly devote so much time to its work.
  Voluntary financial support for Motability will be needed even more in the future; and I am glad it is now undertaking a fundamental review of fund-raising activities. I also note Motability's gratitude to the Department for the creation of the equipment fund, which has made possible grants for the most severely disabled drivers and passengers. At the same time, I am most grateful to the right hon. Member for Chelsea for the tribute he paid in his speech to my part in creating what is a most important organisation for disabled people who are unable to walk.
  When the Minister comes to reply, I ask him to do so constructively to the renewed concern I have expressed about the inadequacies of the ILF's successor bodies, to deal with the unanswered questions I have posed, and to offer some hope to the severely disabled people, not least the elderly among them, whose claims I have sought to articulate in this debate.
  6.10 pm
  Mr. Alan Howarth: As we debate this Bill, the centre of our concern should be the scope that it provides for severely disabled people to live independently. I know that is at the heart of the personal concern of my right hon. Friend the Minister for Social Security and Disabled People. He was the father of the independent living fund, just as the Disablement Income Group was the midwife. I pay tribute to them, to the trustees of the independent living fund and to the staff at Nottingham for their achievements since 1988 in making it possible for independent living to become a reality for significant numbers of the most severely disabled people.
  We should see support for independent living as, above all, a moral imperative. In a great many cases disability is less a function of physical impairment than a failure by us—family, friends, professionals, society and politicians acting on its behalf—to do as much as we can to enable the physically impaired person to take control of his or her life and to take his or her full place in society.
  I was glad, therefore, when my hon. Friend the Under-Secretary of State for Health recently told the House:
  "The cornerstone of our community care reforms is the empowerment of the individual."—>[Official Report, 26 January 1993; Vol. 217, c. 858.]
  He was speaking in the spirit of the opening words of the foreword to the White Paper, "Caring for People":
  "Helping people to lead, as far as possible, full and independent lives is at the heart of the Government's approach to community care."
  Similarly, the social services inspectorate, in its guidance for local authorities on assessment procedures, takes it as a principle that people should

  63
  "be in charge of their own lives and make their own decisions, including decisions to take risks."
  Those are clarion statements, but I want to be surer than I am that the practicalities of policy remain fully consistent with them. The trust deed that constitutes the independent living (1993) fund contains a provision in section 2, under "Definitions and Interpretations", which states that "pay to" shall include
  "apply for the benefit of"
  But that is the crucial distinction. To elide it is to travel back to a paternalism and to assumptions about dependence from which it has been the achievement of my right hon. Friend the Minister and of the ILF to carry us forward.
  I lay my main emphasis on the desirability of provision to assist disabled people being made in the form of cash payments, enabling them to be in charge of purchasing and organising their own domestic and personal assistance. The Government have no objection to that in principle—that is what the social security system does, what the ILF has done and what the two new funds are to do.
  However, the Government raise objections to local authority social services departments making cash payments. They observe that it is contrary to the provisions of the National Assistance Act 1948. In this Bill, we have a legislative opportunity to dispose of that obstacle. The Government raise other objections. They say that there would be problems in defining appropriate eligibility to receive such payments. That problem arises with any benefit and presents no difficulty that cannot be surmounted as a matter of routine. The Government again say that there would be problems of cost control. But the various disciplines on local authority spending are real enough and well known to us all. I see no difficulty in social services departments assessing the value of care that they should provide for a client and paying over the relevant sums, at appropriate intervals, with requirements for clients to account for how the money has been spent, and for a periodic review of assessments. The Government also say that it would be excessively bureaucratic. I would suggest, with respect, that it would be less bureaucratic than the scheme that the Government intend, whereby social services departments will organise, in detail, the provision of the various services required by a client.
  My hon. Friend the Under-Secretary of State for Health recently acknowledged to the House the extent of support for cash payments. It did not sound like the fiercest opposition when he said that the Government are not ready at this stage to take that on board. I hope that I can assist him to persuade colleagues—whoever they are, whether in the Department of the Environment, or in the Treasury—who need to be persuaded to take that plunge.
  Social services departments, of their nature, are unable to provide services to clients with the same sensitivity, flexibility and precision as disabled people themselves. Notwithstanding the personal commitment of local authority staff, bureaucracies are always liable to fit the client to the service, rather than the other way round.
  Ann Kestenbaum, in her research for the ILF, and Jenny Morris, for the Rowntree trust, have both documented this in persuasive case histories. Jenny Morris quotes a disabled woman, Elizabeth, who says:
  "Yes, sometimes they're very patronising. They're overbearing and they want to do more than I actually need.
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  They want to give help in a…this is a hard word for me to say but I'm going to say it…custodial sense rather than facilitate. It's a big difference. When you're being custodial you're, well you're dictating aren't you, more or less, you're smothering a person's sense of independence."
  That is exactly what we do not want to do. Care in the community must not be institutionalisation in the community.
  The simplest way out of that snare is to enable local authorities to pay cash to clients. The psychological and practical value of this to severely disabled people is immense, as the ILF's experience attests. Ann Kestenbaum found:
  "When clients and family carers were asked what it was about their care arrangements that they valued most highly, a number of themes repeatedly emerged: choice of care assistant; continuity; flexibility; respite; self-respect; control; and choice of where to live. These benefits were clearly perceived as being directly related to their ability to pay for care."
  She cites moving case histories to exemplify those points.
  Jane Lakey of the Policy Studies Institute has researched the same issue more recently. I shall quote what some of her interviewees said:
  "I know I can feel at ease with people I choose."
  "Because they're employed you don't feel embarrassed to ask for too much help."
  "I can get the hours that are most helpful to me. Times for lifting and bathing as I wish."
  "You can pick who you want. Someone with the same interests"
  "You can employ friends. People you know and like and do things you want to do."
  "You can tell them more and instruct them and not feel you're begging them to help you."
  Other people have commented how important it is to them to be able to give back rather than simply to take
  Only 5 per cent. of the ILF's severely disabled clients have found themselves unable to handle the recruitment and management of their assistants. The new confidence and the enhancement of self-esteeem that the experience provides are restorative and enabling for disabled people. A number of disabled people have used the experience as a springboard to get into work.
  Cash payments are, moreover, better value for money. Helpers employed through ILF grants cost less per hour than helpers employed by social services departments and fewer of them are needed as they are more flexible and adaptable in what they will do. Disabled people usually want a streamlined system to minimise the complication in their lives of helpers, equipment and so forth. They have an obvious interest in cost-effective arrangements that enable their incomes to go as far as possible.
  Local authorities acknowledge that the money goes further in the hands of clients. At the annual general meeting of the Association of Directors of Social Services last autumn, there was unanimous support for a resolution calling for local authorities to be empowered to make direct payments to disabled people. The association stated:
  "The case for direct cash payments, following careful assessment and the application of eligibility criteria, is overwhelming in terms of autonomy, direct management, quality assurance and value for money. In addition such schemes encourage flexibility and creativity beyond that which a local authority may be able to offer."
  The Association of County Councils and the Association of Metropolitan Authorities back the directors. I am not aware of any disability organisation that does not agree with them. As it is, however, the Government have not accepted the point and I am apprehensive that the new

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  system to be established by the Bill will produce less satisfactory results than we could achieve. To provide, through different channels, a mix of services and cash will not, I fear, be the best arrangement, in many cases at least.
  The Spinal Injuries Association tells us that the average cost of care in its field is £300 per week. There is no way, if the first £200 worth of support has to be provided in the form of local authority services, that the client can, with another £100 from the 1993 fund, design and control his own arrangements for assistance.
  It is expected that the new 1993 fund, with £4 million, will support 1,500 new clients in the year. They will receive an average of £50 cash a week compared to the average payment by the ILF of more than twice that. The figure of 1,500 new clients compares with 8,500 new clients for the ILF in 1992. I understand that there is a backlog of 6,500 applicants. It is hard to believe that there will not be some numbers of disappointed disabled people.
  The 1993 fund starts with £4 million, which is due to rise to £17 million by 1995–96. It is intended as a fund to top up the provision to be made by local authorities. My right hon. Friend the Minister expressed confidence that it would be sufficient. But it may be as well to remember that the ILF itself was originally conceived as a top-up fund. It started at £5 million in 1988. By 1992, by which time local authorities were contributing in no more than half its cases and numbers were rising towards the present 21,000 clients, its budget was £97 million. I hope that the Government will be alert to recognise any need that emerges to increase the fund beyond present plans. After all, how confident can we be that the extra £26 million made available for local authorities will be applied to benefit the most severely disabled? One local authority has told the Disablement Income Group that it expects to use part of that money for day and respite care for children. The £26 million is not ring fenced for the most severely disabled and it may seep away.
  Much depends on whether the money provided for community care generally proves sufficient. None of us yet knows. Local authorities are, however, worried about it and consequently they are worried about the risks that they will take in making assessments of need about the £200 level. The 1993 fund has only £4 million. If the trustees decline to make a grant to a particular client and the local authority has committed itself to an assessment above £200, it will be obliged to meet the full cost. There is, therefore, a pressure on local authorities to minimise their assessments of client needs.
  I hope that the £117 million to be provided for the independent living (extension) fund will also be sufficient for its purposes. The fund will inherit 21,000 clients. Latterly, I have been advised—I hope that my hon. Friend the Under-Secretary will correct me if I am wrong—that it has been paying out grant at the rate of £125 million a year, with administration costs on top of that. Lord Henley has said in another place that all those in receipt of funds from the ILF will be protected under the new arrangements. The very detailed requirements for financial reporting month by month set out in the agreement between the trustees and the Secretary of State mean, at any rate, that the Government will get a prompt alert if that pledge looks like running into difficulties.
  I should like to draw my hon. Friend's attention to section 6·1 of the agreement, which adds specificity to section 6·3 of the trust deed by saying:
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  "the Trustees shall not pay pursuant to the Trusts of the Deed more than £560 per week to or for the benefit of any person."
  I may have misunderstood, but it struck me that that might be inconsistent with the statement of my right hon. Friend the Minister of 25 January when he said:
  "Subject to its cash limited provision, the successor body will have an unfettered power to review the awards of existing beneficiaries."—[Official Report, 25 January 1993; Vol. 217, c. 587.]
  I mention that not in any nitpicking frame of mind, but because it would seem a not insignificant point, as the needs of clients are liable to rise as they grow older and the £560 limit on awards set by the ILF might need to rise over time. I should be grateful if my hon. Friend the Under-Secretary, or my right hon. Friend the Minister, could resolve that difficulty for me.
  The Government are setting a limit of £500 on how much can be spent per week to support the needs of a severely disabled person through the local authority and the 1993 fund together. Is it wise, or cost effective, to set this cap? Domiciliary care is pretty well always cheaper than residential. The Spinal Injuries Association has told me of the case of a young man of 28, totally paralysed from the neck downwards as the result of a trampolining accident. After four years in hospital and residential institutions he was able to move into his own flat, thanks to a package of help from the ILF and his local authority worth £650 to £700 per week. If that young man were to have his accident today, he would not apparently be so fortunate. Can it really be the case that the £500 limit would mean his being confined in an institution, which would be more exepensive to the local authority as well as deeply frustrating for him? I hope that my right hon. Friend the Minister can confirm that that is not so. If it is, I hope that the trustees and my right hon. and hon. Friends will argue vigorously for an increase in the £500 limit.
  By the way, the schedule of meetings set out for the trustees in such detail in the deed will not help them very much in making their case. If they meet only in October to minute the Secretary fo State in November as to their funding requirements for the following year, they will be far too late for the public expenditure survey round. It looks as if the Treasury got at that bit of drafting.
  My right hon. Friend said that anticipation of mounting costs is the reason why the Government have set an age limit for new clients of the 1993 fund. I appreciate that my right hon. Friend has positively sought to provide more and better help to younger, severely disabled people who have not had the opportunity to build up savings and pension entitlements. I applaud that, as I am sure we all do, but I am somewhat bothered that section 4 of the first schedule of the 1993 trust deed, as the right hon. Member for Manchester, Wythenshawe (Mr. Morris) observed, goes so far as to say:
  "Any applicant who is young and in work should be given priority for receiving financial assistance."
  The annual report of the ILF for 1991–92 shows that 37 per cent. of its clients were aged 60 or over. Already, there is discrimination against people over 65 in respect of disability living allowance. I feel that elderly people have an equal claim on our society for care. Nor need the cost be unmanageable. The Government's own estimate is that it would cost an additional £2 million if the fund were permitted to take on people over retirement age, rising to £9 million by 1995–96. That is not exorbitant.
  The trust deed, the agreement and the circular of 4 March between them do not, I think, provide answers to

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  a number of specific, practical questions. Who will apply to the new fund—the local authority or the client? How are joint assessments to be made? How is £200 worth of local authority services to be defined and measured? What £200 buys varies, in any case, significantly in different parts of the country, but that is a different point.
  There appears to be scope for confusion and even, I fear, antagonism. Will harmonious co-operation be furthered by the requirement on the trustees in section 8(7) of the deed that, if they are of the opinion that any local authority is not fulfilling its statutory obligations to provide personal care to a client, they should
  "forthwith report the matter to the Secretary of State"?
  Was it necessary to put that in? We do not want disabled people losing out amid disagreement and rows between local authorities and the fund. No doubt rows would be exceptional, but there is a danger that arrangements designed and put together piecemeal will not be efficient.
  The relatively complicated processes required are also liable to take a lot of time. If, in order to wind it up, the ILF had to be closed to new applicants four months before care in the community was due to start on its new basis, how much longer will it take for a new, untried and more complicated system to deliver help to severely disabled people? We could have a disturbingly long hiatus.
  The new system is due to be operational two-and-a-half weeks from now. After tonight, money can be paid into the two funds by the Department. I understand, however, that much has still to be done to establish the new administrative arrangements. Do the new funds yet have their director? I believe that the ILF staff at Nottingham have had their contracts extended until July, but they have not been encouraged to stay and many of them are leaving. It would surely be preferable to have as much continuity as possible between the ILF and the two new funds. The Department's press notice of 24 November explained that the ILF would be closing the next day
  "to ensure an orderly handover of cases to the successor bodies".
  There is an enormous amount that the successor bodies can learn and inherit from the ILF.
  For example, over its five years, the ILF has developed assessment procedures that provide a model which I very much hope will not be discarded in the new system. Will the ILF's admirable social worker's report form be carried forward and used, with appropriate modifications, by the new funds and by local authorities?
  My right hon. Friend the Minister of State confirmed, I think, that none of the trustees of the ILF has been appointed to be a trustee of either of the new funds. I understand that there has not even been consultation with them. That seems curious. It is true that the ILF trustees have been rather sturdy people; they have needed to be positioned as they have been between the Treasury and the disablement movement. But I do not think my right hon. Friend the Minister for the Disabled ever minded that.
  I recognise, as my right hon. Friend observed, that the new bodies will, in important respects, be different from the ILF. The ILF was a joint charitable undertaking between the Government and the Disablement Income Group. The deeds establishing the new funds preclude independent trustees. The emphasis in the description of the trustees' role is on monitoring and financial oversight.
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  The affairs of the trusts will be run by the director, whose appointment must be specifically approved by the Secretary of State and whose job description is clearly set out in the second schedule. The Government plainly intend to exercise tighter control, as is evidenced by the more detailed criteria for eligibility written into the funds. The emphasis in the documents on management practice, while perfectly proper, does perhaps express a somewhat different ethos.
  I do not know whether the outgoing ILF trustees would wish to serve on the new bodies. I hope, however, that they would. My right hon. Friend the Secretary of State can appoint another five trustees for each fund. My right hon. Friend the Minister of State did not encourage us to expect this to happen, but I hope that my right hon. Friend the Secretary of State will, after all, invite some of the former trustees to continue to serve. It would help at a practical level with continuity. I hope especially that, come what may, my right hon. Friend will appoint some trustees who are themselves disabled. That would send a signal to disabled people that their voices are heeded, that their expertise and commitment are valued and that the Government believe it right that disabled people should share ownership of the system which we establish for their support.
  I thank my right hon. and hon. Friends for their continuing commitment to the cause of independent living. I congratulate my right hon. Friend the Minister of State and my right hon. Friend the Secretary of State on their achievement in securing funding for the new trusts. I am sure that they will be vigilant and determined to ensure that funding in the event proves sufficient and that the practical operation of the new trusts, in collaboration with local authorities, fulfils the hopes that the most severely disabled people, and all of us on their behalf, have of them.
  6.33 pm
  Mr. Archy Kirkwood: I was interested in the remarks of the hon. Member for Stratford-on-Avon (Mr. Howarth), who made a full and, if I may say so, eloquent speech. His interest in the subject is well known. I am sure that his remarks will repay careful study.
  I shall begin what I hope will be a brief contribution to the debate with a couple of boring technical points, but I would certainly sleep slightly easier in my bed if I were to receive explanations. First, the Bill is presented under Standing Order No. 48. Surely the Department of Social Security has the power to introduce the grants that we are discussing. If that is so, why is the Bill necessary? Why has Standing Order No. 48 been used to bring the Bill forward? As a fortnight will pass before the new procedure is implemented, perhaps I shall be sent a letter if my questions cannot be answered when the Minister replies.
  Secondly, the Bill has the stench of hybridity about it.
  Mr. Willetts: My hon. Friend the Under-Secretary of State is an expert on hybridity.
  Mr. Kirkwood: I am receiving some reassuring body language from the Minister. I know that he is a specialist on hybridity as well as crosses from the right wing into the penalty box. That might not be understood by everyone. I wish only to say that the hon. Gentleman is an extremely good inside forward. I have the pleasure of playing in the same parliamentary team. We seem always to get beat.

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  As I have said, there is an element of potential hybridity. If the Department has considered that, I would welcome some reassurance. It is a peculiar procedure to be giving grants and establishing organisations by means of private deed.
  I turn to the substance rather than the technicalities. I feel that the prevailing mood is that the House is rather disappointed that the Government have approached the matter in the way that is set out in the Bill. Hon. Members on both sides of the House, including myself, had misgivings when the independent living fund was set up. We have all come to recognise, however, that it has played a valuable role for a specialist group with extremely severe disabilities. Have we embarked on the best way of making long-term provision for their needs? We have not stepped back to take a longer term view.
  There is an argument for continuing with the ILF. I understand, of course, that the position will change after 1 April when community care is introduced, and I welcome that. Community care, in principle, is an extremely good approach. A case could be constructed, however, that people with extremely severe disabilities should be dealt with outwith the provisions of community care.
  Perhaps we should start by asking about the entitlement of those with severe disabilities. What should we be offering them? What choices should we be offering them? What do they expect? If we as a community do not help them, they will not be able to help themselves. It is almost a moral question, and it is one which seems not to have been properly addressed. What duty do we as a legislature owe people who have extremely severe disabilities? These questions are not merely administrative or financial. It seems to me that they are much more fundamental than that. I have the feeling that many in the House take the view that the severely disabled deserve better consideration. Our approach should be more thorough and longer term than that which we seem to be debating this evening.
  Does the Bill represent everything that people with severe disabilities may look forward to in the longer term? I hope that that is not the position. I understand, of course, that there is a need to make changes because of the consequences of the introduction of community care, but I hope that the Minister will say that a careful review will continue to be undertaken by the Department.
  We have had the Office of Population Censuses and Surveys studies and I accept that the Government have done much for the disabled. I do not take the view that was adopted by previous Opposition Front-Bench spokesmen. The new management of the official Opposition seems much more reasonable and more sensitive to the real problems. At the same time, the Government must make clear what they believe can be done in future. Surely this is not the end of the story.
  Once the new system is up and running we may have time to reflect on what benefits are available, and will continue to be available, as a result of using quasi-independent trustees. I certainly recognise the courage of the Disablement Income Group and others who decided to interpose themselves between the needs of disabled people and the Treasury. It was a brave decision to take and they were vindicated for doing so.
  The discretion available to the trustees of the ILF was innovative and the power was used with great skill in sorting out some of the problems and dealing with some of the tight budget constraints that appeared latterly. What experience have we gained from that? Are not we in danger
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  of throwing some of it away in the changes. I hope that the Department will carefully consider the lessons that can be learnt from that combination of independent trustees' discretion and judgment and all the other matters that have formed the system to date. I hope that proper analysis will be carried out so that we can have the benefit of that experience.
  I think that the mood of the House reflects my impression that the concept of an independent living fund has been ever so slightly marginalised—indeed, not ever so slightly; it has been marginalised—in the changes, which is a matter of some regret.
  A number of administrative questions need to be answered. The hon. Member for Stratford-on-Avon touched on many of them, so I shall not reiterate them. Cash in hand is absolutely crucial. The Government's position in constraining the assistance able to be deployed by the new funds to those of working age is a bit mean-minded. The parliamentary questions to which the hon. Member for Stratford-on-Avon referred struck me as being good value for money—£2 million, rising to £5 million or £6 million over a number of years. The Government have not yet explained adequately why they have rejected that.
  What discussions have there been with local authorities? There was some banter earlier when that point was raised. The Minister plays an old and mean hand at the Dispatch Box and tries to soothe our worries. However, there are real concerns about the consultations that have been undertaken and those that have still to be undertaken, as well as about the shortness of time in which to get the system properly up and running by the date set by the Government.
  In an intervention I asked the Minister about the process of reviews and appeals. It is my belief that the Government will end up in court in a short time because some of the elements of discretion that will be exercised by local authorities will put them at the wrong end of judicial reviews in high courts throughout the land. That does not make for good law. We, as legislators, should be absolutely certain that we do not leave the courts to take in our dirty washing because we are not doing our job properly.
  Other hon. Members have already called for an assurance that payments will not be delayed by the changeover in the system. We do not want any of the chaos that occurred with the disability living allowance and disability working allowance for all the reasons that the Government have given. We must not put people through that again.
  When will we know the identity of the trustees who will share the burden of such a heavy responsibility? I can think of no reason why those who have gained experience with the independent living fund should not be invited to serve on the new bodies.
  Who will have access to the trust deeds for the new bodies? They were published on 25 February, but I have not yet studied them to the extent that they have been studied by the hon. Member for Stratford-on-Avon. I assume that they are generally available to Members of Parliament, but will they be made readily accessible to those outside this place so that they can study them and ask questions about them?
  When will the regulations—if there are to be any—be introduced? Perhaps the trust deeds will stand by themselves, which would be a strange parliamentary

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  procedure. The guidelines and implementation of the funds would be described, constrained and set out in trust deeds rather than in statutory instruments. If there are to be statutory instruments, will they be subject to the negative or the affirmative procedure? Will they deal with the procedures for review or repeal?
  The hon. Member for Stratford-on-Avon dealt adequately with the point about payment in cash directly to the recipient.
  I welcome the Motability scheme as a beneficial scheme for those with access to it. However, I am puzzled why the administrative expenses should be so high. If my researchers are right, the scheme cost £1·8 million in administration in 1992–93 for an equipment fund of only £1 million. I accept that increases have been admitted during the course of the changes, and the Minister referred to them in passing—£2 million administration costs for a £2 million equipment fund. Nevertheless, I do not understand why it should cost that amount to administer what I accept is a beneficial scheme but which involves a relatively small amount of money.
  What estimates have been made of attrition rates? The Government are being a little optimistic about new people gaining access to what is, in effect, a cash-limited fund. What has been the experience with the rate of deaths among those who have benefited from the fund? It is important to know what provision has been made for increased access by new applicants.
  The question of ring fencing has a particular application north of the border. Although there was ring fencing in the community care budget south of the border in England and Wales, the community care budget for Scotland has not been ring fenced. I want an assurance that the Bill and the provisions of the community care budget will not have a knock-on application in Scotland after 1 April.
  I want to raise a point about resources and the £500 ceiling. I understand that there are two component parts to that. I cannot think of any way to index that figure. I may be wrong because I have not studied the trust deeds to the same extent as the hon. Member for Stratford-on-Avon. However, it is an important question and we need to know how the Government intend to achieve some level of indexation for the middle to long term.
  The sum of £4 million that has been set for the extension fund is not enough. I need to be convinced that it is anything like enough money to meet the demands on the fund. The hon. Member for Stratford-on-Avon and I referred earlier to an extension to those aged over 65. That matter should be reviewed.
  The measures contained in the Bill should have been brought to the House a long time ago. The process of consideration has not been properly thought through. The consultation, such as there has been, with interested parties has been inadequate. The level of resources provided in the Bill appears to be inadequate for the tasks set out. If the needs of those with severe disabilities are to be properly catered for, I fear that the House will need to return to these matters before very long.
  6.49 pm
  Mr. David Willetts: I welcome being able to participate in a debate on legislation in which a clear manifesto pledge is implemented so effectively. The Bill implements this pledge in the Conservative party manifesto:
  "The Independent Living Fund has proved a great success in giving severely disabled people an opportunity to live in the community. We are committed to maintaining a fund which supports the most severely disabled people."
  The Bill is a distinctive and subtle mixture of continuity and change, which is just what one would expect of the Government. In particular, the continuity comes from the name of the new fund.
  An enormous amount of help is now provided to disabled people. The total benefits budget is approximately £15 billion—an increase three times the rate of inflation since 1979. One difficulty in debating that budget and its enormous increase is that many people outside the House think all that expenditure goes on the severely disabled. They do not appreciate that under some of the definitions of disability with which we now work—for example, in the recent work of the Office of Population Censuses and Surveys—people with relatively modest impairments to movement count as disabled. There are 6 million disabled people in this country and I am sure that there are right hon. and hon. Members who would count as disabled under some definitions now in use.
  None of the uncertainties about what exactly constitutes a disability affects the Bill, because it undoubtedly deals with the severely disabled—those whose disabilities are much more severe than those suffered by people oh, for example, invalidity benefit.
  The Bill can be traced back to the social security benefit review of the mid 1980s and the enormous pressure under which the Government found themselves to simplify the then supplementary benefit rules. I vividly remember the then Secretary of State for Health and Social Security, my right hon. Friend the Member for Sutton Coldfield (Sir N. Fowler), coming to a meeting bearing two volumes of supplementary benefit regulations and saying that the system was collapsing under the weight of its own complexity. He argued that it was impossible to expect social security office staff to administer a system that had become so intricate.
  The pressure therefore was for simplification, so the Government simplified the system to create income support, which is in many ways superior to the scheme that it replaced. But the Government found that many of the specific areas of help provided under supplementary benefit could not be ignored. The domestic care addition, then paid to 6,000 severely disabled people, was a classic example. While moving from a complicated system to a much simpler one, the Government found themselves having to introduce a new element of discretionary help for the severely disabled to replace the old domestic care addition. Hence, the independent living fund was born.
  There has been almost universal praise for the discretionary ILF in today's debate, but it struck me that no one referred to the social fund. The social fund was a parallel initiative in providing discretionary help for people in particular need. It had the same origins—it, too, was an attempt to keep the new income support system simpler than the previous supplementary benefit system. I hope that hon. Members who praised discretion today will not, next time that the House debates the social fund, give

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  sermons on how the discretionary distribution of public money somehow contradicts a fundamental principle of the British constitution.
  Mr. Frank Field: We have been intervening because we are burying the independent living fund in all but name. Is the hon. Gentleman proposing that there should be a Bill to do the same to the social fund?
  Mr. Willetts: As the hon. Gentleman knows, I support the principle of the social fund. With the establishment of the two new funds under the Bill—the extension fund to cover people receiving payments under the old arrangements and the 1993 fund—there will still be an element of discretion in the system. I respect the hon. Gentleman's comment, but it does not address the fundamental point—if discretion is acceptable in respect of the severely disabled, why is it not acceptable elsewhere in the system? The arrangements make a reasonable attempt at providing a framework of general rules by which public money is distributed and for a reasonable element of discretion.
  There is a second paradox in some of the arguments made today, particularly by Opposition Members. A perennial dilemma in public policy is the way in which central Government should handle their relationship with local government. We are used to hearing the criticism that ours is a centralising Government taking discretion away from local authorities and denying them the freedom that they need. Yet hon. Members who happily make that criticism are also among those who plead most vigorously for severe limits on local authority discretion when it comes to the new community care proposals that are to be implemented in April.
  The hon. Members who argue that ours is a centralising Government are the ones who are the most vociferous in pressing for ring-fenced grants and specific central Government limits on the action that local authorities may take. When it comes to practical implementation, those hon. Members' commitment to local authority discretion seems rather wanting.
  We heard today from members of Labour's Front Bench the ultimate logical absurdity, by way of a demand for a ring fence within a ring fence. Labour is not happy with the overall ring fencing of £565 million for central Government grants to local authorities to spend on community care, but wants ring fences within that—for specific assistance previously covered by the ILF. The only business that would thrive under that system would be fence making.
  There must come a point at which, if we are serious about giving a role to local authorities, they must have the discretion to exercise their judgment in distributing the enormous sum of public resources available to them.
  Mr. Dewar: Does the hon. Gentleman object to the concept of extending local authority power by allowing authorities the discretion to make cash grants in the circumstances of particularly difficult cases? The Minister seemed to be saying—I hope that I am not misrepresenting him—that local authorities are too busy and that administrative difficulties might be created. He gave that as the reason for not allowing such discretion. I hope that the principle of such an extension might appeal to the hon. Gentleman.
  Mr. Willetts: I will refer to that aspect later. The hon. Gentleman's instincts are good in respect of policies that particularly tempt me.
  Like many hon. Members who spoke today, I have been much influenced by the work of Jenny Morris of the Rowntree trust, who has undertaken valuable and practical research into the assistance that disabled people particularly want. We all know the buzz words of independence and flexibility. While many working in social service departments recite those words as mantras, research by Jenny Morris and others show that independence and flexibility are still not necessarily the experience of the severely disabled.
  I would like to set out some of the lessons of the research about what flexibility and independence really mean. One thing that we have learnt is that receiving domiciliary care in one's own house is not always the best route to flexibility and independence. I fear that we may be going from one extreme to another. Everyone is now supposed to be against institutional care in favour of care that enables people to live in their own homes, but one's own home should not become a prison. People should not be given care only if they stay within those four walls; it should be possible to provide a care package that allows people the freedom to leave their own home from time to time. One of the strong messages of the research is that domiciliary care must not become a sophisticated and up-market form of imprisonment.
  It is also important that people requiring care should be able to exercise the maximum choice in the care they receive. One of the anxieties that many Conservative Members have had over the past few months—as Ministers know—is that some local authorities will succumb to what must be a conflict of interests. They are the purchasers of care, yet many are also providers of care. They will be strongly tempted to push as much as possible of their budget in the direction of their own employees. That is why I welcome the 85 per cent. rule, which will require local authorities to spend a very high proportion of the extra grant that they will receive from Government on private providers. There is no reason why services for groups such as the severely disabled should be provided by public sector employees.
  Mr. Frank Field: For the first time that I have heard him speak in the House, the hon. Gentleman seems to be caught in a time warp. It is perfectly proper for him and his hon. Friends to point out that it is wrong for Opposition Members to be committed to the idea that public provision must be better than private provision. Is he not making a similar error by saying that the Bill marks an advance because it will tie local authorities to providing 85 per cent. of care through the private sector? Is not the big divide one of freedom? The Bill marks a failure in our attempts to protect and extend the freedom of the individual. It marks an increase in paternalism: no matter what skills the hon. Gentleman deploys in presenting his case, that is what is happening. Whether it is local authority or private provision is a secondary issue; it is less important than allowing people to choose for themselves.
  Mr. Willetts: The fundamental dilemma presented by the Bill is whether we believe in community care. Despite the attempts of the hon. Member for Huddersfield (Mr. Sheerman), I was not persuaded of the possibility of combining the previous arrangements for the independent

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  living fund with the principles of community care, which give local authorities the lead responsibility for the assessment of the needs and means of people who come within the categories laid down by community care policy. The ILF was established before the implementation of community care policy. It strikes me as unfair on local authorities—and, indeed, inconsistent—to say, "We back community care and believe in this discretion for local authorities, but we are not prepared to give them such a role in regard to severely disabled people." That is the dilemma on which the hon. Member for Birkenhead (Mr. Field) and the Opposition Front Bench seem to be impaled.
  Mr. Field: It is a simple point. I believe that the lead authority should, wherever possible, be the individual; the hon. Gentleman clearly does not.
  Mr. Willetts: I entirely accept that and I was about to deal with it in my speech. The individual—a person requiring care—should be empowered by the policies, if I may use an expression that originated with the new right in America and has now been picked up by the Labour Front Bench. I do not believe that community care makes such empowerment impossible.
  Mr. Sheerman: Let me add my voice to that of my hon. Friend the Member for Birkenhead (Mr. Field). The empowerment of the individual is what is important. Community care is not such an ideologically iron construct that we cannot build into it the idea on which it was originally based. Originally, it was seen by both sides of the political spectrum as the ability to enhance the development of individual potential. We should subscribe to that concept, but we should apply a criterion—does community care achieve what it was originally intended to achieve? Sometimes it does, in the Government's terms; sometimes it does not. In the present instance, Labour is saying that it does not.
  Mr. Willetts: Two different points are being made and Opposition Members are in danger of confusing them. I accept that community care reforms must be implemented in such a way as to give maximum choice and power of decision to those receiving care. That is fundamental and I will come to it later in my speech. I do not think, however, that it follows that community care can be provided only for certain groups and that the ILF must be kept on its old basis for severely disabled people.
  It seems to me that the sensible approach is to ask how the new community care reforms can be introduced in a way that maximises power of the individual. We cannot say that the community care policy applies to some groups, while the old ILF structure applies to other groups.
  Mr. Sheerman: What would the hon. Gentleman say to the hon. Member for Mid-Kent (Mr. Rowe), who would agree with him about empowerment through community care, but says that that can be facilitated by giving local authority social services departments the ability to pay cash to individual disabled people?
  Mr. Willetts: I have already been pressed about that and I shall return to it in a moment. My hon. Friend the
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  Member for Mid-Kent (Mr. Rowe) has been sadly absent this evening, given the contributions on the subject that he has made in the past.
  I accept that our objective is to maximise the independence of the recipient of community care. We should draw on the research that has been done and on our own conversations with severerly disabled people.
  Mr. Barry Porter: I hesitate to intervene when all the experts on compassion are gathered together, but I am rather puzzled. The right hon. Member for Manchester, Wythenshawe (Mr. Morris) and one or two others have suggested that the Bill is Treasury driven. I am present only because I do not see why the severely disabled should be subject to a flint-hearted Treasury if that can possibly be avoided. How what money there is should be distributed, whether it should be cash limited and whether local authorities should do this, that or the other is a matter for the hon. Members who have appointed themselves as experts.
  Is this a Treasury-dominated Bill? Is it an attempt to save money, or is it an attempt to launch a better and more organised system, whereby the severely disabled are treated in the way in which human beings should treat them?
  Mr. Willetts: I must confess that, when I hear that the Bill is supposedly Treasury driven, I experience a mixture of emotions, having been a Treasury official for six years. I am not sure whether a Treasury driven Bill is necessarily as terrible as some hon. Members clearly assume it to be. If "Treasury driven" means that a Bill applies sensible criteria to the spending of taxpayers' money—even in regard to social security and benefits for disabled people—I very much hope that this Bill is Treasury driven. I also believe, however, that, within the community care arrangements it is perfectly possible to pursue the crucial objective shared by hon. Members on both sides of the House—that the recipients of care have the maximum power and ability to decide when it comes to the pattern of care that they receive.
  There are clear lessons to be learnt from the work of researchers such as Jenny Morris and from our own practical experience of the right and wrong ways of delivering care to those who need it. One of the obvious practical messages is that recipients of care do not like their living rooms becoming like Victoria station. They do not like a host of public employees employed by different services thinking that they have a God-given right to knock on the front door, come in and check on the occupants or deliver some distinct service. It is important to have a limited range of contacts, with one or two people providing a variety of services. For example, I regret the tendency for home helps to be called home carers and to cease to provide the range of services that they provided when they were home helps. That is a perennial complaint by recipients of care services. There is no party element in that comment; the observation could be made by any hon. Member. There is no reason why the proposed community care changes should not help us to address that problem.
  Another important matter is the power of disabled people to employ the care that they choose. That has been touched upon in the comments about cash. I am struck by the conversion of Opposition Members to the cause of private employment contracts and the cash nexus. I was brought up when the ultimate hero of the welfare state

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  among Opposition Members was Richard Titmuss, who wrote about the gift relationship in blood transfusions and who thought that bringing the cash nexus of private contractual arrangements into the provision of welfare was corrupting and somehow removed the overriding ethical purpose of the welfare state. Several Opposition Members called for the direct payment of cash, the direct employment of providers and clear contractual arrangements. That represents an extraordinary transformation of thinking about the welfare state. Conservative Members greatly welcome that.
  Mr. Sheerman: I was taught by Richard Titmuss at one time. If anything, he was almost the ultimate pragmatist. He said that if a concept worked for the individual and delivered the service it was ideologically sound. If it did not work and did not deliver, another way should be found. To tar Richard Titmuss with a narrow-sighted ideological view of the world is a Treasury reaction and it is not right.
  Mr. Willetts: The hon. Gentleman, who sat at the feet of Titmuss, will agree, I hope, that Titmuss's definition of the core of the welfare state, its ethical function, was incompatible with private contractual arrangements. There has now been a plea for such arrangements. I shall now discharge my earlier promise to address the issue of whether local authorities should be allowed to give cash to people who need care.
  I understand that for local authorities suddenly to become issuers of large numbers of giro cheques would represent a dramatic change in their functions. In effect, they would become branches of the Department of Social Security and instead of changing the way in which care was allocated the Department would be reinvented. However, two arrangements are widely used to avoid the legal obstacle to local authorities giving out cash and they achieve the flexibility that we should like to see. One such arrangement is for local authorities to give money to charities which would then pass it on to people who are in need of care. The other arrangement is for trusts to be established specifically for the purpose of helping severely disabled people. Perhaps the Minister can explain the Government's view of such arrangements, which seem to enable crucial flexibility to be maintained without breaking the requirement that local authorities do not simply hand £10 notes over the counter.
  I have spoken about the background to the measure and about the need for independence and flexibility and what those great terms mean in practice. Finally, let me set out two grounds for optimism about the policy on disabled people. We often address the difficulties, but we do not always remind ourselves of fundamental changes that seem to bring great hope to disabled people. The first such change is technological advance. Severely disabled people have benefited greatly from rapid technological change since the war. That has made it possible for them to receive much more assistance and to enjoy much more mobility and flexibility in meeting their personal needs. Of course, it also makes it possible for increasing numbers of disabled people, even those who are severely disabled, to hold down jobs. Advances in computer processes have enabled people with little control over their limbs to carry out remunerative employment. Therefore, I especially welcome the disability working allowance, which is an attempt to encourage the future employment of disabled
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  people. I hope that it will grow from its rather modest beginnings as more and more disabled people hold down paying jobs.
  The other cause for optimism is the changing pattern of wealth and income in our society. One of the fundamental changes is that older people are becoming richer. That change is no surprise because in a successful free market economy people acquire assets during their working lives and run them down in retirement. A high proportion of disabled people are older citizens: many of them are over 60.
  We speak about disabled people and about the extraordinary transformation in the financial circumstances of retired people, but rarely do we bring the two together and recognise that some retired disabled people hold assets and enjoy the ownership of their home, a telephone, television set and central heating—the sort of benefits that everyone now expects. That increase in wealth and income which is a feature of today's retired population has improved the prospects of many disabled people because they are disproportionately represented in the retired population.
  I welcome the Bill and the Government's extraordinary record in trebling the amount spent on disability benefits. Their record surpasses that of any Government this century. I hope that the Minister will address the specific issues that I have raised.
  7.18 pm
  Mr. Norman Hogg: The hon. Member for Havant (Mr. Willetts) will forgive me if I do not follow closely on what he said. He made an interesting speech and even had the audacity to quote from the Conservative party manifesto. Anyone who does that is bound to cheer up our proceedings.
  I pay tribute to the work of the independent living fund during its five years of existence. I am sure that hon. Members will agree that providing the support necessary to enable disabled people to live in their own homes rather than in residential care is a worthwhile aim. The ILF has carried out its function with great success. The fund has been administered with great skill by the trustees and has become an invaluable source of help for disabled people. About 21,000 or 22,000 disabled people receive help from the fund, and I and many of my hon. Friends wish that the Government had had the wisdom to keep the fund functioning instead of winding it up in this manner.
  It has also been a good deal for the taxpayer, a point that was made by my hon. Friend the Member for Huddersfield (Mr. Sheerman). Residential care is very expensive. The small amount of taxpayers' money used for grants from the independent living fund has saved the Exchequer money in the long run. The average ILF grant is about £106 a week. I cannot think of a residential home that could provide care for that sum of money.
  Before I discuss the new arrangements, I must say a word about the manner in which the ILF was closed to new applicants. The use of a parliamentary answer on 24 November to announce the closure of the fund at midnight the very next day left many disabled people in the lurch. How could anyone be expected to find out about the closure of the fund and organise the submission of an application within 24 hours? Such a deadline might have been more acceptable had it been announced well in advance, but that was not the case. There was no

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  consultation whatsoever with organisations representing the disabled and no warning was given that the door would slam shut in this manner.
  The plight of those trying to submit new applications was made worse by the fiasco over the disability living allowance. The condition that applicants had to be in receipt of the higher rate of attendance allowance or the care component of DLA caused great difficulties for potential applicants because of the mess over the administration of those benefits. I am sure that all hon. Members have received as many letters about this as I have.
  Since 25 November, disabled people who would have applied to the ILF have had nowhere to turn. Given the success of the ILF, acknowledged by the Government in the need for the successor arrangements dealt with by the Bill, what justification can the Minister have for cutting off all help between the end of November and April? Was this not a callous act where the money saved was far outweighed by the hardship caused to disabled people?
  The new arrangements themselves give great cause for concern. The Government have cut the scope of the new independent living (1993) fund. The new fund is intended to deal with only 1,500 applications per annum and it is being restricted to people of working age. Common sense tells us that the age restriction is a major cut in provision, as the elderly disabled relied heavily on the ILF; 34 per cent. of the ILF's caseload were over the age of 65.
  The Minister said in reply to a parliamentary question tabled by my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) that the cost of extending the new fund to cover people over retirement age would be only £2 million next year. Will the Minister reconsider this restriction, given the small amount of money saved by it? Again it seems as though the Government are set to cause great distress to the elderly disabled in order to save a very small amount of money. In my view, it is simply not worth it. I hope that the Government will think again.
  The Minister made great play of his view that most of the sort of help provided by the ILF will be provided by local authorities, following the introduction of the new community care arrangements. The Secretary of State for Health did indeed announce extra funds for local authorities for this purpose, totalling £26 million next year. However, the fact is that, although overall local authority budgets for community care are ring fenced in England and Wales, the extra money announced by the Secretary of State for ILF purposes is not. Is there not a great danger, given the pressures that local authorities are already under over community care, that this money will be swallowed up in the general community care pot?
  It is not only the total amount of money available that causes concern; the restrictions upon its use also cause concern. As I understand it, the criteria for help from the new ILF are that, where the costs of independent living for a disabled person exceed the costs of residential care, he or she will be able to apply for help from the fund. That will happen only after the local authority has assessed the needs of the person concerned. It would therefore appear that independent application to the new ILF is excluded. Instead, everyone will have to go through the local authority.
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  In addition, the help provided by councils will have to be in kind—I think that it was described by the right hon. Member for Chelsea (Mr. Scott) as services. They will not be allowed to give cash grants in the way that the ILF did. The only group who will now get cash grants will be those for whom the costs of living in their own home exceed those of residential care. That is, surely, a retrograde step which will deprive many disabled people of the freedom of choice that they were able to exert under the ILF.
  Disabled persons who received help from the ILF could, under the old arrangements, use a cash grant from the ILF to organise their care in the manner best suited to them. How can that be the case under the new arrangements, when most people will not receive help in the form of cash grants? Help in kind is inevitably less flexible than help with cash, over which the recipient has control. I do not understand the Government's thinking, since they constantly claim that choice is a hallmark of their administration.
  Are the Government saying that disabled people are unfit to exert free choice? Can they not be trusted to obtain the best help, with the resources available to them? I am confident that local authorities will do their best to administer the new arrangements with the greatest sensitivity, but it is difficult to see how they can match the freedom conferred by the cash grants allocated under the old ILF.
  All these new arrangements will need to be carefully monitored. I hope that they live up to the claims that the Minister and others have made for them. I have made it clear that I should have preferred the ILF to continue. Given the Government's determination to end it, I hope that the new arrangements can at least be amended. The least that should happen is that the exclusion of those over retirement age should be rescinded and that help from the new fund should be extended to them.
  The Government should also think again about the funding arrangements. I realise that there are pressures upon public spending, but it will be a dark day indeed when we have to start economising on help for the most vulnerable people in society. I hope that the Minister will address some of these points when he replies to the debate.
  Mr. Sheerman: As I understand it—perhaps the Minister will confirm this when he winds up the debate—the law in Scotland on cash payments is different. The hon. Member for Havant (Mr. Willetts), who is now leaving the Chamber and who intervened several times during my speech, should appreciate that, as I understand it, the law in Scotland is different and that cash payments by local authority social services departments to adults are permissible. Can my hon. Friend and the Minister clarify why that should be so? It means that some bold and interesting experiments that could not be carried out in England could be carried out in Scotland.
  Mr. Hogg: I am grateful to my hon. Friend for raising that point. He is right to say that the situation in Scotland is different. We would argue, of course, that in Scotland we do it better. Therefore, we are always willing to give advice on these matters. If, therefore, the Minister wishes to contact me about them, I shall gladly give him advice.
  7.28 pm
  Mr. Peter Thurnham: Thank you, Madam Deputy Speaker, for allowing me to participate in this excellent debate. I apologise for being unable to attend all of the debate because of developments in Bolton where, tragically, a doctor died from AIDS but did not disclose his condition while treating patients. His name had not been revealed by the health authority, and I have been pressing all day for it to be revealed so that my constituents can at least allay their anxieties on that score. The development of AIDS is another matter for which there may be a need for more care in the community.
  I especially enjoyed the opening speech by my right hon. Friend the Minister for Social Security and Disabled People. I should like to place on record how excellent his personal contribution has been. It is fair to say that the independent living fund was his creature. From small beginnings with a £1 million budget, the fund expanded to a budget of more than £100 million and is a good example of how there is nothing so permanent as that which is regarded as a temporary arrangement. I believe that the arrangements now being discussed will prove to be just as important as my right hon. Friend's 1988 initiative.
  In 1988, the right hon. Member for Manchester, Wythenshawe (Mr. Morris) condemned the fund by saying that it would be seen as an abdication of the Government's responsibility. However, as my hon. Friend the Member for Havant (Mr. Willetts) said, one of the remarkable features of the debate is the coming together of thinking among the parties. The Labour party is now endorsing the thoughts of Conservative Members, which goes to show that the original thinking behind care in the community is now being done by Conservative Members as much as it ever was by Labour Members.
  Mr. Sheerman: I know that the hon. Gentleman is an entrepreneur. We know each other in a different guise as co-trustees of the National Children's Centre, which is based in my constituency. It was not the Government who were the driving force behind the independent living fund but the disabled people themselves and what they wanted. If the hon. Gentleman saw a going concern, which was enormously successful and had been running with great acclaim from the consumers for five years, would he, as an entrepreneur, wind it up and start something completely different?
  Mr. Thurnham: Firstly, on 1 April new arrangements for community care will come into force. They did not exist when the ILF was set up. Secondly, we have set up two funds which will continue to provide for existing recipients of the benefit and for the topping-up of additional requirements. I am sorry that I was unable to hear the hon. Gentleman's speech, but perhaps he could explain what he is driving at.
  Mr. Sheerman: I gave full weight to the Minister's contribution in setting up the ILF, although I also said that it went far beyond his expectations. It was set up because of pressure to fill a void or gap in social security provisions because of changes in the over-arching laws on social security. We were arguing that, these days, such provision should be driven by what the disability lobby and disabled people want. The matter should not be put into the hands of social services departments or other people who will act as a barrier between those who know
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  what they want and a decent independent living fund, which can respond quickly and without intermediaries to existing need.
  Mr. Thurnham: The hon. Gentleman has not enlightened me. I should have thought that he would favour the new arrangements for community care, the responsibilities that have been given to local authorities and, now, the top-up. I think that he will agree that, when one is dealing with the most disabled people, one source should not be regarded as the sole provider of all care. It is a matter of partnership and if additional people can be involved, so much the better. I intend later to cite the cases of one or two constituents who feel that the partnership still needs developing because the carers are contributing the most.
  We are setting up the independent living fund anew, with two new arrangements. I should have thought that the hon. Gentleman would welcome that as an additional provision to those of the local authorities'.
  Mr. Sheerman: We shall have a system which will he less well funded. To get help, a disabled person will now have to go through what the Minister called "gatekeepers". The hon. Gentleman was here for the Minister's speech although he did not hear mine so he will have heard that the gatekeepers will be the local authorities and the new independent living fund, which will send their own social workers to make an assessment. The DSS will also have a role. There will be a new bureaucracy instead of the direct relationship which, knowing the hon. Gentleman, I should have expected him to applaud. There will no longer be a direct relationship between the disabled person and the independent living fund. I am sure that the hon. Gentleman understands that the Bill will put three intermediaries or gatekeepers into that relationship. Why on earth should disabled people want gatekeepers between them and their express needs and desires?
  Mr. Thurnham: The hon. Gentleman begs the question of how well local authorities will carry out their duties. Under care in the community, it is clear that their duty is to assess what the needs are and then establish how they are to be met. If there is to be an additional provision, I welcome it. I cannot understand why the hon. Gentleman suggests that one should ignore local authorities' responsibilities. They are important responsibilities and cause me great concern in case they are not exercised correctly.
  In the past few days I received a letter from a family in Bolton. It runs to nine pages so I shall not read it all. It is from Mr. and Mrs. Whiteley who describe eight years of the most intolerable incompetence by the local authority, as a result of which Mr. Whiteley lost his job and the family lost their house while the council said first one thing and then another about help in caring for their son Andrew. He is now nine years old and suffers from spina bifida. Caring for him is more than Mrs. Whiteley can manage on her own. The local authority has messed this family about so much that Mr. Whiteley had to give up his job, and the family have lost their house, because of the administrative confusion.
  It is most important that local authorities carry out their responsibilities properly. In that respect, the Government should be congratulated on the provisions that they have made. There has been a substantial increase

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  in financial provision, with a trebling of the money for care, which has increased from £5 million to £15 million in real terms over the past 14 years. There has also been a substantial increase in the number of people provided with care. When the Labour party was in power only 360,000 people received help with the cost of care or mobility. Now, 2 million people receive such help.
  Although there have been criticisms of the way in which the benefit agencies introduced the new allowances, substantial numbers of people have benefited and in a shorter time scale than when the Opposition introduced the mobility allowance and took four years to deal with far fewer people.
  I have just received a letter from Mr. and Mrs. MacDonald—Iain and Wendy—of 25 Rose Lea, Harwood. They say that the new arrangements are working well. Mr. MacDonald wrote to appeal about one matter relating to the disability living allowance but says:
  "I am, however, completely satisfied with everything else. Thanks to your intervention my case has been handled personally by Mrs. Pauline Padley, Customer Service Section, Invalid Care Allowance Unit, D.S.S. Palatine House, Lancaster Rd., Preston. I cannot stress too highly the sympathy, help and understanding she has given to myself and my wife. She is a credit to herself and her Department…if the time could be found…to thank her I know how much it would be appreciated. It is the only gesture I can think of that would be in keeping with her continuing efforts on our behalf."
  I quote that letter as an example of how well the Government are making the new arrangements work. In this case, the invalid care allowance is the important benefit which the MacDonalds are receiving.
  The calls for additional top-up funds through the new independent living funds will become greater. Just as the original fund grew from £1 million to £100 million—this is the point made by the hon. Member for Huddersfield (Mr. Sheerman)—the demand on the new funds will be substantial and will grow.
  I refer to a letter that I have received from Mrs. Cummings of 280, Hough Fold Way, in my constituency. She cares for her adult son David who is severely handicapped and she points out that the funds that she gets at present from the independent living fund are supposed to be sufficient for 21 hours of care per week. She finds that the costs are greater than the amount that is being provided by the ILF, leaving her out of pocket. Each month, the ILF provides her with £322, but each month she actually pays out more than that and receives less care than the 21 hours that she is supposed to be able to receive. She would like the ILF to have greater funds for her requirements. She would also like additional funds to cover respite care so that she and her husband could have a holiday. The funds that they have at present are not sufficient to provide for that.
  Mrs. Cummings gives the example of how Crossroads care committee in Bolton has arranged to fund one family with £8·50 a week to buy in care at the weekends. However, Crossroads charges £8·90 per hour at weekends. So the amount provided is not enough for one hour's care. She also refers to other recipients of care from the Crossroads fund who do not receive enough to meet requirements. She gives the example of a family who are allowed £200 a month by the ILF, although the amount
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  required for the number of hours of care specified would come to at least £240 on current costing. Again, she presses for further help in that respect.
  Mrs. Cummings then points to the extra costs that arise when people suffer from incontinence. I should like the Government to consider the better provision of incontinence aids because the costs of such aids can lead to substantial extra charges for individual carers who find that the supply of aids as arranged at the moment is insufficient for their needs.
  I am delighted to say that a new respite care centre is being set up in Bolton through the voluntary arrangements worked out with the Bolton Handicapped Action Group. I commend its work to the Minister and I hope that he will have an opportunity to come to see its work. The group has set up in partnership with the health authority and now, I believe, with the local authority to provide a package of care. It will manage the new respite care centre which, I am delighted to say, will be called Grosvenor House, thanks to the support of the Duke of Westminster who was happy to lend his name to the initiative.
  I confirm that the way in which the Government have provided additional funds will give the flexibility that is so important with care and especially for those who are the most severely disabled. At present many people's care packages cost less than £500 a week because of the uncosted input of the individual carers. There is anxiety about the possibility that if carers cannot contribute fully and if care has to be bought in, sufficient care could not be provided for £500 a week. That raises the threat of the person who is disabled being moved into a home against the family's wishes. I should be grateful if my hon. Friend would consider that aspect and if he would give assurances that the future level of care limits will be reviewed so that people need not fear that the one for whom they care so lovingly may be moved into a home that is not of his or her choice when the family would prefer that person to be able to live at home if funds were available.
  I commend the Bill to the House and I congratulate the Government on their record of care for the disabled. I look forward to a continuing growth of the funds for people with disabilities. Although the Opposition have had thoughts on these issues, when in power they failed to fund the requirements of the social services budgets. Only this Government have been able to find the money to provide for such a substantial increase as we have seen to date and which, I am sure, will continue.
  7.44 pm
  Mr. Malcolm Wicks: As we near the end of the debate, it is important to recognise that we have heard many good speeches and two very brave speeches. As has been said, one such speech was made by the hon. Member for Havant (Mr. Willetts). He quoted from the Conservative party manifesto and thus nailed once and for all the vicious rumour among the Opposition that all the copies had been collected up, ring fenced and burnt. It is unfortunate that he did not have time to quote other pledges in the manifesto so that we could debate them, too.
  The other brave speech was made by my right hon. Friend the Member for Manchester, Wythenshawe (Mr. Morris). Waxing strongly—rightly so—about Motability, he compared the numbers benefiting from Motability with the size of the Chinese army. To have made that

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  comparison on the day that the Foreign Secretary made a statement about Hong Kong was brave. Motability may soon have its finest hour. The hidden message in my right hon. Friend's speech will not be lost on military strategists in Beijing.
  The key words today have been cash, care and choice. We are at the interesting stage of looking more rigorously at the association and interface between care and cash and, therefore, at the interface between two Government Departments—the Department of Health and the Department of Social Security. As a new Member of Parliament, I am struck by the fact that one cannot ask parliamentary questions about how one Department co-ordinates with another, yet in many respects today we have been discussing that very theme. Increasingly in social policy we are dealing with matters that cut across departmental boundaries and we need to get the discussions right in this area.
  We are also approaching 1 April when principles, policies and philosophies about community care will be tested by realities and by practice. The timing of this debate is good. There is widespread agreement that the goals of community care are right and that they are goals that we all want to be implemented. The White Paper "Caring for People" said that the components of community care included
  "services that respond flexibly and sensitively to the needs of individuals and their carers; services that allow a range of options for consumers…services that concentrate on those with the greatest needs."
  In discussing the ILF, we are often talking about those with the very greatest needs.
  All the objectives are excellent, but we must now ask tough questions about the practice. I hope that we shall do that during the rest of today's debate and in Committee. There is a sense in which, as we approach 1 April, the waters of community care are becoming murkier As we move towards the end of March, there is a sense that we are moving towards, not greater clarity, but greater confusion. In certain letters that have been leaked, although not always published, we are hearing more about costs and less about choice. I worry about that.
  This is an appropriate opportunity to ask Ministers some clear questions. Is there now a limit on what social services authorities can spend on those with disabilities? Is the £200 limit now a clear limit?
  The Parliamentary Under-Secretary of State for Social Security (Mr. Alistair Burt)indicated dissent.
  Mr. Wicks: The Minister shakes his head, and I am pleased about that. I should like clarification of that point. In the social work press and more widely, there is concern that Government officials and the social services inspectorate are now warning local authorities that they should not offer too much to clients. The Minister may want to correct this. A headline in The Independent—which never tells a lie—on 12 March read:
  "Councils told to 'hide' care services shortfall".
  The article said:
  "The Department of Health has advised social services directors to keep secret the services they lack after community care comes into force next month.
  In a letter, an official says that they should not give people a list of nursing and community care services which they ideally need, in case the council is sued for maladministration if it cannot afford to provide the service."
  Given that we are all agreed on the objective of openness and the need to bring carers and the cared for
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  into the discussion about care packages, how can such secrecy be part of the deal? The Minister may want to shake his head again. I hope that, in conjunction with his colleagues from another Department, he will be able to tell us that social service authorities are not being cash-limited in that way. If they are, there can be no effective and honest partnership between those needing care and the care providers, which means that the objectives will not be fulfilled in practice.
  Hon. Members on both sides of the House have expressed concern about the £500 limit. If we are to judge community care partly by the extent of its impact on people in the greatest need, the question of the £500 cash limit, which will inhibit proper community care, is crucial. I hope that the Minister will say something clear and reassuring about his willingness to consider amendments in Committee. I understand that, at present, fewer than 1 per cent. of those benefiting from ILF money will be affected. I take that point. Nevertheless, that represents a significant number of individuals.
  Moreover, I think—and I shall be happy to be corrected—that, in practice, the £500 is a larger sum than is implied because, under the old ILF scheme, one could also get support from social services. If that is now being costed at up to £200, more than 1 per cent. may be caught by the care trap. I seek clarification on that.
  Whether we are talking about one or two people or several dozens or more, the crucial question must be what will happen in practice. What happens if the care package that is devised costs £600 or £700, as it may well do in the most extreme cases? Will that person have to go into institutional care? Some say that they will have to he dragged screaming and kicking if that is the case. Again, the Minister shakes his head.
  What happens if the social services department cannot afford to spend any more under the cash limit, given that the ILF regulations specify that the figure must be no more than £500? I am told that we are talking here about some of the most serious cases of paralysis—people who have broken their neck in a road accident and those suffering from multiple sclerosis or are in the more advanced stages of motor neurone disease.
  To those listening to the debate, £500 may seem a great deal of money—and it is a great deal of money—but a great deal of money is needed if someone who requires round-the-clock care is to be cared for in the community rather than in residential care, which is the principle to which we all aspire.
  As has been said, there is, in any case, no sense in asking a person to move into residential care if that will cost more than a package that could be devised. The individuals affected may be few: it would be nice to have some estimates. In any case, what happens to them will be a key test of the Bill, and we need to consider that both today and in Committee.
  I am worried that what should be a new dawn for community care is fast becoming a debate about residential care not only as regards the ILF and its cash limit per person but in different ways. Certainly, all the initial controversy following all fools' day will be about residential care—about whether people are having their costs paid and about the concerns of home owners.
  I have another fear. As a result of the Government's ideology and dogmatism, social service authorities will have to spend 85 per cent. of the new money on the so-called independent sector, which is predominantly,

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  although not exclusively, the private sector. The private sector is mainly—again, not exclusively—in the business of institutional care, so that will pull the money towards institutional rather than community care. If, as we have said today, the £500 limit stays and we cannot shift the Government on it—I hope that we can—some critical cases, who, despite terrible disabilities, live in the community and often thrive in and contribute to it, may be moved into institutional care.
  Moreover, there must surely still be many people suffering from terrible conditions who are in institutional care but who, in the right circumstances and given the right opportunities, cash and care—and, of course, the choice—could come back into the community and live more fully than they do at present. Let us not forget that group. We need to think how we can enable them to come back into the community if they want to. Can they do that with a package of care costing £500? Some will need more, and that is an important point.
  The theme of cash or care and the association between the two Government Departments may be a more fundamental theme for the future than this small but important measure concerning the ILF suggests. Our society is faced with important questions about the costs of disability and aging. We know that the Bill does not cater for those over 65, but we have to consider the costs of disability and aging and who should meet them.
  In future, in some of our mainstream debates about social security, and not least about pensions, we should ask about both the private sector—occupational pension schemes—and the public sector—the national insurance Fund—and determine whether the risks against which we should insure ourselves include the risk of the need for intensive care as well as pensions. If we discuss pensions on one day and community care on another, we start to make great mistakes about the risks facing us in our later life and the different ways in which we should insure against them.
  7.56 pm
  Mr. Charles Hendry: I am grateful for the opportunity to contribute to the debate. I am glad that the Government have found time for it in their programme. At a time when many of our attentions seem to he diverted overseas, it is nice to find time to consider matters rather closer to home which have a direct bearing on many of our constituents' daily lives.
  The Government's priorities for disabled people can be categorised in three ways: first, a desire to enable people to live as independently as possible; secondly, a commitment to target more resources on people who are disabled in a way that recognises their particular needs; and, thirdly, a commitment to look at their wider entitlement and interests to enable them to play as full a role as possible in society. The Bill addresses all three.
  Hon. Members have referred to a number of the ways in which the independent living fund has grown over the years. It has grown from £1 million in 1989 to £100 million today and is now helping 21,000 people, or more—this is one of the rare occasions when the Labour party is saying that we are helping more people than we say we are helping. The Opposition's support and encouragement on that are welcome. The House should be reminded that the introduction of the ILF was criticised and questioned by
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  the Labour party. In listening to the Opposition's concerns today, we should bear in mind the fact that they have not always been fulsome in their support.
  We should also bear in mind the fact that the fund has helped far more people than were being helped under the old supplementary benefit system. Before 1988, 6,000 people were being helped to the tune of some £30 per week. Today, 21,000 are being helped with a weekly average of over £110 per week. That shows clearly the Government's ongoing commitment.
  That takes us to where we should go next. There can be no doubt about the success and popularity of the ILF. We must accept, however, that the benefit was introduced initially to help the most severely disabled people. All of us have had constituents come to us and say, "My friend down the road has been given support from the independent living fund. Why can't I, since my condition is similar?"
  Inevitably in such cases, the boundaries become frayed and, in time, they are enlarged and more people benefit. It is very good that we can claim to be supporting more people than we ever envisaged supporting. However, we must also remember that the intention is to help the most severely disabled. The proposals will enable that intention to be maintained.
  We must also consider areas where there is clear consistency, not just in name, but in the way in which the fund will operate in future. Through care in the community, it is the intention that care should be tailored to meet the individual needs of disabled people and that the structure of the support should be flexible to allow that to happen.
  Also, and this is paramount, individual disabled people must be involved in determining how best their care needs can be met. We must stress, and the Government have made it clear, that the needs and wishes of disabled people should come first.
  Mr. Bradley: If the package designed by the local authority conflicts with the wishes of the individual, would the hon. Gentleman support the right of an appeal system within the proposals?
  Mr. Hendry: Any new system develops over time. We do not set a principle in cast iron and then, 20, 30 or 40 years later, say that it should not be changed. We must consider how the system operates and identify the difficulties. If flexibility or alterations are required in time, that can be achieved. To suggest that we are simply casting something in stone does not reflect historical precedents accurately.
  Mr. Bernard Jenkin: In the care in the community programme, we are dealing with local authorites which are ultimately governed by elected councillors and subject to the pressures of the normal lobbying process, not least the letter to the Member of Parliament asking him to intervene on behalf of the client concerned. Does my hon. Friend agree that the idea that we are creating a system in which there is no appeal procedure, redress or comeback is entirely false?
  Mr. Hendry: I agree with my hon. Friend. Many of us have received letters from our constituents about the independent living fund. We have raised cases on their

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  behalf and have been able to ensure that those cases were reviewed properly and effectively. Members of Parliament can and do properly play that role.
  I would also like to consider the fact that we recognise a need for change, but are also trying to establish a principle on a secure and long-term footing. On several occasions in my constituency, parents who are inevitably getting older have expressed their fears about their severely disabled children who may now be in their teens or twenties. They want to know how their children will be supported when they have died. That is an immensely responsible attitude.
  From the conversations that I have had with such parents, and having seen their sincerity, I have no doubt that they would like their disabled children to be looked after as much as possible in the home where they were brought up within the community. Parents recognise that in familiar surroundings it will be easier for their children to face the pressures.
  Several comments have been made about the role of the disability living allowance. Introducing something as large as that in one go has caused teething problems. I commend the Government for being willing to introduce something on a scale which will help more than 250,000 people. I commend them for introducing it in one go instead of phasing it in over four years, as the Labour Government did with mobility allowance; that helped only about 5,000 people. The Government took a brave and important step.
  There will inevitably be a rush of cases and a huge administrative caseload to be handled. However, I congratulate the Government on the way in which they have reacted to that and I congratulate the people working in the benefits offices on the way that they have dealt with those problems. As a result of their efforts, 60 per cent. of claims are cleared within a month and older people are being targeted as priorities.
  I am aware of cases in my constituency where people have felt that their cases have been delayed unduly. However, in relation to the vast number of cases that have already been handled, I have no doubt that the majority are being handled efficiently and effectively. There is now a system in place which is trying to push matters forward.
  Mr. Bradley: What does the hon. Gentleman think about a situation in which the application of one of his constituents may have been delayed and missed the cut-off point? That person may have been awarded DLA, but would not have been able to apply to the ILF. Should such a person be compensated because he or she was unable to receive help from the ILF?
  Mr. Hendry: One of the difficulties in implementing change is that there must be a cut-off date. We cannot get away from that. If after the cut-off date we say that anyone close to the cut-off date will receive special remedial treatment to ensure that that person does not receive less money than he might otherwise have received, we completely undermine the principle of change. If we are to make changes and tough and sometimes brave decisions, we must accept that there will be difficulties.
  It is easy for the Opposition. They are not trying to raise taxes to pay for the support. They are not responsible for Government decisions. It is easy for Opposition Members to say time after time, "Let's throw more money at it." As it is not the Opposition's money, they can spend it as if it is going out of fashion. That has always been the
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  Opposition's tendency. However, if the Opposition ever want to be taken seriously as credible politicians, they must accept some of the financial facts of life.
  Mr. Thurnham: My hon. Friend has just referred to the Labour party as the "Opposition". In a number of town halls around the country, the Labour party is charged with and is responsible for the delivery of services. From my experience and from the reports from constituents, I have noticed that many restrictions are placed on home helps—or, as they are now called, home carers—which include trade union restrictions and limits on whether they can work at weekends. I have heard that carers have been told that they must not work at weekends and they have had to do that work in secret. Opposition Members have said that they want more openness when such extraordinary arrangements are taking place. Does not that show that, when the Labour party is in power locally, things are very far from perfect?
  Mr. Hendry: As is so often the case, my hon. Friend is absolutely right. I would like to pay tribute to the incredible amount of work that he has carried out on behalf of disabled people through his involvement in charitable work and in pushing their case in the House.
  I need no lectures or advice from my hon. Friend the Member for Bolton, North-East (Mr. Thurnham) about the difficulties involved in living with a Labour local authority. My constituency is in Derbyshire and we have one or two problems with our county council, not least in that area. It consistently refuses to charge for home helps. To suggest to people who, in many cases, have significant resources and would be happy and keen to pay towards the costs of home helps that they may not do that is absurd. Ultimately fewer people will receive home helps because there is no way of getting the additional resources from the people who would be happy and willing to pay towards that provision.
  Mr. Jenkin: It is important that we do not tar all Labour councils with the same brush. I draw my hon. Friend's attention to Strathclyde regional council, with which I became familiar when I contested a Labour stronghold in Glasgow, Central in the 1987 general election. That council made a very bold move, probably unconsciously, realising that it was privatising its social services, when it made its social workers self employed. The council employed people on piece-work contracts which effectively made the work force much more flexible so that they could provide a much more flexible service to clients. I would not always criticise Labour local authorities in the way that my hon. Friend has just done, although there is always justification for doing that in certain cases.
  Mr. Deputy Speaker (Mr. Geoffrey Lofthouse): Order. The debate is now ranging rather widely. If hon. Members will keep their comments within the boundaries of the debate, we shall be able to discuss the Bill thoroughly.
  Mr. Hendry: I am grateful for your guidance, Mr. Deputy Speaker. I shall come directly to another aspect of the Bill that is worth our attention—Motability. All hon. Members will welcome the enormous growth in the provision of cars for disabled people under the Motability scheme. Since 1977, Motability has had a tremendous record for supplying cars. It hardly seems possible that in November 1991 Her Majesty the Queen presented the

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  250,000th car, yet less than two years later the Prime Minister will be handing over the keys for the 350,000th car. If we look at the number of cars that were provided last year, it presents an astonishingly good picture of an organisation that works effectively. In 1992, there were 75,195 applications for a car under the scheme, of which 63,745 were granted. That is an amazingly high figure and is a testimony to the way in which the Government have backed Motability by contributing to not only its running costs but its capital costs. The Government have worked in conjunction with the private sector, car manufacturers and those who convert cars to provide a real benefit to many members of the community.
  I became aware recently of the case of a multiple sclerosis sufferer whose family had not taken a holiday together because of his inability to travel around the country. With little support from me, Motability moved fast to provide and convert a car, and as a result he and his young family enjoyed a holiday. I pay tribute to its work and the way in which it has helped countless thousands of others. More than 140,000 people have cars under the Motability scheme.
  We should be grateful for the increased quality of cars. Not many years ago, we lived in mortal fear not of the quality of driving but of the fact that dangerous little three-wheelers were scurrying around the streets, posing a threat to many others. Disabled people can now have not only the dignity but the comfort of a standard car under the scheme, which is a tribute to the scheme and what it has been able to achieve.
  Dr. Liam Fox: I hope that my hon. Friend will give credit to car manufacturers and banks for the help that they give to the scheme. Many hon. Members often attack the clearing banks for their behaviour in some sectors, but this is one area where they are contributing much to helping disabled people.
  Mr. Hendry: I willingly do so. I paid tribute to the way in which car manufacturers have helped. I extend the warmth of my congratulations to the banks.
  The significant increase in resources allocated to the independent living fund has demonstrated the Government's record of support for disabled people. When the Government took office in 1979, 360,000 disabled people were receiving help with the costs of their care and mobility but the figure has now increased to 2 million, which shows how vastly increased our commitment to disabled people has been in the past 14 years.
  This year, £14·9 billion will be spent on the long-term sick and disabled, which represents an increase of £9·9 billion in the past 14 years. Any Conservative Member who suggests that the Government lack commitment in looking after the needs of disabled people need only look at those figures to realise how substantial our record of support has been.
  The Bill deals with disabled people as whole; real people rather than simply statistics and numbers. I will not rehearse a range of arguments across education, transport and other matters but will consider a couple of aspects, the first of which is the right of disabled people to employment. I was very pleased and honoured recently to open a conference in my constituency on behalf of the
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  placing, assessment and counselling team in Derbyshire, which considers how employers can better take account of disabled people.
  One of the things that struck me most during that seminar was the way in which the scales fell from the eyes of local employers who believed that there may be problems in hiring disabled people but who gradually realised that they should look beyond the disability at disabled people as whole people and hire them on the basis of their strengths and skills. One small element in that concept was the way in which the Government changed the title of my right hon. Friend from the Minister for the Disabled to the Minister for Disabled People. The Government recognised that they are disabled people and not an analogous lump. The more that employers do so, the better it will be not only for disabled people but for companies and employers.
  I pay tribute to companies in my constituency that have gone way beyond their quota in hiring people who have disabilities. One firm, Otter Controls in Buxton, has made it a policy to take on people with disabilities. Despite the difficulties of the recession, from which it is now recovering, it has done all that it can to ensure that it continues to be a major employer of disabled people.
  Mr. Alfred Morris: The hon. Member referred to the right of disabled people to employment. He will know that there is very strong feeling in all the organisations of and for disabled people in Derbyshire, in particular, about the importance of the Civil Rights (Disabled Persons) Bill. May I take it that the Bill has his support? I know of the hon. Gentleman's interest in this field. He will know how strongly the Bill is supported by the organisations of and for disabled people in Derbyshire.
  Mr. Hendry: I have told the organisations in Derbyshire that have made representations to me that I feel that the position taken by my right hon. Friend the Minister is correct. The Government wish to proceed through voluntary measures, and if that does not prove sufficient my right hon. Friend will reconsider legislation. I am instinctively opposed to unnecessary legislation. The rights of disabled people are immensely important, but it is much better to use voluntary procedures than to introduce legislation and the difficulties that go with it. As the legislation on equal opportunities for women and race relations have shown, there are inevitably difficulties when enshrining sufficient rights in law.
  The final matter that I wish to consider is access for disabled people. I commend a young lady in my constituency who is significantly disabled and who recently was pushed around the town of Buxton in her wheelchair by a disabled colleague. She took her video camera to try to highlight for the benefit of people such as myself who are blessed in not suffering from the disabilities that she has the day-to-day problems that disabled people experience in trying to live their lives as normal people. A lot of Buxton was designed by the Georgians, who believed in pillars and lots of steps, so it is not easy for a disabled person to move around in a wheelchair. The town was built on many slopes and hills, which makes life more difficult. My constituent's work has done much to bring to the attention of the county council and myself the difficulties that disabled people face.
  The Bill gives us the opportunity to look more generally at the needs of disabled people but particularly at the way

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  in which we look after and service the needs of the most severely disabled people in our society. I commend the Bill and recommend that the House gives it a Second Reading.
  8.18 pm
  Mr. Bernard Jenkin: My hon. Friend the Member for High Peak (Mr. Hendry) has given us an able assessment of the benefits of the Bill. Indeed, throughout the debate hon. Members have successfully explored its benefits for severely disabled people. I should like to comment on the contribution by the right hon. Member for Manchester, Wythenshawe (Mr. Morris) before he leaves the Chamber, and in due course on the speech by my hon. Friend the Member for Havant (Mr. Willetts).
  In a debate on a motion relating to the Bill of the right hon. Member for Wythenshawe——
  Mr. Alfred Morris: The Civil Rights (Disabled Persons) Bill.
  Mr. Jenkin: I am grateful. In that debate I thought that we explored extremely well the subject of disabled people and civil rights. It opened my eyes to some of the disadvantages of the current set-up.
  I remain unconvinced, however, that civil rights legislation in this area would solve the problem that it seeks to solve. There has been a gradual increase in the number of disabled people in employment and the disabled working allowance is proving of benefit, providing encouragement and incentive, not compulsion. That seems a better course.
  Mr. Alfred Morris: The hon. Gentleman has referred to the debate in the House on my Civil Rights (Disabled Persons) Bill on 26 February. He will know that the issue was debated for five hours on that day and that the motion was carried by the House after the Minister had spoken. I hope that he shares my pleasure in that decision by the House of Commons on that day. It is certainly shared by all the organisations of and for disabled people.
  Mr. Jenkin: I certainly take note of the House's decision that day, although of course there was not a large number of hon. Members present to vote. I take note of the view expressed by the House in the early-day motion on the subject. I pay tribute to the right hon. Gentleman for the campaign that he has waged—no one in the House has contributed as much to the debate on disabled people. I am sure that that debate will continue and that we will all continue to listen to the points that the right hon. Gentleman makes. The debate is by no means over.
  I want to concentrate, first, on the purpose of the Bill; secondly, on the funding provided to enable it to be put into effect; and, thirdly, and perhaps most importantly, on the principles of assessment that will be used to apply the benefits of the Bill. I should begin, however, by discussing the background and the financial restrictions under which the Government are working.
  We have a huge budget deficit. I am impressed that this debate should be taking place not to moan about the quantities of funding available, but, in a constructive spirit, to discuss how best the limited funds available should be allocated. That is a tribute to both sides of the House.
  This Bill, as my hon. Friend the Member for Havant pointed out, fulfils a manifesto pledge that we made at the
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  general election. Its purpose is to help with financial support for the most severely disabled people. It unashamedly builds on the success of the independent living fund. I do not regard it as a step backwards from that fund; I regard it as an extension of the work of the fund, although we are delegating much of the responsibility for that to local authorities.
  The Bill establishes the extension fund, supplementing the independent living fund, and the 1993 fund for new applicants, but it is the partnership with local councils that will represent an advance in the provision of care for the disabled—it is not a step backwards.
  Secondly, the funding provided for the implementation of community care includes £26 million in the ring-fenced total of £565 million. The £26 million is for the severely disabled and that represents an overall improvement. Overall funding of community care has been generously increased for the forthcoming year. I refer to what was said by the incoming president of the Association of Directors of Social Services, quoted in The Independent on 3 October 1992:
  "We recognised that the public spending round would be difficult and we think that in the context of the present economic climate Mrs. Bottomley has done well to get this money and to give us specific funds for the second and third year of implementation."
  That is not a cheapskate formula; the overall provision for the disabled, within overall community care budgets, is generous indeed. If we remember that the total provided for the disabled from the DSS budget is about £15 billion—a threefold real terms increase—it can hardly be accused of being cheapskate. The Government have clearly demonstrated their continuing commitment to the disabled.
  My third point concerns the principle of assessment and the interesting discussion that we seem to be having about cash payments as opposed to direct provision. I have great sympathy with the points made by the hon. Member for Birkenhead (Mr. Field) in this regard. It is important to understand, however, how the local authority will fulfil the role of care adviser in the provision of care for the disabled under the care in the community proposals. First, the local authority will identify people who appear to be in need of care services; then it will assess what support or help they need. It will then share those assessments with the people Concerned—the most important aspect of this method of empowerment. It is important to involve the client in decisions about the type of provision, and that is expressly provided for under the care in the community proposals. Clients' wishes and preferences must be discussed with them so that their needs are reflected from a material point of view and so that they are involved in decisions about their care.
  Finally, the local authority will decide what services should be arranged in response to the assessment. Such services may be provided by the local authority, but increasingly a greater proportion will be purchased under contract from organisations in the independent—the non-local authority—sector. That, too, is important, because there is a danger in the arrangements for community care that the services will be producer dominated. By specifying a limit on the quantity of services that can be directly provided by the local authority, a separation between purchaser and provider is created, and that will improve the authority's advocacy on behalf of the people who require the care.

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  If someone appears to need health services or help with housing, the authority has a duty to get in touch with the relevant people. This system will replace the system of special higher rate income support payments, currently available to the less well off people who enter residential and nursing homes, to help meet the costs of their care. The current system has a bias in favour of residential care, regardless of what is best for the people concerned. The reforms remove that bias, offering users genuine flexibility and choice in how they are looked after.
  My hon. Friend the Member for Havant drew our attention to the excellent work done by the Rowntree trust. I wish to draw attention to the developing ideas that we have for care advocacy and further separation of the role of the client and the care advocate, and that of the financier and provider. In particular, I draw attention to a case that I share with my neighbour, my hon. Friend the Member for Colchester, South and Maldon (Mr. Whittingdale). It involves a family whose child is mentally handicapped and which recently lost control of the child. The simple reason is the easily imagined one. When a severely handicapped child is born, the parents naturally say that they will look after the child, but things become more difficult as the child gets older. Looking after a severely mentally handicapped teenager is a demanding operation.
  In that case, the strain on the marriage and on family life and finances proved too much for the parents, and they finally accepted that the child would have to enter an institution. Imagine their shock when they realised how much that would cost. Let me emphasise that the health services had offered the child high-quality care, but it was institutional care, not family care or care in the home. For the lack of anything between £2,000 or £8,000 for the additional help that they needed in the home to enable them to continue looking after their child, the health service is now picking up a bill for about £35,000 a year.
  That is where the argument for service advocacy or brokerage comes into play. We could not only make resources stretch much further, but involve the families of disabled or mentally handicapped people or the clients themselves where they are capable of making the decision. The money could be allocated to them, instead of to the health authority or the local authority to invest in plant—that is, a residential home or residential care of one sort or another.
  The Rowntree trust draws attention to stories involving people in the work that it does. For example, Patrick, who had spent almost all his life in residential care until he moved into a home of his own at the age of 27, said, "It means exercising choice and control and having the right to choose who gets me up and who puts me to bed." In another case, 40-year-old Maria explained: "It means I can get up in the morning when I want to, I can go to bed in the evening when I want to, go out when I want to."
  Extremely good though institutions may be, the present arrangements of institutionalised care often fail to enable disadvantaged people to lead their own lives, or to lead their lives with their families.
  Mr. Thurnham: My hon. Friend quoted what seems a high figure for the cost of the care of a constituent's child, at I think £37,000 a year. Does he agree hat there are differences in how well organisations can manage their
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  budgets? Voluntary organisations can also call on charitable causes for their capital costs if not for a contribution to their running costs.
  My son is now at an establishment called Brookvale, near the constituency of my hon. Friend the Under-Secretary—in Bury, South—where costs for care are only £15,000 a year, but the standard of care is very high. That compares to the cost of £30,000 a year for neighbourhood network homes in my constituency, run by the local authority, where I do not believe that, in all cases, the care is as good as it is at Brookvale.
  Mr. Jenkin: My hon. Friend highlights the point that I am making, which is that different types of provision, provided at different standards, are available. We want the client and the families of the client to be involved in the choice of the provision. A purchaser-provider approach often means that the price of such provision is not as expensive as it is when it is provided by a top-down approach.
  As we are debating service brokerage and carer advocacy, I shall say something about the ambiguity in the attitude of the Opposition. What we have successfully achieved in the independent living fund seems to have converted a substantial part of the Opposition to the idea of service brokerage. However, as my hon. Friend the Member for Havant pointed out, that does not seem to extend to the social fund. I feel that it should extend to general practitioner fund holding because that is a form of service brokerage where the purchasing power is put in the hands of a care adviser—a general practitioner. He or she then decides, on behalf of the client, how best to allocate resources on behalf of the patient. It means that the community care proposals that are to be implemented at the beginning of April are an interim step on the long road to more responsive care in the community, in its generic meaning, of all kinds. It is artificial to have a care advisory or brokerage system simply for the disabled and not involve the health services and all the other relevant services.
  The ultimate social services system of the future must ensure that, where moneys for health and social services for those acute cases are all held under one fund, and a single broker advises the client or the client's family on the services that are required, they are purchased from the local authority, the private sector providers, the health service and all the other institutions, bodies and charities that are involved in acute care. That interesting and exciting challenge lies before us as we develop social services and health care in the 1990s. I commend the Bill to the House.
  8.37 pm
  Mr. Peter Luff: It is a tribute to the House that, for the second time in a little over a fortnight, we have been afforded an opportunity to have a serious debate about the needs of disabled people. It has been a privilege to hear some of the speeches made on both sides of the House on that important matter.
  I was, however, a little disappointed at the ribaldry among Opposition Members when my hon. Friend the Member for Bolton, North-East (Mr. Thurnham) praised the hard work done by the civil servants in the disability living allowance unit and elsewhere to assist disabled

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  people. I pay tribute to those officials, with whom my constituency office works closely to achieve satisfactory outcomes.
  Mr. Thurnham: My hon. Friend spoke of Opposition Members. Is it not right to point out that, during almost all the debate, there have been twice as many hon. Members on the Government Benches as there have been on the Opposition Benches? Even now, there are 10 Members on these Benches and only five on the Opposition Benches.
  Mr. Luff: My hon. Friend makes his own point, which will be noted by everyone outside the House.
  I hope that it will be in order, when paying tribute to those staff, also to pay tribute to the House of Commons staff who work closely with them to achieve satisfactory outcomes for disabled people in our constituencies. The Benefits Agency staff and the DLA staff are always anxious to do all that they can to promote the needs and interests of those in genuine need. In particular, I should like to praise the staff of the Benefits Agency office in Worcester, who work so hard and consistently for disabled people.
  The original independent living fund was a bold partnership. It was not without controversy when it was introduced but it has become a central part of the Government's commitment to disabled people. Perhaps it is not surprising that within two years of the fund's introduction the Select Committee on Social Services was writing:
  "On 9 February 1990 the Minister for Disabled People issued a press release headed: 'Independence is the key to better lives for Disabled People'. The help provided by the Independent Living Fund cannot be appropriate for all disabled people. We believe however that the Independent Living Fund has given meaning to the Minister's phrase for many disabled people. Our concern is that the Government has not fully appreciated the innovatory nature of the ILF in giving some disabled people and their families the resources to build up their own packages of care. We recommend that the ILF should continue to exist not only for an interim period, but also after the implementation of community care legislation, and should be provided with sufficient resources to meet the claims of those who meet the present criteria to help from the Fund, and whose needs have not been met through the eventual implementation of community care policy."
  I was delighted to find that the Conservative party's manifesto, to which I still attach great importance, contained a strong commitment to maintaining a fund to support the most severely disabled people.
  Slightly more than two weeks ago we debated the Civil Rights (Disabled Persons) Bill. I am sure that hon. Members on both sides of the House accept that there is no more fundamental civil right for a disabled person than the opportunity to decide how he or she will live his or her own life. In that context, the ability of the individual to remain in his own home is of central importance. It is important also to emphasise the mobility aspects of this civil right and to welcome especially the features of the Bill that relate to Motability.
  The Bill widens the legislative powers that govern the Government grant that is paid to Motability. It will enable the Government to ensure that they can continue to fund the organisation in future. I am glad to say that Motability commands genuine cross-party support in the House. It helps disabled people to obtain a car or a powered wheelchair on favourable terms, thus increasing their independence.
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  The people most often helped by the charity are the severely disabled, who are unable, or virtually unable, to walk. They include people with cerebral palsy, spina bifida, muscular atrophy and many other crippling conditions. We have heard unusual tributes from hon. Members to the role of the clearing banks in helping to fund Motability, and it should be recognised that it is a partnership. It is a registered charity that is assisted by the Department of Social Security, clearing banks, motor manufacturers and dealers and insurance companies. I am sure that we all have constituents who benefit from the operation of the scheme.
  The Government pay significant sums to Motability and about 140,000 people are now being helped. Since the scheme's inception, about 330,000 vehicles have been supplied. It is worth bearing in mind that the scheme has helped the environment, apart from the disabled, through its pioneering role in pushing the case for lead-free petrol.
  Reference to the mobility features of the Bill enable me to correct an omission from my speech——
  Mr. Alfred Morris: The hon. Gentleman has referred to motor manufacturers and dealers, clearing banks, insurance companies and other interests that were brought together to create Motability. Speaking as a patron of Motability, may I say that I hope that he will appreciate that it has always relied as well on a great deal of voluntary effort. Many people give of their time to ensure the success of this very important organisation, and have done so continuously since it was started by the memorandum of 1977.
  Mr. Luff: The right hon. Gentleman's intervention is a timely one. I intended to move on to emphasise that aspect of Motability's work and to link it with the work of another scheme for disabled people, shop mobility, which makes an enormous contribution to the mobility of disabled people. It enables them to make their purchases in ordinary shops in shopping centres, for example. I was privileged to see in great detail the work of shop mobility at Worcester when I drew its Christmas raffle some months ago. The role of the voluntary sector—individuals—in helping the disabled to achieve independence in their lifestyle must never be overlooked.
  The Government should be proud of their record in responding to the needs of disabled people. The increase in spending has been phenomenal, and that is spending of which the ILF is a part. Spending has trebled in real terms since 1978–79, and is now £14·9 billion. We have seen the introduction of the disability living allowance. It has not been without its problems, but already there have been nearly a third of a million successful claims. I especially welcome the disability working allowance, which provides a top-up for the earnings of disabled people.
  I attach enormous importance to giving independence to disabled people and their ability to choose their own lifestyle in the context of the role of carers. Expenditure on the invalid care allowance has increased significantly from only £4 million when the Government came to power to about £366 million today. The number of beneficiaries has increased from 5,000 to 195,000.
  It is entirely appropriate that one of the key objectives to the Government's proposals for community care is to ensure that service providers give practicial support for carers a higher priority. That is recognised in the Government's White Paper, "Caring for People". There is

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  clear recognition in that document that helping carers to maintain their valuable contribution is right and a sound investment. Local authorities and health authorities will be expected to continue to develop services for carers in advance of the introduction of assessments in April.
  It is not going too far to say that carers are perhaps the most long-established voluntary sector that looks after the disabled. I am concerned that their work should not be over-professionalised. It is work that often goes unsung, and even more often it is unnoticed. I am sure that the entire House would wish to offer thanks and gratitude to those who are doing so much to promote the interests of disabled people.
  Dame Elaine Kellett-Bowman: My hon. Friend is far too young to remember that the process started with the work of the Council for the Single Woman and her Dependants. It has continued for many years since then.
  Mr. Luff: My hon. Friend makes an important point. Many of us are accustomed to seeing carers in that context. There are so many relationships that relieve the state of a financial burden and enhance the quality of life of the individuals who receive care.
  I welcome the role of local authorities. The Government are often criticised for diminishing their role, but that is not our objective. It is often our objective to take powers to others, and I have in mind grant-maintained schools. They represent an attempt to give power to parents, not to take power from local authorities.
  The Bill will do exactly the opposite of what our critics sometimes accuse us of doing because it will significantly enhance the role of local authorities. The ILF and its successors provide help on the basis of a care plan that is agreed between the fund, the disabled person and the local authority. As a result of assessment, the authority will provide a specified level of service, which the fund will then supplement by a cash payment to the client.
  If the system is to work properly, it is essential that local authorities have full confidence in their ability to live with their side of the care-in-the-community bargain. I know that a year or so ago, when care in the community had still not been fully implemented, nursing homes in my constituency and in the area covered by the county council were worried that they would not be in a position to take on that responsibility. I made vigorous representations to the Government, as a result of which, I believe, the Government have responded appropriately to ensure that local authorities can play their full role in delivering care in the community. I welcome particularly the generous funding that the Government have made available to local authorities to enable them to do that. If there were not the confidence that the necessary funding was in place, I do not think that there would be the same confidence in the value of the ILF and its successors.
  Local authorities have been allocated significant additional funds to support their new responsibilities for community care. The ring-fenced grant of £565 million for England, specifically and exclusively for community care next year, is very welcome. That sum includes some £399 million that would otherwise have been spent through the DSS; £140 million to facilitate the introduction of the changes; and £26 million to help meet the needs of severely disabled people.
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  It is important that we remember that that ring-fenced money is in addition to the general increase for social services spending next year. Taking both of those into account, councils in England will receive a massive 15 per cent. increase in their personal social services standard spending assessment next year, to a total of £5·6 billion. It is an important development if the needs of disabled people are to be properly protected by local authorities.
  I take particular comfort from the £26 million to which I referred, which is being provided in recognition of the additional costs that will fall to local authorities as a result of the closure of the independent living fund to new clients and the establishment of the 1993 fund. That sum is budgeted to rise to £53 million in the following financial year and to £100 million in the year after that. By any standards, that is a significant sum of money.
  In that context, it is little wonder that my county council, Herefore and Worcester, has given a warm welcome to the Government's approach to care in the community in general, and to the two new funds in particular. However, the council does have two difficulties, which are not unique to Hereford and Worcester. The first difficulty is that in delivering care in the community, whether for disabled or able people, the council has to deal with a large number of authorities. The second difficulty is the large number of elderly people retiring to the area, many of whom have significant disabilities.
  On the council's first difficulty, it has to deal with three health districts—North Worcestershire, Worcester and District, and Hereford—as well as nine district councils. It also has to deal with the various voluntary bodies, housing associations and other organisations. It has to liaise with all of them to deliver the service effectively. There is a continuing, strong and powerful case for further rationalisation of the administrative boundaries of government to enable the effective delivery of Government policies.
  On the council's second difficulty about the pressure of numbers, anything that the Bill does to relieve the pressure for residential accommodation in Hereford and Worcester will be welcomed.
  Mr. Oliver Heald: Does my hon. Friend agree that one of the great benefits of the ILF is that it has been able to meet a huge increase in numbers—from 6,000 to 21,000—very effectively? Is not that something to be welcomed?
  Mr. Luff: That is right. There has been a dramatic increase in the numbers being helped across the whole range of Government assistance to the disabled. When we hear criticisms about, for example, the disability living allowance, it is important to remember the very sharp increase in numbers helped. It is a great tribute to those involved in the delivery of the various help available to disabled people.
  My county council expects the Bill to be of particular value in the rural areas, where it is especially beneficial to be able to keep disabled people in their own homes rather than force them into residential accommodation, often against their will. If that provision is to be delivered effectively, it will mean a close working relationship with a large number of bodies, such as housing associations.
  It is important to remember that one reason why such a large number of elderly, often disabled, people are attracted to my area is that the county council has

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  followed Government policy and encouraged the provision of private sector care. It has not resisted that, as some Labour-controlled county councils have done. However, the council is concerned that, because it has encouraged that provision and worked closely with the private sector in providing care for the elderly and the disabled, it will be penalised under the funding arrangements for care in the community.
  I very much welcome the way in which the Government have approached the special transitional grants, which have significantly reduced my council's fears. The geographical patterns of DSS spending on residential care are very different from the patterns for standard spending assessments. Inevitably, DSS expenditure is linked to the areas where the homes are located. Because of the often different political perspective on how such care should be provided, the homes operate with very different rates in different parts of the country.
  I understand that it is the Government's intention that, in the long run, all funds for community care should be distributed through the revenue grant, on the basis of standard spending assessments. However, the Government recognise that a precipitate rush to that mechanism would imply a significant and rapid shift of resource, which might lead to severe problems for the elderly and the disabled in specific council areas. Therefore, I welcome the transitional arrangements. It is all part of the confidence building that enables me to have confidence that the successors to the ILF will deliver the necessary care to disabled people. I hope that the Government will keep a careful eye on the transitional arrangements to ensure that there are adequate funds for county councils such as mine.
  I understand that the entire caseload of the ILF will be transferred to the extension fund. I have been told that people will "in the main" be unaware of any changes to the fund other than the change of name. The term "in the main" causes me some alarm. We know that many of those who benefit from the fund are people in great personal need. We also know the very real distress that any change—or even the threat or rumour of change—in their financial arrangements would cause. I hope that my hon. Friend the Minister will assure me that the term "in the main" will be struck out and that individuals will, in fact, be unaware of any changes to the fund. It is important that that fear or threat is removed.
  There is some controversy about the reduction to 65 in the upper age limit under the new fund. I know the reasons that the Government have given for that, and I respect them. In current circumstances, it would be irresponsible to argue for any increase in the upper age limit. However, I hope that the Government will carefully monitor the way that the funds operate and that if they think it appropriate at some stage to increase the upper age limit they will do so.
  I especially welcome the way that the Bill has built on the Government's determination to break down the barriers between the public and the private sectors and to build on the work of the voluntary sector. I am constantly impressed by the extraordinary efforts of the voluntary sector in my constituency. Indeed, I am often moved by the efforts of individuals to assist less fortunate members of our society. It has always seemed to me to be a tragedy that, previously, there was a view that care was provided either privately or publicly. Now, we are moving towards
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  a spectrum of provision. That is a healthy development in the way that we provide for the care of less fortunate members of our society.
  The fund was an interim measure, but expenditure rose from £1 million on its inception to £100 million today. The Bill provides conclusive evidence of the Government's commitment to the disabled, but that commitment must not blind us to the excellent work of many local authorities, individual carers and the plethora of voluntary bodies to which I referred earlier. The Bill is more than anything else about providing disabled people with choice and dignity, and in that spirit I commend it to the House.
  8.58 pm
  Mr. Keith Bradley: The debate has been interesting and wide-ranging and we commend those hon. Members who made practical contributions, as well as those who expressed philosophical views about the future needs of the disabled. I commend in particular the opening speech of my hon. Friend the Member for Huddersfield (Mr. Sheerman) and the excellent contribution of my right hon. Friend the Member for Manchester, Wythenshawe (Mr. Morris).
  It would be remiss not to point out that, although much of tonight's debate centred on the independent living fund and its successor, notable plaudits were handed out for the work of Motability. We pay particular tribute to my right hon. Friend for his work in establishing that scheme. It is no exaggeration to say that the continuation of Motability, which has been a worldwide success, is greatly to be welcomed. It gives me particular pleasure to pay tribute to my right hon. Friend as a fellow Manchester Member of Parliament.
  We heard excellent contributions also on the practical details from the hon. Members for Stratford-on-Avon (Mr. Howarth) and for Roxburgh and Berwickshire (Mr. Kirkwood) and from my hon. Friend the Member for Cumberanuld and Kilsyth (Mr. Hogg). Interesting philosophical contributions were made by the hon. Member for Havant (Mr. Willetts) and my hon. Friend the Member for Croydon, North-West (Mr. Wicks).
  I cannot say that all the contributions were of the same significance and it was a cheap jibe on the part of the hon. Member for Bolton, North-East (Mr. Thurnham) to comment on the number of hon. Members on his side of the House as compared with this side of the House and then for the hon. Gentleman to disappear to the Tea Room. As the hon. Gentleman flitted in and out of the Chamber tonight, perhaps he should have been present to hear the concluding speeches.
  The independent living fund was introduced to deal with the urgent need to repair the gap created by the withdrawal of special allowances for the disabled available under the old supplementary benefit scheme. I pay tribute to the Minister for Social Security and Disabled People for identifying that gap and introducing the fund quickly. However, under the old system the disabled had statutory rights to help but the ILF was a discretionary fund. It was successful because its trustees, director and staff recognised that they would have to fight all the way to win acknowledgement for the needs of the disabled, ensure the availability of funds, and use discretion in ensuring the continuity of payments.
  It was said that the discretionary ILF, which we praised, should be compared with the social fund. Our

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  criticism of the social fund does not relate to the payments made in terms of community care grants but loans. It was never a feature of the ILF that the disabled were expected to pay for the services that they received or to repay cash payments made to them. There is a fundamental difference between the two funds.
  At the centre of the thinking of the fund's trustees, director and staff, and of the Minister, was the rights of disabled people. I do not believe that the Bill is particularly supported by the Minister because the rationale behind the successor fund is clearly Treasury-led and is about money and not the needs of the disabled.
  No right hon. or hon. Member expected the ILF to go on for ever. The Government announced as long ago as January 1990 that it would be replaced when the community care legislation came into effect. However, nobody could have foreseen the suddenness with which the fund would be wound up, in the form of a short statement from the trustees—who were placed in an invidious position—and a brief DSS press release dated 24 November 1992, informing potential claimants that they had one day to finalise their ILF applications. Nobody expected that the new fund would be so limited in its terms of reference in respect of new claimants.
  The Government have announced two successor funds, the ILF extension fund—which is to take over the current caseload of 22,000 people—and the new ILF 1993 fund for new claimants. What is so unacceptable is the position of people who failed to apply to the old fund, along with the limitation in the scope of the new fund. I shall return to those points later.
  Tonight's debate has highlighted key elements which I am sure the Parliamentary Under-Secretary will want to consider further. It has underlined the uncertain future of disabled people—first, in regard to the way in which the two successor trusts have been set up. It is strange that we should debate this Bill on 15 March, given that it will, in practice, come into effect in barely two weeks' time; moreover, only two trustees have been appointed. Indeed, I understand that they were appointed solely to ensure that a bank account could be set up to ensure the continuation of some payments from 1 April. It is scandalous that the other five trustees have not yet been appointed—if they have been appointed, their appointment has certainly not been announced to the House tonight.
  It is disgraceful that, although the Minister paid fulsome tribute to the work of the previous trustees, staff and director, none of those people has been considered for appointment to the new fund. I am not arguing their case in particular; I am saying that their expertise, the importance that they have attached to the needs of disabled people and the continuity that they have provided are being lost through the Government's decision not to allow them to continue. I gather that, although they had been told that they were no longer required, they offered to stay in post for a further 15 months for the sake of continuity, to ensure that there would be no hiccups in the changeover and to prevent disabled people from being disadvantaged. Sadly, the Government rejected their offer.
  I looked up the details of many of the trustees in "Who's Who". I find it incredible that someone with the expertise of Mr. Lyon—who was an ILF treasurer, has an impeccable record of service and was once president of the
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  Institute of Actuaries—was told that he was no longer required to help to organise the successor fund. The Government should seriously reconsider the nature of trustees. The rejection of any representatives of the Disablement Income Group—or, it would appear, of the disability world in general—is to be particularly deprecated. I hope that, in considering the appointment of the other five trustees, the Government will take into account the expertise of people from the world of disability to ensure that the interests of disabled people are properly represented.
  I am also anxious about the amount of money that will be available, first, for the extension fund. We have been told that £117 million, in round terms, will be available, in 1993–94; that £119 million will be available in 1994–95;and that £121 million will be available in 1995–96. It is not clear, however, whether those amounts will be sufficient to cover in full any increase in the care costs of those already receiving support from the ILF. Mention has been made of people dropping out of the fund for various reasons, but a good deal of concern is felt nevertheless. The Government recently confirmed that,
  "subject to its cash limited provision, the successor body will have…power to review the awards of existing beneficiaries."—[Official Report, 25 January 1993; Vol. 217; c. 587.]
  The worry is that if budgetary pressures develop there will be nothing to stop the new trustees of the extension fund reducing the payment or making less favourable the terms for payment. That pressure was put on the old ILF and the trustees had to make adjustments, if only in terms of who was eligible. I hope that the Minister will allay the worry that if budgetary pressure is put on the extension fund people who already receive help from it will not have the amount that is available to them reduced.
  I reiterate what hon. Members have said about thousand of people being left out of the 1993 fund. The new fund will exclude thousands of people with severe disabilities. The restrictions proposed on access to cash from the ILF's successor are far greater than those which applied to the ILF, even though that has become increasingly restricted since its introduction in 1988.
  The Official Report of 15 December 1992, c. 153–55, shows that the Government estimate that approximately 10,000 severely disabled people who might have looked to the ILF for cash help will not be eligible for such help from the new fund. A total of no more than 1,500 people a year are expected to receive help, compared with roughly 8,500 who were taken on by the ILF in the last financial year. That is a severe restriction on the number of people who will receive direct help from the 1993 ILF fund. Many of those people, if not the overwhelming majority of them, will be over 65 years of age. That is a major concern. More than one person in three, 34 per cent., who received help from the independent living fund in November 1992 was over the age of 65. The Government estimate that it will cost an additional £2 million in 1993–94 if eligibility is extended to include people over retirement age. That will rise to a mere £9 million in 1995–96.
  In the context of overall Government expenditure, it is difficult to accept that such a relatively small amount could justify the exclusion of this age group from access to the new fund. Projecting as far forward as 1995–96 a mere £9 million could be allocated to the fund to allow the

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  extension of eligibility to those who are over the age of 65. I urge the Government to think again and to ensure that those people are not excluded.
  The organisations representing that age group are extremely concerned. We have heard the view of the Alzheimers Association and I shall reinforce that view by repeating it. It stated:
  "95 per cent. of people with dementia are over working age."
  Those people will be excluded from the fund. Age Concern wrote to me today and said:
  "Discrimination against older people, in the form of denying them access to disability benefits, is unacceptable. Such discrimination implies that disability is considered normal in later life. Most older people live full and healthy lives into their 70s and beyond. The minority who do become disabled should not be denied extra help with the financial costs of disability."
  Those comments should ring loudly in the ears of Ministers and I hope that they will be further considered. If they are not considered, people with no opportunity to apply for help from the independent living fund may be forced into residential care.
  Eligibility is further restricted because not only do people have to be between the ages of 16 and 65 but they have to be in receipt of the highest rate of the care component of the disability living allowance. After paying care costs with help from the fund such people would have to be left with income at or about the level of income support and would otherwise have gone into residential care. That creates a care equation on which local authorities will make their assessment for help from the new fund.
  Under the care in the community provisions, local authorities will be required to assess the needs of people with disabilities, for the purpose of agreeing a care package, but when considering an application for a grant from the new fund on behalf of a person who meets the eligibility requirements the local authority will have to work out the total cost of that individual's community care package. The local authority will be expected to provide services that are equivalent to agreed thresholds, based on the average care costs to local authorities of a place in residential or nursing care.
  This assessment rests entirely upon the local authority. What we see straight away is the lack of the right of the individual to be properly consulted. Mention has already been made of the need to reconsider whether the service element should be translated into a cash payment. We have heard many times tonight that one of the great successes of the old fund was that individuals had the right to be a party to deciding their care needs, to purchasing their care needs and to ensuring that their care needs met their individual requirements. However good local authorities will be in making those assessments, because of the general constraints placed upon them and their need to maximise what we do not believe will be a sufficient allocation of money for care in the community, they will be unable to meet sensitively the individual needs of disabled people. We want to protect those rights.
  We are worried by the guidelines that have been issued. One section of the guidelines stresses that there should be a partnership with the local authorities. It says that the fund will provide help only on the basis of a care plan agreed between the fund, the disabled person and the local authority, whereby the authority will provide a specific level of service which the fund will supplement with a cash
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  payment to the individual client. The guidelines refer to an agreed care plan. If, therefore, the local authority or the fund do not agree the plan, the individual is caught in the middle and does not obtain access to the help that he or she so desperately needs. That problem could be overcome if the care package were funded by means of a cash payment and if the individual were allowed to spend that money on meeting his or her individual needs.
  We are worried about the cost calculations, a point that has been made strongly in the debate, and the ring fencing of the £26 million that is to be handed over to local authorities. I am not, in many ways, a keen advocate of ring fencing, particularly at a time when we should give to local authorities freedom to get on with the job of assessing care packages in general for care in the community, not the particular needs of disabled people. However, because of the community care pressures on local authority budgets, it is inevitable that local authorities will look at the total money available and see how best it can be stretched to meet the needs not only of the severely disabled but of the disabled, the elderly and other groups for which they are responsible.
  The great worry is that the £26 million will not meet the needs of the disabled people for whom that money is intended. When the Government look at the way in which the fund works in practice and at the way in which local authorities in practice draw up their plans, I hope that they will ensure that the £26 million meets the target for disabled people. As the system settles down, I hope that ring fencing will not be required. The Government have justified ring fencing of the community care budget in general, so they should specifically ensure that the £26 million for disabled people is ring fenced.
  There is immense concern that the amount of money in the independent living (1993) fund will be insufficient to meet the needs of the people who will apply to the fund. In 1993–94, the new fund will have a budget of a mere £4 million, a tiny amount compared with the independent living fund's latest annual budget of £97 million. I know that they are not directly comparable, but, having restricted the number of people eligible and cut out the over-65s, the Government are allowing fewer people to get help by allocating a small budget which, on their own admission, will serve only 1,500 people. The Minister shakes his head. Does he seriously believe that only 1,500 people need help from the ILF 1993 successor fund? I look forward to the first reviews of that fund when we shall find out how many people have been left out of the system.
  Many people were denied the right to apply to the old fund because of the bureaucratic delays and administrative chaos caused by the introduction of the disability living allowance. Many people have commended the Minister for not phasing in the DLA, but the people who applied to the DLA agency say that it has been phased in. They have had to wait months and months for their entitlement.
  I am glad that the Minister has clarified the trustees' role. He passed the buck to them for denying to people who had suffered administrative delays the right to apply to the old fund. In answer to a question from me, the Minister said:
  "It would have been open to the trustees of the independent living fund, before deciding to cease taking claims with a view to having an orderly hand-over of cases to the new trust in April, to deem someone who had applied for disability living allowance to have been in receipt of it and,

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  therefore, to be eligible for help through the independent living fund."—[Official Report, 10 February 1993; Vol. 218, c. 1081.]
  The trustees were outraged by that statement because they had given a commitment to the Minister that, at the end of the financial year, they would not pass on any commitments which could not be filled from the old fund. It was an outrage that they were told that they had the discretion to keep the fund open longer, not knowing how many people could be deemed to be in receipt, and then not being able to fulfil the financial requirements.
  The Minister has tried to rectify the situation. I do not believe that he was responsible for that statement; I think that he was trying to cover up for Lord Henley in another place. I am glad that he has put the record straight because it was a scar on the integrity of the trustees. They were trying to do the best that they could in difficult circumstances with the cash available. It was never on offer to them to keep the fund open beyond the cut-off date.
  Thousands of people who may have been eligible to apply to the ILF have been denied the right to do so because of the administrative chaos in processing their applications. In addition, if they had had their applications processed, that access may have been a passport to other benefits sooner. I believe that the Minister should reconsider the case of people who had made their applications before the cut-off date, who were subsequently found to be eligible for the DLA and who could have applied to the old ILF. Some compensation should be given to ensure that they have not been doubly disadvantaged by administrative delays and the lack of opportunity to get funds from the old ILF.
  We have always been worried about the lack of consultation and continuity—the old fund will end before the new system, which is to come into operation properly on 1 April, has been set up. We are worried that, by 15 March, the Bill has still not completed all its stages and needs to go to another place for consideration. Many people involved in disability issues are concerned to ensure that there is no delay in payment to people already in receipt of money from the ILF. We want that assurance, but we also want the assurance that, despite the complexities that will clearly arise when the 1993 fund is in motion from 1 April, the relationship between the fund and the local authority will have been properly worked out and established.
  I have no confidence from the documents that I have seen that there has been proper dialogue. As two of the trustees were appointed only a couple of weeks ago, there has clearly been no dialogue between the trustees and the local authorities about how the system will work in practice. We must ensure that the arrangements are in place and that there is no delay for the limited number of people who will seek care through the local authority and the independent living fund jointly. We must ensure that there is continuity and that there is not the administrative chaos that has been the hallmark of the disability living allowance.
  Under the new system, the stated hallmark of most Government policies—choice for the individual—will be even more curtailed than it is now. People will no longer be able to choose their own carers as they would have been able to under the old independent living fund. The recent guidelines state:
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  "the 1993 fund will not consider applications direct from an individual who has not first been in contact with his or her local authority social services department".
  What is of great concern is the difficulties that individuals may have when the new system comes into effect on 1 April as a result of the massive job that local authorities will have to do in assessing a range of people who will come under their jurisdiction. People with the greatest needs may be put into a queue because they cannot make direct representations to the new fund, as they could to the old fund, for someone to come to see what their situation is. They will have to rely on the local authorities.
  There is massive concern that the resources in the coming months will be limited. Naturally, priorities will be set by the local authorities about where they start the whole process. As the independent living fund element has been so delayed—I stress that we are debating it only a couple of weeks before it will come into practice—there will be further considerable delays which will hit the most severely disabled people. I hope that the Minister can give us assurances tonight that there will be no delay or, if there is likely to be delay, what contingency plans he will prepare to ensure that the needs of disabled people who will apply first are met.
  Many disabled people have been in limbo since the old fund was abolished on 25 November. They have been asked to wait and there have been assurances that the new fund will be there to meet their needs. Those assurances can be met only if the administrative arrangements are clearly in place and if a proper relationship is established between the local authorities and the new funds. If not, disabled people will again be caught in the middle—caught in the care trap. They may be less able to suffer such delay than people with less severe disabilities are. It will be seen as a scandal by all; it will certainly be seen as a scandal by people with severe disabilities.
  This has been a wide-ranging debate. The Opposition will not vote against the Bill tonight because we do not want to deny disabled people access to funds. When the Bill goes into Committee, we shall press the Government on crucial points. I hope that as a result of the contributions of my hon. Friends and myself tonight the Minister will give special consideration to the role of the trustees and their relationship with the disabled community, special consideration to the needs of the over-65s and special consideration to whether there will be a ceiling on the contributions of the local authority and of the independent living (1933) fund. If applications are not made to the independent living fund, local authorities will be free to extend their contribution. If an application is made to the independent living fund, there will be a ceiling of £510. We seek assurances on that and, equally, that the figure will not be set in concrete as the one that will be around for years to come, but will be annually reviewed in reports to the House to ensure that the sums available through the local authorities' service contribution and the independent living fund meet the needs of disabled people. That issue and many others will be discussed in Committee.
  We welcome the opportunity to discuss the practical and philosophical issues affecting disabled people. I hope that the Minister will be able not only to allay the Opposition's many fears but to address the anger that has been expressed by people who work with disabled people

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  and by disabled people themselves, who do not believe that their needs will be properly met by the two successor funds.
  9.29 pm
  The Parliamentary Under-Secretary of State for Social Security (Mr. Alistair Burt): I thank the hon. Member for Manchester, Withington (Mr. Bradley) for putting the case with his customary clarity. I shall endeavour to answer his questions.
  We have had a good and wide-ranging debat—much of it, I feel, conducted on the false premise that the change in the nature of the independent living fund somehow does away with a category of care for a whole group of people. That is not the case; it is a false belief, arrived at by those who have considered the Bill out of the context of community care as a whole. I hope to show that the worries expressed by Opposition Members are not founded.
  As always in disability debates, a high degree of knowledge and care has been brought to bear by hon. Members on both sides of the House. We have heard a variety of extremely good speeches. I commend the opening speech made by my right hon. Friend the Minister for Social Security and Disabled People—a man who understands disabled people very well—who put the Government's case extremely well. My right hon. Friend was answered in a number of good speeches by Opposition Members. I commend in particular the comments by the right hon. Member for Manchester, Wythenshawe (Mr. Morris)—a friend of long standing—who speaks with great knowledge on these matters.
  The kindest part of the speech of the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) was the reference to my footballing prowess. Whatever deals may or may not be negotiated in the next few weeks, I shall certainly remember those remarks.
  I was grateful also to the hon. Member for Croydon, North-West (Mr. Wicks), whose experience in social policy matters is a great asset to the House, as are the comments of my hon. Friend the Member for Havant (Mr. Willetts), who brings a degree of intellectual rigour to these matters of which we shall all live in dread for many years to come. His was another excellent speech.
  Some hon. Members, including my hon. Friends the Members for Bolton, North-East (Mr. Thurnham) and for Colchester, North (Mr. Jenkin), brought to our attention down-to-earth concerns about the problems of disability in their own constituencies. Others spoke more widely about the Government's record on disability and carers. My hon. Friends the Members for Worcester (Mr. Luff) and for High Peak (Mr. Hendry) made significant contributions in that regard. We had a wide variety of different speeches, all of them made with clarity and care, and I shall do my best to answer in the most logical and straightforward way, bearing in mind the constraints of time.
  The hon. Member for Roxburgh and Berwickshire asked why we needed to proceed under Standing Order No. 48 and referred to problems of hybridity. The Bill has been introduced because it was found that payments to the independent living fund and Motability were not properly covered by section 64 of the Health Services and Public Health Act 1968. Under the Public Accounts Committee concordat, it is not appropriate to rely on the annual
  110
  appropriation Act alone to sanction outgoing payments. The Bill is introduced under Standing Order No. 48 because its main object is to create a charge on public funds. Questions of hybridity are for Madam Speaker to rule on rather than for the Government to determine. I understand that those matters have been examined and that there is no problem of hybridity in this case.
  The hon. Member for Roxburgh and Berwickshire also wanted to know whether regulations will be introduced. The schemes are discretionary schemes set up by trust deeds. Accordingly, there is no need for Government statutory instruments or directions. The trust deeds and the conditions of grants set out the parameters within which the trustees can exercise their discretion. In a sense, that forms the regulatory framework that secondary legislation and regulations would have formed had there been an Act and statutory procedure.
  If that were the case, the hon. Member for Roxburgh and Berwickshire also wanted to know, quite rightly, who would have access to the trust deeds. The trusts are private trusts and the deeds are not necessarily available to the public generally. However, the founding trustees have agreed that the deeds should be made available in the Library and I am sure that they would be willing for the deeds to be made more widely available. I am sure that we all hope that that is the case. There is no reason why the deeds should not be made available to the agencies which expect to make most use of the funds. I cannot see a particular problem in relation to that.
  My hon. Friend the Member for Stratford-on-Avon (Mr. Howarth) made a significant contribution which was full of detail and obvious knowledge of the subject. I pay tribute to that. He questioned whether the trust deed was over-restrictive. The trust deeds and conditions of grant set out the parameters within which the trustees are able to exercise their discretion. The two new trusts will derive the whole of their resources from the Government. It is therefore perfectly proper for the Government to set down clearly the conditions under which the money is granted.
  The trusts are not controlled by regulations. Therefore, all the controls on a very significant amount of money must be set down in the key trust documents. Accordingly, they are set down in detail. The conditions may appear pernickety, but they amount to no more than good accounting practice. It is better to be as clear as possible about the requirements in advance than for the Government to seek additional information later.
  My hon. Friend the Member for Stratford-on-Avon raised a point, which was also raised by several Opposition Members, about the continuity of trustees. My right hon. Friend has already expressed his gratitude to the trustees, as I do, of the current independent living fund. The current fund was set up as an interim measure jointly by the Department of Social Security and the Disablement Income Group. The trustees have done a splendid job, but the new 1993 fund will operate in new ways in partnership with local authorities.
  It is of course our intention that at least one of the trustees should be disabled. However, I do not believe that there is a need for continuity of trustees. There will be continuity of the staff at Nottingham, but I believe that the time has come for a new group of trustees to carry the work forward following the introduction of community care. Notwithstanding the excellence of previous trustees,

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  it cannot be the case that new trustees are not available who would also show similar expertise, care and attention to the matters in hand.
  My hon. Friend the Member for Stratford-on-Avon also suggested that the director and staff had not been encouraged to stay. That is not so. The director of the ILF had been on secondment from the Department for five years—an unusually long secondment. The creation of the new funds provided a suitable opportunity for a change and we have recruited a new director.
  As for the staff, it is not true to say that they have been encouraged to leave. Far from it. The Department has encouraged the existing staff to stay. Indeed, the contracts of the directly employed staff have been extended in advance of 1 April to provide reassurance for the staff.
  Mr. Dewar: I would not normally press the Minister on this, but as he has said that a director has been appointed, I do not think that we know who that is. Can he possibly tell us who it is?
  Mr. Burt: Yes. A new director has been appointed. Her name is Margaret Baldwin. She is expected to take up her post in mid-April.
  Two trustees have been appointed—Robin Wendt, the secretary of the Association of County Councils and member of the Social Security Advisory Committee, and John Shepherd, a retired finance director of Remploy. The two men will bring excellent care to the new body of trustees and plans are in hand to recruit the remaining five trustees. Three more will be appointed shortly and the rest in the near future. I am quite sure that the new trustees will exhibit the same degree of quality and care as that exhibited by the trustees of the previous funds.
  Hon. Members mentioned the closure of the independent living fund, and I am anxious to answer their questions. The fund was not forced to close because of deficiencies in its funding. The timing of the closure to new applications was a matter for the fund's trustees. It was always intended that, in its present form, the fund would cease to operate in April 1993, although payments would continue to those who were receiving money from it as of 31 March. The trustees promised that they would ensure that all applications for help were processed by 31 March. They took the decision to close to new applications with effect from 25 November 1992 to process the applications already in hand.
  One or two hon. Members asked why more time was not allowed. People were aware that the fund was due to close in April 1993 and therefore more applications were being made in anticipation. I am sure that hon. Members will understand that if a closing date had been set at some stage in advance, it would only have encouraged a last-minute sale, which would have made it impossible for the fund to continue.
  The trustees took the decision to close with great reluctance but recognised that the fund had become a victim of its own success. By last November, there was a backlog of 6,500 outstanding applications, which the trustees had a legal obligation to clear before the planned and final closure of the fund on 31 March. I know that staff have worked hard to clear the backlog, assess applications and process cases.
  Mr. Dewar: Before the Minister concludes—we have left him a full half hour—will he deal with the small but important point about people who might have been eligible to apply before the closing date but were not in a position to do so because of delays in processing DLA claims? How does he propose to ensure that they are not prejudiced? If it is clear that several months of support have been lost, some form of backdating should be considered.
  Mr. Burt: The hon. Gentleman anticipates my next point and I am happy to deal with it. I appreciate that some people who were awaiting a decision on a DLA claim before applying to the independent living fund were unable to apply before 25 November. I regret that, but payments from the ILF are charitable and discretionary, so there is no question of an automatic entitlement or of backdating. I was grateful for the comments of the hon. Member for Manchester, Withington (Mr. Bradley) because it certainly was not the intention of Ministers to suggest that the trustees could have kept the fund open for such cases. That would have been impossible for the trustees and would have negated the point of the closure, which was to allow time to process the cases in hand.
  The trustees have worked tirelessly for the independence of disabled people. I should not like a misunderstanding of the problems of processing DLA to cast doubt on the high regard with which Ministers hold them. Payments from the fund are not social security benefit payments, so there is no entitlement to them.
  Mr. Bradley: The Minister is not accurately reflecting my comments. I said that it appeared that the Government were blaming the trustees for the problem, which clearly was so in the other place but now has been clarified. Although the fund is a charitable trust and there is no right to the money, if some individuals' applications for DLA had been processed they might have been eligible for payment under the fund. They have been denied the opportunity to have their applications assessed. The Government have a duty to compensate those people for the administrative chaos that the Government have caused.
  Mr. Burt: I do not accept the hon. Gentleman's point, but I am happy that he has cleared up the position in relation to trustees.
  The closure of the independent living fund did not leave those disabled people without redress or support. As always, the local authority maintains its overriding responsibility for disabled people. The independent living fund was set up to supplement existing care. Despite its closure, people could still go back to their local authority, and those who qualified are able to apply to the new fund. There is no possibility of any form of compensation or backdating for a fund whose payments are discretionary.
  Mr. Dewar: The Minister will recognise that his statement will cause widespread disappointment and some anger—I certainly feel some anger. Surely, if someone is disqualified from applying for ILF help because the shutter comes down on 25 November, and at that stage his DLA application is caught in the logjam, and if he subsequently applies and receives help three or four months later, there would seem to be a prima facie case for saying that he has been deprived of lLF during that period

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  by the logjam and by the administrative inefficiency with which cases were processed. Surely that adds up to some claim for compensation under any form of common law.
  Mr. Burt: No, I do not think it does. The fund always had to set eligibility limits depending on the pressure on it. The reason for the closure was the build-up in the backlog of cases—it could not possibly have processed any more of them. I repeat: I am not aware of any mechanism to allow compensation to be claimed for a discretionary fund.
  I should like now to deal with the meat of the argument—whether setting up the new fund and the extension of the old fund in any way limits the opportunities for severely disabled people. I found extraordinary the degree of suspicion expressed by the hon. Member for Huddersfield (Mr. Sheerman) and other Opposition Members—suspicion of the expertise of those in local authorities charged with putting community care into effect. The whole idea of community care has been to carry forward the ideas of greater empowerment for all people who might need some form of assistance—hence the idea of care packages. The forces embodied in the success of the ILF—the tailoring of need and response to that need—are the very forces that have already shaped and will continue to shape community care for all. That is why the Bill cannot be seen in isolation from the community care package around it, and it is why the premise of the hon. Member for Huddersfield and others was wrong.
  Mr. Sheerman: When I made that point I quoted bodies that were of that mind, including the Association of County Councils, the Association of Metropolitan Authorities and the Association of Directors of Social Services. If they do not know their onions, I suspect that the Minister does not know his.
  Mr. Burt: Bearing in mind that this debate started with an admission by the Opposition of how wrong they got the original ILF, I suggest that they are wrong again. As they have spent most of the time apologising for being wrong about the first case I am not prepared to take lessons from them about this one. I have put the matter straight, and I shall deal with it again when we come to the facts and figures.
  Opposition Members have displayed a fundamental misconception about how community care and the independent living fund fit together.
  Mr. Jenkin: Does my hon. Friend agree that if we were to take the Labour party seriously on issues of empowerment, discretionary funding and discretionary care, its members would have to start by supporting fund holding for general practitionersu—a good example—and continue by supporting the social fund?
  Mr. Burt: My hon. Friend makes his own point. We have heard a number of references to the Conservative party manifesto—often light-hearted references from Opposition Members. We have not heard many references to Labour's manifesto because the Opposition have already torn it up. We remain, as always, interested in further policy developments. The Opposition seem to get closer and closer, week by week, to policies espoused and put into practice by the Conservative party.
  To return to the central point—the relationship of the independent living funds and the community care proposals, we must put the Bill's proposals in the context of other developments in the cash provision for disabled
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  people. In January 1990 the then Secretary of State for Social Security, my right hon. Friend the Member for Braintree (Mr. Newton), published "The Way Ahead: Benefits for Disabled People". He announced that the Government saw three main strategic strands in policy on benefits for disabled people. The first was to improve the balance of benefits available to people unable to work, and in particular to do more for those disabled from birth or from early in life. The second was to help those disabled people who could and wished to work by making it easier for them to take up and keep jobs. The third was to improve for those of working age and below the coverage of help with the extra cost associated with disability.
  We have demonstrated that the independent living fund was set up to provide a supplement to the existing care provision. We all knew that care provision was moving on, in ways in which many hon. Members, implicitly and explicitly, have approved. That means the creation of a better relationship between the individual looking for care and assistance and those who are pledged to provide it. We have moved some way from the old ideas of the recipient of care being simply that—a non-participant of whatever was given.
  Mr. Dewar: We are going back to that.
  Mr. Burt: I do not believe that we are and I hope to be able to deal with that as I go on.
  Mr. Dewar: I accept that things have moved on and that the new ILF will be a top-up provision to help people with a certain level of disability to stay in the community and not move from their homes. However, it has not been properly explained why that top up should not be available to the over-65s.
  Mr. Burt: The hon. Gentleman anticipates me again. I shall come to that point.
  It has been suggested that, in some way, local authority services take away choice from the individual. That suggestion negates the concept behind community care. Local authorities and those who provide the services have also moved on. They are providing people who will look at those in need of care as individuals and set up the right sort of package for them. One example used is that of an individual who had an independent living fund grant and who was able to ask a carer to do particular tasks. The individual was not bound by a local authority job specification but could work at the behest and need of those in receipt of the independent living fund grant.
  That is community care that is intended to work for the individual, who, being assessed to stay at home, if that is the best provision for him, will find himself able to have exactly that. So much of what used to be provided through the independent living fund for a section of the population is now provided for by community care. That is why the independent living fund can be reduced to provide only for the categories of people whom we have mentioned. Community care does the job for others. To see the independent living fund outside the context of community care, as so many Opposition Members have done tonight, is not right. That is why they have been fundamentally misled.
  Mr. Sheerman: Will the hon. Gentleman give way?
  Mr. Burt: I should like to make some further progress, because I have a number of questions to answer.

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  The right hon. Member for Wythenshawe spoke of the worry about sheer practicalities. He asked why, when up to now disabled people have been dealing with only one agency, they should have to deal with the local authority as well. The premise was not based on fact. The majority of disabled people getting help from the independent living fund were also receiving support services from their local authority, and so have always been in contact with two sets of social workers. Therefore, it is much better for the entire package of care to be discussed between the parties concerned. The disabled person will benefit from having a complete personalised package of care.
  The 1993 fund will work, as the circular to local authorities explains, by ensuring that all the eligible clients will be people already in touch with their local authority. The social worker assessing the person's needs will say, "You are in the right age group—16 to 65—you are getting the top rate of DLA care component, your income is insufficient to meet your care needs, you need help which will be assessed at roughly, say,£400 a week. That means that you might be eligible for help from the 1993 fund. Do you want to make an application?" The social worker and client will then apply to the fund. The fund's social worker and the local authority social worker will make a joint visit to the client. All three will then agree what package of care is to be provided.
  It has been suggested that there may be great disagreement but there is no reason why that should be the case. People are now working to see that the individual needs of those in need of care are provided for. That is in the great spirit of co-operation, about which we hear so much from the Opposition when they are in the business of defending local authorities. They say often that local authorities can do the job. In relation to the disabled, they will be able to do that, and we shall back them.
  The right hon. Member for Wythenshawe also asked what would happen about appeals and complaints. That is a fair question. Since April 1991, local authorities have been required to operate complaints procedures in relation to their social services functions. If an individual is dissatisfied with the outcome of the local authority assessment, he can make use of that procedure, which includes referral of the complaint to a panel with independent members if necessary.
  Should cash payments be provided? We feel that the partnership arrangement between the individual, the fund and the local authority means that the individual has more not less choice as a total package of care is agreed, rather than some random services being provided by the local authority with a cash top-up from the fund. We do not believe that it is appropriate that the local authority should be able to make cash payments to individuals. There are difficulties in determining which clients would be eligible and in controlling costs. The need to develop funding and monitoring mechanisms is likely to lead to a bureaucratic and inflexible system.
  The Government have given careful consideration to local authority payments and we have decided that at this stage it would not be wise to introduce such a provision. However, I see no reason for that to be an irreversible decision. I think I shall be responding to the mood of the House by keeping a close and careful eye on this issue for the future.
  Mr. Sheerman: Unless the Minister was asleep when I made my speech, as he obviously is in his own, he should surely respond to those who have asked, including the hon. Member for Mid-Kent (Mr. Rowe), why such a scheme can be permissible in Scotland but not in England. He should explain why we in England and Wales cannot have cash payments. Why is such a system bureaucratic and cumbersome?
  Mr. Burt: I have given the hon. Gentleman an assurance that I shall examine extremely carefully the possibility of introducing cash payments in future. At the moment, we are not convinced that it is the right thing to do. Some local authorities find ways of making small cash payments, and that may be the position in Scotland. It is for local authorities to ensure that they keep such payments within bounds.
  Some hon. Members have asked whether moneys could be given to charities or trusts to enable them to do the work. When the full flexibility of community care is understood, some of the concerns expressed by Opposition Members will disappear. The objective of community care, and the way in which it can work with the ILF, is to enable local authorities to provide services up to a cost of £200 a week, with £300 available as extra top-up, but they need not be provided by the local authority. A local authority must simply ensure that £200-worth of services are provided, but that could be done through an independent provider. Indeed, the one provider could supply the £500-worth of services. The degree of individualisation and flexibility was not previously understood.
  Opposition Members seem to be confused about the responsibilities of the 1993 fund and those of local authorities. The ILF did not remove any responsibilities from local authorities and nor does the 1993 fund. The 1993 fund simply provides an additional option for a particular client group—those aged between 16 and 65 years with care needs amounting to between £200 and £500 a week. People who do not fall into that group—that is those over 65 or those with needs that amount to less than £200 or more than £500 a week—will remain the responsibility of the local authority. For the majority of the severely disabled who do not fall into the special group for whom the 1993 fund was intended, the local authority will consider with the client what is the best way of providing or buying in care services. It is untrue to suggest that authorities will opt to pay £800 or £1,000 to place somebody in residential care when such expenditure, or less, could support that individual in the community.
  In gist, if somebody is over 65 or is looking for care that will cost more than £500 a week, the local authority will be able to provide the individual care package that the ILF used to be able to supplement when community care did not exist. Opposition Members seem beset with the idea that our proposals should be considered outwith community care. They should understand that the community care individualisation package does the job for the vast majority of people who used to benefit from the ILF. That is why the concerns of Opposition Members are out of place.
  In setting up the ILF extension and the 1993 fund, the Government are anxious to reassure those who are now on the ILF that they will be able to receive their new payments—the point was made by my hon. Friend the Member for Worcester—and notice nothing different—no change—except the name on the cheque. For the rest, the new fund

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  will deal with a much smaller group of people, perhaps only 10 per authority, so the degree of bureaucratic difficulty will not be as great as Opposition Members suggest.
  There have been dealings with local authorities. I am convinced that the system will be a great success. I am convinced that, just as Opposition Members have now admitted that they made an error in denying the success of the original ILF, in years to come they will recognise that they have made an error tonight and will acknowledge that this is a good Bill.
  Question put and agreed to.
  Bill accordingly read a Second time, and committed to a Standing Committee, pursuant to Standing Order No. 61 (Committal of Bills).

  DISABILITY (GRANTS) BILL [MONEY]
  Queen's Recommendation having been signified—
  Resolved,
  That for the purpose of any Act resulting from the Disability (Grants) Bill, it is expedient to authorise the payment out of money provided by Parliament of grants to—

  (a) the Independent Living (Extension) Fund established by a deed dated 25th February 1993 and made between the Secretary of State for Social Security of the one part and Robin Glover Wendt and John Fletcher Shepherd of the other part,

  (b) the Independent Living (1993) Fund established by a deed of the same date made between the same parties, and

  (c) Motability.—[Mr. Wood.]

  STATUTORY INSTRUMENTS, &c.
  Motion made, and Question put forthwith pursuant to Standing Order No. 101(5) (Standing Committees on Statutory Instruments, &c.) and Order [26 February],
  STATUTORY INSTRUMENTS, &c.

    HIGHLAND AND ISLANDS SHIPPING SERVICES
    That the draft Undertaking by the Secretary of State for Scotland with the consent of Her Majesty's Treasury and of Orcargo Limited, which was laid before this House on 18th February, be approved.—[Mr. Wood.]
    Question agreed to.
    Motion made, and Question put forthwith pursuant to Standing Order No. 101(5) (Standing Committees on Statutory Instruments, &c.),

    OFFICIAL SECRETS
    That the draft Official Secrets Act 1989 (Prescription) (Amendment) Order 1993, which was laid before this House on 17th February, be approved.—[Mr. Wood.]
    Question agreed to.

  National Health Service (Charges)
  10.1 pm
  Mr. Bob Cryer: On a point of order, Madam Speaker. I understand that motions Nos. 5, 6 and 7 are to be taken simultaneously. They have not yet been considered by the Joint Committee on Statutory Instruments. You will appreciate that the timetabling of these statutory instruments for today is an imposition by the Government, not a request of the Opposition. It is quite unfair of the Government to impose them before the Select Committee set up by the House to examine statutory instruments and report back on any defects has had an opportunity to do its work. I hope that you, Madam Speaker, like me, will deprecate the Government's attitude in what is, in my view, a misuse of time and for denying the Committee the opportunity to do its work.
  Madam Speaker: I have noted what the hon. Gentleman has said, but he will appreciate that the motions are in order—otherwise, they would not have appeared on the Order Paper for debate today.
  10.2 pm
  Mr. David Blunkett: I beg to move,
  That an humble Address be presented to Her Majesty, praying that the National Health Service (Optical Charges and Payments) Amendment Regulations 1993 (S.I., 1993, No. 418), dated 2nd March 1993, a copy of which was laid before this House on 2nd March, be annulled
  I understand that it will be convenient also to consider motion No. 6—
  That an humble Address be presented to Her Majesty, praying that the National Health Service (Dental Charges) Amendment Regulations 1993 (S.I., 1993, No. 419), dated 2nd March 1993, a copy of which was laid before this House on 2nd March, be annulled
  and motion No. 7—
  That an humble Address be presented to Her Majesty, praying that the National Health Service (Charges for Drugs and Appliances) Amendment Regulations 1993 (S.I., 1993, No. 420), dated 2nd March 1993, a copy of which was laid before this House on 2nd March, be annulled.
  I remind the House of the words you used, Madam Speaker, when you ruled on the manner in which the increases in charges had been announced to the world. You deprecated the way in which the Government had used the procedures of the House to make the announcement, without the opportunity to question Ministers on the regulations. Tonight, I deprecate the fact that the Secretary of State is not here, willing to answer for the Government questions about the increases.
  We deprecate the substance of the announcement—the shameful and disgraceful increases in prescription charges, in charges for eye tests and spectacles, and in dental charges. The idea of charging the sick more in order to protect the rich more is a disgraceful act by a Government who have no morality. The increases hit at the most vulnerable people in the country—those who fall just above the income exemption levels or just outside the specific exemption levels. They and others would wish us tonight to question the Secretary of State if she were here, if she had bothered to turn up to defend Government policy, if she were not like Mary Poppins, leaving it to the No. 2 to answer for Government policy and if she were not ducking out of answering for what is a disgraceful act by a Government who know no shame. The Government are

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  prepared, through increased prescriptions, to charge those suffering from cystic fibrosis, arachnoiditis, or chronic asthma or who—week in, week out—must take medication for blood pressure.
  When that matter was raised with the Minister of State on a recent edition of BBC's "Question Time", he had the temerity to mislead the studio audience and viewers about whether cystic fibrosis was exempt from charging policy. Only last week I received a letter from a Mr. Brian Mott, who wrote to the Minister asking him to put the record straight. I ask the Minister to do so tonight.
  Those young adults—and thankfully there are more of them—who reach the age when they qualify for prescription charges, and who previously would have died but for medical science, are compelled, if they have any income over and above the stringent exemption limits, to pay charges. Is it not time that people suffering from debilitating and life-threatening diseases were exempt from paying? Is it not time that the Government had the courage to admit that they were wrong and to widen the exemption limits? Will the Government allay tonight the fear that, far from increasing the number of prescriptions on the exemption list, they have every intention, either in tomorrow's Budget or in the autumn Budget, of reducing the number? Will the Minister of State make it clear tonight that those rumours are incorrect and that the Government will not tax even more of those who are sick or in need of support or help or of remedial action in order to protect the rich? That is what it amounts to.
  One remains untouched by the regulations if one has a good job, good income, good health, good sight and good teeth—and one is lucky enough to have a family and friends who are also blessed in equal proportion in those respects. However, if one is in need of regular prescriptions or medication, one will be dealt with quite differently. Instead of the £14,000 a year gain that those earning more than £70,000 a year enjoy under Conservative tax changes, those most in need are taxed because they happen to be sick.
  Raising prescription charges by eight times the rate of inflation—2,100 per cent. since 1979—in the course of 15 changes was done after a promise by the former Prime Minister, the guru of the new right, who on 18 April 1979 said:
  "We have no intention to raise prescription charges."
  Pardon my bad English, but those were the words of the former Prime Minister. In the same speech she said:
  "Let me make it clear that the Conservative party has no plans for new NHS charges."
  Will the Minister of State repeat the former Prime Minister's promise?
  We are mindful tonight that the Government are on the point of breaking a second promise. Having broken their promise not to increase prescription charges from 20p, they are undoubtedly looking—and have already made it clear from the Treasury—to increase charges so that those receiving NHS treatment will pay for the service rather than taxpayers as a whole.
  Why is the Secretary of State not prepared to respond tonight? The answer is simple. Just over 20 years ago, in "Poverty Pamphlet No. 8", she made her position clear. She spelt out why it was that people could not afford the 20p that they were then asked to pay towards their prescriptions. She quoted one mother as saying:
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  "It's a waste of his time and mine".
  She was referring to visiting the doctor, because the family could not afford it. The pamphlet went on to say:
  "one harassed mother said 'Eight mothers said that they could not afford the twenty pence prescription charge, and were shopping around the market for home-made cures for minor ailments.'"
  Those are not my words; they are the words of the Secretary of State, who is so timorous—so unusually timorous; so remarkably timorous—that she will not stand up and answer those questions at the end of my speech. I am delighted that the Secretary of State has turned up, albeit late—less like Mary Poppins than like Cinderella at the ball.
  Millions of people are concerned about the changes that we are discussing tonight, and about the way in which they are expected to pay the price of the Conservative Government's failure to deal with the economy. The Government have had to raise charges rather than taxes; they are unwilling to fund from general taxation what should rightly be a benefit for those who need medication most. Not only have they failed to keep promises and to protect people who need the occasional prescription; they have failed to protect those who need multiple regular prescriptions, week in, week out. That is why we are praying against the regulations.
  A 50p increase per prescription may seem very little to people who earn vast sums out of the hard work of others. It may seem very little to Conservative Members. For many people, however, it will represent a major burden on their income. Three or four prescriptions will constitute a large imposition on those who are struggling just above income support levels, with just enough income to keep their families together. Such people are often on part-time earnings.
  The Parliamentary Under-Secretary for Health (Mr. Tim Yeo): What about the poll tax in Sheffield?
  Mr. Blunkett: All that we get from Conservative Members are cheap remarks about people paying their poll tax. The poll tax and the prescription charge have one thing in common: they do not take from the rich, but they load disadvantages on to the poor. They are an alternative form of taxation. The most regressive taxation taxes those in specific need of medication while alleviating the position of those who could well afford to pay for that medication.
  It is worse than that, however. It is nonsensical in itself for someone receiving one form of exemption to be exempt from everything, and for those who are not exempt to have to pay everything. Why should people suffering from cystic fibrosis not be exempt, while those suffering from ailments that are already exempt find that everything else falls into place?
  Only this morning, I received a letter from a Mrs. Forbes of Aberdeen. Her son, aged 28, has cystic fibrosis, and is struggling for life. She is fortunate, because he is exempt—not because of the major life-threatening ailment from which he suffers, but because of a related problem that enables him to receive prescriptions. It is nonsensical; everyone knows that. The system needs to be changed, and the amounts that people are paying need to be frozen. Tonight, however, we are debating a 50p increase, and the draconian weighting of that increase on those who can least afford it.
  Why are we debating the issue on the eve of the Budget? The answer is simple: the Government are not prepared

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  —as they were not when they made the announcement—to stand up in the light of day and the public arena, knowing that they will be reported, and argue their case. They know that that case is wrong; they know that the charge should not be levied, and that they are being unfair to those who are least able to defend themselves.
  10.14 pm
  The Minister for Health (Dr. Brian Mawhinney): From 1 April the National Health Service (Charges for Drugs and Appliances) Amendment Regulations 1993, the National Health Service (Dental Charges) Amendment Regulations 1993 and their Scottish equivalents introduce responsible increases in NHS prescription charges and in the maximum and proportional charges for dental treatment. Those charges will be paid only by people who can afford to contribute to the cost of their treatment and medication.
  The existing wide-ranging exemptions and remission for people who cannot afford prescription charges are unchanged. No child, no expectant or nursing mother, no state retirement pensioner and no one on income support or family credit pays a charge. They and the people who get free prescriptions because they are exempt on medical grounds or are on a low income are unaffected by the 50p increase.
  I shall set the regulations in context. NHS spending is at an all-time high. The gross provision for 1993–94 is over £37 billion, a real terms increase over this year and up by 61 per cent. in real terms since 1978–79. To put it another way, we are spending just over £100 million a day on the national health service. That amounts to £649 for every man, woman and child compared in equivalent constant prices with £417 when the last Labour Government left office.
  In 1992–93, £19 of every £20 spent on the NHS will be met from taxes and national insurance contributions. It is estimated that less than 4 per cent. will be met from all the charges in the NHS put together. Nevertheless, that 4 per cent. is not insignificant in terms of better patient care. From 1 April the proposed increase in prescription charges from £3·75 to £4·25 will raise about £278 million a year for the NHS in England alone. Opposition Members may be interested to know that that would fund the building of about seven 300-bed district general hospitals and their running costs, or over 70,000 hip replacement operations or more than 45,000 coronary artery bypass grafts.
  Mr. Thomas Graham: Not long ago I wrote to the Minister about a constituent with a chronic disease. The reply that I got only a week or so ago was basically that if the Government gave her an exemption they would need to exempt people with cancer, with dialysis problems, with diabetes—the lot. Does not the Minister realise that our hospital bill will increase if people cannot afford the medicine that will keep them out of hospital? An increase of 50p will deny proper medicine to people on low wages and they will end up in hospital costing £600 to £2,000 a week. Is that the way that the Minister want to go?
  Dr. Mawhinney: Of course, there must be some truth in the hon. Gentleman's general proposition, but he was not listening to me. I said that those on low income were exempt from charges. Therefore, the hon. Gentleman's point is not valid.
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  On average, people who pay prescription charges receive six items a year on prescription. The new prescription charge, which is still much less than the average total cost of a prescribed item to the NHS, will cost such people £3 a year more than they are paying this year. For the minority who pay charges and who are heavier than average users of prescribed items, the prescription prepayment certificates offer real savings. The new proposed cost of four-monthly and annual prescription prepayment certificates will be £22 and £60 respectively. As hon. Members know, other charges will be increased by a percentage similar to the rise in prescription charges.
  Perhaps Opposition Members would like to suggest which of our planned improvements in NHS services next year they would like to cut to make up the shortfall. Such cuts would take place without providing any benefit for the least-well-off because they do not pay prescription charges. The charging structure recognises people's differing ability to pay. Four out of every five prescribed items are now dispensed free—more than at any time since the Labour Government reintroduced prescription charges in 1968. When Labour last left power in 1979, only three out of five prescriptions were dispensed free.
  We propose to increase the maximum charge for a course of dental treatment which starts on or after 1 April this year from £225 to £250. I noticed that the hon. Member for Sheffield, Brightside (Mr. Blunkett) did not mention dental charges, so I am grateful to him for his support on this aspect of the regulations. That increase will affect less than 1 per cent. of adult courses of treatment. At the same time, the proportion that a patient contributes to the cost of a course of dental treatment will increase from 75 to 80 per cent. Increases in the proportional and maximum charges for dental treatment will raise an estimated £17 million for the national health service in England in 1993–94 and about £25 million in a full year. And £25 million is equivalent to the annual cost of about 250 general dental practitioners.
  As with prescription charges, only those who can afford to do so are asked to contribute towards the cost of their dental treatment. All treatment to those under 18 years of age is free and some 21 per cent. of adult courses of treatment are free. Many others on low incomes get treatment at reduced rates. We are seeking to encourage a positive attitude and changed habits to dental care through the provision of free dental treatment for children and the continuing care which the new contract for dentists introduced for all adults.
  Since the introduction of the new contract, more people are coming forward for dental treatment and registering with a dentist. Adult registrations at 31 January were more than 21 million, an increase of 3·3 per cent. since 1 July 1992. More courses of treatment are being undertaken on these people. That does not sound to me like a system under which people are so scared of charges that they put off going to the dentist.
  Finally, the National Health Service (Optical Charges and Payments) Amendment Regulations 1993, together with, their Scottish equivalents, increase the value of optical vouchers by an average of 2·75 per cent. Once again this increase is in excess of the current rate of inflation and should preserve the real terms value of the vouchers. About 34 per cent. of the population are entitled to optical vouchers, including children under 16, students under 19, people on income support or family credit,

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  others on low incomes and people who need certain complex lenses. Expenditure on the optical voucher scheme costs the NHS about £100 million a year.
  Mr. Jimmy Boyce: Will the Minister be kind enough to explain to the House what he means by "low income" before people have to pay?
  Dr. Mawhinney: I think that the hon. Gentleman knows the answer to that question. It relates to qualification for existing social security benefits.
  Last year, from 1 April, we carried out a wholesale redefinition of voucher bands. This increased the value of voucher A, the most common voucher, by over 20 per cent. and the majority of customers are considerably better off.
  The hon. Member for Brightside set out the Opposition's current position on prescription charges. Year by year during the 1980s the Opposition attacked the Government for asking the limited number of people who actually pay prescription charges to contribute more. Year by year, the hon. Member for Livingston (Mr. Cook) attempted to convince the world that he was outraged. Year by year he won his sound bite on the evening news, so when the time came to write the election manifestos, Conservative Members rushed to have a look at what the Opposition would say and see how they would use this opportunity to put their principles into practice. We looked for their pledge to reverse the rises in prescription charges which they had so vehemently opposed. We looked in vain. Labour devoted two pages of its manifesto to health, but, in all that space, it had precisely nothing to say about prescription charges. The hon. Member for Brightside had nothing to say about them this evening. He was but a poor, pale imitation of the hon. Member for Livingston—and we know where he progressed to.
  Of course, in their manifesto, the Opposition were willing to remove £500 million from patient care to fund the minimum wage proposals, so beloved of their union sponsors, but even they baulked at having to remove another £240 million by scrapping prescription charges. Unless the hon. Member for Brightside is able to do better than he has this evening, the pages of his speech and all the words that he will pour forth in sound bites tomorrow and in the weeks to come will wind up in the same paper shredder as the words of the hon. Member for Livingston. The hon. Member for Brightside is trying to have it both ways—outrage but no guts to make a commitment that he would reverse the changes that we are announcing tonight.
  All Governments have to make choices. We are committed to increasing spending on the NHS and our record is significantly better that than of the Opposition. However, we also have to balance the needs of the service against finite resources. Available resources should be directed at the greater need. The charges for dental treatment and prescriptions, which will apply from 1 April, are a small but nevertheless important contribution towards the funding of the NHS and will continue to be paid only by those who can afford that contribution.
  The public understand the usefullness of a limited additional contribution to the NHS from those who can afford it. Their concern is not to engage in party political point scoring, especially of the spurious type so beloved of
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  Labour politicians, but to have the best possible national health service. Those who share the public concern should vote against the motions.
  10.27 pm
  Ms Liz Lynne: I welcome the chance to debate the issues, but not the increases in prescription or dental charges. I welcome the increase in the value of the voucher, although' it does not go far enough.
  This is the 15th rise in prescription charges since 1979. There has been a horrendous increase of 2,000 per cent., a 13 per cent. increase on current levels and, at the same time, an increase of only 1 per cent. in real terms in the whole national health service budget. How can the Government justify a 13 per cent. increase in prescription charges but a real terms increase of only 1 per cent. in the NHS budget? So much for the NHS being free at the point of delivery.
  How many more people will be put off going to their general practitioner for a prescription? The pharmaceutical industry has said that increases could be dangerous because many patients will have to choose between which prescription they collect. I know of people in my constituency who have already had to choose between painkillers and antibiotics. Of course, they opt for the painkillers because they want to kill the pain, but they are storing up problems for the future. If they do not take the antibiotics, they will cause long-term problems which will cost the health service more. The Government's attitude is, therefore, very short-sighted.
  The Minister has just said that those who cannot afford to pay will not pay, but I disagree. Many people on very low incomes will not be able to afford to pay. They will not be included in the exemptions and they are not included at the moment. For example, students who receive loans are not exempt. Many students do not get free prescriptions, free eye tests or any of the other free services that they used to get. Certain people on invalidity benefit, for example, will not get free prescriptions.
  The citizens advice bureaux brought the case of a constituent to my attention. He has to have medication to thin his blood and he cannot get that medication free. The medical exemptions were probably good enough when they were drawn up in 1968, but they must now be changed. I urge the Government to look at the matter seriously and to extend the list of medical exemptions to cover the advances in medicine in the past few years. My constituent might then be included in such a list of exemptions.
  I know that the drugs bill is large—nobody disputes that. I know that the Government have said that we cannot afford the present drugs bill. Perhaps we should consider other areas, such as over-prescribing. I know that the Minister has done some work on that, which I welcome. Some general practitioners over-prescribe and issue repeat prescriptions far too often. GPs should also consider referring people for alternative medicine instead of putting them on to particular drugs. I understand that GPs can already do that under extra-contractual referrals, but I believe that many GPs are not aware that they can do that and I should like the Government to make GPs more aware that alternative medicine is available. That could mean that a patient could be referred for chiropractic, for example, instead of being given drugs.

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  Dental charges are up by 6·7 per cent. I know that that increase is not as great as the increase in prescription charges and I suppose that we should be grateful for small mercies; personally, I do not think that we should be. The patient's contribution is up from 75 per cent. to 80 per cent. As the Minister said, the maximum payable has increased from £225 to £250. In the past few years, NHS dentistry has been damaged beyond repair. Some dentists already refuse to take NHS patients. The regulations will make it even more difficult for patients to get treatment.
  I have heard of a child in my constituency—I am looking into the case at the moment, so I do not know how true it is—who has been refused NHS treatment for a brace. She is a fairly young child and her father has brought the case to my attention. These regulations will not help patients to go to the dentist. Many people refuse to go to the dentist now for check-ups because they cannot afford it.
  Then we turn to vouchers for glasses. The Federation of Ophthalmic and Dispensing Opticians, in a survey in 1992, found that the cheapest spectacles were £38·55 inclusive of VAT. The voucher was £23·70 and has gone up to £24·40. Where is the £14·15 to come from for those who need glasses and who are supposed to be getting them free? The voucher does not cover the cost of the spectacles.
  A mother in my constituency has talked for the past few years to me and to anyone who will listen about her daughter, who keeps falling and breaking her glasses. She can get them repaired, but the voucher does not cover the cost completely. Each time her daughter falls and breaks her spectacles, she has to go to the optician and top up the money over and above the voucher. That is not good enough.
  Dr. Mawhinney: May I point out to the hon. Lady that the most recent survey of spectacle retailers showed that 50 per cent. of retailers were able to offer spectacles at within the voucher value?
  Ms Lynne: But 50 per cent. is nothing like enough. If one does not live in a constituency where——
  Mr. Graham: Does the hon. Lady realise that I represent a rural constituency and that if my people had to keep running into the centre of town for prescriptions, they would pay pounds and pounds in transport costs—if they were lucky enough to get a bus in the first place?
  Ms Lynne: I take the hon. Gentleman's point.
  The Under-Secretary of State for Health said in 1991 that people would not have to top up. I gather that he meant that they would not have to top up at all. On 11 December 1991, in the Committee that considered the National Health Service regulations, the Under-Secretary said:
  "The hon. Gentleman also sought reassurance that voucher values would be sufficient to permit anyone holding a voucher to have access to the purchase of spectacles without needing to pay a supplement. That is, indeed, the Government's view."—[Official Report, Second Standing Committee on Statutory Instruments, &c., 11 December 1991; c. 14.]
  Obviously it is not the Government's view any more, because the Minister refers to a figure of 50 per cent. Do the Minister and the Secretary of State think that the vouchers will cover costs in all cases? I doubt whether the hon. Gentleman could stand up at the Dispatch Box and say that, in every case, the voucher would cover the cost of spectacles.
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  There is real fear that people will not be able to get the treatment that they need. They will not be able to get their prescriptions. In many cases, they will not be able to get the dental care or the eye care that they need.
  On 11 March 1993, Virginia Bottomley herself—[HON. MEMBERS: "Order"."]—the Secretary of State for Health said:
  "above all, the NHS will continue to offer care on the basis of need, not ability to pay."
  I hope that the Government take that into account, because if the regulations go through tonight, that will certainly not be the case.
  10.37 pm
  Mr. Jerry Hayes: It is always a joy to follow the hon. Member for Rochdale (Ms Lynne). Whatever she tells the House, she tells it with great aplomb. The trouble is that she never tells us very much. It was most interesting to hear what the hon. Lady had to say. I refer her to a document that her party published in February 1992, entitled "Restoring the Nation's Health". The sum total of the Liberal Democrats' views on prescription charges can be paraphrased thus: the total abolition of charges is not necessarily desirable. So I ask the hon. Lady, "What is the Liberal Democrats' policy?"
  Never mind the Liberal Democrats; let us deal with those on the Opposition Front Bench. A great thing happened to this nation last week. Mr. Yentob of the BBC made the cataclysmic announcement that "Eldorado" would he taken from our screens. Some of us occasionally switched on at 7 o'clock in the evening and watched totally inadequate, totally hopeless people limping from crisis to crisis, without any idea of what on earth they were doing. Where will we look now to make us look adequate? I suggest that we look at the health team on the Opposition Front Bench. I cannot attack their policy on prescriptions because I do not know what their policy is, and if I do not know what their policy is, I know that they do not know what their policy is.
  In the run-up to the general election, the hon. Member for Livingston (Mr. Cook) said that Labour would freeze prescription charges and that, over time, they would decline in value.
  Mr. Paul Flynn: On a point of order, Madam Deputy Speaker. This is a specific debate about the Government's proposals and has nothing to do with Opposition policies. Many hon. Members wish to catch your eye to talk about the specific proposals before us. The hon. Member for Harlow (Mr. Hayes) has spoken for some minutes now without mentioning the Government's proposals.
  Madam Deputy Speaker (Dame Janet Fookes): I usually allow a little latitude, but the word is "little". I am sure that that point will be taken on board.
  Mr. Hayes: I always obey your rulings in these matters, Madam Deputy Speaker. In my constituency of Harlow, we live in a nuclear free zone. Obviously the Opposition Front Bench lives in a policy-free zone.
  I was simply trying to constrast what Opposition Members have been saying with Government policy. That is a perfectly fair and reasonable thing to do. The Opposition spokesman did not tell us what the Opposition were going to do.
  Mr. Ron Davies: Order.
  Mr. Hayes: The Opposition are praying against the regulations. They should have the courage to tell us what they are going to do. The House and the general public deserve an answer, but we have not heard an answer tonight.
  What did we hear from the hon. Member for Sheffield, Brightside (Mr. Blunkett) tonight? Perhaps he, or one of his colleagues, will tell us later what the Opposition will do. Would they freeze prescription charges or abolish them? Would they bring more money into the health service? Or is the hon. Gentleman going to continue, as the press reports that he is, to attack my right hon. Friend the Secretary of State for Health?
  In the Financial Times the hon. Member for Brightside accused my right hon. Friend the Secretary of State for Health for caving in to the Treasury. He said that the Government were prepared to tax the sick, not the rich. Therefore, according to the hon. Member for Brightside, my right hon. Friend is caving in to the Treasury. The proposals in the regulations involve £278 million. Is that money going to the Treasury? No, it is going directly to health care and directly to the patients. As my hon. Friend the Minister said so eloquently a moment ago, it will go to hospitals, into coronary bypasses and into reduced waiting lists. [Interruption.] I am sorry. The hon. Member for Brightside may have said something about a policy. Is he attacking that amount of money?
  The Opposition always talk about cuts. I talk about them as well. I remember the cuts in the pay of doctors and nurses under the last Labour Government.
  Madam Deputy Speaker: Order. The subjects of tonight's debate are the regulations that make increases. Those regulations are being prayed against. The hon. Member for Harlow (Mr. Hayes) should consider the pros and cons of the proposals.
  Mr. Hayes: You are absolutely right, Madam Deputy Speaker. However, I thought it only fair, right and proper to put the record straight. The trouble is that the Opposition have no policy that we can attack. They have all the balance of a wet blancmange.
  Hon. Members have asked me to consider the achievements in the drugs budget. We are talking about more than £2·3 billion being spent every year. Opposition Members said that we are taxing the sick and the poor. Four out of five prescriptions are free. They are free if one is pregnant, a child, elderly, or in receipt of income support. The provisions are the most generous in the western world. If the Opposition had any decency or honesty, they would admit that.
  I do not want to provoke any of my Conservative colleagues who might be regarded as the gnomes of Maastricht—mercifully they are not here tonight—but perhaps I can refer to Europe. The Opposition are great at praying in aid what happens in Europe. Let us consider what happens in Europe.
  Mr. Ron Davies: Order.
  Mr. Hayes: The hon. Gentleman may say, "Order", but my point is directly relevant to the debate. The Opposition tell us what happens in Europe and what should happen in this country in relation to Europe. They tell us how much money we should be spending vis-a-vis Europe. Perhaps I
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  can remind hon. Members what happens in Europe. The German Government intend to reduce the drugs budget by 5 per cent. It is the intention of this Government——
  Mr. Kevin Hughes: On a point of order, Madam Deputy Speaker. Is the hon. Member for Harlow (Mr. Hayes) trying to address the 50p increase in prescription charges that the Government have imposed on the people of this country or is he auditioning for a part in "Eldorado"?
  Madam Deputy Speaker: It is not for the Chair to judge the quality of any contribution.
  Mr. Hayes: I am deeply grateful for that.
  We are talking about a 50p increase for many people who are not poor, frail or most in need. It is the equivalent of two copies of the Daily Mirror, if anyone in his right mind wishes to read the Daily Mirror and I am not suggesting that the hon. Member for Doncaster, North (Mr. Hughes) is in his right mind.
  Spain and Britain are the only EC countries to exempt pensioners from prescription charges. German pensioners have 6·25 of their state pension deducted. In socialist France, with 3 million unemployed, pensioners are expected to pay £4·60p a day for hospital charges, and in Belgium pensioners pay up to 25 per cent. of a doctor's consultation fee. What are the Opposition praying against? A 50p increase in the charge? We are talking about £278 million that is going not into the hands of the Treasury but directly into patient care. I cannot understand, and I doubt whether the general public can possibly comprehend, what on earth they are complaining about.
  10.46 pm
  Mrs. Alice Mahon: I wish to add my voice to those who object to a tax on the sick. I do not think that the poor or sick will gain any comfort from the speech of the hon. Member for Harlow (Mr. Hayes), and certainly not from the Minister's hard and unfeeling speech. He presented an almost Dickensian figure at the Dispatch Box. Far from protecting those who are on low incomes and need medication, the Government have placed an intolerable burden on them. The Minister tried to defend the indefensible, which probably accounted for his rather heartless rhetoric.
  Fourteen months ago, I introduced the Health Benefits Bill, which would have exempted from prescription charges all people in receipt of other benefits. Conservative Members do not realise or recognise that people who claim poll tax benefit, housing benefit, invalidity benefit or disablement benefit are not entitled to free prescriptions, yet their low incomes are recognised by the fact that they need help with such basic needs as housing. The Minister was challenged about the level of incomes of people who are in receipt of benefits, but he did not have an idea. I do not think that he lives in the same world as anybody else.
  My Bill would have exempted from prescription charges anybody who was diagnosed as chronically sick. It seems eminently sensible that if people have chronic illnesses the least a caring society should do is to ensure that they have free medication. It would have exempted people requiring long-term medication, to whom my hon. Friend the Member for Sheffield, Brightside (Mr. Blunkett) referred, such as those with chronic bowel disease. A constituent of mine has Crohn's disease. He

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  received an increase in benefit of just 8 per cent., which took him above the level at which he could get free prescriptions. He needs them weekly—all the time, in fact. So he ended up with a cut in his weekly income of £3.
  I wish that the Minister had taken more notice of my Bill, which would have taken care of such people. Those with asthma, multiple sclerosis and cancer do not automatically get free prescriptions.
  One of the saddest categories of people whom the Government continually ignore is that of the mentally ill. I have a great deal of contact with a self-help group in Halifax. The group is for people who have suffered from a mental illness, and it is called Calderdale Survivors Speak Out. Its members would clearly tell the Minister about their friends who, when faced with electricity and other bills, often pay the bills but do without their medication. They then get progressively worse and end up back in hospital, costing the system a lot more than if they had had free prescriptions in the first place. It is obvious to all that such people will be badly affected by the increase proposed tonight.
  The Bill that I presented drew attention to the help that may be derived from the health benefits scheme. Those benefits are for dental and optical charges, and for travel costs—but they offer little or no help with prescriptions. In practice, the scheme does not meet its objectives. It is terribly bureaucratic, and thousands of people are deterred from claiming health benefits because of the scheme's complexity.
  I sent the Minister a copy of the form that people are expected to fill in to claim back small amounts. Its 20 pages contain 50 questions. Not surprisingly, there was no reply from the Minister.
  In reply to a question from a Conservative Member almost two years ago, the Secretary of State for Health promised:
  "During 1991, the Department of Health will undertake a review of the administration of the low income scheme. The review will produce proposals by the end of 1991 for simplifying the claim form AG1 and other administrative procedures."—[Official Report, 22 May 1991; Vol. 191, c. 530.]
  Nearly two years on, we are still waiting for the Secretary of State to do something about this complex and wasteful system.
  The system has failed. Almost 1 million people a year try to get help through it. The National Association of Citizens Advice Bureaux said last year that almost 100,000 people a year go to them for help to fill in the forms. Even so, 35 per cent. of all forms are sent back to the claimants because they are incorrectly completed.
  The Government have a duty to tell us tonight what they intend to do about the health benefits scheme. It offers some help, but it is so complex that it is failing to help those who need it most.
  I felt ashamed this evening to hear the Minister trying to defend the £4·25 that the Government now charge for each prescription. The Minister talked about the last Labour Government. The charge was 20p in 1979. The Minister cannot defend an increase that attacks the most vulnerable people in society—who go without the treatments that they require because the Government have callously decided to tax the sick.
  10.54 pm
  Mr. Geoffrey Dickens: There is no question but that our national health service is the finest in the world. It is the envy of the world and many people from all over the world come here to examine in great detail the way in which we handle it. Perhaps because it is the best in the world, it is one of the most costly and the taxpayer does not have a bottomless pit of money. The Government do not have any money at all. What they have is taxpayers' money, which they have to circulate——
  Mr. Jim Dowd: Do not be stupid.
  Mr. Dickens: I am not being stupid. The Government have to recirculate the money and spend it in a wise way, to the benefit of everyone.
  I suspect that, if I were in opposition, I might be praying against the regulations. However, I would not be doing it for genuine reasons—I would be doing it to make political advantage, as the Opposition are doing this evening. If only four out of five people pay for prescriptions, aid must be targeted on those in greatest need. It is marvellous that not one pensioner nor person on income support has to pay for a prescription.
  I feel sorry for some people—those who are in the narrow band of the poverty trap. They are considered too rich to get any benefits, but they are often a little too poor to keep paying ever-increasing prices. We appreciate that a line has to be drawn somewhere. I often used to get letters from people saying that they would willingly pay more tax to do something about this or that. I would write saying that my local hospital would be grateful to receive a donation towards various units, but those units never got any money from my constituents. Sometimes, such claims are false.
  People are nervous about their health and they should be pleased that we have such a wonderful health service. I do not want to make a long contribution, because I know that some—[HON. MEMBERS: "Go on!"] Well, in that case, I will. Many hon. Members wish to speak. We have had some thoughtful contributions.
  I congratulate my very dear friends the Secretary of State and the Minister for Health on what they are doing for the health service. Many of our reforms, which cost an awful lot of money, meet initial opposition. All the medics were up in arms and against reforms, but now they are rushing to be budget holders and to be part of an NHS trust. They can see the benefits, but those benefits have to be paid for. As the Secretary of State and the Minister realise that throwing resources at everything is not always the answer, they have introduced streamlining and efficiency. That is why we have such a great health service.
  Each and every hon. Member should be honest. We have something very precious. They must not whinge and run it down. If those who can afford have to pay a little more, they should remember that the money will not go to build motorways. It will go into the NHS for further patient care. Who knows, the constituents who write to Opposition Members may need that care and they will thank God that we have a health service. Perhaps they will even thank Him that we charge those who can pay just a little more. We should remember that some people can get a season ticket. [HON. MEMBERS: "Oh!"] Hon. Members asked me to continue.

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  You know me and my generous disposition, Madam Deputy Speaker. I would not take advantage of all those who want to continue to rubbish the health service. One day, Opposition Members, or their constituents, might be glad of the NHS. They should thank God—I know that they are praying against the regulations—that they are fortunate enough to live in the United Kingdom, comforted by a health service second to none—I defy anybody to tell me of a better one—paid for by the taxpayer. He pays for new techniques, new operations and procedures that were not even thought of only a few years ago. We are delivering them now.
  Hon. Members should remember that ours is the best health service in the world. I shall now be fair and let others speak in the debate.
  11 pm
  Mr. Jimmy Boyce: The hon. Member for Harlow (Mr. Hayes), who is no longer in his place, was clowning, as usual. His feet were planted firmly in the air. The hon. Member for Littleborough and Saddleworth (Mr. Dickens) followed the example of his hon. Friend and we heard the same nonsensical rhetoric.
  The Opposition are not arguing that the moneys collected from prescription charges will not go to the health service. We are not saying that they will go to the Treasury. We are arguing that the moneys, if necessary, should come from the Treasury. We are engaged in an economic debate because with the rundown in the economy the health service can no longer be funded properly. We are not talking about where the moneys that will be collected from the outrageous increases will be spent. We simply say that the increases are outrageous. After all, we are faced with a current charge of £3·75.
  I take four forms of medication a day for a minor ailment. Under the Government's proposal, I would be faced with a charge of £17. I am extremely fortunate because I can afford that.
  Dr. Mawhinney: If the hon. Gentleman cared to buy a season ticket, the charge would be £22 for three months.
  Mr. Boyce: That is right. I could afford that. In fact, I have a season ticket. The Minister should understand, however, that some people would not be able to afford a charge of £17, let alone £22. People are having to make choices and I doubt whether they are going without their medicine. Indeed, they could not do so. That means that they do not spend on other things. If the poll tax suffers—their payments—they will be hounded. They will be put under pressure for the non-payment of an iniquitous tax. We know that all Conservative Members voted in favour of that pernicious tax and imposed it on working people.
  Earlier, I asked the Minister about the level of benefits. The hon. Gentleman said that I should be aware of it. I am only too well aware. After all, it was a rhetorical question. We are talking about those who are slightly above income support level, who are the poorest in society. I knew the answer to my question.
  There will be a time of reckoning. The time will come when the Conservative party will have to account for all the misery that it has inflicted on ordinary people. If the Government want to find the money without increasing
  132
  charges—my opinion may not be shared by all my right hon. and hon. Friends—they should scrap the nuclear arms programme.
  11.4 pm
  Mr. Thomas Graham: I am astounded that the poor and the sick of our nation are expected to pay increased prescription charges. I never thought that the Government would have the audacity once again to increase the charges. I listened to the hon. Member for Harlow (Mr. Hayes), and I thought that I was listening to Jean Harlow, an actress. As for the hon. Member for Littleborough and Saddleworth (Mr. Dickens), what an example we present of fat, healthy people. However, we have £31,000 a year and can afford the increase in charges. Many people in my constituency cannot pay the current prescription charges.
  I have written to the Department on a number of occasions, seeking exemptions for chronically sick constituents. The answers that I received were horrific; they were insensitive to the problems of sick people. How can any Health Minister say that he will not give an exemption to a chronically sick person? How can he say that he will not give an exemption to someone suffering from cancer?
  A woman constituent wrote to me about her husband, who was suffering from cancer. She had to buy £16 worth of medicine a week. She did everything possible to give her husband aid and succour in his dying days. I wrote to the Minister about that case. How, for God's sake, can we inflict such pain and suffering on the sick? Can hon. Members imagine being sick, going to the chemist with four prescriptions and saying, "Pick the one I don't need"? A doctor—a professional with the skills and ability at least to try to make someone well—has written four prescriptions, but the patient cannot afford them. Hang your head in shame, Minister——
  Madam Deputy Speaker: Order. I know that the hon. Gentleman feels strongly, but would he please remember that he is addressing me, not the Minister?
  Mr. Graham: I apologise, Madam Deputy Speaker. Unfortunately, such matters get me wound up. If I do not fight for the sick and disabled, who will?
  The Minister cannot get away with simply saying that the orders are the way to save £300 million in the health service. There is no saving when people are being denied proper medication because they cannot afford it. The Government should be trying to improve the provision of medication if there is a problem—and there is. There is a massive problem with thousands and thousands of constituents not getting the medication that they need. People are already suffering because of low pay; the regulations will make matters worse.
  I do not want to take up parliamentary time. I am becoming so angry that I am likely to breach parliamentary order and privilege. My sick constituents deserve better from the Government. The hon. Member for Littleborough and Saddleworth said that there was not a bottomless pit. These regulations should be named the Bottomley pit. It is a pit of the Government seeking once again to tax the sick in our community.
  There should be a new regime to look after the health of Great Britain, and under no circumstances should it be that lot sitting in the Department of Health. We do not

  133
  want anyone—Tory, Liberal, nationalist or Labour voters—to suffer the indignity of a Government driven continually by the market place, by a free market. At the end of the day, millions of people are unemployed and thousands are on low pay. We sat for weeks and weeks listening to the Government talking about a trade union reform Bill. They abolished the wages councils, so we will see the spread of low pay, which will drive people further into bad health and sickness. They will not be able to recover because they will not have enough money to pay for prescriptions—and that will be because of the Government's unthinking, uncaring and sheer heartless attitude.
  11.9 pm
  Mr. John Gunnell: Even though I have been in the House only a short time, I realise that it is traditional to refer to the remarks of the previous speaker. I can truthfully say that I have never been so strongly in agreement with the speaker who immediately preceded me, my hon. Friend the Member for Renfrew, West and Inverclyde (Mr. Graham), as I am now. I will emphasise a number of his points and comment on tonight's announcement and our reaction to it. It is worth remarking on the nature of the announcement, the manner in which it was made, and the Government's defence—although I was able to agree with my hon. Friend that the Government have ceased to defend any of their proposals. The announcement was made in a matter-of-fact way, as if it were just a 50p increase. The point has already been made that prescription charges have in fact increased 2,000 per cent. under successive Conservative Governments.
  The 50p rise in prescription charges represents a 13·33 percentage increase. The Government constantly boast about low inflation and the level of wage increases that should be sought—but the charges represent a 13 per cent. increase and the Government do not bat an eyelid. They think that it should be accepted without protest and query the fuss that we are making tonight.
  The announcement was cynical and was delivered as though it was of little importance to anyone. The information was just slipped out. We learnt of the increase a week ago through a parliamentary procedure that did not involve a public announcement which would have allowed the public to react. The Opposition had to make it clear that the announcement had been made and to publicise it—just as it is left to the Opposition to comment on the increased charges tonight.
  The Government have offered no defence. The Minister says that the poorest will be protected. Even the hon. Member for Littleborough and Saddleworth (Mr. Dickens) pointed out that those at the margin are in the most difficult position. The same was said by my hon. Friend the Member for Renfrew, West and Inverclyde and other of my hon. Friends. To many, the increase represents a massive rise. For them, £4·25 for every prescription that they need is a lot of money. The Minister would not disagree that many people need double prescriptions and they will have to pay £1 more and a total bill of £8·50p. Many at the margin will have great difficulty paying those higher charges.
  The hon. Member for Rochdale (Ms Lynne) mentioned certain categories who would suffer, such as students. I have engaged in correspondence with the Minister about a student in my constituency, who wrote to me setting out
  134
  his budget. He said that he felt that, given his income, he should not have to pay the prescription charges. He was determined to get through his college course without recourse to a student loan; as he explained in his letter, he would much prefer to be free of debt when he graduated. He was trying not to draw heavily on his parents' resources, while also trying to complete his course without a loan.
  When I asked the Minister why that student was having to pay prescription charges, it was explained to me that he was being charged as if he had drawn his student loan. He had been told that he had a notional student loan. He had been lent no actual money, but the fact that a loan was available to him apparently meant that the money that he had not claimed still counted against him. That is just one small indication of the lengths to which the Government will go to penalise, in this case, a student who was determined to complete his course and be free to pursue employment—if he could find it, that is—without the hindrance of a loan.
  That student was forced to pay prescription charges on the basis that he had claimed a loan that he rightly had not claimed. He is just one of a category of people for whom the imposition of extra charges will be the last straw. A 13 per cent. increase in a charge that is so important to so many people is simply not acceptable. The defence advanced for the charges has been negligible; such a level has never been justified.
  Mr. Jack Thompson: An increase is now being proposed in the number of items being taken off the list that a doctor can prescribe. Those receiving the benefit of not having to pay prescription charges are now having to pay normal chemist shop prices. They are being hit twice. If they are elderly, for instance, they will get away with not paying prescription charges, but they will probably have to pay more for the same medicine than they would have paid otherwise.
  Mr. Gunnell: I thank my hon. Friend for raising that important point, which has been raised by others. I only hope that the Chancellor will not impose VAT on medicines tomorrow. I noted that the pamphlet provided by the House of Commons Library included medicines among the items that might attract VAT; certainly, many people would be affected by that. As others have pointed out, there are quite different ways in which a Minister could choose to tackle the allegations of waste in prescribing.
  Mr. Barry Porter: I agree with my hon. Friend the Member for Littleborough and Saddleworth (Mr. Dickens) that our national health service is the best in the world. Can the hon. Gentleman tell me which country in the western industrialised world has lower prescription charges than those proposed in the regulations and which has exemptions more generous than those provided here? There is none.
  Mr. Gunnell: I shall have to refer the hon. Gentleman to the paper that I have received from the Library. What I know, however, is that the Conservatives voted against the NHS when it was set up in 1947.
  Mr. George Kynoch: Will the hon. Gentleman give way?—[Interruption.]
  Madam Deputy Speaker: Order. If the hon. Member who has the Floor does not give way, hon. Members trying to intervene must sit down.
  Mr. Gunnell: I think that I have said enough to make it clear that I, like my right hon. and hon. Friends, find the scale of the increases and the way in which they have been announced unacceptable. Once again the Conservative party is proving that the NHS is not safe in its hands.
  Ms Dawn Primarolo: In the few minutes that are left to me to sum up for the Opposition, it is important to return the debate to the subject of the regulations—the 13 per cent. increase in prescription charges. That is higher than the 1·5 per cent. pay increase that the Government forced on health service workers, whose lobby we saw today. The increases will take dental charges to 80 per cent. of the total cost of treatment for national health service patients. It is part of the Government's strategy to force dentistry out of the NHS.
  There has been a great deal of misinformation from the Government about exemptions from charges and about who can or cannot afford to pay the increases. We should be under no illusions. The increases are a result of the Government's failed economic strategy. They are a tax on the sick to pay for the health service because the Government's economic strategy is not delivering the resources.
  The increases will weigh heavily on those who just fail to qualify for the benefit that hon. Members have mentioned. Forty per cent. of the population pays national health service charges. Perhaps in his winding-up speech the Minister will reveal the information in the Government's possession about the true failure of their income and exemption schemes. The Minister wrote to Ms Ann Abraham, chief executive of the National Association of Citizens Advice Bureaux, on 16 July 1992. His letter followed the report by the association entitled "Health Warning" which pointed to the problems with the exemption scheme.
  For example, people have to apply for exemption on a 19-page form. Even those who administer the scheme find the form difficult to understand and make erratic and incorrect judgments on people's entitlement. What must it seem like to people applying for needed medication? The grounds for exemption are not consistent. For instance, a pensioner is exempt from prescription charges but not from other charges. A pregnant woman can get help with most charges, but not with hospital visits. The maximum help that is available does not cover the total cost of, for example, optical charges.
  The Government agreed that the system did not work and that the people they were trying to help were not helped by the system. In his letter to Ms Abraham the Minister said:
  "As you know, the Government has been concerned to keep the arrangements for providing help with NHS charges under close scrutiny. The decision to carry out the Review announced by my predecessor shortly before the…report…was published, reflected our concern to improve…the Scheme.
  Although the Review has been completed, more detailed work is being carried out on the wider implications of…the proposals. This will assist the decision making process."
  Where is that review? What does that tell us about the Government's empty promises about helping people in need? Why did they not implement the review before looking at increasing the charges?
  136
  If we need further evidence about the complications of the scheme, I refer the Minister to a letter of 10 August 1992 to Baroness Hollis about the disability working allowance—a special allowance to help disabled people get back into work. However, they are not exempt from paying prescription charges, despite the fact that they are on low incomes.
  The Royal Pharmaceutical Society of Great Britain said that more people will be unable to have the medicines that they need. The president asked the Government to consider the implications—that people will be forced back to their doctors because they will have to choose between the drugs that they need instead of having them all. The British Medical Association calls this rise a tax on illness. It is illogical; it is unfair; it is discriminatory; and it bears no resemblance to the Government's rhetoric this evening. There should be no increases.
  Dr. Mawhinney: With permission, Madam Deputy Speaker. I should have liked to——
  Miss Joan Lestor: On a point of order, Madam Deputy Speaker. I believe that the Minister has to ask for the permission of the House to speak again. As a Member for the House, having been disgusted by the behaviour of those who have been on the Treasury Bench during the debate, I should like to deny the Minister the opportunity to speak again. If I may give you my reasons for this——
  Madam Deputy Speaker: Order. That is not necessary. A single objection, when a Minister seeks leave to speak again, is sufficient.
  Mrs. Mahon: Further to that point of order, Madam Deputy Speaker. May I add my voice to that of my hon. Friend the Member for Eccles (Miss Lestor).
  Madam Deputy Speaker: Order. There is no need for that. A single objection is sufficient.
  Several hon. Members rose——
  Mr. Rhodri Morgan: On a different point of order, Madam Deputy Speaker.[Interruption.]
  Miss Lestor: Perhaps I may explain why I do not believe that the Minister should be allowed to speak again.
  Madam Deputy Speaker: Order. We do not need to have a debate about that. A single voice uttering dissent is sufficient.
  Several hon. Members rose——
  Madam Deputy Speaker: Order. No more.
  11.28 pm
  The Secretary of State for Health (Mrs. Virginia Bottomley): Once again, Madam Deputy Speaker, we have had a catalogue of whingeing and moaning and a lack of policy from the Opposition. My hon. Friends are not prepared to put with their diatribes. Time and again——
  Several hon. Members rose——
  Madam Deputy Speaker: Order.
  Miss Lestor rose——
  Madam Deputy Speaker: Is this a point of order?
  Miss Lestor: Yes. The right hon. Lady came in late to

  137
  this debate. [HON. MEMBERS: "You weren't here, either".] Oh, yes I was. [Interruption.]
  Madam Deputy Speaker: Order.
  Mr. Kevin Hughes: On a point of order, Madam Deputy Speaker.
  Madam Deputy Speaker: Order. I am already dealing with a point of order. [Interruption.] Order. I do not expect to be interrupted when I am addressing the House. Objection was taken to the Minister replying to the debate. Therefore, it seemed to me to be perfectly reasonable that the Secretary of State for Health should be given the opportunity to speak.
  Mrs. Virginia Bottomley: Every week, Madam Deputy Speaker, there are 2 million more free prescriptions than there were in 1979.
  Mr. Kevin Hughes: On a point of order, Madam Deputy Speaker.
  Madam Deputy Speaker: Is this a different point of order?
  Mr. Hughes: Yes. When the Secretary of State for Health stood up at the Dispatch Box, my hon. Friend the Member for Eccles (Miss Lestor) was on her feet. She ought surely to have been allowed to finish what she was saying.
  Madam Deputy Speaker: Order. That is a matter for me. If the criticism is of me, there is a regular way of dealing with it, which is by substantive motion tabled in the House—not now.
  Several hon. Members rose—
  Madam Deputy Speaker: Order. The Secretary of State.
  Several hon. Members rose——
  Mrs. Bottomley: The Opposition are trying to deprive the House of the opportunity of hearing the sensible reasons why we have taken these decisions.
  Mr. Gordon Prentice: On a point of order, Madam Deputy Speaker.
  Madam Deputy Speaker: Is it a different point of order?
  Mr. Prentice: Is it appropriate for the Secretary of State to reply to the debate as she arrived late and did not hear all the contributions?
  Madam Deputy Speaker: It is for the occupant of the Chair to decide who to call.
  Mrs. Bottomley: I have full confidence in the Minister. He was ably explaining to the House the reasons for the decisions, but the Opposition refused to hear them.
  Mr. Morgan rose——
  Madam Deputy Speaker: Order. The House is not behaving well. Is it a different point of order?
  Mr. Morgan: Could you, Madam Deputy Speaker, tell the House whether you have received a request for a statement on the collapse of the Government's court case between the Welsh Office——
  It being half-past Eleven o'clock, MADAM DEPUTY
  138
  SPEAKER put the Question pursuant to Standing Order No. 15 (Prayers against statutory instruments, &c. (negative procedure)).
  The House proceeded to a Division——
  Mr. Hayes(seated and covered): On a point of order, Madam Speaker. Will you rule on whether there has been a gross abuse of procedure? Although the Opposition objected, properly, to my hon. Friend the Minister of State speaking, when my right hon. Friend the Secretary of State rose to speak, they refused to hear her arguments.
  Madam Deputy Speaker: It is not appropriate for me to deal with that now. Points of order taken during a Division must relate to the Division.
  The House having divided: Ayes 229, Noes 289.

  Division No. 194]

  [11.30 pm

  AYES

  Abbott, Ms Diane

  Cunningham, Jim (Covy SE)

  Adams, Mrs Irene

  Cunningham, Rt Hon Dr John

  Ainger, Nick

  Dafis, Cynog

  Ainsworth, Robert (Cov'try NE)

  Darling, Alistair

  Allen, Graham

  Davidson, Ian

  Anderson, Ms Janet (Ros'dale)

  Davies, Bryan (Oldham C'tral)

  Armstrong, Hilary

  Davies, Rt Hon Denzil (Llanelli)

  Ashton, Joe

  Davies, Ron (Caerphilly)

  Austin-Walker, John

  Davis, Terry (B'ham, H'dge H'l)

  Banks, Tony (Newham NW)

  Denham, John

  Barnes, Harry

  Dewar, Donald

  Barron, Kevin

  Dixon, Don

  Battle, John

  Dobson, Frank

  Bayley, Hugh

  Donohoe, Brian H.

  Beckett, Rt Hon Margaret

  Dowd, Jim

  Beith, Rt Hon A. J.

  Dunwoody, Mrs Gwyneth

  Benn, Rt Hon Tony

  Eagle, Ms Angela

  Bennett, Andrew F.

  Eastham, Ken

  Benton, Joe

  Enright, Derek

  Bermingham, Gerald

  Etherington, Bill

  Berry, Dr. Roger

  Evans, John (St Helens N)

  Betts, Clive

  Fatchett, Derek

  Blunkett, David

  Field, Frank (Birkenhead)

  Boateng, Paul

  Fisher, Mark

  Boyce, Jimmy

  Flynn, Paul

  Boyes, Roland

  Foster, Don (Bath)

  Bradley, Keith

  Fraser, John

  Bray, Dr Jeremy

  Fyfe, Maria

  Brown, Gordon (Dunfermline E)

  Galbraith, Sam

  Brown, N. (N'c'tle upon Tyne E)

  Galloway, George

  Bruce, Malcolm (Gordon)

  Gapes, Mike

  Burden, Richard

  Garrett, John

  Byers, Stephen

  Gerrard, Neil

  Caborn, Richard

  Godman, Dr Norman A.

  Callaghan, Jim

  Godsiff, Roger

  Campbell, Mrs Anne (C'bridge)

  Golding, Mrs Llin

  Campbell-Savours, D. N.

  Gordon, Mildred

  Canavan, Dennis

  Graham, Thomas

  Carlile, Alexander (Montgomry)

  Griffiths, Nigel (Edinburgh S)

  Chisholm, Malcolm

  Griffiths, Win(Bridgend)

  Clapham, Michael

  Grocott, Bruce

  Clarke, Eric (Midlothian)

  Gunnell, John

  Clarke, Tom (Monklands W)

  Hain, Peter

  Clelland, David

  Hall, Mike

  Clwyd, Mrs Ann

  Hanson, David

  Coffey, Ann

  Hardy, Peter

  Cohen, Harry

  Harman, Ms Harriet

  Connarty, Michael

  Hattersley, Rt Hon Roy

  Cook, Robin (Livingston)

  Heppell, John

  Corbett, Robin

  Hill, Keith (Streatham)

  Corbyn, Jeremy

  Hinchliffe, David

  Corston, Ms Jean

  Hoey, Kate

  Cousins, Jim

  Hogg, Norman (Cumbernauld)

  Cox, Tom

  Hood, Jimmy

  Cryer, Bob

  Hoon, Geoffrey

  Cummings, John

  Howarth, George (Knowsley N)

  Cunliffe, Lawrence

  Howells, Dr. Kim (Pontypridd)

  139

  Hughes, Kevin (Doncaster N)

  O'Hara, Edward

  Hughes, Robert (Aberdeen N)

  Olner, William

  Hughes, Roy (Newport E)

  Orme, Rt Hon Stanley

  Hughes, Simon (Southwark)

  Parry, Robert

  Illsley, Eric

  Pendry, Tom

  Ingram, Adam

  Pickthall, Colin

  Jackson, Glenda (H'stead)

  Pike, Peter L.

  Jackson, Helen (Shef'ld, H)

  Pope, Greg

  Jamieson, David

  Powell, Ray (Ogmore)

  Jones, Barry (Alyn and D'side)

  Prentice, Ms Bridget (Lew'm E)

  Jones, Lynne (B'ham S O)

  Prentice, Gordon (Pendle)

  Jones, Martyn (Clwyd, SW)

  Prescott, John

  Jowell, Tessa

  Primarolo, Dawn

  Kaufman, Rt Hon Gerald

  Purchase, Ken

  Keen, Alan

  Quin, Ms Joyce

  Kennedy, Jane (Lpool Brdgn)

  Randall, Stuart

  Khabra, Piara S.

  Raynsford, Nick

  Kinnock, Rt Hon Neil (Islwyn)

  Rogers, Allan

  Kirkwood, Archy

  Rooker, Jeff

  Leighton, Ron

  Rooney, Terry

  Lestor, Joan (Eccles)

  Ross, Ernie (Dundee W)

  Lewis, Terry

  Rowlands, Ted

  Litherland, Robert

  Ruddock, Joan

  Livingstone, Ken

  Sheerman, Barry

  Lloyd, Tony (Stretford)

  Sheldon, Rt Hon Robert

  Llwyd, Elfyn

  Short, Clare

  Loyden, Eddie

  Skinner, Dennis

  Lynne, Ms Liz

  Smith, Andrew (Oxford E)

  McAllion, John

  Smith, C. (Isl'ton S & F'sbury)

  McAvoy, Thomas

  Smith, Llew (Blaenau Gwent)

  Macdonald, Calum

  Soley, Clive

  McFall, John

  Spearing, Nigel

  McKelvey, William

  Spellar, John

  Mackinlay, Andrew

  Squire, Rachel (Dunfermline W)

  McLeish, Henry

  Steel, Rt Hon Sir David

  McMaster, Gordon

  Steinberg, Gerry

  McNamara, Kevin

  Stevenson, George

  Madden, Max

  Strang, Dr. Gavin

  Mahon, Alice

  Taylor, Mrs Ann (Dewsbury)

  Mandelson, Peter

  Taylor, Matthew (Truro)

  Marshall, David (Shettleston)

  Tipping, Paddy

  Marshall, Jim (Leicester, S)

  Turner, Dennis

  Martin, Michael J. (Springburn)

  Walker, Rt Hon Sir Harold

  Maxton, John

  Wallace, James

  Meacher, Michael

  Walley, Joan

  Meale, Alan

  Wareing, Robert N

  Michael, Alun

  Watson, Mike

  Michie, Bill (Sheffield Heeley)

  Wicks, Malcolm

  Milburn, Alan

  Williams, Rt Hon Alan (Sw'n W)

  Miller, Andrew

  Williams, Alan W (Carmarthen)

  Moonie, Dr Lewis

  Wilson, Brian

  Morgan, Rhodri

  Winnick, David

  Morley, Elliot

  Wray, Jimmy

  Morris, Rt Hon A. (Wy'nshawe)

  Wright, Dr Tony

  Morris, Estelle (B'ham Yardley)

  Young, David (Bolton SE)

  Morris, Rt Hon J. (Aberavon)

  Mowlam, Marjorie

  Tellers for the Ayes:

  Mudie, George

  Mr. Jack Thompson and

  Murphy, Paul

  Mr. Peter Kilfoyle.

  Oakes, Rt Hon Gordon

  NOES

  Adley, Robert

  Beresford, Sir Paul

  Ainsworth, Peter (East Surrey)

  Biffen, Rt Hon John

  Alexander, Richard

  Blackburn, Dr John G.

  Alison, Rt Hon Michael (Selby)

  Body, Sir Richard

  Amess, David

  Booth, Hartley

  Ancram, Michael

  Boswell, Tim

  Arbuthnot, James

  Bottomley, Peter (Eltham)

  Arnold, Jacques (Gravesham)

  Bottomley, Rt Hon Virginia

  Arnold, Sir Thomas (Hazel Grv)

  Bowden, Andrew

  Ashby, David

  Bowis, John

  Atkins, Robert

  Boyson, Rt Hon Sir Rhodes

  Atkinson, Peter (Hexham)

  Brandreth, Gyles

  Baldry, Tony

  Brazier, Julian

  Banks, Robert (Harrogate)

  Bright, Graham

  Bates, Michael

  Brooke, Rt Hon Peter

  Batiste, Spencer

  Brown, M. (Brigg & Cl'thorpes)

  Bellingham, Henry

  Browning, Mrs. Angela

  Bendall, Vivian

  Bruce, Ian (S Dorset)

  140

  Budgen, Nicholas

  Hawksley, Warren

  Burns, Simon

  Hayes, Jerry

  Burt, Alistair

  Heald, Oliver

  Butler, Peter

  Heathcoat-Amory, David

  Butterfill, John

  Hendry, Charles

  Carlisle, Kenneth (Lincoln)

  Higgins, Rt Hon Sir Terence L.

  Carrington, Matthew

  Hill, James (Southampton Test)

  Carttiss, Michael

  Horam, John

  Cash, William

  Hordern, Rt Hon Sir Peter

  Channon, Rt Hon Paul

  Howard, Rt Hon Michael

  Clappison, James

  Howarth, Alan (Strat'rd-on-A)

  Clark, Dr Michael (Rochford)

  Howell, Rt Hon David (G'dford)

  Clarke, Rt Hon Kenneth (Ruclif)

  Hughes Robert G. (Harrow W)

  Clifton-Brown, Geoffrey

  Hunt, Rt Hon David (Wirral W)

  Congdon, David

  Hunt, Sir John (Ravensbourne)

  Conway, Derek

  Hunter, Andrew

  Coombs, Anthony (Wyre For'st)

  Hurd, Rt Hon Douglas

  Coombs, Simon (Swindon)

  Jack, Michael

  Cope, Rt Hon Sir John

  Jackson, Robert (Wantage)

  Couchman, James

  Jenkin, Bernard

  Cran, James

  Jessel, Toby

  Currie, Mrs Edwina (S D'by'ire)

  Johnson Smith, Sir Geoffrey

  Curry, David (Skipton & Ripon)

  Jones, Gwilym (Cardiff N)

  Davies, Quentin (Stamford)

  Jones, Robert B. (W Hertfdshr)

  Davis, David (Boothferry)

  Jopling, Rt Hon Michael

  Day, Stephen

  Kellett-Bowman, Dame Elaine

  Deva, Nirj Joseph

  Key, Robert

  Dickens, Geoffrey

  Kilfedder, Sir James

  Dorrell, Stephen

  King, Rt Hon Tom

  Douglas-Hamilton, Lord James

  Kirkhope, Timothy

  Dover, Den

  Knapman, Roger

  Duncan, Alan

  Knight, Mrs Angela (Erewash)

  Duncan-Smith, Iain

  Knight, Greg (Derby N)

  Dunn, Bob

  Knox, David

  Durant, Sir Anthony

  Kynoch, George (Kincardine)

  Dykes, Hugh

  Lait, Mrs Jacqui

  Eggar, Tim

  Lang, Rt Hon Ian

  Elletson, Harold

  Legg, Barry

  Emery, Rt Hon Sir Peter

  Leigh, Edward

  Evans, David (Welwyn Hatfield)

  Lennox-Boyd, Mark

  Evans, Jonathan (Brecon)

  Lester, Jim (Broxtowe)

  Evans, Nigel (Ribble Valley)

  Lidington, David

  Evans, Roger (Monmouth)

  Lightbown, David

  Evennett, David

  Lilley, Rt Hon Peter

  Faber, David

  Lloyd, Peter (Fareham)

  Fabricant, Michael

  Lord, Michael

  Fenner, Dame Peggy

  Luff, Peter

  Field, Barry (Isle of Wight)

  Lyell, Rt Hon Sir Nicholas

  Fishburn, Dudley

  MacGregor, Rt Hon John

  Forman, Nigel

  MacKay, Andrew

  Forsyth, Michael (Stirling)

  Maclean, David

  Forth, Eric

  McLoughlin, Patrick

  Fox, Dr Liam (Woodspring)

  McNair-Wilson, Sir Patrick

  Fox, Sir Marcus (Shipley)

  Madel, David

  Freeman, Roger

  Maitland, Lady Olga

  French, Douglas

  Malone, Gerald

  Fry, Peter

  Mans, Keith

  Gale, Roger

  Marland, Paul

  Gallie, Phil

  Marlow, Tony

  Gardiner, Sir George

  Marshall, John (Hendon S)

  Garel-Jones, Rt Hon Tristan

  Martin, David (Portsmouth S)

  Gill, Christopher

  Martin, Michael J. (Springburn)

  Gillan, Cheryl

  Mawhinney, Dr Brian

  Goodlad, Rt Hon Alastair

  Merchant, Piers

  Goodson-Wickes, Dr Charles

  Milligan, Stephen

  Gorman, Mrs Teresa

  Mills, Iain

  Gorst, John

  Mitchell, Andrew (Gedling)

  Grant, Sir Anthony (Cambs SW)

  Mitchell, Sir David (Hants NW)

  Greenway, Harry (Ealing N)

  Moate, Sir Roger

  Griffiths, Peter (Portsmouth, N)

  Monro, Sir Hector

  Grylls, Sir Michael

  Montgomery, Sir Fergus

  Hague, William

  Moss, Malcolm

  Hamilton, Rt Hon Archie (Epsom)

  Needham, Richard

  Hamilton, Neil (Tatton)

  Nelson, Anthony

  Hampson, Dr Keith

  Neubert, Sir Michael

  Hannam, Sir John

  Newton, Rt Hon Tony

  Hargreaves, Andrew

  Nicholls, Patrick

  Harris, David

  Nicholson, David (Taunton)

  Haselhurst, Alan

  Nicholson, Emma (Devon West)

  Hawkins, Nick

  Norris, Steve

  141

  Onslow, Rt Hon Sir Cranley

  Sackville, Tom

  Ottaway, Richard

  Sainsbury, Rt Hon Tim

  Page, Richard

  Scott, Rt Hon Nicholas

  Paice, James

  Shaw, David (Dover)

  Patnick, Irvine

  Shaw, Sir Giles (Pudsey)

  Pattie, Rt Hon Sir Geoffrey

  Shephard, Rt Hon Gillian

  Pawsey, James

  Shepherd, Colin (Hereford)

  Peacock, Mrs Elizabeth

  Shepherd, Richard (Aldridge)

  Pickles, Eric

  Shersby, Michael

  Porter, Barry (Wirral S)

  Sims, Roger

  Porter, David (Waveney)

  Skeet, Sir Trevor

  Portillo, Rt Hon Michael

  Smith, Sir Dudley (Warwick)

  Rathbone, Tim

  Smith, Tim (Beaconsfield)

  Redwood, John

  Speed, Sir Keith

  Renton, Rt Hon Tim

  Spencer, Sir Derek

  Richards, Rod

  Spicer, Sir James (W Dorset)

  Riddick, Graham

  Spicer, Michael (S Worcs)

  Rifkind, Rt Hon. Malcolm

  Spink, Dr Robert

  Robathan, Andrew

  Spring, Richard

  Roberts, Rt Hon Sir Wyn

  Sproat, Iain

  Robertson, Raymond (Ab'd'n S)

  Squire, Robin (Hornchurch)

  Robinson, Mark (Somerton)

  Stanley, Rt Hon Sir John

  Roe, Mrs Marion (Broxbourne)

  Steen, Anthony

  Rumbold, Rt Hon Dame Angela

  Stephen, Michael

  Ryder, Rt Hon Richard

  Stern, Michael

  142

  Stewart, Allan

  Waller, Gary

  Streeter, Gary

  Ward, John

  Sumberg, David

  Wardle, Charles (Bexhill)

  Sweeney, Walter

  Waterson, Nigel

  Sykes, John

  Watts, John

  Taylor, Ian (Esher)

  Wells, Bowen

  Taylor, John M. (Solihull)

  Wheeler, Rt Hon Sir John

  Taylor, Sir Teddy (Southend, E)

  Whitney, Ray

  Temple-Morris, Peter

  Whittingdale, John

  Thomason, Roy

  Widdecombe, Ann

  Thompson, Sir Donald (C'er V)

  Wiggin, Sir Jerry

  Thompson, Patrick (Norwich N)

  Wilkinson, John

  Thornton, Sir Malcolm

  Willetts, David

  Thurnham, Peter

  Winterton, Mrs Ann (Congleton)

  Townend, John (Bridlington)

  Winterton, Nicholas (Macc'f'ld)

  Townsend, Cyril D. (Bexl'yh'th)

  Wolfson, Mark

  Tracey, Richard

  Wood, Timothy

  Tredinnick, David

  Yeo, Tim

  Trend, Michael

  Young, Sir George (Acton)

  Twinn, Dr Ian

  Vaughan, Sir Gerard

  Tellers for the Noes:

  Waldegrave, Rt Hon William

  Mr. Sydney Chapman and

  Walden, George

  Mr. Nicholas Baker.

  Walker, Bill (N Tayside)

  Question accordingly negatived.

  Wessex RHA (Computer Project)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Robert G. Hughes.]
  11.43 pm
  Mr. John Denham: I am extremely grateful for the opportunity to initiate this Adjournment debate. Over a period of eight years, Wessex regional health authority spent more than £60 million on the failed regional information systems plan—or RISP—computer project. Millions were wasted. The Public Accounts Committee will now examine the Wessex saga in detail, but it might not have done so had it not been for inquiries by Computer Weekly, The Independent and myself.
  Ministers have known everything that I am about to say for months and, in some cases, years. They have done nothing to reveal the full facts. It is only today, faced with the prospect of this debate, that Ministers have announced new measures to control computer projects in the health service. Control will never be successful, however, until the full lessons of Wessex have been learnt.
  I have four main concerns: the failure of the Department of Health to control Wessex and its active connivance at the cover-up; the network of personal, political, commercial and corporate interests that exploited Wessex and their interest in concealing the truth; the way in which Wessex sought to divert attention from key aspects of the RISP project, particularly those personally involving Sir Robin Buchanan, the chairman of Wessex and now of the NHS supplies authority; the abject failure in nearly every case to recover public funds or to take effective action against companies or individuals.
  In September 1986, Arthur Andersen and Co. and IBM received the main RISP contract. Public concern broke out almost immediately because in May 1986 the tendering process had been reopened to enable the IBM-Andersen bid to move from fourth place to become the prime contractor.
  The report that the Government had wanted to suppress reveals that, during that process, the RHA chair and/or the regional general manager were lobbied aggressively by people with vested interests: Jim Foster, who was an RHA member and also a board member of IBM; Sir Edwin Nixon, the then chairman of IBM, who became deputy chairman of Natwest; Sir Anthony Cleaver, the chief executive of IBM; and the noble Lord Jenkin, a consultant to Arthur Andersen, who clearly had unusual knowledge of rival bids which the district auditor implies were wrongly obtained through other Andersen consultancies with Wessex. At one stage, Andersen was allowed to accompany a Wessex visit to the United States to assess a DEC bid even though Andersen was a direct rival in competition. Andersen also took part in Wessex debriefings. There was much to cover up.
  At least one company protested to the Department of Health. In 1986, the district auditor submitted a report in confidence which I am informed covered all the major issues revealed in the 1992 confidential auditor's report.
  The Department knew what had happened, but immediately moved to conceal the truth. In December 1986, my hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson) asked the then Minister of State, the right hon. Member for Braintree (Mr. Newton), who had advised Wessex on any aspect of the prospective
  144
  contracts before tenders were invited. He was given a list of consultants employed between October 1984 and October 1985, but those arbitrary dates excluded Andersen's role dating back to 1983. The Minister did not draw attention to Andersen's role in 1986. At the time that that question was answered, the hon. Member for Derbyshire, South (Mrs. Currie) was a junior Health Minister. Her husband and brother-in-law worked for Andersen.
  On 17 December 1986, my hon. Friend the Member for Cynon Valley (Mrs. Clwyd) asked the right hon. Member for Braintree on what basis, and by whom, the tendering companies for the Wessex RHA were selected. That question was answered five months later on 15 May, the day when Parliament was dissolved for the 1987 general election in which health was to be a major issue. A major scandal involving companies with individuals at the heart of the NHS and involving senior members of the Conservative party would have done grave damage to the Government. What better way to conceal a disingenuous answer than to wait five months until everyone's attention was elsewhere.
  Not much happened in those five months. On 15 May the Minister told my hon. Friend the Member for Cynon Valley:
  "I understand from the regional health authority that the tendering companies were selected under the EC-GATT arrangements."—[Official Report, 15 May 1987; Vol. 116, c. 431.]
  On 21 October, the Parliamentary Under-Secretary of State for Health, the hon. Member for Bolton, West (Mr. Sackville), told me
  "There is no record of any correspondence between the right hon. Member for Braintree and the then Regional General Manager&it is possible that such assurances were given verbally although it would now be impossible to verify…it is clear that this procedure was not followed on subsequent re-evaluation of the tenders, which led to the contract being awarded to a different company than that originally selected."
  It took five months to make one alleged and unrecorded telephone call to produce an answer which was simply wrong and which the Department must have known, or suspected, was wrong.
  It is not clear whether the district auditor who compiled the 1992 confidential report was asked to examine or was given access to the Department of Health's files on RISP. Last July, Wessex said
  "the people with principal responsibility for RISP in the period 1982 to 1989 are no longer employed by the RHA."
  That was carefully worded and calculated to divert attention from three people associated with RISP after 1989. Sir Robin Buchanan became chairman in August 1988 after chairing the Bath district health authority when he must have been aware of the problems with RISP. Far from wrapping up RISP, he drove it forward long after health district support had collapsed.
  Harry Tuffill was seconded to Wessex from IBM at Buchanan's request and reported directly to him. He was to abuse the conflict of interest inherent in the position that Buchanan had created for him. He did not leave Wessex until 1990.
  The third was not a matter for Wessex staff: Philip Sellers was chairman of CSL. CSL advised Wessex on the privatisation of its computer division—the division responsible for RISP—and, through subsidiaries CFM and WIS, took over services. As the district auditor noted,

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  "The involvement of CSL as consultant and supplier was contrary to accepted best practice."
  The WIS contract was negotiated before Buchanan became chair and signed just afterwards. It effectively enabled Sellers' company to determine Wessex's computer budget in the company's interests. According to the district auditor,
  "at worst, CSL knowingly or recklessly intended to promote its own interests and those of its subsidiary, WIS, at the expense of the RHA and public funds."
  Did Sir Robin end this deplorable situation? Far from it. He tried to raise a loan from Sellers to fund RISP in Bath, which, given WIS's position, would have been used to fund work by Sellers' companies, CSL and CFM, which enjoyed a unique ability to exploit the region, and would have been repaid by the taxpayer.
  Sir Robin personally renegotiated the WIS contract in February 1990 on terms even more favourable to WIS. By this time, RISP was collapsing. Eight out of 10 districts had refused to accept the system. RISP should have been closed down, but Sir Robin went ahead. Bypassing the region's internal and external legal advisers, he brought in solicitors, Blake Lapthorn, who had never worked for the RHA before and who reported directly to him. The contract removed penalty and performance clauses. New provisions, which Deloittes advised against, were incorporated in the new contract that Sir Robin personally negotiated.
  What was the position? WIS, a private company, could undertake work for other organisations knowing that its staff costs and overheads were already paid for—even overpaid for—by Wessex. The contract signed with WIS paid for 40 staff more than worked for the company. Work done by WIS for Rampton and Broadmoor was undertaken at non-commercial rates but was of course pure profit. Wessex was meant to get a share of the profits, but the original 50:50 split was altered under Sir Robin's chairmanship to become two to one in favour of WIS. According to the district auditor, there are strong grounds for questioning whether Wessex regional health authority has received full credit for profits earned on outside work undertaken by WIS. A payment of £68,000 "would appear suspect", as WIS recorded a turnover of £4·7 million.
  When WIS and its parent company, CFM, ended their relationship with Wessex in 1991, they took possession of office equipment and personal computers. According to the auditor,
  "it is probable that the equipment taken by CFM included items that were the property of Wessex. CFM should be required to prove that equipment they had taken possession of had not been paid for by Wessex."
  Under the contract, WIS records should have been made available to the auditors. To date, the confidential report records that
  "these records have not been examined by Wessex or its internal auditors."
  Sir Robin Buchanan attempted to borrow money from Sellers to implement the RISP project. He negotiated the WIS contract in Mr. Sellers' favour, but he did not apply elementary audit procedures to Sellers' companies. Sir Robin Buchanan is now chairman of the NHS supplies authority, responsible for £4 billion a year of public money.
  The Department had said that the WIS contract should be tightened. It knew that it had not been. The Department did nothing. I understand that one district
  146
  auditor who reported on RISP to the Department of Health from 1986 to 1989 finally resigned from the service in frustration, sending a file to the Department.
  The district auditor said that Wessex should take action against CSL for breach of contract. He said that it should take action against CSL and WIS in respect of neglect and/or fraudulent advice and should recover money paid ultra vires or for work not needed by, and in respect of which no benefit accrued to, the regional health authority. He also said that Wessex should take action against Andersen/IBM; and that IBM should be asked to return part of the money paid for a 3090 computer, bearing in mind that the RHA had a good legal claim against the IBM secondee, Tuffill, who advised against cancellation.
  I have, before this debate, tabled a series of early-day motions covering the auditor's main conclusions about the action that Wessex should have taken. To date, all action against IBM and Andersen has been dropped. Ministers have told me in parliamentary answers that this is entirely a matter for Wessex, but Wessex is the very organisation chaired by the very individual with the most to lose from full exposure of these facts in a court of law.
  Wessex is now attempting to avoid court action involving WIS and its parent companies, again avoiding exposure and public scrutiny of private settlements. No doubt Ministers will say that this is a matter for Wessex as well, but it is all a convenient means of hiding the truth.
  Full exposure would not just hit those directly associated with the Wessex saga. In his report, the auditor criticises the NHS management executive for lack of co-ordination, lack of effective management and project control, little attempt to cost-justify it, and too much reliance on suppliers. Much responsibility for the state of affairs that allowed Wessex to be exploited must lie with the chief executive of the NHS management board. From 1986 to 1989 the chief executive of the board was Sir Leonard Peach, now chairman of the Police Complaints Authority. He had been seconded to that post from IBM, which continued to pay his salary.
  The drive to bring business principles into the NHS laid bare the heart of the NHS to business exploitation and a network of influence with close connections to the Conservative party. That, above all, is why everyone has been so anxious to cover up the RISP affair.
  The Public Accounts Committee inquiry is welcome, but I believe that an inquiry is also needed into the conduct of Ministers and the Department. I believe that at every stage there were Ministers and officials who were aware of what was happening in Wessex, but did nothing about it. I want an inquiry that will reveal how much the Department knew, when it knew it, who was informed, what advice Ministers gave, what decisions were taken about what, if anything, to reveal, and why so little was done. I want to know tonight whether the Government will encourage and support such an inquiry.
  Meanwhile, the people of Wessex should be compensated for what they have lost. Tonight in aging Victorian wards at the Royal South Hants hospital in my constituency, patients will be settling down to sleep in wards that are run down, outdated and impossible to maintain at today's standards. Despite the care that patients receive from staff, those conditions should not exist in the NHS. It would cost £10 million to replace those wards—money that has been wasted on the RISP scandal. Will the Government refund the people of Wessex for what they have lost because of their neglect in recent years?

  147
  On 11 February, the hon. Member for Bolton, West told my hon. Friend the Member for Bradford, South (Mr. Cryer):
  "I have every confidence in Sir Robin Buchanan".—[Official Report, 11 February 1993; Vol. 218, c. 762.]
  Does he still have that confidence? When I raised this matter at Question Time on 23 February, the Minister told me:
  "Waste is something that we do not recognise."—[Official Report, 23 February 1993; Vol. 218, c. 749.]
  I wonder whether the Minister can now recognise what has been happening in our health service. When the NHS was set up under a Labour Government by Nye Bevan, the idea was that the wealth of the community should be used to banish the pain and suffering arising from ill health. When we see how companies and powerful individuals, who read like the roll call of the British establishment, have got into the NHS and used and manipulated it for their own benefit, we realise how far we have come and how low the Government have sunk.
  11.59 pm
  The Parliamentary Under-Secretary of State for Health (Mr. Tom Sackville): I congratulate the hon. Member for Southampton, Itchen (Mr. Denham) on his success in the ballot for a debate on the Adjournment of the House. As I know from previous questions of his interest in information systems in the NHS, it is no suprise that he has chosen today to raise the matter of the Wessex regional information systems plan. However, there is no connection between the debate and the announcement of various future monitoring systems for the procurement of information technology in the NHS, made at Health Care Computing 1993. That is the largest such event in Europe, so it is not surprising that I made such an announcement in Harrogate this morning.
  Before I reply to the points made by the hon. Gentleman, I think that it is important to make abundantly clear, in case any hon. Members or the public are under any misconception, that those events did not occur yesterday, this year or even in this decade. The matters to which he referred were proposed first by the Wessex regional health authority in the early 1980s, and were developed from 1984 until cancelled in early 1990 by the then new regional general manager of Wessex RHA.
  That is not to say that I am trying to, or would, defend what occurred on the project during that period. We do not defend what appears to be a gross mishandling of public money, and neither does the regional health authority. That is why my right hon. Friend the Secretary of State for Health said on 10 February that she welcomed the decision by the Public Accounts Committee to commission a further report on the project for the Comptroller and Auditor General. We believe that it is important that the matters should be studied and lessons learnt. That is also why I welcome the opportunity to reply to the hon. Gentleman on that important matter.
  Before I go any further, I must say that the hon. Gentleman has used his parliamentary privilege to cast aspersions on the integrity of a number of people in public life. I found particularly regrettable the mention, which he did not develop, of my hon. Friend the Member for
  148
  Derbyshire, South (Mrs. Currie) and her work with a certain company. I think that he would not dare repeat several of his remarks outside the House.
  Mr. Denham: If the Minister reads the official record, he will see that I put together a conjunction of simple factual statements. I have not repeated certain allegations that were made in 1986 about the hon. Member for Derbyshire, South (Mrs. Currie). Does the Minister agree that the best way to resolve the issues involving that hon. Member and others would be for him to support an independent inquiry into the conduct of the Department of Health, and of Ministers, which I urged on him earlier in the debate?
  Mr. Sackville: The hon. Gentleman knows that the Public Accounts Committee will be investigating all those matters.
  I do not propose to defend the actions of individuals previously employed by Wessex RHA. As the hon. Gentleman knows, some of those individuals appeared in court in Winchester earlier this month to answer for their actions. I am here to defend the actions of the current management of Wessex RHA, which has devoted a considerable amount of time to ensuring that all factors contributing to that have been fully investigated and that budgetary, financial and management lessons have been identified and learnt.
  It is important to remember that it was the current regional general manager, fully supported by his regional chairman, Sir Robin Buchanan, who took urgent action on his arrival in the region to rectify the weaknesses inherited from the previous general manager which were the root cause of the RISP affair. It was these remedial actions that the district auditor commended in his report in the public interest.
  The hon. Gentleman suggested that on many occasions the Wessex RHA tried to cover up or suppress the events concerned with RISP. That is rubbish. I remind him that it was the RHA which invited the district auditor to carry out his investigations. It was the RHA which held a press conference in July 1992 to announce the findings of the district auditor. It was the RHA which on several other occasions held press conferences at which it always answered questions put to it. In addition, the RHA and its staff have complied fully with requests from the National Audit Office, the District Audit Service, the Public Accounts Committee and the NHS Management Executive for any information or clarification on matters relating to RISP. I know that they will continue to do so despite allegations to the contrary from sections of the press and the hon. Gentleman. I find the hon. Gentleman's allegations all the more remarkable as I understand that the regional chairman wrote to him in November 1992 offering to discuss his concerns and to answer fully any questions that he wished to put. I am aware that the hon. Gentleman has now taken up that offer to discuss the matter personally.
  With regard to requests that Ministers should——
  Mr. Denham: Will the Minister note that I accepted the invitation before I knew that I had secured tonight's Adjournment debate?
  Mr. Sackville: Indeed the hon. Gentleman did—several months after the offer was made.
  I have mentioned the very thorough actions taken by Wessex RHA to rectify the organisational and financial

  149
  weaknesses where they were found to be the main cause of the failure of RISP. Before I turn to the actions that my Department has taken as a result of this and other problems with computer systems in Wessex, the west midlands and elsewhere, I should mention that legal actions are being taken by Wessex RHA as a result of its and the district auditor's inquiries.
  As recommended in the district auditor's report, Wessex RHA has taken comprehensive legal advice. As a result of that advice, the RHA has reached a settlement with one of the computer suppliers, AT and T Istel. It was also decided at that time, on the basis of independent legal advice, not to pursue legal action against Arthur Andersen and Co. and IBM in respect of the contract for three of the five core systems which were to make up RISP. The RHA is taking actions against other companies involved in RISP and it would be inappropriate at this time to comment further on that. I would wish to reassure the House, however, that Wessex RHA is pursuing all avenues for legal redress. In addition, on the basis of the confidential information provided by the district auditor, the Hampshire constabulary has been pursuing its own inquiries into possible criminal charges resulting from the RISP project.
  I turn to the actions taken by my Department to seek to ensure that events such as this one cannot be repeated. Earlier, as I have said, I addressed the 1993 conference in Harrogate. I was able to announce a series of measures to be taken to increase our control over future investment in information technology. Before describing them, I would not wish you, Madam Deputy Speaker, or anyone else, to gain the impression that the example that has been quoted is in any way typical of the investment that the NHS has made and makes in IT.
  At today's prices, there are about £800 million-worth of computers operational in the NHS. Most of the money spent has gone into operational systems in hospitals such as patient administration systems, pathology and radiology. The majority of these systems are working day in and day out without problem. Unfortunately, things can and do go wrong. The events in Wessex and the west midlands, and unfortunately in the London ambulance service, are the results of what happens when things do go wrong.
  There is never any simple explanation. We shall continue to study all the projects to learn from our mistakes. We have already identified some common threads, especially managers and IT professionals losing
  150
  touch with the end users of systems; unrealistically high expectations; lack of formal project control, including financial control; lack of informed involvement by senior management; and, in some places, a level of IT skills that does not match what is required.
  Mr. Denham: The Minister's list is interesting, but it does not include corruption, the use of influence, the use of insider knowledge, close relationships between NHS staff and suppliers of equipment, and the exploitation of those weaknesses by unscrupulous firms. Does he agree that those should also be on his list of what has gone wrong with the health authorities in Wessex and other places?
  Mr. Sackville: If any of those allegations are proven, appropriate action will be taken.
  Last December I announced the launch of a national strategy for IT. I stipulated that all future IT investments of more than £1 million would be reviewed by the management executive in the Department of Health against explicit criteria. I shall briefly list them—a properly structured business case based on good investment appraisal; a clear plan for benefits realisation; sufficient skilled and experienced IT staff; commitment from the chief executive, board chairman, clinicians, nurses and everyone involved to implementation and benefits realisation; proper project management; an adequately resourced and structured training programme; and a clear post-implementation evaluation of investment. I stress, as I did at the conference earlier today, that not only projects costing more than £1 million will be evaluated against the criteria; I have asked all authorities approving all substantial investments to use them.
  I reiterate my appreciation to the regional chairman and the regional general manager of Wessex for their considerable efforts both in dealing with the affair and in the efficient and effective way that the health service is managed in Wessex. I have every confidence in Sir Robin Buchanan as chairman of the Wessex RHA and, indeed as chairman of the supplies authority. Only with his strong backing has the regional general manager been able to take the necessary actions, so commended by the district auditor, to rectify the weaknesses that led to the events mentioned in the debate. I have full confidence in the work that they and the authority have done to investigate these matters fully.
  Question put and agreed to.
  Adjourned accordingly at twelve minutes past Twelve o'clock.

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  Olympic Symbol
  Monuments
  Monuments
  Animal Experimentation
  Animal Experimentation
  Sites of Archaeological Interest
  Sites of Archaeological Interest
HOME DEPARTMENT
  Prostitution
  Prostitution
  Firearms
  Firearms
  Prison Service Industries
  Prison Service Industries
  Accommodation Charges
  Accommodation Charges
  International Crime
  International Crime
  Police Cells
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  Drug Trafficking
  Drug Trafficking
  Common European Time
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  Witness Intimidation
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  Unitary Fine System
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  Coroners
  Coroners
  Criminal Justice Act 1991
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  Secure Units
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  Juvenile Crime
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  Special Constables, Dorset
  Special Constables, Dorset
  Notifiable Offences
  Notifiable Offences
  Greyhound Racing
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  Racehorses (Drugs)
  Racehorses (Drugs)
NORTHERN IRELAND
  Planning Appeals
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  Minority Languages
  Minority Languages
  Race Relations
  Race Relations
  Roads
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  Hospital Budgets
  Hospital Budgets
  Royal Victoria Hospital
  Royal Victoria Hospital
  Electricity
  Electricity
  Actively-Seeking-Work Test
  Actively-Seeking-Work Test
  Income Support Claimants
  Income Support Claimants
  English Language Teaching
  English Language Teaching
  Community Care
  Community Care
  Health Service
  Health Service
  Community Care Trusts
  Community Care Trusts
  Radioactive Material
  Radioactive Material
TRADE AND INDUSTRY
  Sellafield
  Sellafield
  Gas-powered Electricity Generation
  Gas-powered Electricity Generation
  Utilities (Pension Schemes)
  Utilities (Pension Schemes)
  Radio Amateurs
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  Air-cooled Diesel Engines
  Air-cooled Diesel Engines
  Plastic
  Plastic
  Petrol Stations
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  Offshore Oil and Gas Industry
  Offshore Oil and Gas Industry
  Trawsfynydd Power Station
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AGRICULTURE, FISHERIES AND FOOD
  Contracting Out
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  Set-aside Land
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  Paper Sludge Recycling
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  Haddock
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  Biofuels
  Biofuels
  Coppicing
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WALES
  Care Programmes
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  Committee of the Regions
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  Nuclear Fuel (Transport by Sea)
  Nuclear Fuel (Transport by Sea)
  Anglesey Mining
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  Environmentally Sensitive Areas
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  Biofuels
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  Energy Forestry
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  Nature Reserve
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  Welsh Development Agency
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  Yale Sixth Form College
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EMPLOYMENT
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LORD CHANCELLOR'S DEPARTMENT
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DEFENCE
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  Archaeological Monuments
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  Leishmaniasis
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CHURCH COMMISSIONERS
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  Ordination of Women
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ENVIRONMENT
  Urban Regeneration
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  Tenants' Choice Legislation
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  Matlock-Hexham Bridleway
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  Government Service (Cars)
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  Leighton Hospital Incinerator
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  Smokestack Emissions
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  Housing Associations
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  Thermal Oxide Reprocessing Plant
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  Enterprise Zones
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  Nuclear Waste
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  Information Guide
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  Waste Recovery
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  Rent Deposit Schemes
  Rent Deposit Schemes
  Environmental Grants
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  Dog Wardens
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  Urban Programme
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  Chlorofluorocarbons
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  Countryside (Access)
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  Dangerous Wild Animals
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  Local Government Finance
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TRANSPORT
  Marine Employers (Safety)
  Marine Employers (Safety)
  "Ships of Shame"
  "Ships of Shame"
  Sellafield
  Sellafield
  London Underground
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  Thameslink
  Thameslink
  Rail Lines (Tree Felling)
  Rail Lines (Tree Felling)
  Rail Closure Procedures
  Rail Closure Procedures
  Rose Grove Station
  Rose Grove Station
  Thames Road Bridges
  Thames Road Bridges
  Rail Privatisation
  Rail Privatisation
  Railway Investment
  Railway Investment
  Dial-a-ride Services
  Dial-a-ride Services
  Network SouthEast (Ticket Sales)
  Network SouthEast (Ticket Sales)
  Offshore Emergency Vessels
  Offshore Emergency Vessels
  Nuclear Fuel
  Nuclear Fuel
  Rail Track and Signalling
  Rail Track and Signalling
  Railway Rolling Stock
  Railway Rolling Stock
  Rail Privatisation
  Rail Privatisation
  Freight Facilities Grant Scheme
  Freight Facilities Grant Scheme
  Railway Lines (Access Control)
  Railway Lines (Access Control)
  London Travelcard Scheme
  London Travelcard Scheme
  Overhead Railway Cables
  Overhead Railway Cables
NATIONAL FINANCE
  Personal Equity Plans
  Personal Equity Plans
  Mr. John Birt
  Mr. John Birt
  New Businesses
  New Businesses
  Animal Skins
  Animal Skins
  Market Testing
  Market Testing
  Local Offices
  Local Offices
  Inland Revenue
  Inland Revenue
  Pension Funds
  Pension Funds
  Inward Investment
  Inward Investment
  GDP
  GDP
  Self-employment Schemes
  Self-employment Schemes
  Equal Opportunities
  Equal Opportunities
SCOTLAND
  Local Government Finance
  Local Government Finance
  Housing Associations
  Housing Associations
  Surplus Food
  Surplus Food
  National Galleries
  National Galleries
  Nursery Schools
  Nursery Schools
  Crime Statistics
  Crime Statistics
  Hospital Waiting Lists
  Hospital Waiting Lists
  Nurses
  Nurses
  Social Workers
  Social Workers
  Botanic Gardens
  Botanic Gardens
  Scottish Association for the Care and Resettlement of Offenders
  Scottish Association for the Care and Resettlement of Offenders
  Prisoners
  Prisoners
  Forestry Commission (Land Sales)
  Forestry Commission (Land Sales)
  Fraud
  Fraud
  Ancient Monuments
  Ancient Monuments
  Empty Houses
  Empty Houses
  Stray Dogs
  Stray Dogs
  Training
  Training
  Secondary School Teachers
  Secondary School Teachers
  European Court of Justice
  European Court of Justice
  Child Care
  Child Care
  Official Entertainment
  Official Entertainment
  Plutonium
  Plutonium
  Fraud
  Fraud
SOCIAL SECURITY
  Unemployment
  Unemployment
  Pensioners
  Pensioners
  Invalidity Pension
  Invalidity Pension
  Occupational Pensions
  Occupational Pensions
  Disability Living Allowance
  Disability Living Allowance
  Invalid Care Allowance
  Invalid Care Allowance
  Fraud
  Fraud
  Child Support Agency
  Child Support Agency
  Family Credit
  Family Credit
  Maxwell Pension Funds
  Maxwell Pension Funds
  Unemployment Benefit
  Unemployment Benefit
  Severe Hardship Payments
  Severe Hardship Payments
  Child Benefit
  Child Benefit
  European Council Directive
  European Council Directive
  Rent Rebates, Wakefield
  Rent Rebates, Wakefield

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

French Nuclear Power: Cost
Viscount Hanworth Viscount Hanworth asked Her Majesty's Government:
Whether they can give an estimate of the cost of power from French nuclear electricity generation and whether they consider that a newly-built PWR station in the United Kingdom would be fully competitive with other forms of electricity generation.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Baroness Denton of Wakefield): My Lords, the French Minister of Industry has estimated that the lifetime costs of a new PWR station would be about 2.7p per kilowatt hour. Whether new nuclear capacity in the United Kingdom can be competitive with other forms of generation is a matter for the Government's forthcoming review of the future prospects for nuclear power.
Viscount Hanworth: My Lords, I thank the Minister for that reply. Can she say whether, before 1994 or earlier, the public will be given a reasonable assessment of what might be the cost of new nuclear power?
Baroness Denton of Wakefield: My Lords, I am delighted to tell the noble Viscount now that the Nuclear Electric figures estimate that the lifetime cost of Sizewell 13 will be 5.2p per kilowatt hour and a twin reactor at Sizewell C could generate at under 3p per kilowatt hour.
Lord Mason of Barnsley: My Lords, is the Minister aware that the cost of imported French nuclear power is equivalent to the loss of five coal mines, and consequently to the loss of 5,000 coal miners' jobs? Is not that a case of the blatant import of unemployment? When one considers our own unemployment problems and the state of the mining industry, is that worth while?
Baroness Denton of Wakefield: My Lords, I am as aware as the noble Lord that those are questions which in due course the coal review will look at. But I point out that legislation to prevent imports of French electricity would be likely to fall foul of the Treaty of Rome.
Lord Gray of Contin: My Lords, does my noble friend accept that during its construction the Sizewell B power station gave employment to more than 20,000 people at its peak? Does she agree that it is one of the few projects which can boast of being below budget and ahead of schedule? Furthermore, would she emphasise to her colleagues in government that
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when they announce the review it is imperative that they give a positive commitment to the future of the nuclear industry?
Baroness Denton of Wakefield: My Lords, I am delighted to take the opportunity given to me by my noble friend to congratulate the project management of Sizewell B on coming towards completion on budget and in time. I confirm that it is the Government's policy to ensure that we have a diverse and economic supply of energy for British industry.
The Earl of Halsbury: My Lords, does the Minister agree that estimates for nuclear power are very largely nonsense because no credit is taken for intermediates and transfer pricing?
Baroness Denton of Wakefield: My Lords, I agree with the noble Earl that the complicated costing of nuclear issues is something of which we should all be very conscious.
Lord Stoddart of Swindon: My Lords, is the noble Baroness aware that when that link was first thought of, the reason for it was what we called in the electricity supply industry "peak lopping"? In other words, during our peak period for demand we obtained electricity from the French, and during their peak period they obtained electricity from us. Will the noble Baroness say how many megawatts per day are sent to this country, and how many megawatts per day are sent from this country to France?
Baroness Denton of Wakefield: My Lords, it will not surprise the noble Lord that I cannot put my hands on those figures at the moment. I will check with him. It is possible that he understands those matters well because his colleague instigated the line.
Lord Stoddart of Swindon: My Lords, I understand them very well because I worked in the electricity supply industry.
Viscount Mersey: My Lords, does my noble friend agree that unemployment in the Sizewell area is very bad at the moment because of the pulling out of the biggest employer in the area, which is the American Air Force? Is she therefore able to give us any hope that the building of Sizewell C will start as soon as Sizewell B is complete? In particular, can she give us any hope that the government White Paper on nuclear power might be with us in 1993, and not in 1994?
Baroness Denton of Wakefield: My Lords, obviously Sizewell C is a commercial matter for Nuclear Electric and for the review. As to the review itself, bringing forward the 1994 review was one of the recommendations of the Trade and Industry Select Committee report on the market for coal. The Government will respond to that committee's report in due course. It would be inappropriate for me to prejudge the response.
Lord Donoughue: My Lords, the Minister did not answer the first part of the Question from the noble Viscount, Lord Hanworth, about the actual cost of French nuclear generated electric power. Can she do that, or is she in difficulties because even the French

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admit that they do not know the true costs of generating their nuclear power? We know that it is subsidised. Following her reply to my noble friend Lord Stoddart, does she agree that it gives a helpful indication of the value of that two-way trade of electricity between England and France to say that since the new interconnector was established in 1986, the French have sold to us 40 times what we have sold to them; and that since privatisation, we have sold virtually nothing to the French?
Baroness Denton of Wakefield: My Lords, I repeat my first Answer, which I am sorry was not clear. The French estimate, with all the provisos to which the noble Lord drew attention, that the lifetime costs of a new PWR would be 2.7p per kilowatt hour. In a recent visit by my honourable friend Mr. Eggar to meet the French energy Minister, it was confirmed that the French welcome discussions in regard to the export of electricity to France on a commercial basis. Discussions are already taking place between EDF and a UK supplier.
Lord Campbell of Alloway: My Lords, does my noble friend agree that in order to keep a sense of proportion and balance, the commitment having been given regarding nuclear energy, it is appropriate also that some commitment should be given regarding the retention of our coal industry?
Baroness Denton of Wakefield: My Lords, I draw my noble friend's attention to the fact that the Question relates to nuclear matters. I am sure that the coal review will answer his question.
Lord Eatwell: My Lords, will the Minister tell the House whether there are any plans to widen the current nuclear and coal reviews into a review of the criteria for the development of energy policy as a whole? Is not that the only rational way forward?
Baroness Denton of Wakefield: My Lords, I am sure that the noble Lord will find that the review of the coal situation covers all aspects of energy.

Nuclear Weapons: Non-Proliferation
2.45 p.m.
Lord Mayhew Lord Mayhew asked Her Majesty's Government:
What proposals they have for preventing the proliferation of nuclear weapons.
The Minister of State, Foreign and Commonwealth Office (Baroness Chalker of Wallasey): My Lords, we attach the highest priority to preventing the proliferation of nuclear weapons. We participate actively in international efforts to that end. The most important instrument of the non-proliferation regime is the Treaty on the Non-Proliferation of Nuclear Weapons. As a co-depositary of the treaty, we are working to secure its indefinite extension in 1995.
Lord Mayhew: My Lords, I thank the noble Baroness for that reply. But why do the Government allow those admirable aims to be undermined by their nuclear weapons policy? How can other governments
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be expected to take seriously the views on non-proliferation of a government which are increasing the fire power of their strategic deterrent, designing a new additional nuclear missile system and opposing the comprehensive test ban treaty?
Baroness Chalker of Wallasey: My Lords, we are not opposing the comprehensive test ban treaty. The non-proliferation treaty, as the noble Lord well knows, enhances the security of the parties by constraining the acquisition of nuclear weapons. That is why indefinite extension is in the interests of all parties, irrespective of a progress towards a comprehensive test ban. But the benefits of restraints on testing in countering proliferation must be examined carefully. I know that is an anxiety of the noble Lord.
In the past the ban on testing was seen as a means of restraining increases in the arsenals of superpowers. Those arsenals are now dramatically shrinking. The emphasis must be on preventing proliferation of nuclear weapons in other countries. We must be exceedingly careful. As I said in this House only last week, a determined proliferator could still produce and deploy crude nuclear weapons without first establishing their safety or reliability through testing.
Lord Jenkins of Putney: My Lords, in view of the Government's support of the non-proliferation treaty, perhaps I may ask this question. Why do they not do as their fellow nuclear superpowers do, with the sole exception of China, and give support to a comprehensive test ban? They say that they are not against it, yet they are not for it. Cannot the noble Baroness say that as from now Great Britain will join France, the United States of America and Russia in actively supporting and requiring a test ban treaty, and preferably one which will come into effect in 1996?
Baroness Chalker of Wallasey: My Lords, I made clear to the noble Lord last week that the Americans have not yet made up their minds. We are in close touch with them. I cannot add to what I have said. Many other critical aspects of the nuclear weapons question appear on our agenda, particularly North Korea's decision of withdrawal from the non-proliferation treaty, which is of grave anxiety to us all.
Lord Hailsham of Saint Marylebone: My Lords, is it not absolutely plain that this problem, important though it is, is infinitely more complicated since the break up of the communist empire? So long as that remains the case, it must be in the interests of this country and the world that this country retains a cautious attitude towards rather quick-solving solutions.
Baroness Chalker of Wallasey: My Lords, my noble friend is absolutely right. We must be extremely cautious. However, we have sought to assist the former Soviet Union because the rapid and safe implementation of arms control obligations remains one of our highest priorities. We and our NATO allies were quick to offer our help with the elimination of nuclear weapons due for destruction in the former Soviet Union. We continue to seek to work with them.

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Last week I told the House about the expenditure of £30 million to assist Russia in securing transport and special containers for nuclear warheads. Of course, it is the Ukraine which continues to worry us greatly. We continue to urge them to honour their commitments to a non-nuclear weapon status at the earliest possible date.
Lord Wyatt of Weeford: My Lords, can the noble Baroness say what the Government are going to do about the Iranian Government signing agreements with the Moslem-dominated republic of Kazakhstan in the former Soviet Union to buy equipment to make nuclear weapons in the next couple of years or so?
Baroness Chalker of Wallasey: My Lords, I thank the noble Lord for his question. He will know that the Lisbon protocol to START I committed the Ukraine, Belarus and Kazakhstan to the ratification of START I. Kazakhstan has now ratified, but we share the noble Lord's concern that it must be not only committed to accede to the non-proliferation treaty as a non-nuclear weapon state but must actually put that into action as well.
Lord Kennet: My Lords, the noble Baroness has mentioned North Korea, and we must all share her anxiety in that regard. Will she confirm that it is the right of any signatory of the non-proliferation treaty to secede from the treaty if it feels that its national interests are threatened? Is it not the case that for many years past South Korea and the United States have mounted an annual military exercise called Team Spirit in which they practised in South Korea the invasion of the shores of North Korea? List year President Bush very wisely cancelled it and North Korea began to treat seriously with South Korea on reunification, and so on; but towards the end of his faltering election campaign, President Bush decided to hold an exercise this year—
Noble Lords: Question!
Lord Kennet: My Lords, I am asking whether this is not the case and whether those facts are correct. Is it not the case that President Bush decided to hold an exercise this year, supported by bombers based in Japan and all the rest of it?
Baroness Chalker of Wallasey: My Lori s, I am amazed to find that a Member of your Lordships' House seems to be in sympathy with North Korea withdrawing from the non-proliferation treaty. The treaty states that a country announcing its withdrawal must provide three months' notice to all other parties. But we should examine why this has happened. North Korea agreed in April/May of last year to the safeguards. It then allowed six inspections, perfectly properly; but as soon as the IAEA spotted two sites—former villages—which were probably now military sites it refused to allow access. This is the very first time that the IAEA has attempted to make special uninvited inspections—because of the suspicions. That is why North Korea has taken this decision. The reason is probably that it has illicit nuclear testing sites. I should have thought that this was something that the noble Lord would actually protest against.
Lord Richard: My Lords, perhaps I may follow up the Minister's answer. North Korea having given notice of its withdrawal, what can the world community actually do about it? Can she confirm that the IAEA will meet in Vienna this week to discuss North Korea's withdrawal? Does she know whether North Korean representatives will attend that meeting? Further, I understand that under the terms of the treaty, a withdrawal has to be reported to the Security Council. Can the noble Baroness tell us whether the Security Council will meet? If the Security Council meets, what action do Her Majesty's Government propose that it should take?
Baroness Chalker of Wallasey: My Lords, the noble Lord, Lord Richard, is right that the IAEA intends to meet this week in Vienna. I do not know whether North Korean representatives will be present. Given past experience, I rather doubt whether they would turn up, even if invited. That or no, I am quite certain that the Security Council will wish to consider the North Korean decision fairly quickly. Our position will be, with others, that because the United Kingdom is determined to maintain and strengthen the non-proliferation treaty, we will decide with our partners what steps should be taken at the Security Council meeting. I am not in a position at this moment to give details because we have not had consultations.

Ethnic Minorities: Funding
2.52 p.m.
Baroness Hamwee Baroness Hamwee asked Her Majesty's Government:
Whether the proposed cut in funding under Section 11 of the Local Government Act 1966 (special provision by means of Home Office grant for ethnic minority communities) will adversely affect the access of people lawfully settled in this country to a full range of opportunities.
The Minister of State, Home Office (Earl Ferrers): My Lords, Section 11 grant remains a major expenditure programme. We will work closely with local authorities and others so as to ensure that the available funding achieves the maximum benefit for members of ethnic minorities.
Baroness Hamwee: My Lords, I thank the Minister for that reply. He will be aware that the available funding is being reduced. Will he accept that fluency in the English language is fundamental and that English as a second language is not a national curriculum subject and therefore cannot be supported out of mainstream funding? In answering, will he bear in mind that my question is based on words published in the Conservative manifesto last April? They are:
"We are determined that everyone lawfully settled in this country should enjoy the full range of opportunities in our society".
Earl Ferrers: My Lords, I quite agree with the noble Baroness that fluency in English is vital. We intend to see that the best use is made of the moneys available. The sum available next year will be increased on the sum available this year. It will be after that that there

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will be a cut in the amount of the grant given. In the present economic difficulties it is not possible always to maintain the level of grants which one might normally wish to do.
Lord Morris of Castle Morris: My Lords, can the noble Earl explain to the House how it is either just or logical that Section 11 money is confined to projects benefiting New Commonwealth citizens when for the past 20 years, at the very least, the increasing majority of refugees have come from places like Chile, Vietnam, Iraq, Iran, Ethiopia, Somalia, and now from the former Yugoslavia? Are not their needs every bit as great?
Earl Ferrers: Yes, my Lords, the reason for that is historical. The money available has come under the 1966 Act which referred to Commonwealth immigrants. When a suitable legislative opportunity comes it will be possible to extend that grant to other ethnic minorities. However, the noble Lord will realise that the ethnic minority grant has been made available specifically for that purpose.
Baroness Seear: My Lords, the noble Earl accepts that a knowledge of English is vital. Does he agree that if Section 11 money is regrettably cut funds should be made more freely available to the many adult colleges that are running basic English courses specially calculated to help these people? That is another way of getting help if they are not getting it through Section 11.
Earl Ferrers: My Lords, there are all kinds of reasons why it is desirable to increase grants for various purposes. The noble Baroness will be the first to understand that in difficult economic circumstances one has to make certain cuts in various arrangements. But certainly the noble Baroness's point has validity. I shall look at it.

Olive Oil: EC Subsidies
2.57 p.m.
Lord Campbell of Croy Lord Campbell of Croy asked Her Majesty's Government:
Whether they are giving support to the aim of the EC Court of Auditors to improve the accounting system for subsidies to growers of olive trees and producers of olive oil.
The Earl of Strathmore and Kinghorne: My Lords, the Government are most concerned that the European Court of Auditors has for the second time reported on inadequacies in the systems for providing and controlling aid in the olive oil sector. We fully support the court's conclusion that the consumption aid scheme offers the requisites of a reliable control system, which the production aid system does not. We are therefore pressing the European Commission to come forward with proposals for reform of the regime along the lines recommended by the court.
Lord Campbell of Croy: My Lords, I am grateful to my noble friend for that reply. Are the Government
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satisfied that an effective system is in prospect following and in the light of events since my Questions last July about large quantities of phantom olives and about olive trees which move from place to place like Birnam Wood in "Macbeth"?
The Earl of Strathmore and Kinghorne: My Lords, the debate on 8th March on the report on The Fight against Fraud went into great detail as regards the developments to reduce fraud. Important steps have been taken over the past year. These include the following: first, the United Kingdom secured important provisions in the Maastricht Treaty, including making explicit that member states should treat fraud against the Community budget with the same vigour as fraud against national budgets; and, secondly, under the United Kingdom presidency, two meetings of the Economic and Finance Ministers considered ways of improving the Community's performance and agreed important extra steps in the fight against fraud. The Edinburgh Council emphasised the importance of sound financial management of the Community budget.
My noble friend made reference to Birnam Wood. There have been a number of press reports on mobile olive groves, but I gather that an aerial survey has been carried out which should help the situation.
Lord Bruce of Donington: My Lords, is the noble Earl aware that the amount of fraud and irregularity in this particular area is a public scandal which the whole world knows about? Is he also aware that despite the fact that the Court of Auditors spent many pages (nos. 94 to 106) in its recent report dealing with this question, the Commission itself completely ignored the issue in its response? Is the Minister aware that the Commission has no intention of tackling this matter and that the Council of Ministers, particularly after the Edinburgh conference, has no power whatever to tell the Commission what it should do?
The Earl of Strathmore and Kinghorne: My Lords, as usual the noble Lord, Lord Bruce of Donington, makes a vociferous point on this subject. The Government support the Court of Auditors' report in that the production aid scheme contains inherent flaws which could not be rectified quickly nor at reasonable cost. That is why we are pressing the Commission to accept the consumption aid scheme which can provide a more reliable system of controlling aid.
Lord Boyd-Carpenter: My Lords, can my noble friend tell us the total cost to the Commission's fund of this subsidy?
The Earl of Strathmore and Kinghorne: Yes, my Lords. In 1991 the total expenditure on the olive oil regime was £1,920 million of which £1,043 million was spent on production aid, £695 million on consumption aid and £110 million on export refunds. A surplus of £18 million was made on intervention measures. The Commission estimates the cost in 1993 to be in excess of £2 billion. That is the reason why the United Kingdom is calling for a cut in support.
Lord Carter: My Lords, is the Minister aware that British farmers are now having to fill in some

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immensely complicated forms correct to one-hundredth of a hectare to claim their arable aid payments and that a simple mistake can cost a farmer all his aid payments and his crops? Can the Minister assure the House that the olive oil producers in Italy, Greece, Portugal and Spain, who have defrauded the Community of £865 million—that is only the part that has been discovered—are also filling in their claim forms correct to one-hundredth of a hectare?
The Earl of Strathmore and Kinghorne: My Lords, the noble Lord, Lord Carter, asks a question which is slightly wide of the Question on the Order Paper. Suffice it to say, as I indicated in my original Answer, the Government treat fraud extremely seriously. That is why we are backing the Court of Auditors' report on the olive oil issue. Nevertheless, I agree with the noble Lord that the Italian, Greek and Spanish producers should play the game by the rules.

Business
3.3 p.m.
Lord Hesketh: My Lords, at a convenient moment after 3.30 p.m. my noble friend, Lady Chalker of Wallasey, will, with the leave of the House, repeat a Statement that is to be made in another place on Hong Kong.
It may be for the convenience of the House to know that the Committee stage of the Housing and Urban Development Bill will be adjourned at about 7 p.m. for about one hour and that during this adjournment the Report stage of the Video Recordings Bill will be taken.

Delegated Powers Scrutiny: Select Committee Report
3.4 p.m.
Lord Rippon of Hexham: My Lords, I beg to move the Motion standing in my name on the Order Paper.
Your Lordships will recall that this Scrutiny Committee was established as an experiment following pressure in the House, over a considerable period of time, for more detailed consideration of the powers delegated by legislation. It was set up as a consequence of the recommendation made last year by the Select Committee on the Committee Work of the House, chaired by my noble friend Lord Jellicoe. The House will also know that the terms of reference set for the committee by the House on 10th November last year are:
"To report whether the provisions of any bill inappropriately delegate legislative power; or whether they subject the exercise of legislative power to an inappropriate degree of Parliamentary scrutiny".
However, before we were to report formally on any individual Bills, the House, on the recommendations of the Procedure Committee, asked us to conduct a general inquiry into the principles which would guide us in our work. That is the purpose of this report.
The committee has taken both oral and written evidence. I must express our thanks to all the witnesses
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and perhaps particularly to the noble and learned Lord, Lord Simon of Glaisdale, who has consistently drawn attention to the issues raised in the report. Perhaps I may also thank the Government, who have undertaken to provide the committee with a memorandum on each Bill.
Paragraph 22 of the report states that it would then be open to the committee to seek further information, if necessary, from the department concerned and even occasionally to ask for help from other witnesses. Our aim would be to ensure that the committee's views are available to the House before the Committee stage of a Bill, and in some cases perhaps earlier if possible. The Government's evidence stressed the need not to set out too rigid criteria for when delegated legislation was appropriate. Their evidence stated:
"The merits of the Government's proposed use of delegated powers need to be considered case by case in each specific context".
The committee believes that that is the right view. No doubt the criteria applied in these cases can be considered in detail by the House as the occasion arises. In paragraph 24 of our report we have drawn attention to some categories of delegated legislative power which caused exceptional concern in the past. Thus your committee will pay close attention to any Henry VIII clauses, skeleton Bills and to delegated powers subject to unusual procedures.
I should perhaps add that there might be some misinterpretation of one reference in paragraph 27. That is the reference to delegation which allows fees, charges or levies in the nature of a tax to be determined by subordinate legislation. We do not intend to find ourselves in conflict with the Parliament Acts.
Finally, our aim would be to inform the House with a view to saving time on the Floor. We believe that the terms of reference set out by the House are sufficient to enable us to do the job which the House requires. In order that we may commence without delay our work of scrutinising individual Bills, I beg to move that the report be agreed to.
Moved, That the First Report from the Select Committee be agreed to (HL Paper 57).—(Lord Rippon of Hexham.)
Lord Bruce of Donington: My Lords, I promise not to detain your Lordships long on this particular item on the agenda this afternoon. I draw the attention of the House to paragraph 12 in the report of the Select Committee as regards the scrutiny of delegated powers. It reads as follows:
"section 2(2) of the European Communities Act 1972 which allows, subject to certain exclusions in Schedule 2, any provision which might be made by Act of Parliament to be made by Order in Council or regulations under that section".
That means that there is a mass of delegated legislation incorporated in our statute books which at the moment provides some considerable difficulties in effecting proper scrutiny. I do not intend to enlarge on this particular issue for long this afternoon. It is of constitutional importance. As was pointed out in a recent book issued by the Hansard Society, of which the noble Lord, Lord Rippon, is such a distinguished officer, there is a very real danger of legislation passed by the bureaucracy in Brussels without the

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intervention of the Council of Ministers passing its way unencumbered onto the statute books of the United Kingdom. I invite the noble Lord—not necessarily this afternoon but at some convenient time—to say just how the Scrutiny Committee is going to deal with that particular situation.
Later, in paragraph 18, the noble Lord draws attention to the role of this House in the scrutiny of delegated legislation. Paragraph 18 reads as follows:
"In considering what manner of delegation of powers might be appropriate, the Committee had in mind the differences in the powers available to the two Houses of Parliament to control delegated legislation. It was pointed out to us that the distinction between affirmative and negative procedures was more important in the Commons than in the Lords, as less time was made available for debates. But control was more of a problem in the Lords, where the opportunities to reject instruments of either-kind were, by a `weak convention', virtually non-existent".
This is not the first time that I have ventured to draw your Lordships' attention to the infringement on our rights which has sometimes been progressively established not by rules but by conventions which are incorporated in the Companion. It is for consideration whether in future instead of the House, by convention, being faced with the necessity either of affirming a regulation as a whole or approving it as a whole, it should assert its undoubted right actually to challenge individual clauses in the delegated legislation itself. There is nothing save the convention—save the weak convention—that prohibits your Lordships' House from doing that. It may be a matter for consideration for the House as a whole—and possibly for the noble Lord, Lord Ripon, also.
That is all that I have to say, but I venture once again to draw your Lordships' attention to the fact that there is a danger that, by default and by the inactivity of another place, we may allow many of our liberties to disappear into a bureaucracy without effective political checks being made at this political level.
Lord Finsberg: My Lords, I should like to ask my noble friend one question arising from both his report and his remarks. I refer to the question of the Government producing a memorandum. Both in his report and in his speech my noble friend said that that would normally be produced in time for the Committee stage, but there was some sort of slight frisson as if it might not be. I wonder whether he can say how he envisages that it might not be ready, bearing in mind the time that has to elapse between a First Reading, a Second Reading and a Committee stage.
Lord Rippon of Hexham: My Lords, I thank the noble Lord, Lord Bruce of Donington, for what he said. I am sure that he knows very well that no one is more aware than I am of the implications of Section 2 of the European Communities Act 1972 and I am sure that he would have been very critical if the committee had not referred to it.
On the point about the undertaking to try to bring our reports to the House before Committee stage, perhaps I may say that one cannot give an absolute undertaking. We are not in a position to do that before
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the Committee stage of, for example, the Housing and Urban Development Bill, but we are not necessarily precluded from doing it later.
The Lord Privy Seal (Lord Wakeham): My Lords, the House will be grateful to my noble friend Lord Rippon of Hexham for the concise and lucid way in which he introduced the initial report from the Delegated Powers Scrutiny Committee. The House will also be grateful to him and his fellow members of the committee for the work that they put into producing the report.
As my noble friend indicated, it is the general conclusion of the committee that in carrying out its work it needs to consider the proposed use of delegated powers case by case and in each specific context. It is interesting to note that the committee has not felt it possible to set out with precision any test of appropriateness, but the Government note the observations that have been made in the report.
For my own part, perhaps I may simply emphasise one particular conclusion in the report which I welcome. It is that the primary aim of the committee should be to inform debate with a view to saving time on the Floor of the House. I hope that, when the House comes to consider reports from the committee on Bills, it will pay due weight to that conclusion. I also welcome the clarification to paragraph 27 of the report which my noble friend has already made.
Subject to those observations, I commend the report to the House. I hope that the House will now confirm the committee's terms of reference and agree to its proceeding as proposed in the report.
On Question, Motion agreed to.

Housing and Urban Development Bill
3.15 p.m.
The Parliamentary Under-Secretary of State, Department of the Environment (Lord Strathclyde): My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved, That the House do now again resolve itself into Committee.—(Lord Strathclyde.)
On Question, Motion agreed to.
House in Committee accordingly.
[The CHAIRMAN OF COMMITTEES in the Chair.]
Clause 5 [Qualifying tenants]:
Lord Coleraine Lord Coleraine moved Amendment No. 27A:
Page 5, line 40, leave out ("at a low rent") and insert ("regardless of the rent specified in the lease").
The noble Lord said: I speak to Amendment No. 27A, which stands in my name and those of the noble Lord, Lord Williams of Elvel, and the noble Baroness, Lady Hamwee. The effect of the amendment is to remove from the Bill the low-rent tests affecting flats. The tests are included in order to define what is a low rent for the purpose of the Bill, which states in Chapter I that no collective enfranchisement can take place, first, unless two-thirds of the flats in the building are held on long leases at low rents; and secondly, that two-thirds of the lessees of those flats must initiate

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enfranchisement proceedings. Clause 35 states that only lessees with low rents may have lease extensions under Chapter II.
As the Committee will know, Amendment No. 27, which also stood in my name, had the same effect as this amendment. I spoke to it when it was called soon after 11.30 p.m. on Tuesday last week. After I had moved it and spoken to it, it was represented to me that I should withdraw that amendment before any debate took place and that I should table a similar amendment for fuller discussion today. This is what I have done. Having spoken already, I hope to be comparatively brief this afternoon.
I believe that we are all agreed—at least on this side of the House—that enfranchisement and collective enfranchisement must be for long lessees with substantial monetary value in their leases—that is, the leases must command substantial premiums. While encouraging owners of long leases to enfranchise, the Government—reasonably enough—wish to make it clear that enfranchisement and lease extensions are not for tenants who merely rent. This is important. I agree that mere renters have no right to buy their freeholds compulsorily. The question that the Government are trying to tackle is how to differentiate.
The Bill proposes a test under which the rents payable at the beginning of the lease must not have exceeded what the Bill specifies as a low rent. There are three cases. For leases entered into before 1st April 1963, the starting rent qualifies as a low rent if it was not more than two-thirds of the letting value of the flat at the time that the lease was granted. For leases entered into between 1st April 1963 and 31st March 1990, the starting rent qualifies as a low rent if it was not more than two-thirds of the rateable value of the flat when the lease was granted. As rateable values were last adjusted in 1973, the Committee will well appreciate that those rateable values are now very low for leases granted in the past 15 years. For leases entered into on or after 1st April 1990, the low-rent benchmark is £1,000 per year in Greater London and £250 elsewhere.
There is, however, no way in which the low-rent test can be claimed to operate to distinguish full rack-rent long leases on the one hand from long leases of substantial value on the other hand. The arbitrary line of demarcation has been wrongly set and any number of leases of a very substantial value will be wrongly classed under the Bill as rack-rent leases. But I have to ask whether it is necessary to draw the line at all between two classes, or categories, of lease when one of the classes has not been shown to contain even one member. No evidence has yet been produced that a flat has been let on a lease for more than 21 years at a rack-rent. All long leases nowadays are granted at ground rents and for premiums. Thus all long leases of flats satisfy what are the generally agreed criteria for entitlement to enfranchisement. The low-rent test should therefore not just be tampered with. It can, and should be, abandoned.
In another place no decision was reached as to the low-rent test in relation to flats, although an amendment to abolish the low-rent test for houses was
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defeated on Report. It has applied to houses since 1967, and since then the market may be said to have taken account of that fact. Purchasers may be said to know the rules of the game. The argument for retaining the low-rent test for houses is not a good one, but that is not the question before us today.
As I explained to the Committee last week, and as the Minister for Housing and Planning, my honourable friend Sir George Young, told the other place on Report, enfranchisement of flats is something new. Flats have no previous history of low-rent legislation, so that there has been nothing to encourage freeholders to set their rents at just above low-rent levels. There is no existing enfranchisement law for flats to be changed.
The low-rent test was roundly castigated in Standing Committee by all Conservative and other Members who spoke, but the Minister for Housing and Planning persuaded the Committee to let him take the question away for further thought. We have yet to receive that thought. I now await with the keenest interest my noble friend's response today. What I say to him and the Committee is that, unless the test is excised, we shall have created, again and again, on many occasions, anomalous, unjustifiable and unnecessary situations. In some blocks some lessees will be able to enfranchise and they will become the landlords of their neighbours, who may have in all respects identical flats but are precluded from joining in the enfranchisement because they pay a few pounds more by way of ground rent. In some blocks the low-rent test will rule out enfranchisement altogether. In some blocks where enfranchisement is not possible some lessees will be entitled to lease extensions instead of enfranchisement, while their neighbours, whose leases fail that unreasonable test, will have to give up their homes at the end of the leases.
Those people will see their investment in their homes consumed not just by the inevitable effect of the passage of time on a wasting asset—we all understand that and have accepted it—but by economic reality. The truth is that, except perhaps in the peculiar economic micro-climate of central London, the rate of loss in value starts to accelerate, and accelerates year by year, as and when flat leases have less than about 50 years to run. The low-rent test for flats serves no proper purpose. The Government's stated intention is that leasehold enfranchisement shall be as widely available as possible. One effect of the low-rent test for flats will be to remove from some lessees the rights which the social purposes of the Bill, reasonably understood, require that they should have. I hope that the amendment will be supported. I beg to move.
Lord Williams of Elvel: I support the noble Lord, Lord Coleraine, in the amendment that he has just moved. The Committee will be unanimous in agreeing that there must be some distinction between the rental market and the ownership lease market. I think that that is taken for granted. In the Bill we are of course dealing with enfranchisement of ownership leases.
Perhaps I may take, first, some of the penalties that those who fail the test will suffer; secondly, look at the magnitude of the problem in terms of numbers; and,

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thirdly, argue that it is not worth all the trouble and effort to which the Government are going, let alone the prejudicial nature of the Government's measures.
If leaseholders fail the low-rent test, they thereby do not qualify to be tenants who can exercise their rights of collective enfranchisement. They are not qualifying tenants. They therefore not only cannot be part of the scheme for collective enfranchisement; they jeopardise the chances of other tenants achieving collective enfranchisement by reducing the numbers, and they have no right to extend their lease. The result is that they find themselves in the worst of all possible situations. They find themselves with a depreciating asset, as the noble Lord, Lord Coleraine, pointed out; no chance of renewing their lease; and having to terminate and move, against their own volition.
How many people will that affect? What is the magnitude of the problem? We have to distinguish— I hope that Members of the Committee will do so—between those leaseholds which are in London and those which are outside London. As I pointed out on the first day of our Committee, according to the Consumers Association, some 74 per cent. of leaseholds are outside London. The London problem accounts for some 26 per cent. of leaseholds.
Let me take the problem outside London: on all the evidence —this is evidence produced by the Government in another place as a result of a survey conducted by Price Waterhouse in November 1989—there is no problem of overlap between market rents and ground rents on leaseholds outside London. We are not dealing with a problem that occurs outside London. Therefore 74 per cent. of those who are leaseholders at present will be subjected to a test where there is no problem at all so far as concerns overlap between market rents and ground rents.
If we look at a quick, and I admit very rough, calculation of the numbers about which we are talking, we find that it is something like 10,000 leaseholders—on the Price Waterhouse figures—who will thereby be affected if a low-rent test is imposed where there is no problem outside London. Outside London it seems to me to be unfair, discriminatory and abusive.
If we look at the problem within London, and by London I mean Greater London, as the Bill itself says, here there is, according to the Government and Price Waterhouse, an overlap between ground rents and market rents. Indeed they say—some fancy figures have been quoted—that in some estates there are ground rents which are substantially the same as market rents. I am bound to say that the Consumers Association has found no evidence of that. We are relying upon statements made by Ministers without any degree of corroboration. It may well be that there are ground rents of £4,000 or even £10,000, but there is no evidence to that effect, and it could equally be that if there are such ground rents they are merely the result of the extension of a lease on a house due to the 1967 Act.
The problem in London, where 95 per cent. of ground rents are less than £700, means that about 8,000 may suffer from a low-rent test. If we are talking
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—here again I am quoting the Government's figures—about some 50 to 100 examples about which they know—they are doubtful; we have no evidence; and we do not know from where they come—from one estate and possibly others, when we are imposing a low-rent test, it seems to me that we are using a big sledgehammer to crack a small nut. If people living in London fail the low-rent test the penalties are even greater than for those living outside. As the noble Lord, Lord Coleraine, pointed out, their asset depreciates fast and it depreciates faster within Greater London.
We believe that the low-rent test serves no purpose. We do not believe that it is fair. We believe that it will operate in a random manner and we do not like to see the Government introduce such legislation. The legislation as proposed is cumbrous, discriminatory and unfair and I hope that the Committee will reject it.
3.30 p.m.
Lord Boardman: I listened with care to what was said by my noble friend Lord Coleraine and the noble Lord, Lord Williams of Elvel. However, neither touched on the fundamental point: that the tenants who will be able to enfranchise if the amendment is carried are being treated by them as though they have had an unfair deal. In each and every case the tenants are parties to a contract. They took their leasehold in the knowledge of its term, the amount that they must pay and the amortisation which will be necessary. No doubt in most cases sound advice was taken about that and the appropriate provision made. Therefore, it is not a case of someone suddenly being inflicted with hardship by the freeholders.
The amendment will amount to permission to enfranchise all future leasehold properties. It will amount to the abolition of leasehold as a form of tenure. That may or may not be right, but surely it is not the purpose of the Bill. It would be wrong to enable the low rent to be omitted and enfranchisement for all future leaseholders and that would be contrary to the intentions expressed by the Government in another place. I hope that the amendment will be opposed.
Lord Campbell of Alloway: Notwithstanding the arguments advanced in favour of the amendment, the Committee may well believe that there are strong countervailing arguments of crucial consequence, one of which was deployed by my noble friend Lord Boardman. He pointed to the all but inevitable consequence that the long leasehold would be virtually abolished. The amendment is assuredly erosive of the structure of this part of the Bill as conceived by the Government. It is an unjustified incursion into the sanctity of contract between landlord and tenant and it sets an unwelcome precedent.
My right honourable friend Sir George Young said in another place:
"the low rent test provides an important distinction between the rental market and the long lease market".—[Official Report, Commons, 9/2/93; col. 920.]

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That distinction was expressly acknowledged as valid by the noble Lord, Lord Williams of Elvel. It marks the extent of the transfer of equity between the landlord and tenant.
My noble friend Lord Coleraine argued that an arbitrary line of demarcation is wrongly set and, therefore, it is appropriate to have no line at all. The noble Lord, Lord Williams of Elvel, questioned whether it was worth the trouble. He drew the distinction between the London position, the urban position and the country position.
For many reasons the Government are rightly concerned to maintain the distinction acknowledged by the noble Lord, Lord Williams, and to introduce the right to claim enfranchisement only into the long lease market. Leaving aside any personal interests, it is difficult to understand in principle why any Member who happens to sit on this side of the Committee should wish to enlarge the scope of enfranchisement so as in effect to destroy the long lease market, to which my noble friend Lord Boardman referred. That would also challenge the rectitude of the Government's intentions in that regard.
The amendment affects the right to claim enfranchisement, which does not exclude corporate and individual tenants who use the premises other than for residential purposes. I suggested previously that such a provision should be excluded. The failure to exclude such tenants, which I regard as a manifest injustice, is now to be compounded by what appears to me to be another injustice. I say that with respect to my noble friend Lord Coleraine. There are a number of amendments to the Bill upon which, it must be hoped, accommodation can be made with the Government before Report. In any event, the hope must be that the Committee will reject this amendment.
Baroness Hamwee: I support the amendment. The noble Lord, Lord Campbell, drew a distinction between the rented and owned property sectors. That will be shared by all members of the Committee because it is not a matter which is confined to one or another political party. However, I do not believe that the low-rent test is necessary to preserve that distinction. As a matter of common sense, long leaseholders who pay a premium, or a ground rent, are not tenants as one understands the term.
Reference was made to the lack of evidence of long leases at rents approaching market rents. In another place Sir George Young referred to a letter from one of the major estates. He mentioned 50 properties with long leases and rents of more than £5,000 or £10,000 a year. However, he appeared to have no information about the value of each of those properties, nor whether the rents which he mentioned were rack-rents. We can imagine that if the properties were in central London and were valuable rents of £5,000 or £10,000 they would not be rack-rents. That appeared to be the extent of the evidence which went to support the test. I believe that if we exclude the test it will not, in a way that should concern us, prejudice landlords. However, if we include it many long leaseholders will be excluded.
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Many Members of the Committee will have received letters from people currently in leasehold properties, in many cases leasehold houses, who have suffered from the application of the low-rent test. Their rents may have been manipulated by their landlords in order to avoid meeting the criterion. Perhaps I may quote from one such letter. A gentleman wrote to me stating:
"The previous lease was granted as a statutory lease renewal under the Leasehold Reform Act 1967. The new lease introduced a Low Rent clause and eliminated any right to lease renewal. The current lease stipulates that the ground rent shall not fall below two-thirds of rateable value and that if this should happen the ground rent shall be deemed to be £1 more than two-thirds of the rateable value. At present, I am therefore not eligible for enfranchisement and will continue to be in this position under the terms of the Bill. You will note that the lease has been manipulated deliberately to preserve this position".
I was extremely struck by descriptions of that kind which I have heard from a number of people. It is worth continuing to quote to the Committee what the correspondent goes on to say:
"Since buying the house in 1987, I have spent over £150,000 and literally thousands of hours on extensive refurbishment (including substantial re-building) of the house and the gardens and an extension … This process was made all the more expensive because of my wish to conserve the building's original 1830s appearance. The house now features as one of several on the front cover of the local Conservation Area booklet which contains the rules for refurbishment and the council's aims for the area as a whole".
I believe that letter to be very telling.
Because the legislation has been so long anticipated, landlords have been in a position to take avoidance measures. The Minister, Mr. Baldry, in a letter which I have seen this afternoon says—and I am sure it is right:
"We have decided there should be as few exemptions as possible to the Bill".
That must be correct. One must endeavour to frame legislation which does not allow for a raft of exemptions and avoidance measures. However, it seems to me that the retention of the low-rent test will enable individual freeholders to create those exceptions. Not only is it unfair, but I believe that any legislation which can so easily be avoided cannot be good legislation.
Lord Finsberg: My Lords, the question of low rents has exercised me for more than 20 years because the area in which I live and had the honour of representing for a long time has a large number of blocks of flats with low rents. Not all the landlords are as spotlessly white as those spoken about in the experience of my noble friend Lord Boardman. Many tenants were virtually blackmailed into crazy leases. The choice was eviction or giving in to some of the most appallingly evil increases and low-rent terms at the same time.
Therefore, I believe that it is right that we should support the amendment. Many of my former friends in another place warmly supported the proposal. It is interesting to note the way in which Sir George Young did not reject the proposal outright. He said that he would like to think about it. If he was not going to think about it constructively, he would not have used those words because Ministers do not use them unless they have a genuine intention to reconsider what has been said.

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My friend John Wheeler and the late Sir Brandon Rhys Williams fought extremely hard to try to eliminate some of the nastier aspects of the leasehold environment among which low rents certainly occur. I do not believe that the acceptance of this amendment would kill the whole principle of leasehold. That is an argument which really cannot be sustained. The blurring between the two forms of rent—the rack-rent and the low-rent test—to which my noble friend Lord Coleraine referred, can be overcome in the way that he proposes.
I hope, as did my noble friend, that the Minister will tell the Committee that the housing Minister's rethink has resulted in something positive, otherwise I fear that if the opinion of the Committee is tested I shall support my noble friend Lord Coleraine.
3.45 p.m.
Lord Gisborough: To retrospectively remove the low-rent test would be to repeal an important part of the 1967 legislation which has applied since that time. We should be extremely circumspect about taking such a step. The argument is that without the abolition of the test freeholders will be able to prevent leaseholders from enfranchisement and will be denying the will of Parliament. However, we should ask ourselves what is the will of Parliament in this respect.
It may be instructive to look back at the 1967 debate to see why the low-rent test—or a low rateable value, as it was then—was seen as essential to the Act. The theme of that debate is probably familiar with some members of the Committee. It revolved around contracts freely entered into between willing parties and the extent to which the Government should intervene and retrospectively break them. One speaker said:
"One has to be hesitant and cautious about how far one should go in rectifying contracts which have already been made between parties. There is a whole host of legislative precedent for intervening in contracts between parties, but in such circumstances one has to look to the areas of hardship. To have no limits at all might be a more logical approach, but one would have to be cautious that it did not carry rectification of the contract too far in the sense of taking it to unnecessary limits, especially if one paid regard to hardship".
Another speaker, somewhat more cynically perhaps, dryly observed that the reason for observing rateable value limits in the Bill was to prevent a number of wealthy people becoming very much wealthier. Both points of view have their merits and are all the more remarkable for being articulated by members of the Labour Party—the former by the Labour Minister of the day, Fred Willey, and the latter by the late Lord Silkin.
I hope that the party opposite can still support the judgment and motives of their predecessors when in office and will support the Government today as they seek to retain the low-rent test. Just as that Labour Government were concerned about taking the rectification of contracts too far, we should now ensure that we do not go that one step too far and alter fundamentally the whole basis of the property market. We already face the alarming prospect of retrospective interference in freely negotiated contracts to enforce
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the sale of assets. Removal of the low-rent test would extend that enforced enfranchisement right across the spectrum of the private rented sector, far beyond the intention of the Conservative manifesto, which is already misrepresented by Part I of the Bill.
The current low-rent test fairly distinguishes between leaseholders and those tenants in the rental market by marking the extent of the transfer of equity between landlord and tenant. We simply cannot rely on the length of the lease alone as our guide to the status of the property. As the Minister for Housing and Planning revealed in another place, there are numerous examples of long leases where the rent is in excess of £5,000 or even £10,000 per annum. It cannot be said that in those cases the freeholder has relinquished his interest in the property.
What is said about the tenant? As the late Lord Silkin said, wealthy people would become very much wealthier. Are the benefits of this legislation to be targeted at those who not only have the resources to purchase their lease but also at those who pay up to £10,000 per annum? We should be wary also of the indirect results of the proposal. Abolition of the low-rent test would extend enfranchisement right across the private rented sector with the likely result that that market will disappear altogether. What could induce a landlord to rent out property in the sure knowledge that the tenant would be free to enfranchise? We have already embarked upon a path which looks set to wipe out the leasehold sector. Do we wish to send the private sector along the same path? We should be left with a simple choice of housing tenure: freehold for those who can afford it; or a lease of less than 21 years.
The noble Lord's case might have some validity if, far from being freely entered into, those leases were forced upon browbeaten tenants; but that is not the case. The leaseholders knew when they signed the contract that the property was not within the scope of enfranchisement. At that time lawyers would have explained the position to them and their non-enfranchisable leases would have been purchased at a price to reflect that.
I understand Part I is about extending home ownership by giving residential leaseholders the opportunity to purchase their freehold. This amendment does not assist that process. Instead, it represents a retrospective manifesto commitment and, far from improving the property market of this country, would work to its eternal detriment.
Lord Strabolgi: I wish to say a few words from this side of the House. Thousands of genuine long leaseholders will be disqualified from the right to enfranchisement by this test. As has been said, this is because the low rent limit is so low—on average, probably no more than 5 per cent. of the full letting value—that landlords granting long leases have for some considerable time been able to fix rents, or ground rents, just above the limit. Being human, this is what they do because they realise that the process prevents leaseholders from enfranchising. This has happened in many cases. It is grossly unfair as between individual long leaseholders. The previous domestic rating revaluation was in 1973, and many

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rateable values are still at that level. However, rents have risen. The longer the period that has elapsed since 1973, when a long lease was granted, the less likely it is that the rent would have been fixed at less than two-thirds of a 1973 rateable value. This is bound to lead to widespread anomalies in the treatment of similar properties.
How, for instance, would a leaseholder be defined if he has paid, say, £100,000 for a 99-year lease, has taken on full repairing and insuring responsibilities for his house—the noble Baroness, Lady Hamwee, mentioned that—and is paying a ground rent of, say, £305, which happens to be £2 or £3 above his two-thirds of rateable value limit? Would his house be owned or rented? I ask the noble Lord, Lord Strathclyde, to define that. Historically, holders of leases of over 21 years have been defined as home owners. The census form states:
"If your accommodation is occupied by lease originally granted for, or extended to more than 21 years, answer as an owner occupier. For shorter leases, answer 'By renting'".
The Leasehold Enfranchisement Association believes that the fact that a lease is of over 21 years is enough proof in itself of home ownership and that the low rent test is unnecessary. One may ask why there are such long leases. The noble Lord, Lord Finsberg, commented on that with his great knowledge of the real world. He said that many people were forced to take long leases under threat of ejection by landlords who had bought the freeholds to make large capital gains, as I ventured to point out on the previous day in Committee of this Bill. It is not just a question of a free contract between a willing seller and a willing buyer. The real world is not like that at all. It was not like that at all in London where the whole system of renting of flats has been changed in the past 30 or 40 years to the national detriment.
In practical terms, I understand that no one has been able to produce a single concrete example of a property sold on an over-21 year lease but with a market rent, or anything approaching it. The Leasehold Enfranchisement Association has seen literally thousands of lease details and there has not been one case that would even marginally come into this category. This is an all-party amendment. The noble Lord, Lord Campbell of Alloway, wondered why noble Lords on his side of the House were opposed to it. I do not think that is necessarily the case. This is not a party matter at all; it is an all-party matter where we are trying to help the tenants of London against unfair landlords. I support the amendment.
Lord Peyton of Yeovil: Most governments in my limited experience suffer from a number of weaknesses. First, they tend to take a favourable view of their own wisdom; and, secondly, they cherish a belief that when they have made a decision that is the end of the matter and it will not be the start of a process. I have great reservations about not the main purpose of the Bill which is, as I understand it, to give an occupier a measure of control over his own home—I have no objection to that—but this Bill goes much
1232
further than that. The logical next step to it is surely contained in just the amendment which my noble friend Lord Coleraine has moved.
I do not think it would have taken a great deal of imagination or foresight on the part of the Government to realise that anyone of the intelligence and perception of my noble friend Lord Coleraine would view this Bill as a great opportunity to hit the whole structure or the whole vessel of leasehold tenure well below the waterline and sink it. I hope I am not being in any way unfair to my noble friend in saying that. However, just a glance at the amendment shows the degree of attention which my noble friend has given to the Bill and his determination that this Bill should not be the last step but just the first.
Lord Coleraine: I am sorry to interrupt my noble friend and I am grateful to him for giving way. I have tabled a considerable number of amendments on the Marshalled List. Most of them are technical amendments recommended to me by the Law Society whose brief I hold in this matter.
Lord Peyton of Yeovil: I am grateful to my noble friend for explaining his position; but I must say that my willingness to go along with every recommendation and opinion expressed by the Law Society is fairly limited. I certainly do not want to be either unkind or unfair to anybody, but I see in this Bill a certain harvest for the legal profession. There will be a great deal of argument arising from it and the services of lawyers will be much in demand. I am sure that will also apply to building societies. However, I do not wish to go further down that road.
I can quite understand my noble friend wishing to expand the purposes of the Bill. I can quite understand the Labour Party and the Liberal Party doing likewise because they favour enfranchisement of leaseholds. I agree with my noble friend Lord Boardman that if this amendment were passed that would virtually signal the end of leaseholds. For that reason, I imagine that the Government will want to reject it because such an amendment underlines and goes much further than the Bill itself in that it sets out quite clearly to benefit all leaseholders whether or not the premises they are leasing are their homes, whether or not they occupy them, and whether or not they are, generally speaking, deserving cases. There will be many cases in which those who benefit will enjoy a considerable windfall.
In terms of the Government confining themselves to the pledge in the manifesto, I see no basic objection to the Bill. I wish to make it absolutely clear from my point of view that bad, greedy, oppressive, negligent or incapable landlords are a nuisance and should certainly be dealt with by the statute law. However, this favouring of all tenants, no matter who they are, how rich they are, where they come from or where they live is, I think, wrong. I believe this amendment would carry that process one undesirable step further. Having said that, I can perfectly understand how the noble Lord, Lord Williams, can stand up and say that that is what he favours.
I have already expressed my sympathy for my noble friend on the Front Bench—I see that he is in some difficulty this afternoon. Let me put it this way: it will

1233
be a competition between his sense of gratitude and his intelligence—both respectable qualities. If gratitude wins, the noble Lord, Lord Williams, will have the amendment accepted. My noble friend was saved from considerable mortification the other day when the bulk of his own party voted against him, but the noble Lord, Lord Williams, his party and the Liberal Party—who had a perfect right to do so—extracted my noble friend's chestnuts from the fire.
It will be extremely interesting to see what happens. I yield to no one in my respect and admiration for my noble friend: he displays the qualities of intelligence and gratitude to anyone who helps him. It will be fascinating to see which wins this afternoon: gratitude to noble Lords opposite and my noble friend Lord Coleraine; or intelligence which will warn him not to go too far too quickly down the path on which the Government have embarked.
4 p.m.
Lord Wolfson: That was an amusing contribution by my noble friend Lord Peyton. I do not know who is grateful and who is intelligent, but there must be some on both sides. I have listened carefully to the points put forward and support the amendment. It removes a discriminatory and inequitable provision from the Bill which is in some ways self-defeating.
I listened with much interest to the contribution of my noble friend Lord Finsberg who represented a marginal constituency for many years and who pointed out that landlords vary in type ranging from excellent to very bad for the tenant. My noble friend Lord Peyton made the point about a legal harvest and we know from experience that legal harvests are reaped in any situation.
I hope that the Minister will give serious consideration to the amendment which has been so well put forward by my noble friend Lord Coleraine, the noble Lord, Lord Williams, and the noble Baroness, Lady Hamwee. It is an excellent improvement to the provisions of the Bill and I intend to support it.
Lord Carnock: I support the amendment. I believe that it is better than Amendment No. 41 which stands in my name. If Amendment No. 27A is accepted, my amendment will be largely pre-empted; otherwise, I shall speak to my amendment when its turn comes.
Lord Monson: The noble Lord, Lord Williams, complained that the value of a leasehold interest decreases as the number of years remaining for the lease also decreases. He is quite correct, the value does slowly decrease. However, there are two answers to his complaint: first, the price originally paid for the leasehold interest or paid by the purchaser of the leasehold interest will have reflected the fact that he has knowingly bought a slowly wasting asset. Had the freehold of the same property been available, he would have paid a good deal more.
Secondly, even leases with less than, say, 20 years to run still have a considerable value for the leaseholder. Normally it is more financially advantageous for an individual with cash in hand—and there are plenty of
1234
people, not only Arabs, who live in London and have considerable sums of cash in hand—to buy the tail end of a long lease than to pay a rack-rent. Hence the popularity of short leases with only 10, 15 or 20 years to run in places like Belgravia. Consequently, it is also more advantageous to find oneself in possession of a lease, even though it may have only a few years to run, than to have to pay a rack-rent for an identical property, as many people have to do.
Lord Selsdon: I feel that perhaps we have divisions on this side of the House yet again between those who are prejudiced against the Bill and those who seek every reason to extend enfranchisement as far as possible. I stand somewhere between the two and wonder whether or not we are having a party political argument. I do not believe that we are. I have supported and support the Government on the Bill and I am moved by many comments that have been made on all sides of the Committee. Perhaps we have not listened enough on this occasion—and I say this to the noble Lord, Lord Williams—to comments about the impact of the Bill nationwide. It is not a London Bill, as he rightly points out. The highest percentage possible of those who are or could be involved are outside London. If I recall it correctly, there are something like 16 million households in the United Kingdom, and we are talking about 4 per cent. of households. We are talking in general about flats.
If one were to estimate a figure for the 750,000 people to whom we are referring, perhaps 100,000 are in houses and the rest are in flats. The amendment concerns flats and broadening the base for enfranchisement. Whom are we talking about? We are not talking about the rich in London but about the Bs, the Cs, the C1s, C2s and in particular the people whom we all try to support. I think that between 60 and 70 per cent. of the flat purchasers will be first time buyers, stepping on a ladder where they hope for a capital gain in order to move up as they have children and their families expand. Those are the people whom we are discussing today.
Much of the prejudice is based upon the fact that there will not be a fair pay out at the end of the day. We leave that to a later stage under Amendment No. 106 and later amendments when the matter will be debated. I shall then stand up fully for the right to a fair payment, whatever that may be decided to be. If we accept that, then many of the arguments that we put forward at the moment are irrelevant.
Whoever is in charge of the administration of the Marshalled List today should, I think, have sought to group a number of these amendments together. If I am right, the point made by the noble Baroness, Lady Hamwee, about people who have invested in their property and enhanced its value could be covered by Amendment No. 43, if I recall it correctly. Equally we could criticise everyone who holds a different view. But it is not right to criticise any of the freeholders, head lessors or others who, within the terms of existing legislation, have adjusted their affairs in order to protect their interests.
We are talking today about the protection of the interests of some people and the extension of the interests of others. I have supported the Government.

1235
I do not believe that the low rent test is necessarily fair; neither is the present position. There is an injustice here and I look forward to hearing what my noble friend says in reply to the amendment.
Lord Laing of Dunphail: I support my noble friend Lord Peyton in his eloquent comments. The Chinese have a saying—perhaps I may add, in parenthesis, that my company has a factory in China—that the longest journey starts with the first step, but it is important to know where that step is leading. If the amendment is passed, we shall be opening a door to a destination as yet undetermined. I oppose the amendment.
Viscount Torrington: I had intended to speak only to Clause 61 which refers to houses rather than flats, but the point is entirely the same. I feel for my noble friends on this side of the Committee who oppose the amendment—especially those who may be large landowners. I agree with the point about the probity of contract but I should like to point out to my noble friend Lord Boardman that he may be interested if I quote from the election handout from the Member of Parliament for Chelsea in respect of houses. The leaflet says:
"By removing the upper limit on rateable value, all leaseholders of houses will be given the right to buy their freeholds".
I am not quite sure whether that was in the election manifesto but it is certainly how he interpreted it in the leaflet.
Lord Boardman: Perhaps my noble friend would accept from me that the manifesto upon which the Government stand was not in those words. It was limited to residents who live in a flat in a block that they seek to acquire.
Viscount Torrington: I thought that I had qualified that statement by saying that it was not exactly the manifesto. The great thing about this Bill is that there is a commonality of purpose between both sides of the Committee. Whether or not we all agree, all the main political parties seem to be in favour of the gradual end of leasehold. The only thing that seems to stand in the way of that is the low-rent test, which is a totally discriminatory and blunt instrument.
I am not a lawyer, but I am told that any lawyer can look at any lease and say that it is either a long lease or a rack-rent tenancy. In setting limits we are ignoring that the majority of leases today have statements in them to the effect, for example, that where a ground rent is reviewed the rent shall be, say, one-sixth of the fair rental, or 10 per cent. or some such. Clearly anything that is one-sixth of the fair rental cannot be the fair rental. Therefore, where a lease document states something of that nature it seems entirely clear that it is not an open market rental and that the tenant ought to be entitled to enfranchise.
I have put my amendment down later for this test, which is not going quite so far as the removal of the clause altogether. I accept that there may be one or two cases where the test works, or a test actually works, but I think that this Bill has to be even-handed. Either we agree with enfranchisement for all long leasehold tenants or we do not. We should not
1236
discriminate just because a landlord has been clever enough to raise the ground rent by an extra pound. I should like to hope that the Government can give us some assurance that this clause might be changed, otherwise I should feel inclined to support the amendment.
Lord Strathclyde: It comes as no surprise that the debate has been full of deeply held arguments. Last week my noble friend Lord Coleraine said that there was no history of a low-rent test for flats. That is true in the context of enfranchisement because the possibility of enfranchisement for flats has never existed before now. But the market in leases of flats is well established, and so is the statutory framework governing security of tenure. So the refinement of our proposals to align the eligibility of leases with the criteria used in the 1967 Act should have come as no surprise.
My noble friend Lord Coleraine also asked why the Government decided to include a low-rent test for flats. I hope to convince my noble friend during this debate that there is a need for a low rent test to establish whether the grant of a lease has transferred ownership from the landlord to the lessee at the outset. The length of a lease alone is not a sufficient criterion. I should also like to take this opportunity to answer the other questions raised last week by my noble friend Lord Coleraine, although they are not entirely connected to the low rent test. My noble friend suggested that the consultation process on the Bill had been half-hearted. I do not agree. On the contrary, I believe that as full a programme of consultation as possible was carried out.
Turning to the amendment, noble Lords wish to remove the low-rent test qualification on leases eligible for collective enfranchisement. It is suggested that the length of lease alone is a sufficient criterion. I can tell my noble friend Lord Peyton that this is not a question of either intelligence or gratitude, because I am convinced that there is a need for a rent test. The purpose of the test is to establish whether the grant of a lease has in fact transferred ownership from the landlord to the lessee. The length of the lease alone is not a sufficient indicator. There are leases which, although granted for a term of more than 21 years and therefore "long", have an annual rent approaching or equivalent to a rack-rent.
The amount of rent payable distinguishes a lease which confers "ownership" from one which is a renting tenancy. The former carries a nominal ground rent, and the value to the landlord lies in the capital premium paid on its original grant. The latter attracts a rack-rent, which provides an income stream for the landlord. In the former case the landlord has effectively given up the interest for the duration of the lease, but in the latter the transfer of value is not so marked.
The comparison of the annual ground rent to the rateable value, or in the case of pre-1963 leases the letting value, is a simple test. It appears in roughly the same form in several pieces of important landlord and tenant legislation —including the Landlord and Tenant Act 1954, the Leasehold Reform Act 1967 (the precedent for this Bill) and the Rent Act 1977. It has

1237
had quite an impact on the residential property market over several decades. The test has stood the test of time. It does not vary with changes in capital values, and the information needed is readily available. We should not therefore relinquish or alter the residency test lightly. This has been clearly recognised by my noble friend Lord Boardman.
The rent thresholds set out in Clause 7 are well understood and long established. They form the bulwark of the various statutory tenant protection regimes now in place. Generally speaking, leaseholders paying a low rent do not have statutory security of tenure during the currency of their existing leases, and only those with long leases (at a low rent) are entitled to security of tenure when their leases come to an end. They are of course protected during the currency of their leases by the terms they have contractually agreed to.
The noble Baroness, Lady Hamwee, quoted from a letter from a leaseholder who clearly felt that he had been discriminated against. But if I understood it correctly the person she referred to was quite clear what the lease was saying. It was an enfranchisable lease and the tenant no doubt was fully aware of that point, particularly if, as I think the noble Baroness said, it was a lease extension bought under the 1967 provisions.
Furthermore, I point out to the noble Lord, Lord Strabolgi, that we are not saying that a rent just above two-thirds of the rateable value is a rack-rent. It falls in the range between genuine ground rent—that is, less than two-thirds of rateable value—and rack-rent. Therefore, we believe that it is right to draw the line so that only very clear ground rent should enfranchise. Those in the grey area between genuine ground rents and rack-rents should be excluded.
Further, as my noble friend Lord Coleraine recognised, it is not our policy that private sector renting tenants should be able to enfranchise. Ownership of houses and flats with such tenants lies clearly with the landlord, and the tenant is paying only for the right to occupy on a periodic basis. If renting tenants were allowed to force private landlords to sell their property, there would be no encouragement to let property at a time when we are striving to increase the supply of private rented accommodation through various schemes and initiatives. Revival of the private rented sector, and its maintenance in a healthy state, are important elements of housing policy.
I believe that I have covered the ground fully enough. I hope that the Committee is pleased with the explanation that I have given of the Government's stance, and that my noble friend Lord Coleraine will withdraw his amendment.
Lord Williams of Elvel: Before the noble Lord sits down, I wonder whether he recalls the following words:
"It seems appropriate to treat all long leases as qualifying for the purposes of any compulsion provision regardless of whether they are at low rent".
Those words come from the Lord Chancellor's consultation document on commonhold. Do the Government speak with one voice on the matter?
Lord Strathclyde: Of course my noble and learned friend the Lord Chancellor will view his proposals for commonhold in a different way. The reason is that the paper concluded that the complications of a low-rent qualification could not be justified, bearing in mind that special provision would have to be made where some leases were at a low rent and some were not.
Baroness Hamwee: The Minister referred to the gentleman whose letter I quoted as understanding what he was doing when accepting a new rent. I do not dispute that. However, does the Minister accept that knowing that one is between the devil and the deep blue sea does not help. To clarify the point, many people have no real choice regarding the property they take, whether it be leasehold or freehold. When there is the possibility of a lease extension on the property which is on unfavourable terms, the least bad option may be to accept those unfavourable terms. Perhaps the Minister will acknowledge that that is the case.
Lord Coleraine: I am grateful to the Minister for responding. I found his reply to the quotation by the noble Lord, Lord Williams of Elvel, from the Lord Chancellor's consultation paper, surprising. He stated that there had been full consultation on the matter of leasehold enfranchisement. I have criticised that aspect in stating that there has been inadequate consultation. The department has issued a series of pamphlets, having taken advice from various interested parties. However, it has never set out in detail why it has come to its conclusions. We now seek that clarification in this Chamber.
I was not surprised that my noble friend came to the conclusion that he did, nor that he rehearsed almost all the arguments put forward by Sir George Young in his report in another place when he resisted the claim for the low-rent test for houses to be abolished. However, we have much business to undertake today. I am told that I am responsible for much of it. In those circumstances, I shall not attempt to tie together the arguments. I now ask that the Question be put.
4.22 p.m.
On Question, Whether the said amendment (No. 27A) shall be agreed to?
Their Lordships divided: Contents, 117; Not-Contents, 162.

Division No. 1

CONTENTS

Addington, L.

Carter, L.

Airedale, L.

Castle of Blackburn, B.

Annan, L.

Chorley, L.

Archer of Sandwell, L.

Cledwyn of Penrhos, L.

Ardwick, L.

Clinton-Davis, L.

Ashley of Stoke, L.

Cocks of Hartcliffe, L.

Attlee, E.

Coleraine, L. [Teller.]

Aylestone, L.

Dean of Beswick, L.

Banks, L.

Devonshire, D.

Beaumont of Whitley, L.

Donoughue, L.

Blackstone, B.

Donnand of Easington, L.

Bonham-Carter, L.

Eatwell, L.

Boston of Faversham, L.

Ezra, L.

Bottomley, L.

Falkender, B.

Bridges, L.

Finsberg, L.

Broadbridge, L.

Fisher of Rednal, B.

Bruce of Donington, L.

Foot, L.

Carmichael of Kelvingrove, L

Gallacher, L.

Carnock, L.

Galpern, L.

1239

Gardner of Parkes, B.

Molloy, L.

Gibson, L.

Monk Bretton, L.

Gladwyn, L.

Morris of Castle Morris, L.

Glasgow, E.

Mulley, L.

Graham of Edmonton, L. [Teller.]

Murray of Epping Forest, L.

Nicol, B.

Greenhill of Harrow, L.

Ogmore, L.

Grey, E.

Peston, L.

Hamwee, B.

Pitt of Hampstead, L.

Hanworth, V.

Plant of Highfield, L.

Harding of Petherton, L.

Prys-Davies, L.

Harris of Greenwich, L.

Rea, L.

Hayter, L.

Redesdale, L.

Hilton of Eggardon, B.

Richard, L.

Hollis of Heigham, B.

Ritchie of Dundee, L.

Holme of Cheltenham, L.

Sainsbury, L.

Hooson, L.

St. John of Bletso, L.

Houghton of Sowerby, L.

Seear, B.

Howie of Troon, L.

Sefton of Garston, L.

Hunt, L.

Selkirk, E.

Irvine of Lairg, L.

Serota, B.

Jacques, L.

Shackleton, L.

Jay, L.

Shaughnessy, L.

Jeger, B.

Shepherd, L.

John-Mackie, L.

Stallard, L.

Judd, L.

Stoddart of Swindon, L.

Kennet, L.

Strabolgi, L.

Kilbracken, L.

Taylor of Blackburn, L.

Killearn, L.

Tordoff, L.

Listowel, E.

Torrington, V.

Llewelyn-Davies of Hastoe, B.

Turner of Camden, B.

Lockwood, B.

Wallace of Coslany, L.

Longford, E.

Warnock, B.

Lovell-Davis, L.

White, B.

Mallalieu, B.

Wigoder, L.

Marsh, L.

Williams of Elvel, L.

Mason of Barnsley, L.

Williams of Mostyn, L.

Mayhew, L.

Winchilsea and Nottingham, E.

Merlyn-Rees, L.

Wolfson, L.

Milner of Leeds, L.

Young of Dartington, L.

NOT-CONTENTS

Aberdare, L.

Crathorne, L.

Aldington, L.

Cullen of Ashbourne, L.

Alexander of Tunis, E.

Cumberlege, B.

Archer of Weston-Super-Mare, L.

Daventry, V.

Davidson, V.

Arran, E.

Denham, L.

Astor, V.

Denton of Wakefield, B.

Astor of Hever, L.

Dilhorne, V.

Auckland, L.

Eccles, V.

Barber, L.

Eccles of Moulton, B.

Belhaven and Stenton, L.

Elibank, L.

Bessborough, E.

Elles, B.

Blatch, B.

Elliott of Morpeth, L.

Boardman, L.

Elton, L.

Borthwick, L.

Erne, E.

Boyd-Carpenter, L.

Ferrers, E.

Brabazon of Tara, L.

Flather, B.

Braine of Wheatley, L.

Fraser of Carmyllie, L.

Braybrooke, L.

Fraser of Kilmorack, L.

Brightman, L.

Gainford, L.

Butterworth, L.

Geddes, L.

Cadman, L.

Gisborough, L.

Campbell of Alloway, L.

Goold, L.

Campbell of Croy, L.

Goschen, V.

Carnegy of Lour, B.

Gridley, L.

Chalker of Wallasey, B.

Grimthorpe, L.

Charteris of Amisfield, L.

Haig, E.

Chelmsford, V.

Hailsham of Saint Marylebone, L.

Chilver, L.

Clanwilliam, E.

Halsbury, E.

Clark of Kempston, L

Hamilton of Dalzell, L.

Cobbold, L.

Hampden, V.

Cockfield, L.

Hardinge of Penshurst, L.

Colnbrook, L.

Harmar-Nicholls, L.

Colwyn, L.

Harrowby, E.

Constantine of Stanmore, L.

Hayhoe, L.

Cornwallis, L.

Hemphill, L.

Cranborne, V.

Henley, L.

1240

Hesketh, L. [Teller.]

Orkney, E.

Park of Monmouth, B.

Holderness, L.

Peel, E.

HolmPatrick, L.

Peyton of Yeovil, L.

Hood, V.

Portsmouth, E.

Hooper, B.

Radnor, E.

Hothfield, L.

Rawlinson of Ewell, L.

Howe, E.

Rees-Mogg, L.

Hylton-Foster, B.

Renton, L.

Johnston of Rockport, L.

Renwick, L.

Kimball, L.

Rippon of Hexham, L.

Kindersley, L.

Rodger of Earlsferry, L.

Kinloss, Ly.

Romney, E.

Kintore, E.

St. Davids, V.

Knollys, V.

Salisbury, M.

Knutsford, V.

Saltoun of Abernethy, Ly.

Laing of Dunphail, L.

Selsdon, L.

Lauderdale, E.

Shannon, E.

Leconfield and Egremont, L.

Skelmersdale, L.

Leverhulme, V.

Slim, V.

Lindsay, E.

Somerset, D.

Liverpool, E.

Stockton, E.

Long, V.

Strange, B.

Lyell, L.

Strathclyde, L.

Lytton, E.

Strathmore and Kinghorne, E [Teller]

Mackay of Clashfern, L.

Macleod of Borve, B.

Sudeley, L.

Malmesbury, E.

Tebbit, L.

Marlesford, L.

Terrington, L.

Merrivale, L.

Thatcher, B.

Mersey, V.

Thomas of Gwydir, L.

Middleton, L.

Thorneycroft, L.

Monson, L.

Trumpington, B.

Monteagle of Brandon, L.

Moran, L.

Ullswater, V.

Morris, L.

Vaux of Harrowden, L.

Mountevans, L.

Verulam, E.

Mountgarret, V.

Vivian, L.

Mowbray and Stourton, L.

Wakeham, L.

Munster, E.

Wharton, B.

Murton of Lindisfarne, L.

Wilberforce, L.

Nelson, E.

Wise, L.

Norfolk, D.

Wyatt of Weeford, L.

O'Cathain, B.

Yarborough, E.

Onslow, E.

Young, B.

Oppenheim-Barnes, B.

Resolved in the negative, and amendment disagreed to accordingly.
Viscount Goschen: I believe this may be a convenient moment for the Statement, and I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Hong Kong
4.31 p.m.
Baroness Chalker of Wallasey: My Lords, with the leave of the House I should like to repeat a Statement which is being made in another place by my right honourable friend the Secretary of State for Foreign and Commonwealth Affairs. The Statement is as follows:
"With permission, Madam Speaker, I should like to make a Statement about political development in Hong Kong.
"There is widespread support in this House for the proposals put forward by the Governor last October. We sought to respond to the wish of the Hong Kong people for a greater say in their own

1241
affairs, while staying within the terms of the Sino-British Joint Declaration, the Basic Law and other relevant exchanges with the Chinese side.
"The Governor's proposals represent our judgment of the right way forward for Hong Kong. But we have said from the start that we are open to alternative ideas, from the people of Hong Kong or from the Chinese side. We have had a wide range of suggestions from people in Hong Kong. The Chinese side have opposed the proposals without offering anything in their place.
"Since last October, we and the Governor have been urging the Chinese side to discuss these electoral issues with us in order to reach an understanding. We are ready to enter such discussions without preconditions. We want to see as much continuity as possible in Hong Kong's electoral arrangements before and after 1997.
"Some two months ago, we renewed our efforts to get talks under way with China. Since then, there have been intensive diplomatic contacts in Peking. It may be useful for the House if I set out the basis on which we were prepared to hold discussions.
"First, we accepted that the talks should be on the basis of the Joint Declaration, the principle of convergence with the Basic Law and the relevant understandings and agreements reached between Britain and China. The Governor's proposals are wholly compatible with these.
"Secondly, as I made plain to the House on 10th March, we told the Chinese side that the British team in these discussions would include representatives of the Hong Kong Government on the same basis as other officials taking part in the talks. Hong Kong officials have participated over the last 10 years in discussions with the Chinese side as members of the British team, including during the negotiations on the Joint Declaration and subsequently as members of the Joint Liaison Group. We cannot and do not accept what some Chinese officials have said in the last few days—that the role of the people from Hong Kong should be downgraded in discussions about Hong Kong's future.
"We received a positive response on the principle of talks from the Chinese side in early February. To help get talks started, we and the Governor therefore decided, with the advice of the Executive Council in Hong Kong, to postpone the original plan to publish the draft electoral legislation in Hong Kong's Official Gazette on 12th February. As the diplomatic contacts proceeded, we held up publication for four further weeks. But we told the Chinese side that it was not possible to delay indefinitely, given the need to pass legislation before the Legislative Council rose for its summer recess in July.
"It is disappointing that, despite all our efforts, the Chinese side were still not able to agree by 12th March to a date for talks—or even to a date on which an announcement of talks could be made. As
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we had forewarned them, the Governor therefore published his proposals that day. A copy has been placed in the Library of the House.
"Publication in the Official Gazette is only the first step in the legislative process. Introduction of the Bill into the Legislative Council would be a separate step. As the Governor has said, we will have to judge, in the light of developments, when to take that step. Thereafter, I am sure that members of the Legislative Council would want to discuss the draft legislation in great detail, in the light of the various alternatives put forward, before they reach a decision.
"Publication of the legislation should not make it more difficult to begin talks with China. The Bill sets out the Governor's proposals, which have been public since October, in legislative form. This does not affect the basis for talks with China, the need for such talks or our wish to hold them. We have said that if we reached an understanding with the Chinese side we would recommend this to the Legislative Council.
"We remain ready for talks at any time and I hope that the Chinese side will be prepared to settle quickly on arrangements for them. Britain has responsibility for the administration of Hong Kong until 1997. Part of that responsibility is to maintain the steady progress towards democracy in Hong Kong. We are open to discussions about how to achieve that. But the key point is that the electoral arrangements in Hong Kong should be fair, open and acceptable to the people of Hong Kong.
"The Chinese side also has responsibilities and interests as the future sovereign power. Britain and China have every incentive to work together to ensure the future success of Hong Kong. We will continue to pursue steadily the path of cooperation with China: we look to the Chinese side to do the same."
My Lords, that concludes the Statement.
Lord Richard: My Lords, I thank the noble Baroness for repeating the Statement made by her right honourable friend in another place. We on this side of the House welcome the Statement. The Labour Party gave its broad support to the Patten proposals to extend democracy within Hong Kong when they were announced, though we were not perhaps quite so sure that they are sufficient to adjust what I think has been called the "democratic deficit". The proposals could perhaps have been more wide ranging, but despite this caveat we generally support them.
We also believe that these proposals should have been made somewhat earlier. Admittedly Mr. Patten delayed gazetting the proposed Bill in the hope that he could get the Chinese to negotiate; but it would perhaps have been better if the proposals had been announced during the previous governorship.
The Government here must now try to relaunch talks with China as soon as possible. It has, I am afraid, become clear that a gap has developed between the Governor, on the one hand and the Chinese Government on the other. We do not quite understand why that has been allowed to happen; nor, indeed, why relations have been permitted to

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deteriorate quite so far. Somehow or other they seem to have gone badly wrong almost at a personal level. That will not help the resolution of the difficulties that are to come.
As we all know, the Chinese tend to take a long-term view of things, and are prepared to wait—particularly when they do not have to wait so long, against the deadline of 1997. Our prime responsibility is to the people of Hong Kong. It is to ensure that when 1997 arrives the hand-over of power is peaceful and the transition is smooth. Our first priority now must therefore be to do all that we can to see that sensible negotiations are resumed, and resumed quickly. In so far as the gazetting of Mr. Patten's proposals ends a period of uncertainty, they are to be welcomed. At least both sides now know more clearly what they have to deal with and what they have to negotiate about.
I should like to ask the Government two questions: one of detail and one perhaps more general. I observe in the Statement that the Foreign Secretary uses the words:
"But the key point is that the electoral arrangements in Hong Kong should be fair, open and acceptable to the people of Hong Kong".
Does the use of that phrase add anything to the present position, or is it merely meant to be declaratory of what it is? Secondly, how do the Government now see the immediate future? Mr Li Peng's speech today is not exactly promising. But perhaps the noble Baroness can give the House a more up-to-date appreciation of the immediate situation.
Finally, the people of Hong Kong must themselves be involved in the process to decide the future of the colony and their representatives must therefore have the chance fully to discuss the Patten proposals. The Legislative Council should therefore continue with its consideration of the proposals, which in our view are perhaps somewhat overdue.
Lord Bonham-Carter: My Lords, I should like to associate myself with the thanks that the noble Lord gave to the noble Baroness for repeating the Statement made by her right honourable friend in another place. We also welcome the Statement. There are two views about what have come to be known as the Patten proposals. One view is that the Chinese response was foreseeable, indeed inevitable, and that therefore the proposals were foolhardy. The other view—the one which we take on these Benches—is that the proposals were ingenious; that they fell within the terms of the Basic Law, the Joint Declaration and of the conversations held between the two governments at various times.
Thirdly, we take the view that, if anything, the proposals were overdue and that had they been introduced 10 or 15 years ago neither we nor the people of Hong Kong would find ourselves in the uncomfortable situation we are in today. That, I am afraid, is self-evident. But, that having been said, it is a case of "better late than never". It seems to me intrinsically unreasonable on the part of the Chinese Government to demand that the proposals be de facto withdrawn before any discussion about them takes place. It seems to me equally unreasonable for them to
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demand that it would be improper if any Hong Kong officials were present at those talks—bearing in mind that they have been present at the talks over the past 10 years. In all those respects, therefore, we welcome the Statement read by the noble Baroness. I must say that some of us take the view that what is happening is that the Chinese Government are testing the nerve of Her Majesty's Government. I think that our more open support of the Governor in the difficult position in which he finds himself makes it more rather than less likely that talks will be resumed.
Baroness Chalker of Wallasey: My Lords, I thank the noble Lords, Lord Richard and Lord Bonham-Carter, for their welcome to the Statement. In a sense, a lot of people are being wise after the event—I do not mean those noble Lords, but many other commentators outside—when they say, as in the first view presented by the noble Lord, Lord Bonham-Carter, that the Chinese response was foreseeable.
The point that I made in repeating the Statement, which I shall make again now, is that the Governor's proposals on broadening our democracy have, and have always had, our full support. But we have said right from the beginning that we are ready and have always been ready to consider alternative views. The final decisions, rightly, should rest with the Legislative Council. We have said that we respect its judgment, and that judgment is obviously consistent with our own international obligation; namely, the Joint Declaration, the Basic Law.
The noble Lord, Lord Richard, asked me why we did not announce the proposals earlier. That question was echoed by the noble Lord, Lord Bonham-Carter. The Government's proposals were made in response to the development in Hong Kong in recent years of a wish for a moderately faster pace of democracy. The point about that is that the Basic Law does not contain practical proposals for that faster pace of democracy. It may indeed be that which is most feared in Peking. When the noble Lord, Lord Richard, asked me how we see the future, we can only say that we sincerely hope that we will have discussion with the Chinese. But as the noble Lord, Lord Bonham-Carter, said, it is quite wrong to try to exclude from the discussions Hong Kong officials who have taken part in the joint liaison group as part of the British delegation with the Chinese, and who have taken part in other talks, and who suddenly now become unacceptable as members of the British delegation.
I say only that in trying to resolve this very serious situation we are absolutely sincere in wishing to see a resolution which meets the needs and aspirations of the Hong Kong people, which is consistent with Basic Law and the Joint Declaration, and which indeed allows those fair elections. I say to the noble Lord, Lord Richard, that in the spelling out of the phrase "fair, open elections" there is nothing different from what we have always said in that respect. It may have been phrased a little differently, but there is certainly nothing to be drawn from the use of those words today.
4.47 p.m.
Lord Geddes: My Lords, I too would like to thank my noble friend Lady Chalker for repeating the Statement. I endorse very strongly the sentiments expressed in it. When we had the opportunity on 9th December last year to debate the situation in Hong Kong and China a number of varying views were expressed. The remarks that I made on that occasion were interpreted as being in some ways critical of the Governor. If they were so critical, it was criticism of the style of his approach rather than the content of it, and particularly of his taking with him what I and others described as a Westminster approach.
In the Statement repeated today, and indeed in that made by the Governor last Friday to the Legislative Council, everything—with one slight exception, which I shall come to shortly—gave just the facts of the matter. I will not waste your Lordships' time by repeating what my noble friend said, but the efforts to have talks were to be based on the Joint Declaration, the Basic Law and understandings between the parties. The Statement then went on, I think most unfortunately, and my noble friend repeated it, that in the opinion of Her Majesty's Government and the Governor that approach—namely, the Patten proposals—was considered to be "wholly compatible". That may well be, and I am sure that that is the view of Her Majesty's Government and the Governor. But it strikes me that it was gratuitously provocative to make such a statement when everybody knew what the situation was.
Be that as it may, the situation that has now arisen is one that we all feared at the time of our debate last December. There is no excuse for the Chinese to exclude Hong Kong representatives from the talks; there is no excuse to break off the talks if they are "without preconditions". I strongly urge my noble friend to impress on her right honourable friend, and indeed the Governor, to do everything possible to get the talks under way again, basically because, as the noble Lord, Lord Richard, said, it is the future of the people of Hong Kong that is at stake and that is what matters.
Baroness Chalker of Wallasey: My Lords, I agree with my noble friend on many matters except for one point. I must repeat a Statement made in another place and therefore cannot change the words said by my right honourable friend the Foreign Secretary. But the difficulty we faced—I remember the debate of 9th December —was that a number of people were inclined to challenge the fact that the Governor's proposals were compatible with the Joint Declaration, the principle of convergence, the Basic Law and the relevant understandings and agreements reached between Britain and China. I am sure it was for that reason that it was written in both to the Statement and to the words used by the Governor on Friday last.
However, we should draw a distinction between the publication of the legislation and its introduction. We can only decide on its introduction in the light of subsequent developments. There is no reason why publication or even consideration of the draft legislation by LEGCO should be a barrier to talks. We
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know that the legislative process will take months and we hope to get the talks started. But it is absolutely right that we should be discussing the electoral arrangements in Hong Kong not only with the Hong Kong people—because it is in their interests that they should be secured for continuity in 1997—but also with China. We still hope and intend to do so.
Lord Gridley: I rise to support the Minister in the Government's proposals for dealing with the Chinese. For a number of years I have been present in countries about to obtain their independence. I have seen how Britain goes to tremendous lengths to obtain an understanding of those for whose welfare she will soon not be responsible. I cannot see what objection can be taken to a request by Her Majesty's Government that China should discuss their proposals with them.
If I may say so, we got rid of the British Empire without a shot being fired. Surely that is some credit to us. There may have been difficulties in some countries concerning the carrying out of their responsibilities after they accepted them, and they have our sympathy in that regard; but, if the Chinese know anything, they know what it is to shake one's hand over a difficulty, whether in a contract or other situation which they wish to establish with the other side. I ask that we continue in the same constructive and conciliatory manner and try to persuade them to come to the table to discuss the position. Our intentions are to obtain a peaceful settlement, of which we have more experience than many other people in other parts of the world.
Baroness Chalker of Wallasey: My Lords, I thank my noble friend for those remarks. It is only when one sits down to understand the issues in detail that one realises how much time and trouble has been taken not only by the British Government but also by the Governor, his staff and members of LEGCO with the draft proposals. I underline that they are "draft" proposals.
Difficulty will always arise when one party approaches an issue with a preconceived idea, which is what I can only conclude must be the situation over this matter. As the noble Lord, Lord Bonham-Carter, said a few moments ago, it is an attempt to test out the seriousness both of the British Government and of the Governor. But as many noble Lords said, both in this exchange and in previous debates, the essential requirement is that the electoral arrangements shall be fair, open and acceptable to the people of Hong Kong. Without that, the democracy will not be the democracy for which we and they have worked. That is what must be achieved.
Lord Elton: My Lords, the approach towards democracy by Hong Kong has absorbed the interest of this House and another place, the Government and perhaps the British people for some time. That is partly because of the historic role we play in introducing democracy in countries around the world, and in part by the events we saw some time ago in Tiananmen Square and our belief that we had a duty

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to protect the inhabitants of Hong Kong as far as we could after independence against events which one hopes would not occur in a democracy.
That leads me to wonder whether we are not concentrating too much on the single issue of democracy and whether there is not an important bastion of protection available to the people of Hong Kong in the choice, appointment, powers and independence of the judiciary and the entrenchment of the human rights legislation that it will interpret. Without that, democracy will be a fragile barrier, since I do not doubt that it is one which mainland China could subsequently dismantle, albeit over a long time. Without democracy, it will be the only barrier to protecting the people of Hong Kong from events for which we would not wish to be responsible. Can my noble friend tell us what progress has been made in that direction and what we can look for?
Baroness Chalker of Wallasey: My Lords, I appreciate the comments of my noble friend. Of course we agree with the view that the strengthening of Hong Kong's democratic institutions is the best guarantee of the freedoms about which he spoke. Hong Kong has been much more fortunate than many other places; it is probably the most free of any in terms of press freedom in Asia. The Hong Kong Government have always taken the view applauded by my noble friend in following the pursuit of justice and ensuring that human rights are maintained, that there are existing and continuing avenues for redressing grievances arising from human rights complaints and the active role being played by the courts. That is what we should be and are doing. But that does not mean that we should not concentrate also on bringing the democratic rights to the people of Hong Kong.
Lord Marlesford: My Lords, does my noble friend agree that in order to understand the Chinese attitude at the present time, we must be aware of certain domestic political strains between factions inside China, inside Peking, on how China's reconstruction and development should be carried forward? All those who support that reconstruction and development, in which Hong Kong has already played a part and will continue to do, must be sympathetic to that.
Will my noble friend also re-emphasise that there is and has never been any difference between Her Majesty's Government and the Governor on any of the policy initiatives since the Governor was appointed. Britain, Hong Kong and, indeed, China are lucky to have in Mr. Patten someone who is, in effect, a Cabinet Minister resident in Hong Kong to deal with these problems.
Finally, Hong Kong's economy seems to me to be well able to withstand these temporary disputes. But China must be careful not to increase the fears of the people in the street in Hong Kong at the prospect of 1997. It is in that context that I was worried by the comments of Li Peng, the Chinese Prime Minister, in his speech this morning.
Baroness Chalker of Wallasey: My Lords, I well understand the concern expressed by my noble friend on hearing Li Peng's speech this morning. To some
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degree we all share it. But I think it is very important to make it clear beyond peradventure that there is not, and has not been, any difference of opinion between Her Majesty's Government and the Governor of Hong Kong. Indeed, I am quite sure that if Mr. Christopher Patten were elected to another place he would no doubt once again be able to contribute to the affairs of our Government.
In relation to the domestic political strains in China, I would simply say that of course we are very well aware of them, but we are also very well aware that the enormous economic improvements in the southern autonomous region have everything to do with the favourable copying of the way in which things are done in Hong Kong. Much of China's new strength comes from the very example set by Hong Kong. That is being used both as an asset taken for granted by Beijing but at the same time it obviously widens the divide between different modes of thought within China itself.
Finally, I believe that the Hong Kong economy is indeed in reasonably good order. While the Hang Seng index may have come down now, it reached an all time high in late February/early March. We know that the Hong Kong economy continues to perform strongly, as was confirmed by Hong Kong's Financial Secretary in his Budget of 3rd March. The GDP grew by about 5 per cent. in 1992 and is forecast to rise by that amount again in this coming year.
Lord Marsh: My Lords, the noble Baroness quite rightly warned against taking too much notice of all those people who had formed their views on the basis of hindsight. That was very fair. But how would she answer the quite considerable number of very eminent members of the business community and very eminent former diplomats who forecast that this would be the situation which we would reach on the existing policies? I raise that simply as a question.
Baroness Chalker of Wallasey: My Lords, the noble Lord is perhaps right when he asks why we did not see what was forecast by others. I think indeed that we did, but that does not alter the fact that it is absolutely right that the people of Hong Kong should have a full say in their own democracy. Without being given that opportunity, they would have good cause to complain about the actions of this country. Sometimes there are some very unpleasant stages to be gone through in changing a process, but they have to be faced up to. That is exactly what Her Majesty's Government and the Governor of Hong Kong are doing and are fully prepared to do.
Lord Archer of Weston-Super-Mare: My Lords, I confirm my support for the Government and, in particular, for the Governor but add how delighted I am to hear that we are actually waiting for alternative views which are simply not forthcoming. Is it not true that the Governor has to legislate if there are to be local elections in 1994 and Legislative Council elections in 1995, which I understand the Hong Kong people desperately want?
Baroness Chalker of Wallasey: My Lords, my noble friend is absolutely right. The Basic Law does not

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contain any practical proposals for either the local elections in 1994 or the Legislative Council elections in 1995. That is why the Governor has had to put forward the proposals to LEGCO.
Lord Richard: My Lords, I wish to raise a point of clarification. I am sorry to come back to this phrase but it worries me somewhat as to what it actually means. I wonder whether the noble Baroness can address her mind to it again.
"But the key point is that the electoral arrangements in Hong Kong should be fair, open and acceptable to the people of Hong Kong".
What does that mean? If it means anything it means that the Hong Kong people at some stage will be asked whether or not the electoral arrangements are acceptable. I did not know that we were getting into the prospect of tests of acceptability of these proposals in Hong Kong. If it does not mean that, can the noble Baroness tell us what it does mean?
Baroness Chalker of Wallasey: My Lords, I believe that the noble Lord may be trying to make more out of that than is necessary. We simply mean that the Legislative Council, which represents the people of Hong Kong and which is elected to represent the people of Hong Kong, must have a say in this matter. The proposals must be acceptable to the Legislative Council and the whole system must be fair and open.

Housing and Urban Development Bill
5.5 p.m.
House again in Committee on Clause 5.
[Amendments Nos. 28 to 34 not moved.]
The Principal Deputy Chairman of Committees (Lord Boston of Faversham): I should mention that if Amendment No. 35 is agreed to I cannot call Amendment No. 36.
[Amendment No. 35 not moved.]
Viscount Goschen Viscount Goschen moved Amendment No. 36:
Page 6, line 7, leave out ("1960") and insert ("1993").
The noble Viscount said: The purpose behind Amendments Nos. 36 and 176 is simply to bring up to date the references to the Charities Act 1960 and the Charities Act 1992 in Clauses 5 and 83. Following the successful passage of the Charities Act on to the statute book last year, it was decided that there should be a consolidation of the provisions of the 1992 Act and the 1960 Act. It is therefore necessary to change the references to the Charities Act 1960 and the Charities Act 1992 by replacing them with references to the Charities Act 1993. That is the effect of the amendments, and I hope that the Committee will accept them. I beg to move.
Lord Williams of Elvel: Can the noble Viscount kindly tell the Committee whether the Charities Act 1993 has received Royal Assent?
Viscount Goschen: It has not.
On Question, amendment agreed to.
[Amendments Nos. 37 to 39 not moved.]
Clause 5, as amended, agreed to.
Clause 6 [Meaning of "long lease"]:
The Principal Deputy Chairman of Committees: I should mention that if Amendment No. 39A is agreed to I cannot call Amendment No. 40.
Lord Peyton of Yeovil Lord Peyton of Yeovil moved Amendment No. 39A:
Page 7, line 41, leave out subsection (6).
The noble Lord said: I do not intend to delay the Committee for any length of time. Indeed, my ambitions in this matter are very limited because I cannot see the Government accepting the amendment. My desires lead me only this far —to understand what subsection (6) means. I have told my noble friend that I am in a state of some doubt as to the exact meaning. The phrasing does not seem particularly elegant and I should like to be quite sure that my understanding of the words is correct. Perhaps my noble friend would oblige and tell me. I beg to move.
Lord Strathclyde: The Committee will know that I always seek to be understanding of my noble friend Lord Peyton. I am in a position to explain to him what it is that we intend in subsection (6). The subsection deals with the situation where there are two leases; for example, on separate halves of a flat. I understand that this can happen if, for instance, there have been conversion works so that two smaller flats have been converted into one large flat. Under the subsection these are to be treated as one lease on one flat. I can tell my noble friend that this follows a similar provision in the 1967 Act. Furthermore, this is just an operational provision so that in those circumstances the tenant can enjoy the rights under the Bill.
Lord Williams of Elvel: In the light of what he has said, can the Minister explain what will happen if the two leases on two separate flats which are then joined and become one flat for the purposes of the Bill run for different periods? If the two flats are then divided, are there then two leases? If, on the other hand, the flats are not divided and are occupied separately but held together, are there two flats or one flat for the purposes of the Bill?
Lord Strathclyde: In answering my noble friend Lord Peyton, I was seeking to explain what we are trying to do under subsection (6). The noble Lord, Lord Williams of Elvel, has raised some questions but I am not sure that I can give him satisfaction on them. Perhaps he will allow me to look at the matter further. I may explain it to him by means of a letter.
Lord Peyton of Yeovil: My natural kindliness causes me to refrain from asking my noble friend if there are any cases, of which he can give details, where there have been particular problems which have been brought to the notice of the Government. As I said, perhaps the kindest thing I can do is to say that I am content with my noble friend's explanation and to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 40 not moved.]
Clause 6 agreed to.
Clause 7 [Leases at a low rent]:
Lord Carnock Lord Carnock moved Amendment No. 41:
Page 8, line 15, leave out ("that") and insert ("the period of twelve months immediately preceding the relevant date did not exceed £300, or the aggregate amount of rent so payable during the initial").
The noble Lord said: In moving this amendment I have to say that I voted in support of Amendment No. 27A which stood in the names of my noble friend Lord Coleraine and others. I regarded that amendment as a better one than mine. If it had been accepted by the Committee I would not be moving this amendment which stands in my name and the names of other noble Lords.
The purpose of the amendment is to remove the low rent test in respect of long-leasehold flats at rents of £300 or less. This is the area where the burden of the present system of leasehold tenure hurts the most. The amendment is moved to elicit the views of the Committee. The rent of £300 has been set with London in mind. A much lower alternative rent could be set for the country.
I shall not repeat the arguments which have been advanced in favour of removing the low rent test in its entirety. I adopt them. But I wish to emphasise that any proposals that rely on establishing the letting values of flats as they were 30 or more years ago are flawed. In many cases those very old letting values will simply not be known or at best will be very difficult to ascertain. Any proposals that rely on rateable values are flawed.
The rating system was superseded by the community charge and that charge by the council tax. No new rating lists have been drawn up for 20 years. Any proposals that rely on both those old letting values and obsolete rateable values are doubly flawed. If passed into law, the legislation will not stand the test of time.
One particular difficulty arises as a result of the property boom of the 1980s. Flats let at the beginning of the boom might have ground rents of, say, £100 with a rateable value of £270. Exactly similar flats let at the end of the boom might have ground rents of, say, £300 but with precisely the same rateable value, as there have been no rating valuation lists since 1st April 1973. Rateable values have been frozen for 20 years and ground rents have escalated.
Accordingly, flats let at the beginning of the boom might have ground rents not exceeding two-thirds of the rateable value. That is below the low rent threshold. But exactly similar flats let at the end of that period at inflated ground rents might be above that threshold. The former flats would qualify under the Bill and the latter flats would not.
The flats might all be in the same neighbourhood; some perhaps even in the same block. Anomalies would abound; grievances would arise; and the opportunities for manipulation would be increased. Social tensions would be exacerbated. All this would happen to tenants who were not among the more affluent sections of society. If the provisions of the clause were to be enacted without amendment a new division in the property market would be created. We already have a division between freehold and leasehold properties. The Bill would introduce a new subdivision in the leasehold property market itself,
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between the qualifying and the non-qualifying flats. There would be flats which, in type and size, were essentially similar, but as to tenure were essentially different. Some would be qualifying for no reasons connected with their type, size or location, but simply by reason of the dates on which the leases commenced. Others would not qualify. Was the lease granted at a low ground rent at the beginning of the boom or was it granted at an inflated ground rent at the end of the boom? Success or failure in the low rent test would depend on the date of the lease. Where is the logic and where is the sense?
The amendment would make this part of the Bill much more workable and fair. It would save expense and enable many to exercise their rights who otherwise would not. Generally, it would have a streamlining effect. The amendment is directed to ordinary people; namely, those who have long leasehold flats at rents of £300 or less in London, or possibly considerably lower rents in the country. I understand that 90 per cent. of leasehold flats are at rents of £300 or less which represents 675,000 long-leasehold flats. Assuming that each flat on average has about three occupants, we are talking about 2 million ordinary people. If we include the children, parents and close friends whom they will be seeing frequently, we are talking about several million people who will be closely interested in this matter. Those are the people who have the greatest difficulty in obtaining legal advice. The majority of them will not be able to negotiate with their landlords as the leases will have been negotiated and settled by others many years before. They are exposed to exploitation, and they will be exploited. Those who negotiated the original leases will have died or disappeared. They will have put down good money for a wasting asset which will not qualify for enfranchisement. They will not have sinking funds. They will be the victims of leasehold tenure. They are trapped and there is nothing that they can do. This amendment would give them some relief.
The amendment has nothing to do with Belgravia, heritage property or affluent tenants in Onslow Gardens or Eaton Square. It has everything to do with ordinary people who desperately require accommodation and who will expect to find a law which they can understand, which will protect them from throwing their money away on a wasting asset for reasons which they do not understand, and which will protect them from exploitation as so many of our consumer protection measures already do.
A further serious problem will arise in blocks of flats where one or more tenants fail to pass the low-rent test because their leases were granted at inflated ground rents at the end of the property boom even though other tenants, with exactly similar flats, pass the low-rent test because their leases were granted at low ground rents before the property boom. In such a case the tenants who pass the low-rent test might not be able to obtain the necessary two-thirds majority of all the tenants in the block simply because there were too many tenants with similar flats but with inflated ground rents who could not pass the low-rent test. The whole block would then be disqualified from enfranchisement even though Parliament intended

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that all the tenants in such a block should qualify. In other words, the rights of the low-rent tenants would be made unenforceable simply because other tenants with exactly similar flats were paying inflated ground rents. That result defies logic. It is absurd and most inequitable.
My noble friend Lord Bridgeman is very sorry that he is unable to be present today to speak in favour of this amendment. He feels frustrated and has authorised me to say that he agrees with what I have said. I beg to move.
Lord St. John of Bletso: I join in welcoming the amendment which effectively provides for a rent threshold of £300 for flats in London. Although the amendment does not specify "London", I believe that it is drafted to cater for London flats and that a lower rent threshold is suggested for flats outside London.
Without repeating many of the arguments already raised in connection with Amendment No. 27A, there appears to be a major defect in the current low-rent test. Clearly, the relationship between ground rents and rateable values in 1973 has broken down in the past 20 years following the property boom of the 1980s when rents rose substantially—in many cases, by over 300 per cent.—and where rateable valuations have remained unchanged since 1973. I understand that, as the noble Lord, Lord Carnock, pointed out, around 750,000 flats would need to go through the low-rent test unless this threshold were provided.
Without the amendment, many leaseholders with flats at the lower end of the market will run the risk of being unjustifiably disfranchised if they are forced to submit to a low-rent test. Clearly, that would be against the objectives of the Bill. It is for those reasons that I believe that the provision of a rent threshold for the low-rent test is fair and equitable. I support the amendment.
Lord Annan: Perhaps I should first tell the noble Lord, Lord Strathclyde, that when listening to the answer that he gave to the noble Lord, Lord Coleraine, I found myself very much in the position of the wretched judge before whom Mr. F.E. Smith (as he then was) was appearing. At the end of his submission the judge said, "Well, Mr. Smith, I do not know that I am any the wiser", to which the answer was, "Possibly not, m'Lud, but considerably better informed". I feel that I am considerably better informed as a result of the noble Lord's defence of the low-rent principle.
This amendment is designed to incorporate the low-rent principle. As the noble Lord, Lord Carnock, said, it is also designed to get the Government out of a difficulty. It has nothing to do with leaseholds in Belgravia or Kensington but it is designed to help thousands of leaseholders of small flats to become enfranchised.
As my noble friend Lord St. John of Bletso said a moment ago, the trouble is that at the heart of this test is the relationship between ground rents and rateable values. He quoted the kind of relationship that existed between rateable values and ground rents in 1973, but which today is long out of date. The truth is that the
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very long delays in the 1980s in effecting a new method of local taxation, and the fact that it is not based on rateable values, have enabled landlords to raise ground rents (by over 300 per cent. in some cases) while the 1973 rateable value has remained exactly the same.
That is why the amendment proposes a low-rent threshold of £300 for London. Who would be affected by it? Flats with low rateable values dating back to 1973, such as converted basement flats that had very low rateable values before being sold off on a long lease in the 1980s; unmodernised and derelict flats which had no rateable value before being sold off on long leases in the 1980s; and new property developments where leases were granted between 1986 and 1990 at the height of the property boom. As I have said, the point of the low-rent clause was to exclude from enfranchisement properties with high ground rents, but the test excludes flats at the very bottom of the market—those with low rateable values. Indeed, the lower the rateable value of the flat, the more likely it is to fail the low-rent test.
There is a further adverse consequence. Entire blocks of flats may be disfranchised. That is particularly inequitable as, not only is the individual leaseholder disfranchised, but other leaseholders in the building (who may meet all the stated criteria) will also be disfranchised.
The noble Lord, Lord Carnock, has had a lifetime of experience of advising trusts and property owners and he believes that it would be fair to fix a London rent threshold at £300. I am sure that his experience is sound on that matter. If that threshold were accepted, leaseholders paying a rent of that amount or less would be regarded as paying a low rent and would not have to undergo all the provisions that were never designed for them, but which are included in the clause as it now stands.
As I have said, the amendment has been tabled to help the Government. If this matter were left exactly as it is set out in the Bill, I can imagine that many small leaseholders would feel aggrieved. They will have been led to believe that the Bill would be a great step forward, but if it is unamended, they may well wonder what a great step backward would look like. I understand that the amendment would be welcomed by the Lord Chancellor's Department, independent professionals and Members of both sides of the other place.
The amendment will ensure that the vast majority of ordinary leasehold properties will qualify under the test. What is more, it will simplify procedures and stop the anomalies and diseconomies produced by the current test. I hope that the Minister will be able to take this amendment away, study it, and bring back something along similar lines, which I am sure will be considerably better drafted.
5.30 p.m.
Baroness Gardner of Parkes: I support the amendment. I am sorry that I was not here for the debate on Amendment No. 27A. I was sitting on an

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industrial tribunal case which, somehow, would not wind up, and so I arrived just in time to vote against the Government on that amendment.
Lord Strathclyde: And lost!
Baroness Gardner of Parkes: The Government must make up their mind as to whether they want people to be able to enfranchise the flats. If they do, this type of simple, helpful amendment would mean that many more people would be able to enfranchise. If they do not want people to enfranchise, why are we wasting time with the Bill at all? That is the dilemma in which the Government find themselves. They say that they want people to enfranchise, but they create so many difficult conditions that it will require someone with a great deal of ability to understand them. As my noble friend Lord Carnock pointed out, any ordinary person reading the clause, and trying to work out whether he qualifies, would have great difficulty in assessing the matter. If we multiply that one person by a block of flats, and all leaseholders have to try to agree something, it would be even more impossible.
My noble friend Lord Carnock presented the case well. I do not intend to go into the arguments in detail. He said that the provision does not relate to people in expensive areas of London. I must say that he is wrong when he puts ordinary people into one category and people who live in Belgravia and other places in another. I know plenty of people in Belgravia who are pretty poor. They have been there a long time. That is one of their difficulties. We should recognise that people are in similar positions all over London and, I suppose, other parts of the country, although I have no experience of other parts of the country.
I have had letters from people who live in the East End of London who are distressed about the present low rent level. It is so low that even their modest flats would be disfranchised. They are disappointed. In earlier stages of the Bill, I said again and again—I must repeat it again today—that many people will be thoroughly disappointed when the Bill becomes law. Such hopes have been raised and they will not be realised. If the amendment is passed, or accepted by the Government on the basis that they will take it back and look at it, many more people will find it possible to enfranchise their flats. I think that the Government want to help people, and so I support the amendment.
Lord Campbell of Alloway: I agree with my noble friend Lady Gardner of Parkes that many people will be disappointed when the Bill becomes law. They will be different people and have different reasons. I do not believe that my noble friend and I share the same reasons.
Baroness Gardner of Parkes: Definitely not!
Lord Campbell of Alloway: In opposing the amendment, I defer to my noble friend Lord Carnock who has a most impressive wealth of expertise in these affairs. I accept also his sincerity of purpose. I oppose the extension of enfranchisement, as proposed by the Bill, and I oppose the introduction of yet another test which would make it possible.
Lord Monson: The noble Lord, Lord Carnock, told us that the leaseholders whose interests the amendment is designed to further are not among the most affluent members of society, and that the amendment has nothing to do with Belgravia or Onslow Gardens. I accept that a great many of those whom the amendment is designed to help are not among the most affluent members of society, but there is nothing in it to exclude Belgravia or Onslow Gardens.
I should like to pick up what the noble Baroness, Lady Gardner of Parkes, said, and put a different twist to it. There are many people in various parts of London who will benefit and who are extremely well off. They may not be in the majority, but many will benefit. They may well be better off than the freeholders. Not all freeholders are members of great ducal families or even charitable trusts. There are many small freeholders who have only one house in which they have made themselves resident.
With respect, it is an over-simplification to claim that the amendment will benefit only those of modest means. The noble Lord, Lord Carnock, went on to say that many people who had bought leaseholds were unaware that they were buying a wasting asset. If they were unaware, I am staggered. I shall not mention words such as "common sense", but I should have thought that their solicitors would have at least pointed out the type of transaction they were getting into. If they did not do so, perhaps the people have some grounds for taking action against them.
There is nothing intrinsically stupid about buying a wasting asset. An elderly couple with no dependants may find it advantageous to do so. According to figures with which I have been supplied, one can buy a 20-year lease for 37.3 per cent. of the value of a freehold. That may make excellent sense to an elderly couple who are looking forward 15 years or so. They may have no one to whom to leave anything and want to live in a part of London, such as Belgravia, in which they could not possibly afford to live if only freeholds were available.
Lord Shaughnessy: One of the problems with the Bill is what I think has been referred to by other noble Lords as the factor of the numbers game. The enfranchisement, or the exclusion from enfranchisement, of a leaseholder can be governed by a factor of one: £1; 1 per cent. I acknowledge that it must have been difficult for the Government to come to a conclusion about the numbers. However, the Bill's objectives have not changed: they are to give the right of enfranchisement to as many leaseholders as can be appropriately achieved.
The amendment so expertly explained by the noble Lord, Lord Carnock, and supported by my noble friend Lord Annan, goes some distance towards eliminating some of the inequities that the numbers game creates. I hope that the Minister will give the amendment serious consideration, and I shall support it.
Lord Strathclyde: My noble friend Lord Carnock introduced the amendment with great skill and eloquence. He was ably supported by the noble Lord,

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Lord Annan, who said that he was offering me, or at least the Government, a lifeline. I have received a number of letters of support for the amendment from many noble Lords. So I am sorry that I shall disappoint many of my noble friends.
We have already discussed the arguments for and against a low-rent test. It marks the extent of the transfer of equity between landlord and tenant, and provides an important distinction between the rental and the long-lease market.
As I said before, the length of the lease alone is not a sufficient criterion to determine whether the grant of a lease has transferred ownership from the landlord to the lessee at the outset. Leases may be long, if they are granted for a term exceeding 21 years, but attract a high rent more akin to a market rent than a nominal ground rent.
The amount of rent payable distinguishes a lease which confers ownership from one which is a renting tenancy. The former carries a nominal ground rent. The value to the landlord lies in the capital premium paid. The latter attracts a rack-rent which provides an income stream to the landlord. In the former case, the landlord has effectively given up the interest for the duration of the lease, but in the latter the transfer of value is not so great.
The comparison of the annual ground rent to the rateable value is a simple test. The rent thresholds in our low-rent test are long-established. The low-rent test, as I said previously, appears in roughly the same form in several pieces of important landlord and tenant legislation which are referred to regularly.
The leasehold market in property generally, including houses and flats, has distinguished between long leases at low rent and leases commanding rack-rents for the past 40 years. People have organised their property transactions, investments and homes around the parameters the existing rent test has created. To change the basis of it now would significantly affect the market and damage confidence.
I do not detract from the case that has been made by my noble friend and other Members of the Committee. However, I hope that in the light of what I have said, and in reply to Amendment No. 76A, they will accept that I do not consider it appropriate to alter thresholds merely to suit a small proportion of tenants of flats. I hope that having heard my arguments my noble friend will withdraw his amendment, in particular in the light of the recent vote.
Lord Williams of Elvel: Before the noble Lord, Lord Carnock, decides what to do about the amendment, will the Minister enlarge on his response to the question which I asked at the end of our debate on the low-rent test? It related to the difference between low rents under commonhold and the treatment of low rents under leasehold enfranchisement. There appears to be a serious failure of logic on the part of the Government. If commonhold is owning the freehold of what is at present a leasehold and holding the common parts in common and if leasehold enfranchisement is collective enfranchisement of the property and most of the leases, what is the difference
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between the two in terms of the low-rent test? Why does the noble and learned Lord the Lord Chancellor take one view and the Minister take another view?
Lord Strathclyde: I hope that the noble Lord, Lord Williams of Elvel, is not suggesting that there is great disagreement between my noble and learned friend the Lord Chancellor and myself. I can prove that our views are entirely consistent. The paper which was issued in November 1990 by the Lord Chancellor's Department was published before it was decided to proceed separately with leasehold enfranchisement. Reference to rent was included in a section relating to possible forms of compulsion for the conversion to commonhold tenure.
The policy now is that a prerequisite for conversion must be agreement by everyone with a major interest in the block as well as long leases at low rent. Long leases at high rent, short leases for which a premium has been paid and business leases also count as significant interests. The extent of the transfer of ownership between landlord and tenant is therefore irrelevant for this purpose, unlike the issue of enfranchisement which we are discussing today.
The paper concluded that the complications of a low-rent qualification could not be justified bearing in mind that special provision would have to be made where some leases were at a low rent and some were not. The distinction between commonhold and enfranchisement is that the former affects everyone in the block except renting tenants. In enfranchisement the position of non-qualifying tenants does not change; they merely come under a new landlord. Housing association tenants and local authority secure tenants even keep the same landlord. Therefore, no special provisions are needed.
I do not wish to make much of the argument but I hope that I have explained the matter fully to the noble Lord, Lord Williams. If in the light of what I have said I need to write to the noble Lord, I shall do so.
Lord Renton: Before my noble friend sits down, will he confirm that under our constitution we never legislate in anticipation of further legislation? We have not had a commonhold Bill in front of us and we must therefore deal with this Bill on the assumption that there is no such thing as commonhold. Is that right?
Lord Strathclyde: That is clearly right. On Second Reading many noble Lords asked why we were not discussing commonhold. In answer I said that my noble and learned friend the Lord Chancellor may or may not introduce that system in the future because it is fiendishly complicated and may require more thought. I said that in the light of that we were bringing forward these proposals on leasehold enfranchisement which should therefore be seen separately from any other prospective legislation.
Lord Williams of Elvel: I fully accept what the noble Lord, Lord Renton, tried to say. However, let us suppose that the Committee were presented with a Bill proposing that we should all drive on the right-hand side of the road but in turn the noble and learned Lord the Lord Chancellor issued a consultation paper

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proposing that we should all drive on the left-hand side of the road. It would not be unreasonable to take into account the views of the noble and learned Lord in discussing a Bill which proposed exactly the opposite. I am afraid that the noble Lord has failed to convince me about the total homogeneity of view between himself and the noble and learned Lord the Lord Chancellor. Indeed, the latest paper issued by the noble and learned Lord deals merely with tenancies granted for more than 21 years. There is no reference to low rents or to anything else. If the noble Lord will write to me about the matter perhaps a little more convincingly than he has spoken we shall resume the debate on Report.
Lord Campbell of Alloway: Is not the problem—simply stated—that the noble Lord, Lord Williams, is driving along one road and apparently my noble and learned friend the Lord Chancellor is driving along another road? It is not a question of driving along different sides of the same road. We do not have commonhold.
Lord Williams of Elvel: I am not sure that the noble Lord, Lord Campbell of Alloway, is driving on any road at all.
Lord Coleraine: I agree with the noble Lord, Lord Williams of Elvel, that there is an inconsistency in the positions taken by the two departments. I do not believe that in pointing that out, anyone is trying to anticipate commonhold.
Lord Carnock: Apart from my noble friend the Minister only one voice was raised in opposition to my amendment. It most clearly commands a considerable degree of support in Committee and outside. However, I am conscious that the wording is defective. The amendment does not refer adequately or at all to property in the country, which would have to be treated differently from property in London.
I hope that between now and a later stage of the Bill different views will be expressed. There will certainly be further consultations outside the Committee and in view of that I shall probably return to the matter on Report. In those circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
5.45 p.m.
Baroness Gardner of Parkes Baroness Gardner of Parkes moved Amendment No. 42:
Page 8, line 28, leave out ("£1,000") and insert ("£2,000").
The noble Baroness said: As the issue has been debated so many times I shall move the amendment formally and await the Minister's reply. I beg to move.
Lord Strathclyde: The amendment seeks to raise the annual rent threshold for leases in Greater London by a factor of two. I do not wish to disappoint my noble friend but as she recognises we have discussed the issue at considerable length. Therefore, I shall take up no more time by repeating the arguments.
The amendment does not achieve very much, given that changing the threshold will cut across all the tenant protection legislation and will apply only to
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new leases within Greater London. Such leases may have been constructed to make them renting tenancies rather than owner-occupying tenancies. Their leaseholders may in fact be assured tenants. Those are not tenants to whom we as government wish to give the right of enfranchisement. That is the point which we are making in rejecting my noble friend's amendment and I hope that that explanation suffices.
Baroness Gardner of Parkes: I thank my noble friend for that reply. However, I believe that many landlords have anticipated the legislation and have planned their rents accordingly. For that reason I believe that £2,000 would change the situation. As we have discussed the matter in great detail I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Carnock Lord Carnock moved Amendment No. 43:
Page 9, line 5, at end insert ("and
(f) for the purpose of determining the proportion that the rent payable in respect of the flat during the initial year bears to the rateable value, the rateable value shall be increased either to take into account any tenants' improvements in accordance with Schedule 8 to the Housing Act 1974 or to take into account any improvements affecting the rateable value and made before the appropriate date or both.").
The noble Lord said: The purpose of the amendment is to draw attention to a problem which arises where a tenant's flat is intended to qualify for enfranchisement but might not do so because the rateable value has not been increased to reflect the cost of improvements. In order to qualify, the rent of the flat must not exceed two-thirds of the rateable value, but if improvements have been carried out and the rateable value has not increased accordingly, it is possible that in some cases the rent may be more than two-thirds of the rateable value, whereas if the rating system had been operating more efficiently, it would have been two-thirds or less of the rateable value.
The rating system has now been abandoned, but for many years previous to its abandonment it had not operated in accordance with the intentions of those who devised it. The most glaring failure is that there has been no quinquennial valuation since 1972. Therefore, the last up-to-date rating valuation list came into force on 1st April 1973 and is now 20 years out of date.
One of the unsatisfactory elements of this legislation is that reliance is still placed on such an anachronistic and flawed system as rating. However, for the moment, we are stuck with it. There are two types of improvement which are covered; namely, those made by the tenant after the commencement of his lease, and those made by the tenant or others before the commencement of the lease. The amendment covers both situations.
In order to avoid the possibility of any confusion, I should remind Members of the Committee that arrangements for the adjustment of rateable values were included in the Leasehold Reform Act 1967. Those arrangements envisaged only a downward adjustment in the rateable value to cover the possibility that improvements made by the tenant

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might have resulted in the increase of the rateable value so as to bring the tenant above the rating limit for qualification.
The 1967 Act provides a precedent for making adjustments of this kind, even though the adjustment envisaged by the amendment is an upward adjustment while that provided for in the 1967 Act is a downward adjustment. I commend the amendment to the Committee.
Lord Strathclyde: This amendment would provide that, for the purposes of determining whether a flat passes the low-rent test, the rateable value of that flat should be increased to reflect any improvements carried out since the rateable value was set or to reflect any improvements made before the date of the grant of the lease.
I believe that my noble friend has raised an important issue and it is one that I am prepared to consider further. I agree that it may be unfair to judge cases using the normal rules where it is clear that there were special circumstances. I am not sure, however, that the amendment as drafted would achieve all that my noble friend would wish.
It may be possible to take account of improvements which have been made before a lease is granted, but which are not reflected in the rateable value. But I think it may be more difficult to assess what the rateable value of a flat would have been at the time a lease began, taking account of later improvements.
Having raised those potential difficulties, I believe that this is a matter which should be considered further. I am content to look at it again to see how its aims may best be met. I shall consult with experts on rating and valuation to see whether or not a workable proposal can be brought forward. With that undertaking, I ask my noble friend to withdraw the amendment.
Baroness Gardner of Parkes: While the Minister is doing that perhaps he will look at the precedent contained in the Leasehold Reform Act 1967. In that regard, I can recall cases in which improvements were taken into account. Members of the Committee will know that the right to buy depended on the rateable value in London, which I believe was £1,500 at that time. As a councillor I can recall cases in which people proved that improvements that they had made had altered the rateable value. Therefore, perhaps that precedent can be taken into account.
Lord Carnock: In the circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 7 agreed to.
Clause 8 agreed to.
[Amendment No. 44 not moved.]
Schedules 1 and 2 agreed to.
Clause 9 [Premises with a resident landlord]:
Lord Coleraine Lord Coleraine moved Amendment No. 45:
Page 10, line 16, at end insert ("and
() the freeholder was the owner of the freehold of the premises at the date when any written permissions required by law for the conversion of the premises into flats were given by the relevant authorities or, if
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no such permissions were obtained, for a period of not less than twelve months ending on the date on which building work necessary for the conversion commenced.").
The noble Lord said: The purpose of the resident landlord exemption should be to recognise the position of someone who finds that his family home has become too large or expensive and converts it and sells off parts of it. To the extent that this has a good effect on the housing stock, it is also to be encouraged. Any other person who happens to buy a freehold because that is the only way that he can acquire the possession of a particular flat which he may want really has no claim, as a freeholder, to be treated any differently from an outside freeholder.
Amendments Nos. 45 and 46 are intended to provide that the resident landlord exemption is to apply only to the freeholder who converted the house and to members of his family. I give an example of one particular type of resident landlord by purchase. A builder has converted a house into three flats. He sells two flats on long leases. When he sells the third, instead of granting a long lease, he transfers the freehold of the whole building to the purchaser. He is the freeholder. He is living in one of the flats. The other two flat owners are his lessees. It is very difficult to see why that resident landlord should benefit from an exemption.
The two other lessees will, it is true, have the right to lease extensions under Clause 35, but they will remain the tenants of a person who is only the landlord by chance.
Exemption from collective enfranchisement in this case will only tend towards poor relations between the two lessees and their resident landlord. Although, on the whole, I support the liberalisation of the right to lease extension under the Bill, I think that this is an instance of a situation where collective enfranchisement may be the better option. As I understand it—and the Minister will correct me if I am wrong—the former freeholder would take a leaseback of his flat. If he did not do so, I suppose that he could be thrown into the street. One thing would be lacking before there could be said to be an equality of rights and status among the residents in the building. I refer to the right of the freeholder to retain an interest in the freehold. Something would have to be done about that, because it would not be right for the two lessees to be able to buy out their former resident landlord and reverse their positions entirely. This is not really for me to consider today because I believe that the point to which I am drawing attention reflects a defect which is already in place in the Bill in any case where a resident landlord is unable to claim exemption.
The general conclusion that I have reached is that the tighter the conditions for exemption are drawn as regards the personal circumstances affecting the freeholder—the more that it is limited to the person who converts his own home, and to his family—the better it will be. But there must be adequate provision in the Bill for the freeholder who fails the test and finds himself given the old Animal Farm treatment when he is enfranchised against.
The recent Consumers' Association survey showed that 6 per cent. of leaseholders had resident landlords,

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with two out of three of the properties comprising three or less flats. It must be clear from this that a substantial number of flat owners will be affected by the resident landlord exemption, and that we must try to get it right now. The situation where a freeholder shares a building with his long lessee neighbours can be quite fraught.
Before I move the amendment I wish to make a further point on the clause, and if I am right about it I hope that my noble friend will give it some thought between now and Report. Much of the Bill is devoted to the relationship between freeholder and flat owner as though the freeholder was the only person who had a really substantial interest in a property. The long lessee reversioner seems often to have been overlooked. The owner who converts his family home into flats may be a long leaseholder. I suggest that the clause should be expanded so that the resident landlord exemption applies also where the landlord is a leaseholder himself. I beg to move.
6 p.m.
Baroness Hollis of Heigham: We on these Benches support this amendment as it seems to us to be useful in protecting the rights of a landlord whose home it was before the property was converted into flats. As we know, most of the acquisition of flats to the leasehold market have arisen from house conversions. We recognise therefore that there may be a claim to intimacy associated with the previous owner of the entire house. We believe, however, that no such claims of protection can apply to a landlord who subsequently buys in and for whom the purchase is strictly commercial. For those reasons this amendment draws a useful line between someone whose home it was formerly and someone who is buying into a commercial development. We support the amendment.
Lord Strathclyde: The provision that a converted block of four or fewer units with a resident landlord should not be eligible for enfranchisement is designed to ensure that a freeholder can retain a property which is his immediate home. I accept that the most important use of the resident landlord exemption is to allow a landlord to retain the freehold where he has converted a family home which has become too large.
This very narrow set of circumstances is the only resident landlord exclusion which my noble friend's amendment would allow. Our provisions go wider and continue the exemption even where the block has been passed on to another freeholder. I believe that there are some very compelling arguments as to why that should be the case notwithstanding the arguments that were put forward by the noble Baroness, Lady Hollis. Most importantly our provisions allow successors in title to a freehold to continue to benefit from the exemption. Where a person has inherited the family home, in which perhaps he grew up, he has the same claim as the person who converted the property to retain the freehold.
A freeholder may have purchased a block with the freehold and a flat deliberately because it gave him control of a small property which was his home. Our
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provisions again cover this case. Our provisions also follow the precedent of the 1987 Landlord and Tenant Act where the definition of a resident freeholder provides for successors in title. The current provisions follow precedent and make allowance for successors in title. I consider that they make a better provision for the definition of resident freeholder. On that basis I hope that my noble friend will feel able to withdraw his amendment.
Lord Coleraine: I cannot say that I accept the arguments put forward by my noble friend for rejecting the amendment. It does not seem to me that the fact that someone comes along and buys a small property where there may be three or four flats, all let on long leases, and he moves into the empty flat, gives him any particular reason to obtain exemption from collective enfranchisement against those lessees in the other flats in the building. My noble friend mentioned the possibility of a resident landlord coming in by inheritance or possibly by buying back the family home. The second of the two possibilities is fairly remote. I doubt whether one would wish to provide an exemption for that. As regards the landlord by inheritance, obviously the spirit of my amendment would cover that. I do not think anyone would dispute that. The case has not been well made for retaining the clause as it is, but I shall withdraw the amendment now and consider what to do with it between now and Report. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 46 not moved.]
Viscount Goschen Viscount Goschen moved Amendment No. 47:
Page 10, line 46, leave out ("or illegitimate son or daughter").
The noble Viscount said: This is purely a drafting amendment to remove reference in the clause to "illegitimate son or daughter". The intention was to specify that reference to son or daughter as a member of the freeholder's family included illegitimate son or daughter. This is not necessary because of the provisions of Section 1(1) of the Family Law Reform Act 1987 which provides legal interpretation for such references. I beg to move.
Baroness Hollis of Heigham: Does that mean that an illegitimate son or daughter is a member of the family under the Act so quoted?
Viscount Goschen: That is the case.
Lord Renton: It is quite right that we should avoid repetition in Acts of Parliament, but I should have thought that on this occasion, for the sake of clarity and so that everyone knows where they stand, it might be just as well to repeat what is in effect an earlier definition. I know that is not very good advice generally but I think that on this occasion it might well be followed.
Lord Peyton of Yeovil: I also take an interest in the drafting of these measures. I wish that my noble friend would go a little further and explain why the words were included in the first place and why the words are now being taken out. That seems very odd. One is used to some eccentricities on the part of those who draft

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these measures but here they seem to have gone over the edge. I am sure that my noble friend can help us all a little further.
Viscount Goschen: In reply to the point made by my noble friend Lord Peyton, it seems purely and simply that there has been a drafting error. In reply to my noble friend Lord Renton, I accept what he says but our advice is that further explanation is not necessary. It would be redundant and it would therefore cause duplication.
On Question, amendment agreed to.
Clause 9, as amended, agreed to.
Clause 10 [Right of qualifying tenant to obtain information about superior interests etc.]
[Amendment No. 48 not moved.]
Lord St. John of Bletso Lord St. John of Bletso moved Amendment No. 48A:
Page 12, line 19, at end insert ("and
(d) a right of access, in the case of any part of the specified premises, thereto for the purposes of enabling him to obtain a valuation of that interest in connection with the notice; and that right of access shall be exercisable at any reasonable time and on giving not less than three days notice to the occupier of any premises to which access is sought.").
The noble Lord said: This amendment relates to the rights of a nominee purchaser to have reasonable access to all parts of the property in order to make a proper and thorough valuation of the property. Clause 10 provides for the right of qualifying tenants to obtain information about superior interests but does not provide for reasonable access to the whole property for valuation purposes. As the freeholder has the right to inspect the whole property, is it not therefore reasonable for the nominee purchaser to have a reasonable right of access so that a full and proper valuation of the whole property can be undertaken? The Bill provides for the nominee purchaser, on behalf of the group of leaseholders, to make a serious offer for the freehold of the property in question. Clearly in order to make a serious offer a detailed valuation of the property needs to be undertaken.
I shall give an example. As regards a block of 10 flats where seven flats are on long lease and three flats are rented, belonging to the landlord, for a proper valuation of the freehold it is essential that all flats be inspected. As the Bill now stands, there is no such right of inspection over the three flats belonging to the landlord in the example that I have mentioned. Similarly, there might be a situation where part of the block is used for commercial purposes by the landlord or his tenant. Such parts would also need to be valued by a nominee purchaser for a proper valuation of the whole property to be obtained. Another reason why reasonable access to the property may be required is to assess the state of repair or condition of the entire property. My amendment simply seeks to give a reasonable right of access to the nominee purchaser—a right which is always enjoyed by the landlord. I beg to move.
Lord Strathclyde: I well understand why the noble Lord, Lord St. John, brings forward this amendment
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and why he might argue that it would be more difficult to value the interests of those tenants who did not wish or were unable to participate without rights of access, but I hope that I can reassure him that that would not be the case in practice.
No rights of access are of course needed in relation to the flats of tenants who are likely to participate or to common parts. It should not be necessary to have access to the flats or units of those tenants who do not wish to participate or those who do not qualify because the preliminary notice of discovery should provide the tenants with all the information necessary for them to make a realistic valuation.
The amendment applies the right of access during the preliminary notice of discovery before the tenants have concluded that their block is eligible and they wish to proceed with enfranchisement. The right to serve a preliminary notice and the rights associated with it may be exercised by a single qualifying tenant at any time and may be claimed more than once. Many preliminary notices may be served which may not necessarily lead to the tenants committing themselves to enfranchisement. If, as the noble Lord suggests, the right of access were claimed, this would become a considerable nuisance to the nonparticipating tenants whether they be shop owners, renting tenants or qualifying tenants who do not wish to participate.
So the point that I make to the noble Lord is that in practice I do not believe that there would be a problem and that if his amendment were brought forward it could be a considerable nuisance to non-participating tenants. I hope that that full explanation will give the noble Lord some comfort.
Lord Coleraine: The noble Lord, Lord St. John, referred to the nominated purchaser doing all that. I do not suppose that there is a nominated purchaser at this stage, but it seems to me that the objections raised by my noble friend could be overcome if a certain number of qualifying tenants had to make these arrangements for access.
As to the idea that one can value flats just on the basis of information supplied by a reversioner, that seems far fetched. One needs to get inside the flats to investigate the services and whether a covenant has been properly performed and the like. It seems to me that the answer that my noble friend gave is too facile. I hope that he will agree to take the matter further and look at it again. Frankly, throughout the Bill the rights given to reversioners are far in excess of those given to flat owners.
Baroness Hamwee: I support the amendment for the reasons given by the noble Lord, Lord Coleraine. I believe that we are about to find quite a number of valuations undertaken without access to premises proving not to be reliable valuations. I refer to the council tax under which, next month, I suspect a shoal of appeals will be launched against valuations made from outside the premises. I hope that that will be wrong because I wish the council tax to work. However, the amendment seems to me modest and possibly the means of avoiding quite a lot of trouble.
Lord Boardman: I understand the motives for the amendment and the manner in which the noble Lord, Lord St. John, put it commends itself in the interests of valuation. However, in his reply my noble friend referred to the inconvenience—indeed, more than inconvenience—that would be suffered by the non-participating tenants. It seems that throughout the Bill far too little is said in the interests of those who do not wish to or cannot buy their flats and who would therefore, if the amendment were accepted, be subjected to constant visits by their neighbours who would crawl all over their flats in the interests of finding out what value should be paid for them, probably out of inquisitiveness. I believe that the interests of the non-participating leaseholders should be borne in mind, as my noble friend suggested.
Lord Williams of Elvel: I am sure that there is a balance to be struck here. I take the points made by the noble Lord, Lord Boardman, and the noble Baroness, Lady Hamwee. To expect a qualifying tenant to buy blind without having seen the interior of the property he is trying to buy is an odd concept. Perhaps the Minister can look at this and find a way which strikes a balance between the legitimate concerns on both sides.
Lord Strathclyde: I do not wish to be difficult on the issue. The amendment proposed by the noble Lord, Lord St. John, would create considerable problems, I believe, for non-participating tenants, particularly in view of the way the rest of the legislation is drafted in terms that any other tenant could exercise the right to inspect people's homes. Members of the Committee may say that that will not happen in practice, but where potentially it could, particularly to business tenants, a great deal of difficulty would be created.
I do not wish to be difficult, I am quite happy to look further at the amendment. I cannot see a way through the problem but if the noble Lord, Lord St. John, has any other bright ideas, I am happy to look at them.
Lord Williams of Elvel: Perhaps it would help if the tenants in question nominated one person or a nominee purchaser so that we do not have every conceivable tenant going into the flat. There would be one nominee who could make an assessment on behalf of the others.
Lord St. John of Bletso: I am grateful for the Minister's reply and for the support given by other Members of the Committee to the amendment. All I seek in the proposal is reasonable access to the property for valuation purposes. Clearly, one is not able to value a property without physically inspecting it, but I am pleased that the Minister will give consideration to the proposal before the Report stage. Under the circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
6.15 p.m.
Lord Coleraine Lord Coleraine moved Amendment No. 49:
Page 12, line 39, at end insert:
("() Any person who fails without reasonable cause to comply with subsection (7) or is guilty of unreasonable delay in complying with it shall be liable for any loss thereby occasioned to the qualifying tenant who gave the notice.").
The noble Lord said: I wish to speak to Amendments Nos. 49 and 50 which are grouped together, although they are separate provisions. Clause 10 is one of the most important in the Bill because flat owners who are considering enfranchisement have to be absolutely certain what they are taking on and whether they are legally able to enfranchise. For this purpose, they need a great deal of information which is of necessity within the knowledge of freeholders and superior leaseholders. If anything goes wrong, the flat owners stand to waste a considerable amount of money and to be liable even to the freeholder for his costs. Clause 10 sets out information which the flat owners may obtain and the obligation of the freeholder to supply the information.
There is a power to go to court under Clause 82 if there is delay on the part of the freeholder for which a sanction should be obtained or if there has been a refusal to supply information. However, all the court can order under the provision is that the party in default makes good the default within 14 days and further notices have to be served on the freeholder before the application to the court is even made.
Further complicated applications would have to be made in order to turn the court order into an adequate sanction. That does not seem to me to be good enough procedure to be adopted against a freeholder who may be dragging his heels in an effort to thwart an intended collective enfranchisement.
I am proposing two amendments. One has been drafted and recommended to me by the Leasehold Reform Co-ordinating Committee consisting of the Consumers' Association, the Council of Mortgage Lenders and various flat owners' groups. Amendment No. 50, the second amendment, makes failure to perform a duty under subsections (7) and (8) a summary offence, attracting a fine not exceeding level 4 on the standard scale. I am advised that Section 25 of the Landlord and Tenant Act 1985 is a very good precedent for that sanction, a comparable case where the landlord has failed to provide information.
Amendment No. 49, which is the Law Society's recommended sanction, provides that a person who fails without reasonable cause to supply information within the time limits should be liable for loss occasioned to qualifying tenants who ask for information. That is far from being a draconian remedy; it may need tightening up so that all tenants who suffer loss as a result of the failure to comply with the Clause 10 requirements are indemnified. I believe that the principle of the amendment, as of Amendment No. 50, is one which my noble friend should support. I beg to move.
The Lord Advocate (Lord Rodger of Earlsferry): Perhaps I may deal first with Amendment No. 49 moved by my noble friend. In relation to that matter

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he has argued that provision should be made for the tenant to recover loss incurred if the landlord had failed to respond to a discovery notice served under Clause 10 or delayed unreasonably. It has to be remembered that the preliminary inquiries, the discovery notice, come at an early stage, and it is not entirely easy to see how a significant loss could arise to the tenant, or indeed how it could be quantified. No initial notice has yet been served, and of course the nominee purchaser may not even have been appointed, as my noble friend mentioned a few minutes ago. The tenant's lease is unaffected, and no risks have yet been taken.
But my noble friend mentioned Clause 82 when moving the amendment. That is a carefully constructed clause which deals with the situation of default, and gives to the qualifying tenant the right to go to court after a certain procedure is gone through, and to have the default made good. We believe that that is the correct way to go about this matter. Given that that power exists, and that it is open to the tenant to use that clause, it is not clear to us that there should be any room for continuing loss due to a continuing default by the landlord, because it lies within the power of the tenant to use the remedy in Clause 82 and to have the default put right. We believe that Clause 82 represents the correct way forward, and that the particular provision that my noble friend has moved is not necessary.
I turn to Amendment No. 50. It does not appear to us that it would be appropriate or useful to introduce criminal sanctions into the Bill. After all, it is essentially a civil matter with which we are dealing, and it is important, as has already been said by noble Lords from several parts of the Committee, that landlords come in various types and guises. They are not all great estates with professional managers and estate offices. Some may be people in comparatively humble circumstances who do not have the assistance of such people.
There may therefore be a wide range of situations where it may be that a great estate would have no excuse for failing to comply with an obligation, but other freeholders, individuals who have perhaps inherited a property, may not have a great deal of advice available to them, and therefore their default may be comparatively venial. Therefore, it should be said that the issuing of such a notice under Clause 10 is a matter which lies exclusively in the hands of the tenants. The individual tenant can choose to issue such an order at any time that suits him. At that time of course the landlord may be on holiday, or may not entirely understand the significance of the notice that comes to him. There may be many reasons why somebody may not comply with the notice straightaway.
It therefore seems to us that to introduce criminal sanctions into this whole area would not be helpful. If I may refer back, we believe that the correct route through is the use of civil remedies available under Clause 82. That is the correct way forward, and it
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would not be helpful to introduce criminal sanctions. In those circumstances, I ask my noble friend to withdraw the amendments.
Lord Coleraine: I should like to touch first on my noble and learned friend's reply to the second amendment, the criminal sanctions. I think that he is living in a world of his own if he thinks that the criminal law should not be brought into the relationships of landlord and tenant in some of these blocks of which we hear in and around the centre of London. I have been advised that the Landlord and Tenant Act 1985 contains a good precedent for this kind of sanction in this case. However, so far as that amendment goes I shall not be moving it, and I shall no doubt hear from the people who advise me on it when they have read the reply.
Amendment No. 49 is much simpler. If properly fleshed out, it would give flat owners what would amount to a fairly effective sanction, which would not require the need to go to court. I do not for the moment understand why my noble and learned friend is less sympathetic to that. He makes two points which I shall touch on.
First, he feels that under Clause 82 applications can be made to the court. I have looked at Clause 82, and the Law Society will no doubt wish to do so when it has had a chance to consider the reply. But it seems to me that applications to the court are a slow way of bringing some sanction about in circumstances where it may well be that the reversioner is desperately seeking ways to rearrange his affairs, because he knows that his flat owners are contemplating a collective enfranchisement. From the point of view of the flat owners it is essential that these procedures should go through fairly speedily, and that there should be little incentive and little opportunity for the reversioner to slow down things, because it will always be the reversioner—and not the flat owners—who wants to slow down things.
My noble and learned friend also referred to the fact that he could not see what kind of loss might have been incurred in the initial stages before the notice under Clause 11 is served. I should like to tell my noble and learned friend that it seems to me that the flat owners who are contemplating an enfranchisement will have to incur a considerable amount of expenditure before they have served the initial notice. They will have to have the valuation; they will have to arrange finance; they will consult lawyers; they will almost certainly have to redraft many of the leases in the building; and they will have to have a collective agreement among the proposed participating tenants. Therefore, once the enfranchisement goes forward all the rights of the participating tenants inter se will be set out.
There will be a great deal of expenditure incurred by flat owners. There is much room for finding that they are likely to incur loss if things go wrong, and if the reversioner, for example, gives false information. However, these are matters which I should like the Law Society to consider when it has read my noble and learned friend's reply, and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.

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[Amendment No. 50 not moved.]
Clause 10 agreed to.
Lord Coleraine Lord Coleraine moved Amendment No. 51:
After Clause 10, insert the following new clause:

Housing and Urban Development Bill

  Leaseback notices
  .—(1) A qualifying tenant of a flat may give notice ("a leaseback notice") to the person who owns the freehold, requiring him to specify which of the units within the relevant premises he would wish to be subject to the leaseback provisions of section 32 below and Schedule 8 below in the event of an initial notice under section 11 below being served within six months of the service of the leaseback notice.
  (2) If a leaseback notice is served on him, the freeholder shall reply to it within 28 days.
  (3) In this section "the relevant premises" has the same meaning as in section 10 above.").
  The noble Lord said: At Second Reading I drew attention to a property called Morshead Mansions, which consisted of 79 long leasehold flats and 25 flats let to controlled tenants on statutory tenancies. The position I described was that the owner of the block was interested in the rack-rents, as they are called—the Rent Act tenancies—because he saw the possibility of granting long leases at premiums when those tenancies fell in. Almost the entire value of the block was in the 25 Rent Act tenancies.
  As the Bill stands at present the participating tenants have to make their arrangements for financing the purchase of those Rent Act tenancies. As I explained, they have a low flow of income. It will not be easy to raise finance. They will have to go to considerable expenditure. If they can arrange finance no doubt they will have to pay a substantial commitment fee. However, when the enfranchisement proceeds, the result in such a case will be that at some point—I believe at any time before completion—the reversioner will say, "I want a leaseback on those properties". We can be almost certain that it is a leaseback that he wanted all along but in order to confuse the flat owning tenants he has held his cards back until the last minute. He has given them a rough ride until, at the last moment, he eventually says, "I want those flats back".
  It would be much simpler if we could devise a procedure such as that set out in the amendment whereby the enfranchising flat owners could require the reversioner to state at an early stage whether or not he will wish to take a leaseback on certain properties. The result of such a procedure would be that, if and when the enfranchisement went ahead, the reversioner would be obliged to take leasebacks from those on which he has stipulated that he wanted leasebacks but he would be precluded from taking leasebacks on the other properties.
  In a case such as I have described that is an eminently sensible provision. My noble friend's agile mind may have devised similar situations in which the procedure would not work. However, such a provision would make the Bill work more easily. It would be in the general interests of flat owners and not against the interests of reversioners who are seriously trying to comply with all the provisions of the legislation in a constructive way in order to get the enfranchisement through on reasonable terms and in a reasonable time. I beg to move.
  6.30 p.m.
  Lord Boardman: My noble friend asked for suggestions for overcoming the problem as he saw it. As I understood the point he made, he referred to flats in which the majority of occupants are paying rack-rents and are not long leaseholders.
  Lord Coleraine: Perhaps I may assist my noble friend. In the example I chose, in 79 of the flats they were long lessees and in 25 they were not.
  Lord Boardman: I am grateful to my noble friend. He talked in particular of the problem of the rack-rent payers. In those circumstances, perhaps he would be more supportive of the line that I took on earlier amendments with regard to, first, the right of the non-residents not to be able to enfranchise and, secondly, non-resident leaseholders, the rack-rent tenants, who seem to suffer under the proposals in the Bill.
  Lord Strathclyde: I consider that the amendments would place an unnecessary and onerous burden on a landlord. The new clause would allow any qualifying tenant to serve an additional discovery notice asking the landlord which units he would wish to lease back were an initial notice to be served within the following six months. The amendments would then commit the landlord to leasing back those units and no others.
  The present discovery notice is satisfactory and reasonable in that it provides a means for tenants to obtain the minimum information they require to enable them to make a decision on whether to proceed with a claim to the right to enfranchise. It allows them to discover who their landlords are, and whether the block is eligible for enfranchisement.
  It has been devised quite deliberately to be fair to landlords also by not requiring the release of unnecessarily detailed information. It is possible that a landlord could have many discovery notices given to him, none of which lead to the commencement of the enfranchisement process with the tenants' initial notice. He cannot claim costs for the supply of information and it is therefore right that the information required should not be extensive.
  Such a requirement would involve a landlord in a lot more work, and therefore expense, in making his response to the notice. He would have to consider which flats he wanted to lease back which might require him reconsidering his overall investment and its future potential. A landlord may be put in the unenviable position of having to give a realistic answer to a theoretical question about possible enfranchisement at a future date.
  The amendments to Schedule 8 impose an even more unreasonable burden. These make the leaseback of the units specified in the leaseback notice mandatory upon both parties. They also prevent the landlord from leasing back units not specified in the notice. Those provisions could be very onerous. Each time a leaseback notice was served the landlord would be in the position of being tied to any decision he made on leaseback for a further six months. That commitment would be without the benefit of

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  knowledge, which the landlord would later obtain from the initial notice, of the extent of enfranchisement, exactly when it might occur, and on what terms.
  The current provisions are that, once an initial notice is given to the landlord, he will be required to indicate which units he wishes to lease back. After an initial notice has been given the landlord will be able to recover his reasonable costs, which will include any associated with providing information on leaseback. That is fair to the landlord. If his decisions on leaseback affect the tenants' decision to enfranchise, then they may still withdraw and the landlord will receive his abortive costs.
  I am sorry to say this to my noble friend, but I believe that the amendments are unnecessarily onerous to landlords. The information sought will be provided by the landlord when the tenants have a real commitment to enfranchisement. That must be fair on both parties. That is the intention of the legislation and I therefore ask my noble friend to withdraw the amendment.
  Lord Coleraine: Did I understand my noble friend correctly? Was I wrong in thinking that leaseback provisions could be brought into effect by the reversioner at or shortly before the time of completion? Does he say that those provisions can be flushed out of the reversioner with the counter notice? I note that my noble friend nods his head; he is saying that.
  Obviously, I wish to consider the amendment again in the light of what he said. However, at present his objections to my amendment have been long on drafting points and fairly short on principles. If it is a question of extra expense to the reversioner it will not compare well with the expense that could be saved by the flat owners when they seek to sort out their arrangements for financing a large purchase.
  Perhaps I may say this to my noble friend Lord Boardman. The provision does not touch upon the plight of the tenants of the 25 flats which are not included in the enfranchisement. They are not parties to the argument. Possibly I have misunderstood what my noble friend said, but I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Clause 11 [Notice by qualifying tenants of claim to exercise right]:
  Lord Clark of Kempston Lord Clark of Kempston moved Amendment No. 52:
  Page 13, line 21, leave out ("is made") and insert ("may be made at any time after 30th September 1996").
  The noble Lord said: The more I study the Bill the more I am convinced that if a Labour administration had introduced the legislation we, sitting on the other side of the Chamber, would be fighting it tooth and nail.
  Having said that, I remind my noble friend that the voting list on the amendment moved last week by my noble friend Lord Peyton shows that a majority of Back Bench Conservative Members voted against the Government. I suggest to my noble friend that that is a matter which should be taken seriously. Having
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  listened to the Committee stage of the Bill since its inception, I have seen few signs of the Government showing any flexibility. Few concessions have been made.
  The Bill forces freeholders to sell, whatever the qualification may be. Many of us believe that that is wrong. I refer to sharing the marriage value. Why should a freeholder give part of his asset to anyone, whether or not it be the tenant?
  The reason for my amendment is this. I believe that the unfairness of the Bill is exacerbated by the fact that the sale is being forced on a freeholder when the property market is practically at its bottom. When we compute the valuation of the leasehold and the freehold, no matter how it is made, the valuation will be made on the state of the property market. Consequently I should like to suggest to my noble friend that he should give an undertaking to examine the matter.
  I know that in Clause 171 the Secretary of State has the right or the duty to say when the date is going to be, and he does that by statutory instrument. Very well, we accept the fact that it somehow got into the Conservative manifesto at the last election, but if my amendment is accepted by the Government it gives the property market time to recover. It also fulfils whatever commitment we put into the manifesto. I urge my noble friend to accept this simple amendment. Perhaps the wording is not as good as a parliamentary draftsman would like, but if my noble friend accepts the spirit of the amendment, that is all I ask. I beg to move.
  Lord Strathclyde: My noble friend's amendment is drafted in a very clear manner and he has explained it very precisely. The effect, as of the two similar amendments which my noble friend has tabled for later, would be to delay the new rights contained in Part I of the Bill for roughly three years, until October 1996. I feel that it would not be right to delay new rights in that way. There are a large number of tenants of flats who are keen to have at the first opportunity the same rights that people living in houses have enjoyed for 25 years. People who currently face the problem of having an unreasonable landlord or those who cannot sell their flats because the leases are too short will not understand if the Committee delays implementing this commitment by three years.
  My noble friend referred to property prices. They have fallen over the last three years, but I understand that they are now beginning to turn. I, for one, would not be willing to predict where they might be next year, the year after or indeed in 1996; but I cannot believe it is right for the Committee to try to gerrymander by seeking to delay the introduction of the legislation to fit in with particular cycles of the property market. Landlords may do better then, but they may also do considerably worse. Who is to say whether now or 1996 will be the right time to buy commercial property or shares or bonds or any other kind of asset that my noble friend cares to mention?
  I believe that the only course we can take is to legislate for what is right and to leave the markets to fix the value of their interests. I certainly do not have a sufficiently clear crystal ball to tell anybody whether

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  enfranchisement now rather than in three years' time will work to the relative advantage of the landlord or the tenant. I take my noble friend's concerns to heart. I understand how he feels about the legislation, but I hope that he will see that the amendment really is not practicable.
  Baroness Gardner of Parkes: I oppose the amendment most strongly. It is the second time that this matter of being able to delay everything until it all becomes more expensive has arisen. Although property prices may be described as low now, anyone who has been in property for a considerable length of time, as I have myself, though in a very small way, will see that prices are nothing like what they were in, say, 1977 or even the early 1980s. They have gone back from the absolutely ridiculous peaks, which were quite unrealistic, reached in 1988 and 1989, but they have not gone right back again. The further back we look we find that Smith's Charity all started with £2,000 and then we see what it has multiplied to now. There is no way that we can really be worrying about that whereas the thought of delaying the legislation for three years is very difficult. It will in any case take people quite a long time to go through all the procedures and overcome all the obstacles to enfranchisement. The sooner the Bill is passed the happier I shall be.
  Lord Clark of Kempston: I am most grateful to my noble friend for his reply, but I am sure he will understand when I tell him that I do not accept it. Although 1996 may be too long I would be quite prepared to reduce it to 1995 or even to 1994. However, I believe there is a tremendous unfairness, without delaying the Bill unnecessarily, in forcing people who are unwilling sellers to sell an asset when the market is at the bottom. Let it have time to recover. However, in view of what my noble friend says and also in view of the fact that time is getting on, I will come back to the matter at Report stage. In the meantime I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  6.45 p.m.
  The Earl of Lytton The Earl of Lytton moved Amendment No. 53:
  Page 13, line 27, at end insert:
  ("(2A) All qualifying tenants must be given an opportunity to participate in the giving of notice of the claim to exercise the right to collective enfranchisement.").
  The noble Earl said: I will speak to Amendment No. 53 and also to Amendment No. 67, which is grouped with it. These are probing amendments. As the Bill is drafted, enfranchisement can proceed if two-thirds of the qualifying tenants sign the initial notice, but there is no requirement for every tenant to be consulted before participation. It seems to me that the nominee purchaser could on occasion simply forget to include one or more of the tenants. The problem starts with the smallest unit of four flats and can get larger in quantum thereafter, with more numerous qualifying tenants.
  Clearly, it is desirable to ensure that as many as possible qualifying tenants take part in the enfranchisement process. The effect of Amendment
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  No. 53 is to enshrine a right for every such tenant to participate, but not so as to force that participation. That is very important. The onus would be on the nominee purchaser to ensure that reasonable attempts had been made to involve as many qualifying tenants as possible. I stress that in my opinion a collective purchase requires the collective involvement of as many tenants as possible.
  Amendment No. 67 is slightly different. It starts from the fact that the Bill contains no provision to ensure that a nominee purchaser does in fact convey the freehold to the participating tenants. At Second Reading I drew attention to a case in which I had some professional involvement. A nominee tenant, ostensibly purchasing on behalf of himself and a number of other tenants within a building comprising shops and flats—there were shops below and maisonettes above —when he had concluded the purchase of the freehold, put the title in his own name. The other tenants had to sue to obtain rectification of the situation, in accordance with the original understanding. It would be most undesirable obviously if this sort of activity were allowed to take place under the provisions of the Bill once it becomes law. Amendment No. 67 seeks to remedy that.
  There is another reason why the amendment may commend itself to the Committee; namely, that it strengthens the essential relationship between a freehold ownership and the occupation of the property concerned. I should really like to see a provision whereby a share in the freehold was in some way inalienable from the occupation of the building; otherwise it could be alienated and that would be very unsatisfactory. It would lead to a further series of difficulties for tenants in the future. It should be the objective of our discussions in this Committee that we eliminate as far as possible that sort of risk. I beg to move.
  Lord Renton: I hope that my noble friend will give very careful attention to the amendment moved by the noble Earl. It provides an opportunity, if I may take advantage of it, to draw attention to what I regard as the principal defect in the Bill. I can explain it quite simply. Under Clause 3, before there can be leasehold enfranchisement, two-thirds of the tenants in the block of flats have to be qualifying tenants. But that does not end the matter. Under Clause 11, two-thirds of that two-thirds must give notice. That brings us to the proposition that only four out of nine tenants in a block of flats may find themselves forcing leasehold enfranchisement on all the tenants.
  If my noble friend says, "Oh yes, but of the two-thirds qualifying tenants, at least half, and possibly many more, will agree and will give the initial notice", I would beg leave to doubt it. I doubt it for various reasons, some of which can be gleaned from Clauses 11 to 34, which, I may say in passing, are an extraordinarily inconclusive jumble of detailed instructions for tenants and landlords to have to observe. These clauses to which I have referred comprise 28 pages. They also have to be read in the light of Schedule 8, which contains another four pages. Most of what happens between Clauses 12 and 34 could quite well have gone into a schedule. It would

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  have made for better legislation of the kind which we hope, perhaps sometimes vainly, we are leading towards. It is an unsatisfactory situation. I am sure that noble Lords on both sides who support the Bill, and who believe in democracy, which is government by the majority, find it very unusual that we should allow what is potentially a minority of the tenants to force the issue.
  I am grateful to the noble Earl. His amendment, which seems to me a very simple one and which goes towards making the outcome more certain, has provided an opportunity to draw attention to what I suggest is a major defect in the Bill.
  Baroness Hollis of Heigham: We on this side of the Chamber also support Amendment No. 53. As has been mentioned by the noble Lord, Lord Renton, there is a broader issue throughout the Bill of latecomers to the process of enfranchisement. We hope to address some of those issues in Amendments Nos. 63, 64 and 65 on the one hand, and Amendment No. 71 on the other, which deals with latecomers coming in at the stage of participation; participatory notice; and, in Amendment No. 71, latecomers coming in after enfranchisement has taken place—perhaps council tenants who subsequently exercise their right to buy. Amendment No. 53, as I understand it, deals with a preceding stage; namely, it ensures that all qualifying tenants know about, and therefore have the right to participate in, the moving of a Section 11 notice. It seems simple equity that all qualifying tenants should have that right to be conjoined in association. We do not in practice expect it to be a major problem, simply because of financial pressures to broaden the base for qualifying tenants to enter into the purchase of enfranchisement. Nonetheless, the amendment seems to me at worst harmless; and in those rare circumstances where there may be some efforts to exclude one or two qualifying tenants from participating, it would protect their democratic rights to be involved. Therefore we support it.
  Lord Strathclyde: Perhaps I may preface my remarks to the amendment by replying to my noble friend Lord Renton. I am not at all convinced that the amendment would improve my noble friend's view of this particular part of the Bill.
  There is no question of people being forced to enfranchise. What happens to those tenants who do not enfranchise is that they simply go from having one landlord to having a landlord who is controlled by other tenants in the block. I understand my noble friend's point about the difficulties of putting into practice the legislation for people to achieve enfranchisement if they want it. But I understand that most property law is extremely complicated. This leasehold enfranchisement legislation will certainly be no exception. But there are some fundamental basic principles that have to be followed which I believe will make the process considerably easier than my noble friend thinks.
  I turn to the amendment of the noble Earl, Lord Lytton. I have a degree of sympathy with the points
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  put forward, in the same way as the noble Baroness, Lady Hollis, did. The objective here is to ensure that all the qualifying tenants have an opportunity to take part in enfranchisement and that none is squeezed out because, for example, one group living in a block of flats wishes to exclude some of the other residents for an unfair or totally irrational reason.
  I have considered the amendment with some care. I do not, however, believe that it would be practicable to put in statutory requirements giving everybody an automatic right to take part in the enfranchisement. The Bill provides that the freehold of the block shall be transferred to a nominee of the participating tenants. So a right to sign the initial notice in itself is of little value. To have any meaning, what would be required is a right for all qualifying tenants to be part of the nominee—either as a shareholder if it is a company, or as one of the joint owners if the freehold is to be owned individually. But in order to define such a right, it would be necessary to constrain the way the nominee is established. Each tenant would have to be entitled to have the same number of shares as any other tenant if the right was to make any sense. But that would have the effect of restricting the opportunities for some tenants to contribute more than others in the light of their own financial circumstances and their own commitment to the ongoing management of the block. As the noble Baroness, Lady Hollis, quite rightly said, we shall be considering some of these issues in more detail when we debate the amendments in her name later.
  I believe that in practice—and this is what is important —in most blocks the tenants are likely to wish to have the greatest possible number of tenants participating. They will want to share the costs of buying the freehold, and of meeting the freeholders' legal and surveying costs, spread across as many shoulders as possible. The responsibilities which they would be taking on as owners and managers of their blocks are not insignificant, and the more people prepared to share in the task the better. They are more likely to be concerned with getting everyone involved rather than seeking arbitrarily to exclude some tenants.
  I do not believe that giving a minority group a statutory right to join the party is likely therefore to be a sensible answer. If someone is only going to be involved through the exercise of a statutory right and against the will of two-thirds of his neighbours, it is hardly likely that the task of running the block after enfranchisement will be an easy one. Most likely, he will simply be outvoted. If any tenants are excluded from enfranchisement, they will of course continue with their existing leases. Their legal position will be no worse than it was previously. They will merely have a new landlord, something that happens very regularly now under current legislation.
  I have some difficulty with Amendment No. 67. It envisages a second conveyance, at some unspecified time after the nominee purchaser has acquired the interests to which he is entitled by collective enfranchisement, of those interests to those tenants. But in English law, as I am sure the noble Earl knows

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  well, not more than four people can own a freehold. So if the block is of more than four flats it must be held by a nominee.
  I have a great deal of sympathy with the noble Earl's intentions. I believe I have proved that in practice they would not work, and could actually work against the interests of tenants.
  Lord Renton: Before the noble Earl replies perhaps my noble friend will deal with my point. We could end up with a situation in which only four tenants out of nine in a block of flats were in favour of leasehold enfranchisement and, by that minority, the majority would have it enforced upon them.
  7 p.m.
  Lord Strathclyde: My noble friend is right, but perhaps I can explain what happens under current legislation. If a freeholder wishes to sell to another freeholder, he does not need the permission of any of the tenants. We are therefore providing a considerable improvement on that situation by allowing the tenants in a block of flats the opportunity to buy their own freehold. Far from that being undemocratic, it is most democratic and extends the franchise.
  Lord Boardman: The only reason I enter the debate is because my noble friend twice referred to the fact that all that would happen is that non-qualifying tenants would have a new landlord. On one occasion he referred to the new landlord as being someone appointed by the other lessees.
  I am concerned, and I believe that it is a view expressed elsewhere, that a lessee of fellow tenants is quite different from a new freeholder who has nothing to do with the block. My noble friend referred to four tenants out of nine in a block. If those four lived on the ground floor and the others lived on the second and third floors, there would not be much enthusiasm from the freeholders to install a new lift or repair the roof. Freeholders who have the same interest in the whole block are quite different from those who have an interest in being residents of only four-ninths of the block.
  Lord Strathclyde: We are straying considerably from the amendment tabled by the noble Earl, Lord Lytton. It is obviously a point we discussed in previous clauses and no doubt shall discuss again in the near future.
  Lord Coleraine: The amendment is a wide one and I ask the indulgence of the Committee while I sneak in a further point which follows from the comments made by my noble friend Lord Renton. He mentioned the case of four tenants out of nine who are able to enfranchise. What happens should there be two blocks of four each wanting to enfranchise? Who has the right to enfranchise and who does not?
  The Earl of Lytton: First, I thank the Minister for his considered reply, which I found extremely helpful. We are on the same wavelength. I thank other noble Lords who have spoken. This relatively modest
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  amendment seems to have elicited a considerable amount of interest, which was certainly unexpected by me.
  However, I leave the Minister with the thought that there is a requirement for a unity of purpose among those who occupy and manage the building as a result of the changes brought about by the Bill. I have no intention of pressing the amendment. With the leave of the Committee, I beg leave to withdraw Amendment No. 53.
  Amendment, by leave, withdrawn.
  Viscount Goschen: I beg to move that the House be now resumed. In moving this Motion I suggest that the Committee stage on the Bill be resumed again at 8 p.m.
  Moved accordingly, and, on Question, Motion agreed to.
  House resumed.

Video Recordings Bill [H.L.]
7.4 p.m.
Report received.
Lord Elton Lord Elton moved Amendment No. 1:
Before Clause 1, insert the following new clause:

Video Recordings Bill [H.L.]
  Video works shown in public places
  After section 3 of the Video Recordings Act 1984 there shall be inserted the following section—

  Video works shown in public places.
  If a video work which is not suitable for viewing by persons who have not attained a particular age is shown in a public place, and any person under the age sees the video work, or any part of it, in the public place, then the person responsible for the showing of that video work is guilty of an offence." ").
  The noble Lord said: My Lords, I spoke to an amendment on this subject, but in different form, at Committee stage. During that debate I asked my noble friend the Minister whether he would be kind enough to undertake a review of the Video Recordings Act, which the Bill sets out to amend, and the Cinematograph Act. There is an interface between the two pieces of legislation through which some events which should be regulated can escape.
  I thank my noble friend for the letter on the subject which he wrote to me following the Committee stage. He made clear that he thought I was asking for the two Acts of Parliament to be combined, which is an entirely different matter. I would have been content merely to write pointing out the error of his assumption had it not been for the context in which these events were taking place. The context includes the attitudes common to entertainment matters generally and programmes on the screen in particular which have now become familiar to us. It includes also the level at which video recordings are seen in this country. Perhaps I can illustrate those two matters.
  The attitudes of society struck me with some force around the time I received my noble friend's letter. They were summed-up in an episode where a famous film star turned down a leading part in a film about to be made. The plot concerned a psychopath who wanted as his mistress a female whom he

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  dismembered. He removed her arms and legs and kept her in a box. The objection of the famous film star was that the nude scenes were untasteful.
  It seemed to me that the lack of outcry against the proposed film and the reasons for not taking part in it were symptomatic of a change of attitude among those who are hardened to the media to which we, who are not, ought to react. Even so, I may not have felt that it was so important were it not brought to my notice that in this country the density of video recorders is twice as high per head of population as any other European country, and that in this country £17 million a week is spent on videos.
  The final point that pushed me into tabling and persevering with the amendment, though I do not intend to press it tonight, was a chance snatch of an interview that I heard one evening of a recently appointed senior BBC official—I cannot tell your Lordships who because I missed both beginning and end of the programme. He said (in the laughing way in which one normally gives away a common piece of knowledge) that no one really knows whether what one sees on the screen influences one's behaviour. Tell that to Saatchi and Saatchi, to President Clinton and, indeed, to the marines. We accept too easily statements of that sort which I know from my own experience not to be true. I know that I am influenced by what I see on the screen. I know that what I am influenced by is not always material specifically designed to have an influence.
  We should not accept that what is seen on any screen may not be harmful. Neither do I believe that we should accept, as is often advanced, that producers and commentators on media material are merely reflecting life; I believe that they are leading it, and often leading it astray. That makes me feel that we must intervene in some fashion to protect young people from material which, although said to be suitable for adult viewers, is highly damaging to juvenile viewers. It is the intention of legislation to protect them from such material, but I am advised that they are not protected because it is not an offence for them to be shown it in public places to which they have gained admission by paying. This is a large and difficult area and I shall not take your Lordships into the detail. However, I am as concerned with the television lounges of hotels as I am with long distance buses and the videos shown on them. Your Lordships may feel that even hotel bedrooms, where there is unlimited access, are an area for concern.
  I assure the noble Lord, Lord McIntosh of Haringey, that I am not proposing immediate legislation on that. What I am asking for is that the Government should undertake to look at what is going on, to look at these two pieces of legislation and to see whether in fact they are effective or not. If they are not, then I would hope that, within this Parliament or the next, they would come back with a proposal to do something about it. That is a simple request. It is not an expensive one to undertake. If my noble friend can give me the small assurance that the Government will look to see whether or not the legislation is working, I will not feel inclined to come back with a
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  perfectly drafted amendment at Third Reading and platoons of noble friends to try to force it through the Lobby. That would be a most regrettable thing to have to do. It might well imperil the future of the Bill in another place. I believe that the Government want the Bill to succeed in another place. I hope that my noble friend will extend this hospitality, courtesy or common sense in response to the amendment. I beg to move.
  Lord Merlyn-Rees: My Lords, I am drawn to speak in this debate, very briefly I hope, as president of the Video Standards Council, which publishes its own guide to the Video Recordings Act. The noble Lord's amendment seeks to amend the Act, so there are two reasons—one general and one particular—which draw me to speak on the amendment. Except for his courtesy in dropping me a line to say that he intended to raise this wider issue, I would have been drawn to speak on that when I heard what he has just said. I say that for two reasons.
  First, it is not as easy as all that to decide what the influence of film and video is. When I was Home Secretary I remember that one day two reports came to me. One said that violence in film and on television had a great effect as regards causing violence. The other said exactly the opposite. There was probably a third, a fourth, a fifth and a sixth view on the matter, but I had a practical example of it when, purely because of my work with the Video Standards Council, I appeared on the "Kilroy" show the other morning. Also on the show were parents and youngsters. But in particular, there were two young men from the young offenders' prison at Feltham with their excellent governor, who used to be at Long Lartin many years ago.
  Mr. Kilroy-Silk asked them whether anything in the way of film or television had drawn them into the crimes for which they were sentenced, which were stealing cars and speeding round the streets at 90 miles per hour. I made a note of their response. They said that they were interested in crime through watching "Police 5", which is a programme designed to get people to report to the police any crimes that they see. If it was not "Police 5", it was "Crimewatch". Mr. Kilroy-Silk took them up on it, but they were insistent. It was not through watching the American "predator" shows. It was actually through watching the programmes designed by the BBC and the independent companies to get people to fight crime. However, those programmes made those two young men interested in crime.
  Another young boy of about 11 or 12 gave his view of the situation very articulately. He said that he did not mind the "predator" films, if "predator" is the right word. He said that he knew that they were not telling the truth. What made him worried was when he saw the news because it was real life that upset him and not the stuff he saw on videos and when he went to the cinema.
  On Saturday evening I was watching television with my grandchildren. I had been thinking about all this. Suddenly there was a film which was a little like the goodies and the baddies that I used to watch on a Saturday morning in the 1920s and 1930s for tuppence

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  a time. People used to hit each other and everyone cheered. The film I saw on Saturday was most extraordinary. I looked at my grandson of seven and asked him whether he realised that those in the film were hurting each other. He said, "No, they are not hurting each other. If that crack that you hear as they hit each other was telling the truth, they would be lying flat on the ground. But they picked themselves up the next minute".
  I say to noble Lords, beware of the effect of film and video, but far more important are attitudes of mind. I accept that straight away. Middle-class attitudes percolate down to what used to be called the working class, because they watch television and they watch films. I am not giving a new interpretation by saying that the middle classes are to blame for everything, but they have very curious attitudes which are unknown among working-class people. But they pick them up. Working-class people have their own problems, but that is another matter. Therefore, one cannot be sure about this whole matter.
  I wish to say a few words about the amendment moved by the noble Lord. I understand that he intends to withdraw it and that his purpose in moving it is purely to initiate discussion and to get the Government to look into these matters. The amendment states:
  "If a video work which is not suitable for viewing by persons who have not attained a particular age is shown in a public place".
  It is to "public place" that I wish to address my mind. What does it mean? We have this problem in the video industry. To cut down what could be a long section of a speech, arrangements are made that when excerpts of videos are shown in shops they have to be done in the form of a trailer and they have to have the classifications of "Universal" (suitable for children), "Universal" (suitable for all), "Parental Guidance", and so on even if the films that they are advertising are ones that have a much harder classification. So in any event I am not sure that "public place" is in a shop in that sense of the term. In the video industry there is a code of practice anyway. I say to the noble Lord that it would be extremely difficult in a public place. The noble Lord referred to a bus, which is extremely relevant. There is also the problem of aircraft. There the classifications are done by the British Board of Film Classification. I think that the noble Lord is going up the wrong street in trying to amend the Video Recordings Act. I suggest that he would have to amend the Cinematograph Act.
  Lord Elton: My Lords, that was exactly my intention when I spoke to the noble Lord. He was probably thinking so carefully about what he was going to say that he did not catch what I said. I hope that the two Acts can be reviewed together and that the Government decide which to amend.
  Lord Merlyn-Rees: My Lords, I am happy to say that I know very little about the Cinematograph Act and that what the noble Lord said may well be the case. Even there the question is of policing the matter. That is one of the difficulties with it all. I welcome the chance to broaden the discussion about the effects of violence. Anthony Hopkins and Michael Caine have
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  said that they will not appear in certain films because they are worried about the effect that they may have. Voluntary censorship, which I suppose is what it is, is very much better than the state getting involved in censorship. That has never worked properly in any part of the world. What we do now with the British Board of Film Classification raises problems from time to time but it is the best way of proceeding.
  I counsel the noble Lord: get information by all means but it is not a subject which lends itself to clear views at the end of any analysis. No one will ever be able to say that one kind of film causes violence and that another does not. The two young prisoners in Feltham taught me a lesson the other day. People with good intentions have driven two people to crime.
  Lord Birkett: My Lords, the noble Lord, Lord Merlyn-Rees, has saved me a good deal of time in what I was going to say on the subject simply because he referred to the Video Standards Council. It may be some reassurance to the noble Lord, Lord Elton, that, by and large, in what we think of as public places, the code of practice is strictly followed. That is to say, nothing is on view in video shops in any of the main places which is classified other than U or PG, whether a trailer or a whole film. However, if there are exceptions such as long-distance coaches or hotel lobbies where somehow certain things are getting through the net, they are matters which are a little outside the control of the Video Standards Council. If there are such matters, then I welcome the noble Lord's inquiry of the Government as to whether they will look into the matter because I would be as worried as he is.
  I shall not comment further on the general points which the noble Lord, Lord Elton, put before the House this evening, except to say that I am extremely obliged to him for his courtesy to me and his anxiety for this Bill which I too hope will go through both your Lordships' House and another place. I am much obliged for his consideration.
  Lord McIntosh of Haringey: My Lords, we have had a very interesting Second Reading debate this evening. It was not even a Second Reading debate on this Bill but on the original Video Recordings Bill 1984. My noble friend Lord Merlyn-Rees in particular has raised the issue of the possible effects on people's behaviour of sex and violence on the screen. The noble Lord, Lord Elton, said that he is influenced, but I do not believe that he is influenced to the extent of committing sexual or violent crimes when he sees such behaviour on the screen. I am reminded by my noble friend Lord Merlyn-Rees that President Eisenhower set up a presidential commission on pornography in the late 1950s. Evidence was given which was widely accepted at the time that there was really no identifiable effect of pornography causing sex crimes. It might have had the effect of causing more sex; but sex of itself is not a crime. Another presidential commission was set up which produced the opposite result, confirming the advice given to my noble friend when he was Home Secretary.
  I am worried about the amendment because it is fatally imprecise in a number of ways. It is imprecise

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  in the use of the word "suitable" for a person of a particular age. There are perfectly good definitions of "suitable" both in the Act and in the Bill. The amendment is fatally imprecise when it refers to a "public place". If the noble Lord, Lord Elton, believes that an hotel bedroom is a public place, then I am worried about the intrusion which would be implicit in an amendment of this kind. I am very pleased to note that he is not going to press it.
  Lord Glenarthur: My Lords, I wish very briefly to support my noble friend Lord Elton in his amendment in general terms. I fully understand that it may be difficult to find the correct words. He has hinted that the words which he has found for the amendment are not entirely suitable. The worry which has been expressed in recent weeks about violence and its effect on young children is as widespread, as we all realise. I very much agree with the noble Lord, Lord Merlyn-Rees, that no one can be sure precisely what the effect of violence shown in videos and on television screens can be on children. Material going through the eye as well as through the ear does, I believe we all agree, have a much more subtly pervasive, insidious effect which no one has resolved in terms of understanding from it which aspects are thoroughly detrimental. We are in the position of not knowing how the issue can be proved one way or the other.
  One thing which is almost certain to have a deleterious effect is the much greater number of close-ups of particularly violent issues. The blood and gore which are inevitably seen in some of the films is horrific. I wonder whether the rather more distant shots of less violent crime which leave a certain amount to the imagination, would have rather less effect than some films on those who are continually seeing such films today. Having said that, it is too easy on an aircraft, for example, to be subjected to violence which one had not anticipated from looking at the title and the short description of the film.
  I believe that the practical problems which have been raised in defining what my noble friend seeks to do, and in a watertight way, are very real. I cannot believe that it is beyond the wit of man to devise some kind of amendment which fits my noble friend's anxieties. These are extremely complex issues; but, like my noble friend, I very much hope that my noble friend on the Front Bench, Lord Astor, will be able to offer some hope.
  Viscount Brentford: My Lords, I support my noble friend Lord Elton in his request to the Government to look at this issue. It is important and it is something which needs to be kept continually under review. The noble Lord, Lord Merlyn-Rees, was spot on when he said that it is all a question of attitude. For the two young prisoners the effect was as stated; but for another two, the result might be entirely different. It depends so much on the make-up of the person who is watching television. Therefore, I strongly support the plea of my noble friend Lord Elton.
  Viscount Astor: My Lords, those of your Lordships who attended the Committee stage of this Bill will be
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  familiar with the amendment. As the noble Lord, Lord Birkett, and I explained then, our current laws already adequately regulate the exhibition of films and videos in public places. Your Lordships will recall that in most cases such exhibitions are subject to the controls in the Cinemas Act 1985 which require premises other than private dwellings which are to be used for such exhibitions, to be licensed and permits local authorities to impose restrictions on the age of those who may be admitted.
  Where a public exhibition of a video could take place in circumstances which fell outside the scope of the Cinemas Act 1985, such an exhibition would nevertheless be subject to the provisions of the Indecent Displays (Control) Act 1981 which, subject to a few exceptions, makes it a criminal offence to display indecent matter in a public place or where it can be seen from a public place. Such exhibitions would also be subject to the provisions of the Copyright, Design and Patents Act 1988 which make it an offence to infringe a copyright owner's rights by the unauthorised public exhibition of a film or sound recording.
  The Government are generally satisfied with the present operation of the Cinemas Act—and beyond the extent to which we view the amendments contained in this Bill as necessary—the Video Recordings Act 1984. The Government recognise and indeed share the anxieties of my noble friend Lord Elton about the exposure of young people to unsuitable violent material and the possible effects that such material could have on the young mind. We do not perceive that there is a gap in the law in this area which remains to be filled. We do not have evidence that either of the two Acts are not working; no evidence has been presented to us.
  Of course we shall look to see whether there is any evidence of that. I cannot promise a full review of both Acts to my noble friend. If there were a significant problem justifying legislation—as I said, I am not aware of any wide-scale anxiety on this matter—it would probably be necessary to introduce some specific provisions in a more suitable measure than this present Bill which deals specifically with video recordings. I know that that assurance does not go all the way which my noble friend would wish. As I have said, we shall look to see if there is any evidence, and we shall look closely at any evidence which is presented to us.
  Lord Merlyn-Rees: My Lords, perhaps I may make an offer. The Video Standards Council collects a good deal of information. It is reported to us and to our consultative committee which has the assistance of the Mothers' Union, Church bodies and boys' clubs to call on. We could make that information available to the excellent department at the Home Office. We already have a great deal of what the noble Lord is asking for.
  Lord Elton: My Lords, I am grateful to all noble Lords who have spoken. Perhaps I should start at the beginning and ask the noble Lord, Lord Merlyn-Rees, and, going a bit further on, the noble Lord, Lord McIntosh, to pay attention to a case that is currently

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  being tried and about which we cannot therefore make judgments, but in which it is argued that the people accused of tying a couple together, putting them in a motor car and pushing them over a cliff did so immediately after seeing a film in which a couple were tied together, put in a motor car, and pushed over a cliff. Noble Lords might find that case interesting and the judgement, when it comes, may be relevant, but we shall not know whether the film was a contributory factor until then.
  We dealt with shops last time in Committee. This amendment refers only to "public places", entry to which has been paid for. As to the question of "suitable", I thought that in a probing amendment it was not necessary to state "classified for a different age group" but if I had thought so, I should have come to that on Third Reading. I do not think that a hotel bedroom is a "public place" although surveillance techniques are such nowadays that they may very well soon be classified as such.
  The noble Lord, Lord Merlyn-Rees, said that it was all very difficult, but if one sees one's family standing in front of a building which is about to fall down, one does not say that it is very difficult to see how one can prop it up, one either props it up or takes one's family away from the danger. That is the kind of situation that we are now in. I am therefore most grateful to my noble friend the Minister for saying that he will look for evidence. I am glad that the noble Lord, Lord Merlyn-Rees, will enable some of it to be presented; but I trust that my noble friend will not feel that that exonerates him from further efforts. I trust that it will be a serious search for evidence. If such evidence is forthcoming, I should be glad to share it and wonder whether the noble Lord will then entertain the question of whether legislation is necessary.
  In those circumstances, I am glad to beg leave to withdraw my amendment. Perhaps the noble Lord will write to me if he wishes to amplify what he has already said.
  Amendment, by leave, withdrawn.
  7.30 p.m.
  Clause 1 [Titles to be assigned to video works for identification purposes]:
  Lord Birkett Lord Birkett moved Amendment No. 2:
  Page 1, line 17, leave out ("submitted") and insert ("determined to be suitable").
  The noble Lord said: My Lords, this is a very small and technical amendment. Your Lordships will recall that one of the purposes of this Bill is to establish a unique title to every video work. That title is not merely the title, but also a number. This is to help the giving of evidence in the case of prosecutions which at the moment is immensely complicated and which will be vastly simplified by this small device.
  It is perfectly clear to me that the title must be the title under which the film or video was given its certificate. Indeed, I had thought that my amendment made that clear. At the moment, Clause 1(2) (a) refers to,
  "the title under which the video work was submitted".
  The Marshalled List has a misprint. It states "substituted", but it should read "submitted" because
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  that is how the Bill stands at the moment. I had sought to amend the clause to read "determined to be suitable"—in other words, at the moment that the film gets its certificate. I thought that that achieved my' end rather neatly. I am advised, however, that not all legal opinion agrees with this. Unless your Lordships are wholly and entirely content to take the amendment as it stands, I shall obtain some more legal opinion in support, I hope, of what I am saying. I thought that I would explain the position to your Lordships now even if I have to withdraw the amendment in a moment. I beg to move.
  Viscount Astor: My Lords, it is sensible that classified videos should be assigned a unique title and that this title should consist of the name of the video concerned together with a registration number. I believe that it is also agreed that the name should be that which the film company concerned wishes the video to be known by at the time when the classification certificate comes to be issued and not any earlier, variant or provisional title which may have been changed or corrected.
  Therefore, the question before your Lordships is how that desirable outcome is to be achieved by the wording of the Bill. It may be that the fear which underlies the noble Lords's amendment is that the courts will, for some reason, infer that the word "first" should be inserted before the word "submitted" in the proposed new subsection (1A) (a). However, it is most unlikely that such a construction would be placed on the words.
  I am no expert in technical drafting matters such as this, but I am assured by those who are that the current wording of the Bill achieves exactly what is necessary. I have been referred to the existing Section (4) (3) of the Video Recordings Act 1984 which also speaks of a video work having been submitted in a context. The granting of a right of appeal clearly demands that this should relate to a video work in its final state at the time when the board makes its final decision and not to some preliminary version of the work which may first have been submitted and subsequently altered.
  I hope that that will provide some explanation for the noble Lord, Lord Birkett. I realise that he may have had different legal advice from that which I have received. It is a complicated point. If the noble Lord wishes to write to me with an explanation of his legal advice, I shall certainly look at it before Third Reading. I cannot give any commitment to go any further at the moment because, as I have said, we feel that the current drafting is satisfactory.
  Lord Birkett: My Lords, I am much obliged to the noble Viscount. It may be that I am seeking belt and braces. I should like to give myself the chance to persuade the noble Viscount of my case by Third Reading so, if your Lordships will agree, I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Baroness Fisher of Rednal Baroness Fisher of Rednal moved Amendment No. 3:
  After Clause 5, insert the following new clause:

  Offences due to fault of other person
  After section 15 of the Video Recordings Act 1984 there shall be inserted the following new section—

  Offences due to fault of other person.
  15A. Where the commission by any person of an offence under this Act is due to the act or default of some other person that other person shall be guilty of the offence, and a person may be charged with and convicted of the offence by virtue of this section whether or not proceedings are taken against the first-mentioned person." ")
  The noble Baroness said: My Lords, those of your Lordships who have considered the Bill previously in Committee know that I am the vice-president of the Institute of Trading Standards Administration. I speak on behalf of trading standards officers tonight. Enforcing the Video Recordings Act is but one of the many responsibilities of the officers of the Institute of Trading Standards Administration. I know that there has been long and bitter disappointment at the fact that the proper operation of the controls has been hampered by the shortcomings of the original Act. Trading standards officers have felt all along the line that they face serious difficulties. Therefore, while very much welcoming the Bill introduced by the noble Lord, Lord Birkett, they feel that it needs strengthening by the bypass procedure.
  As noble Lords will know, local trading standards officers and their departments can operate only within their own legal boundaries—that is, within the administrative boundaries of their counties or localities. It is unfortunate that the Minister has not been satisfied that the bypass procedure, which could be used, should be incorporated in this legislation.
  The Minister's reply to me in Committee suggested that if an investigation stretched across many local authority areas and was of sufficient seriousness, he expected the local authority trading standards officers to pass the matter to the police. I suggest to the noble Viscount that the role of the police is to deal with serious crime. I do not know whether the Minister has seen the exhibition which the police mounted in Westminster Hall a week or two ago which showed what I suppose one would call filth of the worst nature over which the police wanted to keep tight control. When I spoke to one of the officers, he did not think that this was a priority for them because they would rather go for what they might call the "hard sell".
  As I have said, the role of the police is to deal with what we call serious crime, and not to deal regularly with potential offences under the Video Recordings Act, as those matters are generally a breakdown of trade in the community and this is an area in which trading standards officers have unparalleled enforcement expertise. Trading standards departments would call upon the assistance of the police if any matter under their investigation was of sufficient seriousness.
  I remind the Minister that there is good co-operation between trading standards departments and the police. They work extremely well together. One would not like to feel that there is any suggestion at all that the trading standards authorities want to take over the role of the police. That is not the
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  intention of the bypass provision. It is no business of trading standards officers to want to encroach upon the real role of the police.
  The measure is designed to make more effective use of the scarce resources available to trading standards departments, the courts and businesses. I am sure that the Minister will echo, as do all Ministers, that local authorities and the courts should watch the money that they spend. The proposed by-pass procedure will be beneficial to trading standards departments, and their local authorities, the courts and businesses. It is not just a matter of saving money, as the by-pass procedure and Amendment No. 3 would enable an authority to tackle the person who knowingly manufactures and supplies misleadingly labelled videos. In other words, it goes to the source of the problem. It is no good concentrating upon the retailer only if unclassified videos are still being produced.
  There was a case within the Coventry administrative area within the past few weeks in which it was found that the videos were classified incorrectly. The charge of misdescription was brought under the Trade Descriptions Act because the videos were misdescribed. Through the Trade Descriptions Act the matter was taken to the source of the problem. That case went through the courts, and was dealt with satisfactorily. The manufacturer paid the penalty. Although the outcome was successful, penalties under the Trade Descriptions Act are much less than under the by-pass procedure proposed. Although matters are being dealt with, the penalties for those breaking the law are not as great as they should be.
  The Minister sent me a four-page letter giving all the reasons why I was not doing the right thing in moving the amendment. Some of what he said was complicated. I have so far looked at five Acts of Parliament and four sections. I was disappointed by the Minister's last page on which he wrote:
  "The Government is far from complacent about the problem of unclassified and under-age video supply. That is why we are supporting the Bill".
  I am supporting the Bill on behalf of trading standards officers. The Minister continued:
  "I hope you will agree that the Bill, as it now stands, achieves a number of useful objectives".
  But now I come to what I felt was disappointing and not complimentary to me. The Minister wrote that,
  "its chance of success should not be placed in doubt by being burdened with unsatisfactory amendments".
  That was nice! I thank the noble Viscount for that. He finishes, "Yours ever". If that is not the way to break up a romance, I do not know what is.
  I was disappointed, because I do not believe that the amendment is unsatisfactory, although the Minister and his officials might think so. The measure proposed by the amendment enjoys the widespread support of the video industry, retailers and enforcement departments. Therefore, it is a little disappointing to find that the Home Office is unable to support a clause which is used by other government departments in a number of pieces of legislation. Although I shall withdraw the amendment, it is a great shame that the otherwise admirable Bill introduced by the noble Lord, Lord Birkett, will fall short in that one respect if it becomes law.
  7.45 p.m.
  Lord Elton: My Lords, I think that the noble Baroness is aware that I am a supporter of her proposal, because I would support anything which makes for the speedy and efficient execution of the law. I believe that it is much more efficient for an authority which discovers an offence in its area to trace it to its source. That may be within the area of a less well-to-do local authority with fewer resources, which may have many other trading standards officers homing in on similar activities in its area. It is right that her amendment should be considered seriously, even though she intends to withdraw it.
  The noble Baroness knows also that I am a fellow vice-president of the Institute of Trading Standards Administrators. In case anyone else should not do so—it should not be left on the record—the House will be aware that neither she, nor any of us, can speak on its behalf. We speak on our own behalf only. I know that your Lordships knew what she meant, but it is important that it should not go on record as us speaking for an interest, but only as informed by it. I am informed by the institute. I take the same view as the noble Baroness, but I speak for myself.
  Baroness Fisher of Rednal: My Lords, I apologise to the noble Lord.
  Lord Birkett: My Lords, I believe that the noble Baroness is well aware that I have a good deal of sympathy with the amendment, because it is known to us at the BBFC that there are traders in this country—distributors mostly—who deliberately flout the present Act by never submitting their videos to us for classification. In some cases that may merely be avoidance, meanness or laziness. In much more important and frequent cases it is because they know full well that if they submitted them they would not receive a certificate. Therefore, there is illegal and potentially dangerous material especially in the present climate—I emphasise the words "dangerous material"—circulating. In some cases there is material which has been cut or altered to achieve a classification which is being put out in the original version with the cuts restored as if we had taken no trouble with it whatsoever.
  Procedures exist already whereby such people can be prosecuted. In many cases they are not. It is not the fault of the trading standards officers who in many cases have discovered and reported upon them. It is because the prosecution mechanism in various parts of the country where such people operate is not being enforced. It does not go into action. If that is the position, and I am advised that it is widespread, there may not be many of what I call the villains of the piece, but the amount of material going around the country is considerable.
  If a by-pass amendment is not deemed legally suitable—if the amendment moved by the noble Baroness is not the right one—but there is a mechanism which already exists that can be invoked, then my question to the Minister is: how do we go about ensuring that it is invoked? If the evil of which I speak can be cured, I shall be happy. Whether it is
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  cured with or without the help of my Bill is of no concern to me. The fact that it is cured is what interests me. It is upon that question that I look to the Government to give me some reassurance.
  Lord McIntosh of Haringey: My Lords, I listened to the debate in Committee; I have read my noble friend's letter to the Minister; I have read the Minister's four-page reply; I have listened to this evening's debate; and I am bound to say that I do not believe the reply given by the Minister so far has addressed the issue raised by my noble friend. She gave a clear example of the case in Coventry where the original supplier was chased from Coventry—if I may put it that way—and caught under the Trade Descriptions Act rather than the Video Recordings Act. She pointed out that the penalties available under the Trade Descriptions Act are less than the penalties available under the Video Recordings Act.
  That was made clear to the Minister when my noble friend wrote to him. If it is the case, why cannot the Video Recordings Act be amended in such a way as to provide the same protection as is provided by the Trades Description Act? I assume that the basic job of trading standards officers is to work in their own areas, but, if in order to work effectively in their own areas they have to go outside them, then surely they should be able to do so. That is what I take to be the purpose of a by-pass amendment. I am not qualified to judge the wording of the amendment. However, I agree with the noble Lord, Lord Birkett, that the Government have an obligation to come back to the House on Third Reading with an amendment which will work and which will address the problem which has been raised.
  Viscount Astor: My Lords, I listened with great care to the arguments put forward by the noble Baroness, Lady Fisher, my noble friend and other noble Lords. I fully accept that the aim of the proponents of this change is to achieve a more effective enforcement of the Video Recordings Act by the trading standards authorities. We all share that aim; indeed, all the provisions in the Bill have that as their objective. However, I must tell the House that the Government remain of the view that the amendment is undesirable in principle and that, for technical legal reasons, it would not work in practice.
  I know that there are varying views about the suitability of the drafting of this amendment in the special context of the Video Recordings Act. I do not think that it would be profitable to enter into a complicated legal debate. However, I would inform your Lordships that since the Committee stage the Government have carefully considered the matter further in the light of what was said then and have taken into account the letters sent by the noble Lord, Lord Birkett, and the noble Baroness, Lady Fisher. We have also discussed the issues again with representatives of the local authority trading standards departments.
  Nothing emerged from that further consideration which would lead us to change our view that while such a bypass provision may well be of value in the Trade Descriptions Act and similar consumer-related

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  legislation it simply will not work in the context of the Video Recordings Act with its very different offence formulations and statutory defences. In short, the amendment would not only fail to achieve its desired results but, because of the doubts which it could well cast on existing aspects of the Act, its effect could be positively harmful. That, I am sure, is something which your Lordships would wish to avoid. For that reason I stated in my letter that the amendment was unsatisfactory: I implied no personal criticism of drafting powers and expertise.
  The Government are not persuaded either that the same objective should be achieved by other means; for instance, a specific provision to the effect that a trading standards officer's powers under the Video Recordings Act in this area are not territorially limited and that magistrates' courts could try offences against the Act committed outside their area. Such a provision would be most unusual and would not be justified in the limited context of Video Recordings Act offences where, for instance, each unlawful act of supply, whether by a wholesaler or a retailer, represents a separate offence which can be investigated and tried in the location where it took place. It is the Government's view that where there is an extended network of supply the appropriate way of investigating it is by close co-operation between differing trading standards authorities.
  The fact that the trading standards officers have shared their anxieties with the noble Baroness indicates the measure of their views about the problem. I am sure, therefore, that they will co-operate closely in the investigations. The police are an enforcement agency for the Video Recordings Act and many cases of unlawful supply will raise issues of obscenity which the police will wish to investigate. Video offences are serious with fines up to £20,000.
  As the noble Baroness said, I wrote to her in detail trying to be helpful and giving her a full explanation of our view. I hope she understands that while we commend her efforts to improve the Bill, admire her persistence and, indeed, have considerable sympathy with her in respect of her anxieties on this issue the Government cannot recommend acceptance of the amendment for the genuine reasons that I have explained tonight.
  Baroness Fisher of Rednal: My Lords, before the noble Viscount sits down, perhaps I may ask that his officers should consider the fact that most of the recordings are made in the London area. Most trading standards authorities in the London area are small local authorities and have little finance. It is usually the case that the larger local authorities in the counties have more resources at their disposal. Although the London authorities would like to help more often than not they are unable financially to pursue many of the cases which are brought to their attention. For that reason, help should be given to the London authorities to enable them to put into effect the provisions we are discussing. I feel sure that local government will not receive any more money, so we shall be back at square one if nothing is done.
  Viscount Astor: My Lords, as I said, we have considered the matter carefully and have had meetings with various people. Of course, finance is always a factor to be taken into account. It is for local authorities and not for the Government to decide the financial resources which their trading standard officers should have. I understand the noble Baroness's anxieties but I hope that I have explained the two separate reasons why the Government cannot agree to her amendment. We greatly sympathise with her anxieties but believe that if and when the Bill becomes an Act trading standards officers will have the advantage of working closely in their investigations, which will be helpful in achieving results.
  Baroness Fisher of Rednal: My Lords, I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Viscount St. Davids: My Lords, I beg to move that the House do now adjourn during pleasure for the few minutes which remain until eight o'clock.
  Moved accordingly, and, on Question, Motion agreed to.
  [The Sitting was suspended from 7.57 to 8 p.m.]

Housing and Urban Development Bill
House again in Committee on Clause 11.
[Amendments Nos. 54 to 56 not moved.]
The Deputy Chairman of Committees (Baroness Cox): I should point out that if Amendment No. 57 is agreed to, I cannot call Amendment No. 58.
[Amendment No. 57 not moved.]
The Earl of Lytton The Earl of Lytton moved Amendment No. 58:
Page 14, line 28, after ("valuation") insert ("in writing").
The noble Earl said: Amendment No. 58 relates to the need for a valuation of the property to be in writing.
This is to do with the notice that the qualifying tenants are obliged to give if they wish to exercise their right to collective enfranchisement. An important part of the notice is the requirement that the qualifying tenants obtain a valuation by a qualified surveyor. However, there appears to be no requirement for that valuation by the surveyor to be in writing. It would generally be considered unsatisfactory for a valuation to be given in a less formal way. If the Bill does not specify that, there is a risk that valuations may be verbal and on a basis which cannot be adequately verified by the other party.
The general rule is that all formal valuations for statutory purposes should be in writing. It is important that this matter should be given further thought. The effective way to ensure that valuations are given adequate consideration by the valuer concerned is to provide that he commits himself to paper. On that basis, there is at least some probability that the quality of the valuation will be governed by the standards set by the professional body to which the valuer belongs. I beg to move.
Lord Coleraine: I accept in principle that anyone who is having a valuation made for these purposes would wish it to be in writing. I have only two points

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to raise. I do not necessarily believe that that should be written on the face of the Bill. The other point is that from the amendment I am not clear to whom the valuation should be given in writing. Is it to be given to all the qualifying tenants or can it be given to one or more of their number on their behalf? I ask that because in a large block of flats, where the various lessees may not even know each other, there may well be a flat under the control of the reversioner which he lets to friends of his or associated companies. It would be a pity if valuations had to be given in writing to all the qualifying tenants.
Baroness Hilton of Eggardon: We support the amendment. We believe that to have the valuation in writing will add to the clarity and provide everyone with a clear understanding of the position.
Lord Strathclyde: I have nothing against the principle behind the amendment. I had assumed that in most cases the tenants would automatically expect the valuer to provide a written report. I know that I should do so were I entering into a transaction on that scale. Therefore, we did not believe it necessary to write on the face of the Bill that there should be a written valuation.
I am not certain that adding those words in writing would achieve very much. For example, a scribbled figure on the back of an envelope would fulfil the intention behind the amendment. In view of what my noble friend Lord Coleraine said, the noble Earl may wish to think again about this matter. However, we have nothing against the principle of the amendment although it may be unnecessarily prescriptive.
Baroness Hollis of Heigham: Does that mean that the Minister is suggesting to the noble Earl that he should withdraw the amendment and that the Government may bring forward an amendment of their own on Report?
Lord Strathclyde: No. I thought that my noble friend Lord Coleraine raised some extremely sensible issues as regards the amendment. I was inviting the noble Earl to think again. If he wishes to bring forward an amendment on Report, he may do so. I am merely saying that I am not against the principle behind the amendment.
Baroness Hollis of Heigham: This is an extremely complex part of the Bill and it is an extremely complex procedure. The Department of the Environment's research on the 1987 Act showed how difficult it was for tenants and leaseholders to operate such clauses. Anything which contributes to clarity and understanding and which gives information to leaseholders on which they can consult their solicitors must, prima facie, be good. I hope that the Minister will look again at this matter to see whether we can strengthen the position of leaseholders vis-à-vis the law.
Lord Strathclyde: I believe that the noble Baroness is taking this matter too far. We are not against the principle of the amendment. We do not believe that it is necessary or we should have written it on the face of the Bill. My noble friend Lord Coleraine indicated
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why the amendment probably would not work. I too have indicated that we do not believe that it will help. I should be interested to hear what the noble Earl wishes to say. I shall not bring forward an amendment on Report, but if the noble Earl wishes to do so, that is a matter for him.
The Earl of Lytton: I assure the noble Baroness, Lady Hollis of Heigham, that I shall give further consideration to this matter because I know that the Royal Institution of Chartered Surveyors feels quite strongly about it. There are fairly set-piece routines for dealing with valuations relating to statutory purposes.
I have taken note of what the noble Lord, Lord Coleraine, said. I accept that to include such a provision may cause other complications which I must consider further. I thank the Minister for his helpful noises and, on the basis of what he said, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 11 agreed to.
Schedule 3 [The initial notice: supplementary provisions]:
[Amendments Nos. 59 to 59C not moved.]
Viscount Goschen Viscount Goschen moved Amendment No. 60:
Page 176, line 42, after ("every") insert ("other").
The noble Viscount said: This is a purely technical drafting amendment. Paragraph 12 of Schedule 3 requires the participating tenants to give a copy of the initial notice to the reversioner and:
"to every person known or believed by them to be a relevant landlord".
It would be more accurate to refer to "every other person" who is a relevant landlord, so as to make it clear that it is not necessary to give a copy to the reversioner who will have received one already. The amendment achieves that effect. I beg to move.
On Question, amendment agreed to.
Lord Coleraine Lord Coleraine moved Amendment No. 61:
Page 178, line 11, leave out ("or").
The noble Lord said: In speaking to this amendment I shall speak also to Amendments Nos. 62 and 80. Clause 17 sets out the reversioner's right to require the nominee purchaser to prove the title of the participating tenants to their flats within a period of 21 days. If a nominee fails to comply with any such requirement within the 21 days, the initial notice will be deemed to have been withdrawn and the whole enfranchisement will abort.
I should say immediately that in any well organised enfranchisement the 21-day period should present no problem because among the many steps which the proposed participating tenants will be advised to take before they set out on their perilous journey—and I say "perilous" advisedly because the Bill sets many shoals in their way—will be the necessity to have their leasehold titles examined and approved to the satisfaction of the solicitor who is to act for them in the enfranchisement. It may be that one of the leases turns out defective. There may nevertheless be more than enough participating tenants left with good and properly deduced titles for the enfranchisement to have gone ahead initially without the participation of

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the tenant whose lease was defective. For example, in a case of 100 flats, all qualifying and 90 participating, it would seem unfair to penalise the lot just for one bad title when all that enfranchisement required in the first place was only 67 participating tenants.
These amendments provide that in such cases one bad apple will not spoil the pile. There may be some looseness about the drafting of the amendments; but I think that the intention is clear: that so long as the nominee purchaser has deduced titles amounting in all to the titles of two-thirds of the qualifying tenants in the block, his failure successfully to deduce one or more of the titles of the remaining participating tenants will not result in a deemed withdrawal. I beg to move.
Lord Rodger of Earlsferry: As my noble friend Lord Coleraine has said, Amendment No. 62 is technically defective because under Clause 17(1) it is the nominee purchaser who must deduce title while the amendment refers to the qualifying tenant. I do not wish to stand on the technicality of the matter. My noble friend has raised an important matter of substance. We should like to consider the matter further. If my noble friend will withdraw the amendment, we shall consider the matter further, and I shall write to him once we have done that.
Lord Coleraine: I am glad to hear that my noble and learned friend will write to me on this matter. I take it that if he finds on close examination there is substance to this matter, the Government will be prepared to bring forward a suitable amendment.
Lord Rodger of Earlsferry: That goes without saying.
Lord Coleraine: On that basis, I am delighted to withdraw the amendment. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 62 not moved.]
Schedule 3, as amended, agreed to.
Clause 12 [The participating tenants]:
8.15 p.m.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 63:
Page 16, line 24, leave out from ("acquisition") to ("and") in line 25.
The noble Baroness said: In moving Amendment No. 63, I wish to speak also to Amendments Nos. 64, 65 and 74. As we said in an earlier debate on Amendment No. 53 standing in the name of the noble Earl, Lord Lytton, there is a sequence of amendments about so-called latecomers to enfranchisement. His amendment sought to give all qualifying tenants the right to know about enfranchisement. I hope the noble Earl will come back to that amendment given the degree of support it received in the Chamber when it was moved. It was clear that for someone not to have a right to know about enfranchisement offends natural justice.
Amendment No. 63 together with Amendments Nos. 64 and 65 addresses a somewhat different issue.
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If the Committee were minded to accept Amendment No. 63, it would allow a qualifying tenant subsequently to join participating tenants in determining who shall be the nominee purchaser to whom the freedom of the block would be sold. Amendment No. 71 deals with a situation where tenants subsequently become qualifying tenants after enfranchisement has taken place. Amendments Nos. 63, 64 and 65 would allow tenants to join in at the stage of becoming participating tenants. Participating tenants determine the nominee purchaser. They are the original two-thirds of qualifying tenants who trigger the Section 11 notice.
Under the Bill as it stands at present, unless the Committee was minded to accept this amendment, subsequent qualifying tenants could only join in the process of enfranchisement if they have the agreement of all the original participating tenants. That is the issue we seek to address in this amendment. We believe that that agreement should not be unreasonably withheld. It may be that one, two or three tenants in a block of 15 or 20 people decide that it might be desirable to exercise enfranchisement. They would approach the landlord to seek a list of qualifying tenants. They would then start to canvass the tenants. When they hit their two-thirds majority they could serve a Section 11 notice which would be the first formal stage of the process. At that point some tenants in the block may have remained uncanvassed for whatever reason. They could be sick in hospital, working abroad or be on an extended holiday. They may even be simply unpopular and be the victims of some blackballing.
From that stage on, even though someone is a qualifying tenant, if he did not take part in the setting up of the original Section 11 notice as a participating tenant, he can only subsequently join in the process of enfranchisement with the agreement of all the original signatories. We believe that is harsh. We believe that agreement should not be unreasonably withheld and we believe someone should be able to join in at a fairly early stage in the process and thus take his share of the financial cost.
Given that this seems so reasonable, why did the Government resist this amendment in another place? As I understand it, the Government fear that if qualifying tenants can join in at a later stage they will do so rather than join in at the commencement of the procedure thus making the procedure itself less likely to succeed. I believe that is the Government's case. I ask the Government whether that is reasonable. I agree that the probability is not all that high that the situation will arise simply because most people will want to share the costs on as broad a financial basis as possible. However, it seems to me there may be cases where someone is sick or abroad; and, above all, there may be cases where there is an unpopular tenant whom others seek to marginalise. As a result, those tenants can neither come into enfranchisement nor subsequently, I believe, extend their lease. They will be stranded because they will not have been part of an original Section 11 notice and they would not necessarily even have known about it given that the Government were minded to reject the amendment of

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the noble Earl, Lord Lytton. Therefore in common fairness and in common justice everyone should know and everyone should have the right to participate, sharing equally the costs and the risks. I beg to move.
The Deputy Chairman of Committees: I should point out that if this amendment is agreed to, I cannot call Amendment No. 64 because of pre-emption.
Lord Coleraine: I speak to Amendment No. 64 in the group that we are discussing. That amendment stands in my name. The noble Baroness has made an important point. However, I believe we are not just considering the odd tenant who happens to be away on holiday, or is sick or abroad. The noble Baroness was a little optimistic in thinking this is just a question of preparing a notice and canvassing tenants until one obtains two-thirds of the signatories. Quite frankly, the procedures in any normal case of enfranchisement will take many months of hard work. In that time those who are organising the enfranchisement will make certain that the absent tenants are contacted and are brought into the process or left out of it as the case may be. The problem which the amendments of the noble Baroness and my amendment highlight is the position of those who do not get on with their neighbours and who may well be left out of enfranchisement with—the noble Baroness mentioned this—no rights to an extended lease if the enfranchisement goes ahead.
My amendment provides for the majority consent to be obtained rather than that of all the participating tenants which is the provision in the Bill. The majority consent would be needed before someone who had not originally participated is brought into the process. My amendment indicates no disagreement with the amendments tabled by the noble Baroness; it is merely intended to reflect the fairly fine point suggested to me by the Law Society working party; namely, that it is grotesque that unanimity, which may mean 200 people out of 200, should be required when the consequences are so dire if the request to join in is not accepted.
We are now discussing Clause 12 which is just about the only clause in the Bill which attempts to deal with the problems that arise between tenants. I sympathise with the amendments of the noble Baroness; but I suggest one objection which may be made. I do not wish to double-guess the Minister but anyone ought to see that one response of government might be that there must be unanimity to make it compelling on everyone to come in at the beginning. The Government are rather keen that everyone should join a collective enfranchisement and not stay out. Perhaps the sanction that the Government have in mind, in having unanimity, is that one should know in advance that if one does not come in one is out for ever. I do not go along with that, as the Committee knows.
There is one difficulty that I see in the amendment tabled by the noble Baroness. We want as many people as possible to come in at the beginning because it would be undesirable for potential participating tenants to stand on the sidelines and see which way the wind is blowing before they eventually make a
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decision. It is not that they would not have to pay their proportion of the costs if the enfranchisement went ahead, I am sure that arrangements would be such that they would have to pay their proportion of the costs. However, I am worried about the position of an abortive enfranchisement. A lot of money would be spent and eventually the participating tenants would decide that they could not go ahead. The person who had been standing on the sidelines would be able to say, "Heads I win, tails you lose" and he would benefit. Thus, on principle it is desirable that everyone should come in at the beginning. I do not believe that anyone should have the absolute right to come in at any time. The Law Society proposal that someone should be allowed in on a majority vote is reasonable.
The Earl of Lytton: I wish to address my remarks to Amendment No. 74 in my name. First, I should like to say how much I identify with the fundamentals of the sentiments expressed by the noble Baroness, Lady Hollis, and to assure her that the earlier amendment which I moved is certainly not forgotten. We shall come back to it, perhaps with her help, in a slightly different form at a later stage.
Amendment No. 74 sets out to provide a safety net for those tenants who are unable or unwilling to participate in the acquisition of the freehold, although they are qualifying occupiers for the purposes of the Bill. For all the reasons that have been expressed by the noble Baroness and the noble Lord, Lord Coleraine, there may well be people who are not able to proceed with the new enfranchisement at a given moment. It seems to me that the qualifying tenants should have an absolute entitlement ultimately to join in the freehold ownership. I am very much against that freehold ownership being separated and severed from the occupation of the building. I keep going on about it and I make no apology for doing so, there must be convergence of occupation and ownership—I cannot stress that too strongly—if the Bill is really to perform the functions of social justice that it sets out to perform.
As the Bill stands, if a block of flats is enfranchised and the qualifiers decide not to participate, they will be completely left out in the cold. As I understand it, there will be no facility for them to come back in again at all. That means that certain leaseholders have just one opportunity to join the scheme of enfranchisement. I cannot believe that it is the intention of the Government that those people who, for whatever reason, fall through the net the first time round, should be left out permanently. It would be a source of ferment, giving a sense of lasting injustice if the system allowed that to happen. In speaking to Amendment No. 74, I also associate myself very much with the other amendments that have been moved.
Lord Coleraine: The noble Earl talked about what happens after completion of an enfranchisement. If one assumes that the Government's response will be, "You must go into enfranchisement now, you cannot have it afterwards", will the noble Earl agree that this is another reason for making the leasehold extension option available for those who do not join in enfranchisements?
The Earl of Lytton: I entirely agree with that. My name is on a later amendment to provide for lease extension as the obvious fallback alternative. I believe that the noble Lord, Lord Coleraine, has made a very valid point.
Lord Strathclyde: The amendments of the noble Baroness, Lady Hollis, and my noble friend Lord Coleraine would allow a qualifying tenant who had not participated in giving the initial notice but who then wished to become a participating tenant to do so either without the agreement of any of the other participating tenants or only with the agreement of a majority. The amendment of the noble Earl, Lord Lytton, would give a statutory right to qualifying tenants to purchase a stake in the freehold after enfranchisement.
I am sorry to say that I did not feel that the noble Baroness had made her case. I believe that the amendments would actually work against enfranchisement. That was understood by my noble friend Lord Coleraine who, I thought, made a good argument against all the amendments. They appear to offer tenants a guaranteed way of joining in after the initial notice, or of obtaining a stake in the freehold after enfranchisement. In practice what could happen is that many qualifying tenants will not bother to put their names down on the initial notice, in the knowledge that they can join in later if they wish, and the requisite majority will therefore be harder to obtain.
The amendments would permit any tenant who has bought the lease of a qualifying but non-participating tenant since the initial notice was given, or any qualifying tenants who decided not to participate at the outset, to become participating tenants at any time. Any agreements between the tenants, such as the apportionment between them of the costs of enfranchisement, would continually have to be revised as they would need to establish on what terms the new participating tenants were to join in. I do not consider it would be fair to the existing participating tenants to allow others to join in on indeterminate terms and continually disturb their arrangements in that way.
As we have already discussed, qualifying tenants have ample opportunity to participate. Participation involves agreeing to the buy out and being prepared to risk liability for the landlord's costs if the bid fails. It does not necessarily involve a financial stake. That is very much a matter for the tenants to resolve, with their advisers if appropriate. If they wish to make deals among themselves in order to get uncommitted tenants to join in, that is their business. If they wish to incorporate a structural link between their individual lease interests and their stake in the freehold, they should be free to do so. I do not think it is any business of the law to interfere.
The position of tenants who choose not to participate is safeguarded. Their leases remain intact, and all that happens is that their landlord changes identity. The amendment of the noble Earl, Lord Lytton, is also unhelpful in that it would in effect force the participating tenants to use the company format for their nominee purchaser, thus losing the flexibility of other structures.
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I must ask the rather obvious question: what advantage could there possibly be to a non-participating tenant if he did have a right to buy a share of the freehold at a later date? If he cannot join in by agreement, he is obviously not going to be welcome. He will not be able to contribute anything to the smooth running of the block. Neither would there be a personal financial gain from a stake in the freehold. The right of enfranchisement under the amendment still attaches to his lease, so its saleability would not be affected.
I am sorry to say that I see no merit in the amendments; in fact, I think that they are positively detrimental. Therefore, I ask noble Lords to withdraw them.
Lord Coleraine: I wonder whether my noble friend can say why he thinks that unanimity among the participating tenants should permit someone to come in. It is a matter for the participating tenants to decide. I do not believe it is for the Government to say, "You may not allow people into your enfranchisement once it has started, unless you give unanimous consent". If my noble friend does not like the normal majority, would he consider three-quarters or two-thirds? To demand unanimity seems rather illogical.
Lord Strathclyde: My noble friend can draw the line wherever he wishes. We feel that the best way must be for everyone who has participated in the action to decide unanimously whether anyone else should join in. I made the point in the previous amendment that it must be in the interests of the new freeholders to extend the ability to enfranchise to as many tenants as possible. My noble friend and the noble Baroness have to make a case for reducing the level of unanimity, and I do not think that that case has been made.
8.30 p.m.
Baroness Hollis of Heigham: Will the Minister give us some guidance? Let us consider a situation where a qualifying tenant knew of the effort to enfranchise but had recently lost his job, and therefore felt that his financial circumstances were such that he could not embrace the additional cost of enfranchisement that is, a Section 11 notice. Before it has gone very far he is fortunate enough to find work and his financial circumstances are now secure, but it is too late for him to become a participating tenant except with unanimity. He cannot, because he is a qualifying tenant, extend his lease. Because, therefore, for a period of six weeks, or eight weeks, or three months he was unemployed and thought it imprudent to extend his financial risk, he is permanently disqualified from the right that everybody else in that block will enjoy. Would the Minister help me understand what he should do in that situation.
Lord Strathclyde: Unfortunately the noble Baroness has misunderstood. He is not excluded from enfranchisement. There is nothing in this Bill that excludes him from enfranchising. But he has to get the agreement of his fellow tenants. Why should he not? That must be right. It is entirely fair.
Baroness Hollis of Heigham: I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 64 to 66A not moved.]
Clause 12 agreed to.
Clause 13 [The nominee purchaser: appointment and replacement]:
The Earl of Lytton The Earl of Lytton had given notice of his intention to move Amendment No. 67:
Page 18, line 11, at end insert:
("() When the nominee purchaser has acquired, on behalf of participating tenants, such freehold and other interests specified in subsection (1), he shall convey those interests to the participating tenants.").
The noble Earl said: This amendment has already been spoken to. It is not moved.
[Amendment No. 67 not moved.]
[Amendment No. 68 had been withdrawn from the Marshalled List.]
[Amendments Nos. 69 and 70 not moved.]
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 71:
Page 20, line 13, at end insert:
("(13) The Secretary of State may make regulations for requiring the nominee purchaser—

(a) in such circumstances as may be prescribed by the regulations, and

(b) subject to and in accordance with the regulations to be a body corporate which conforms to such other requirements as are prescribed in the regulations.

(14) Without prejudice to the generality of subsection (13) above, the regulations may in particular make provision—

(a) requiring that, under prescribed circumstances, the nominee purchaser shall be a body registered under the Industrial and Provident Societies Act 1965 or the Companies Act 1985;

(b) requiring that a relevant qualifying tenant be granted a shareholding or other relevant interest in the nominee purchaser, and specifying any terms, including financial terms, on which such an interest shall be granted.

(15) Regulations under this section—

(a) may make different provisions with respect to different descriptions of case, and

(b) shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

(16) In this section, a "relevant qualifying tenant" means a qualifying tenant of a flat in premises in relation to which the right to collective enfranchisement has been exercised, and who is not—

(a) a tenant who was a participating tenant in that exercise of the right to collective enfranchisement; or

(b) disqualified from being a participating tenant by virtue of Part I of Schedule 3.").

The noble Baroness said: This is the third in this group of amendments about latecomers to enfranchisement. We are not dealing now with the right to be informed, the right to join in as a participating tenant, or subsequent to Section 11. This is a different situation. Whereas Amendments Nos. 63 and 65 dealt with the relatively short term—that is, a qualifying tenant becoming a participating tenant—here in Amendment No. 71 we try to take up a different situation. It is still a latecomers' situation, but enfranchisement has already taken place. Therefore, other residents in that block, other leaseholders, no longer have a right to an extension of their lease, and may not have a right to enfranchisement.
Who are we talking about? Who are we seeking to bring within the framework of enfranchisement by producing a legal structure in advance of common-hold, which would make that process straightforward and simple? It could be, for example, council tenants who, at the time of enfranchisement, were not qualifying tenants. Since then they may have exercised their right to buy. They may now be effectively leaseholders of the new landlord, and would like to become freeholders in their own right. It could be an elderly tenant. At the time of enfranchisement he did not wish for the extra worry, money and cost, but he has subsequently sold the remains of the lease with perhaps 60 or 70 years to run. Somebody has bought it, and with others in the block would like to become a freeholder. As I understand it, they have no route to do so.
It might be somebody who was unemployed or redundant at the time, but who subsequently found work and would like to enjoy the same rights as others. We are talking about when enfranchisement has taken place. All these seem to be legitimate cases not of people who stood aside because they were not willing to undertake the financial risk at the beginning, but of people whose circumstances have changed and who now wish to join collectively in the new freehold arrangements.
This amendment, I have to accept, is not as good as one would wish because we do not have commonhold on the books. It is an attempt to overcome some of the discussions entered into in another place as to how best to allow latecomers to buy into enfranchisement when their circumstances have genuinely changed, such as the unemployed, council tenants, or the new incoming leaseholder. This amendment would give the Secretary of State powers to make regulations in advance of commonhold for the construction of an appropriate body corporate framework into which latecomers may buy in.
It is more widely drawn than the proposals put in another place which prescribed a company limited by guarantee. It would allow the Secretary of State the flexibility to determine different forms for different cases where it is a small block, etc. It would avoid the necessity of filing accounts when one has only a handful. But it would recognise the fact that flats as a tenure are marked by rapid turnover and rapid changes in people's ability to buy into enfranchisement.
If the Minister believes, as I am sure he does, in the Government's policy to extend enfranchisement as widely as possible, then the Government in some way or other must address this problem of latecomers to enfranchisement. I refer not only to the right to know, not only at the stage of circulating or signing the Section 11 notice, but later when people's circumstances have changed, if they are not always and permanently to be stranded; neither enfranchised nor extended, but stranded.
If the Government cannot accept this amendment I hope that they will promise to come back with amendments which will address this problem of latecomers to enfranchisement who morally, as well as

1305
in every other way, ought to have the right to be able to enfranchise as others have in the past. I beg to move.
Lord Strathclyde: These amendments are rather sinister. What the noble Baroness wishes to do in this amendment is to give the Secretary of State an ongoing right to interfere in the legitimate arrangements made by leaseholders as regards enfranchising and, in their post-enfranchisement, ownership of the block. First of all, the amendment would allow the Secretary of State to dictate that the nominee purchaser must be a company in certain circumstances.
We have deliberately allowed leaseholders total flexibility in choosing the nominee purchaser. In many circumstances a company in which the leaseholders have shares may be appropriate. However, in a small block the tenants may prefer to own the freehold as joint tenants. It may be that leaseholders cannot afford to own the freehold themselves, or do not wish to do so. In that case it should be open to them to choose a third party freeholder.
I do not consider that the Secretary of State should in any circumstances be able to take away this decision from the leaseholders themselves. But the strangest part of this amendment would enable the Secretary of State, as I understand it, to insist that a non-participating tenant be allowed to have a share in the freehold company. Much has been said here and in another place about interference in property contracts, but I am sure that noble Lords would not support an ongoing power for the Secretary of State, even with parliamentary permission, to impose additional owners on a group of freeholders. Nor is it likely that relationships in a block after such an imposition could possibly lead to a successful company and successful management of the block.
What our provisions do in this Bill is to give leaseholders the right to control their own property and to choose the means of that control. I can see no justification whatever to give the Secretary of State draconian ongoing powers to interfere in choice. I hope that after that the noble Baroness will withdraw her amendment.
Baroness Hollis of Heigham: I take the point about the Secretary of State's powers. I spent a long time in the Chamber trying to fight the Secretary of State's powers. However, the amendment is a well-meaning effort to try to address the problem which the Minister wilfully refuses to recognise exists. I use the word "wilfully" because he knows, as everyone else in the Chamber knows, that there is a genuine problem when people are denied the right to enfranchisement at a later stage.
Let us take an example of a block of 12 flats, all of which qualify for enfranchisement, and eight have enfranchised. Therefore the remaining four now have a new landlord. Those four include one unemployed tenant, one person whose marriage has broken up and two elderly tenants. In the course of the next two years or so, all those flats are sold to other tenants who now have a lease of 60 years, or whatever. However, they
1306
have no right to extend the lease. They have no right to join in the enfranchisement. Those tenants alone are sitting on a diminishing asset with a landlord other than the original landlord of the property. It surely cannot be reasonable to exclude those four new tenants out of the 12—we know that occupation of flats changes quite rapidly—from the right to enfranchise or to extend in perpetuity. I say "in perpetuity" but it is at least until commonhold comes into effect and the Government change their mind on many of the issues.
Before I decide what to do with the amendment, will the Minister please tell me what those people are to do in that situation? It is reasonable for them to wish to join in the enfranchisement. They could not be participating tenants for many good reasons such as finance or because they were not themselves the owners of the leasehold at the time. What should they do? Why should they and they alone be stranded, unable to extend the lease, with a deteriorating asset, having acquired a new landlord and with no right to join in the freehold?
Lord Strathclyde: The noble Baroness paints a rather bleak picture. In the first instance there may be some good reason why the non-participating tenants do not wish to participate in purchasing the freehold. That is entirely legitimate. Under the noble Baroness's example, two things have to happen. First, the non-participant tenants have to change or the tenancy changes hands. Secondly, the existing freeholders refuse to allow those new tenants to buy into the freehold. I believe that to be unlikely. However, I accept the point that the noble Baroness makes: that if the new freeholders decide that those non-participating tenants should not play a part in the freehold, there is not much that they can do about it. However, the purpose of the Bill is to extend the ability of leasehold enfranchisement considerably more than is possible at present. Therefore it is not the case that we are not helping an enormous number of tenants by the Bill. Quite clearly, we are. The noble Baroness refers to a small number of tenants who would not be able to enfranchise.
There is an added point. On the example that the noble Baroness used of 12 flats, the four new tenants would have to get a twelfth of the tenants to go through the process again. In that instance, they would have the right to enfranchise again under the provisions in the Bill. Therefore those four would have to provide a new two-thirds majority of all qualifying tenants to be able to enfranchise. Is that helpful to the noble Baroness?
I think that I was wrong in saying earlier that the tenants would not be able to enfranchise. They would be able to enfranchise but only if they managed to achieve a new two-thirds majority of qualifying tenants.
8.45 p.m.
Baroness Hollis of Heigham: I thank the Minister for that additional response. Obviously we shall reconsider the amendment. However, I wish to be sure that the original leaseholders can enforce their right to

1307
enfranchise against the original landlord; and that the same right to enforce the right to enfranchise against the new landlord is not lost under the Bill. If I have the Minister's assurance to that effect, I shall take away the amendment, and read what he has said. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 13 agreed to.
Clause 14 [The nominee purchaser: retirement or death]:
[Amendments Nos. 72 and 73 not moved.]
Clause 14 agreed to.
The Earl of Lytton The Earl of Lytton had given notice of his intention to move Amendment No. 74:
After Clause 14, insert the following new clause:
Lord Rodger of Earlsferry: Perhaps I may deal with the two amendments together as being directed to one point. They are aimed at preventing the reversioner from seeking to use the same grounds again to resist a claim for enfranchisement if those grounds have previously been rejected by the court. The fear is that a reversioner will seek to defeat enfranchisement by repeating again and again the argument which has been rejected until the tenants give up. The amendment would empower the court to direct that the new counter-notice, to be issued when the initial counter-notice is ruled to be of no effect, shall not contain any reasons specified by the court which have previously been rejected.
The amendment is not necessary, since the matters to be provided for in a further counter-notice are more restricted than those which can be included in an original counter-notice. Subsection (5) of Clause 19 has the effect that a counter-notice required to be given by the reversioner must be treated as if it complied with subsection (2) (a) of Clause 18; that is, it assumes that the right to enfranchise is admitted. It may cover only the matters set out in subsections (3) to (5) of Clause 18; that is, detailed proposals on what interests are and are not to be acquired. So the fear that my noble friend has expressed is unfounded and the amendment is not needed.
The further counter-notice must specify all the points being disputed. If they are not agreed the matter will go to the valuation tribunal. There would not, therefore, be an infinite regress of counter-notices. In those circumstances the amendment is not required and I ask my noble friend to withdraw it.
Lord Coleraine: I am grateful to my noble and learned friend for his reply. I am sure that the Law Society will read his detailed comments on the amendment which it asked me to move. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 85 not moved.]
Clause 19 agreed to.
Clause 20 [Tenants' claim liable to be defeated where landlord intends to redevelop]:
Lord Coleraine Lord Coleraine moved Amendment No. 86:
Page 26, line 32, leave out ("five") and insert ("three").
The noble Lord said: Clause 20 allows the reversioner to refuse collective enfranchisement where he intends to redevelop all or a substantial part of the premises. Subsection (2) (a) provides that he may not exercise his right unless,
"two-thirds of all the long leases … are due to terminate within the period of five years"
of the service of the initial notice. Appropriate fraction and length of years are obviously a matter of judgment and balance. However, I am advised by the

1321
Law Society that it considers five years to be too long and that a period of three years would be more reasonable.
The test of intention to develop is more than a mere intention to develop if possible. It involves an element of reasonable certainty about the ability to realise the intention. It would be extremely difficult to achieve that as early as five years before the end of the leases given the time limits attaching to planning conditions.
I have been asked to speak about this provision also by the Enfranchisement League. That is an organisation of many flat owners. It recommends also that the Bill should contain provision requiring the reversioner to satisfy the court under Clause 20(2) that he will be able to regain possession of the leases at the end of their terms. It is likely that the lessees in question will enjoy rights under Part I of the Landlord and Tenant Act 1954. There may well be cases where the reversioner will satisfy the conditions of the clause but he has not the slightest right to obtain possession on redevelopment grounds when leases come to an end. I believe that it would be wrong to refuse collective enfranchisement in such cases.
The amendment before the Committee provides only that the period before the end of leases in which the reversioner may refuse collective enfranchisement is reduced from five to three years. There is no amendment as regards those other matters on the Marshalled List. I beg to move.
Lord Strathclyde: This is another amendment which deals with a matter of balance. We decided that a period of five years is fair to both the long leaseholder and the landlord. There will be a burden of proof on the landlord that he intends to redevelop and he must go to court to obtain an order excluding the block from enfranchisement. Therefore, the court will only grant such an order where it is satisfied that the landlord intends to redevelop and that he requires possession to do so.
Five years gives a landlord a reasonable length of time in which to consider his long-term investment strategy. The Committee will be aware that drawing up plans for a property and obtaining planning permission can be a complicated and long drawn out process. It is in the best interests of the proper management of property to allow landlords to carry out substantial works or to redevelop where buildings are seriously dilapidated.
Therefore, I do not accept the case made by my noble friend. I do not consider that there is merit in reducing the period in which the landlord can apply from five to three years. Very few tenants are affected and they would be well aware of their position. Five years gives a reasonable time to the landlord to make proper proposals for the block. I hope that my noble friend agrees with me.
Lord Coleraine: We shall have to return to this amendment. However, for this evening, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 20 agreed to.
9.45 p.m.
Clause 21 [Applications where terms in dispute or failure to enter contract]:
[Amendments Nos. 87 to 89 not moved.]
Clause 21 agreed to.
Clause 22 [Applications where reversioner fails to give counter-notice or further counter-notice]:
[Amendment No. 90 not moved.]
Lord Peyton of Yeovil: Before we proceed further I should like to make a comment. My noble friend Lord Coleraine has sprinkled the Marshalled List with a number of amendments, not all of which have been very substantial and many of which have not even been moved. He was good enough to tell the Committee earlier today that as regards the amendments he had moved, he had spoken on behalf of the Law Society. In that case the Law Society's contribution has, far from accelerating the progress of the Bill, delayed it. I wonder whether the Law Society would not be well advised to think carefully before it produces such a number of amendments which it is not prepared to have pressed.
Lord Coleraine: If it is not out of order to do so, I should say to my noble friend Lord Peyton that these amendments are of some substance but they are of a technical nature. There have been a considerable number of long debates earlier on during the proceedings both today and last week. They have been matters basically of politics. What we are discussing tonight are matters of detail. This is a highly technical Bill and my noble friend really has no business to suggest that technical amendments should not be moved.
Lord Peyton of Yeovil: My noble friend has not understood me. I never went so far as to make the suggestion that technical amendments should not be moved. I am merely suggesting that to cover the Marshalled List with amendments which, at least on the surface, appear to be spurious is a waste of the Committee's time.
The Deputy Chairman of Committees (Lord Grantchester): This debate is out of order. We must move on to the question of whether Clause 22 should stand part of the Bill.
Clause 22 agreed to.
Schedule 4 agreed to.
Clause 23 [Applications where relevant landlord cannot be found]:
[Amendments Nos. 91 and 92 not moved.]
Lord Coleraine Lord Coleraine moved Amendment No. 93:
Page 30, line 32, at end insert (", he having died, no grant of representation has been obtained or the freehold of the premises has vested in the Crown as bona vacantia, or").
The noble Lord said: This amendment, like some of the other amendments I have spoken to this evening, has been recommended to me by the Law Society. It is a very definite technical amendment. There have been many technical amendments on the Marshalled List this afternoon where I felt it might be possible to speed up the proceedings of the Committee by engaging in negotiations with the department between now and Report. This amendment provides that

1323
where the relevant landlord is dead and no one has approved his will or obtained letters of administration, the participating tenants who wish to serve an initial notice to start the enfranchisement rolling can go to court to obtain the same vesting order as they could obtain if they could not find the relevant landlord. I beg to move.
Lord Rodger of Earlsferry: I can understand the reason for this amendment. I appreciate that the obtaining of a grant of representation can take some time and we would not wish the process of enfranchisement to be delayed unnecessarily. An amendment of this kind which would allow the court to make an order for the freehold and leasehold interest to vest in a nominee would allow the enfranchisement process to continue, despite the fact that the grant had not yet been obtained.
There is a wider issue of the problems of service, where a grant has not been obtained, and we would be prepared to consider it further. I cannot give an undertaking as to precisely what we shall do, but we are prepared to consider the matter further. On that basis, perhaps I may ask my noble friend whether he would withdraw the amendment at this stage.
Lord Coleraine: I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Coleraine Lord Coleraine moved Amendment No. 94:
Page 30, line 33, leave out ("each") and insert ("any").
The noble Lord said: I wish to speak to Amendments Nos. 94 and 96; the latter is consequential. I understand that Amendment No. 97 in the names of the noble Lord, Lord Williams of Elvel, and the noble Baroness, Lady Hollis of Heigham, has been grouped with my amendments.
My Amendment No. 94 is simple. If one wishes to acquire the interests of various landlords under Clause 8(2) and one of them cannot be found, one would expect to be able to make an application for a vesting order under Clause 23(1) in respect of that landlord's interests. The subsection in the Bill appears to provide that all landlords would have to go missing before one can apply, and one has to apply in respect of all of them. That cannot be what is intended, and the amendments make that clear. I beg to move.
Lord Rodger of Earlsferry: My noble friend has tabled these two amendments but I have to say that they contrast starkly with the current drafting of Clause 23 which quite deliberately enables the tenants to pursue this course of action only where each of the landlords cannot be found.
It seems to me that members of the Committee will agree that it would be wrong to deal with a case where one or more—but not all—of the landlords cannot be found, by allowing the participating tenants to seek a vesting order in relation to that landlord's interest. The reason is that in such a situation, it will still be necessary for the participating tenants to give an initial notice to the remaining landlords and for those landlords, through the reversioner, to serve a counter-notice in the usual way.
1324
It would be quite unhelpful to the tenants to require them to seek a vesting order in respect of a missing landlord's interest before the initial notice had been given to the other landlords. It is important and, I think, economical in every way that the process of enfranchisement should occur as one transaction.
It is for that reason that we have provided for missing landlords to be dealt with in a different way in a case where at least one or more of the remaining landlords can be traced and so an initial notice can be given. The participating tenants must apply in that situation for an order dispensing with the need to give the initial notice to the missing landlord. Part II of Schedule 1, and in particular paragraphs 6 and 7 of the schedule, require the reversioner to seek the directions of the court in respect of a missing landlord's interest. This has been carefully drafted so that the interests of the missing landlord are still protected, and the terms of the acquisition in respect of all the interests can be settled at one and the same time. Having regard to the whole scheme of this part of the legislation, these amendments of my noble friend are inappropriate and I would ask him not to pursue them.
Lord Coleraine: That was an interesting reply, the detail of which I do not pretend to comprehend at the moment. I shall read it with interest later. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 95 to 97 not moved.]
Clause 23 agreed to.
Clause 24 [Supplementary provisions relating to vesting orders under section 23(1)]:
[Amendments Nos. 98 to 100 not moved.]
Clause 24 agreed to.
Clause 25 [Withdrawal from acquisition by participating tenants]:
[Amendments Nos. 101 to 103 not moved.]
Clause 25 agreed to.
Clause 26 [Deemed withdrawal of initial notice]:
[Amendments Nos. 103A to 104 not moved.]
[Amendment No. 105 had been withdrawn from the Marshalled List.]
Clause 26 agreed to.
Clause 27 agreed to.
Clause 28 [Determination of price]:
Lord Boardman Lord Boardman moved Amendment No. 105A:
Page 37, line 21, at end insert:
("() to any amount payable to him by virtue of section (Duty of nominee purchaser to disclose existence of agreements affecting specified premises etc.) (2); and").
The noble Lord said: This amendment has been spoken to, and my noble friend expressed his agreement to it. I beg to move.
On Question, amendment agreed to.
[Amendment No. 105 AA not moved.]
Clause 28, as amended, agreed to.
Schedule 5 [Purchase price payable by nominee purchaser]:
Lord Rodger of Earlsferry Lord Rodger of Earlsferry moved Amendment No. 105B
Page 180, line 4, at end insert:

1325
("() Parts II to IV of this Schedule have effect subject to the provisions of Parts V and VI (which relate to interests with negative values).").
The noble and learned Lord said: I speak here to Amendment No. 105B and the other amendments that have been grouped with it. The amendments are technical. The Committee may be relieved that I do not intend to take the Committee through them in great detail. They are designed for a quite specific purpose—to prevent a potential abuse that was drawn to the Government's attention by the Law Society. The abuse was such that it would have allowed landlords to increase the price that tenants will have to pay, and to increase it artificially by the creation of leases with negative values.
Negative value leases occur quite naturally where, for example, the rent which a landlord receives from his tenants does not cover the cost of the rent for which he is liable to a superior landlord. When making calculations for marriage value, we have provided that such leases have a nil value, rather than a negative one. That decision was taken to ensure that no landlord would require to pay the tenants for the enfranchisement. I believe that the Committee will agree that to make any landlord pay his tenants to enfranchise would have been unjust.
Although the decision is just when applied to naturally occurring negative value leases, it allowed a potential abuse. As the Bill stands, unamended, a landlord could at present create a pair of leases, one with a negative value and one above it with an equivalent positive value. Each lease would be valued separately and while the value of the negative lease
1326
would be reduced to nil, the tenant would have to buy out the superior lease which would have a positive value. The overall effect therefore of creating that superior lease with the positive value would be to increase, artificially but perhaps considerably, the price of enfranchisement to tenants.
The solution to that potential abuse has been complex as it was not wished to make landlords pay tenants to enfranchise where genuine negative leases existed. The government amendments will take away the incentive to create those artificial pairs of tenancies by keeping the negative lease value as nil but reducing the superior positive interest by an equivalent amount.
The amendments also provide for cases where there is more than one lease with a negative value and for the distribution of marriage value and compensation. In broad terms, all those will be calculated to ensure that they deter abuse and compensate landlords first with leases which have a positive value.
These are highly technical amendments. It is believed that they will have the effect of cutting off that route to create those pairs of tenancies; and that in this way that potential abuse will be stamped out before it has begun. For that reason, we desire the provisions to enter the Bill at this stage. I beg to move.
On Question, amendment agreed to.
Viscount Goschen: I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.
House adjourned at five minutes past ten o'clock.

Housing and Urban Development Bill

  Entitlement to purchase at a later date
  .—(1) A qualifying tenant who chooses not to participate in the proposed acquisition shall be entitled at a later date to purchase a share in the new owning company.
  (2) Where such a tenant chooses to exercise that right he shall serve a notice at the registered office of the company and, in addition to the purchase price, he shall be liable to pay any costs incurred either by himself or by other occupiers in the relevant premises.
  (3) The purchase price shall be agreed between the parties or, in the event of disagreement, shall be referred for determination to the Leasehold Valuation Tribunal.").
  The noble Earl said: I have already spoken to the amendment. However, I wish to comment on what the Minister said in his response. It seems more appropriate to do so now than on earlier amendments. Part of the problem arises from the Government's insistence on a snapshot approach. It can only be said that it is detrimental to enfranchisement on the strict terms that the Government have set down. I shall return to the matter.
  [Amendment No. 74 not moved.]
  Clause 15 [Access by relevant landlords for valuation purposes]:
  Lord Coleraine Lord Coleraine moved Amendment No. 75:
  Page 22, line 9 leave out ("3") and insert ("10").
  The noble Lord said: In moving Amendment No. 75, I speak also to Amendment No. 76. Clause 15 gives the reversioner, after the initial notice has been served, the right of entry on any part of specified premises. I note that he is allowed to go into the commercial part of the property—it would be his valuer, no doubt—just as the flat owners would have wished to do. That is to enable him to obtain a valuation of the property. The provision states:
  "That right of access shall be exercisable at any reasonable time and on giving not less than 3 days' notice to the occupier".
  With all its experience of such cases and the time limits which are or are not practicable, the Law Society recommends that it is not practicable to make it a possibility that a freeholder will give only three days' written notice. It suggests 10 days. That is the substance of Amendment No. 75. If the provision for three days were to remain in the Bill, and the lessee was not present when the reversioner's valuer came, the reversioner would no doubt use his key, unlock the premises and walk in.
  Amendment No. 76 provides that the notice shall he in writing. I believe that such notice is always
  1308
  provided to be in writing. Perhaps I may have some hope that the Minister will agree on this occasion that the notice should be in writing. I beg to move.
  Baroness Hilton of Eggardon: We support the simple and straightforward amendment. It refers to formal proceedings. It is reasonable that the tenant should be given 10 days' notice and that that notice should be in writing. I do not understand the necessity for haste. Why is it necessary to give only three days' notice? Some civilised degree of preparation might be required for the tenant if he is to have a valuation of his property, not least perhaps in order to tidy the place up.
  They are formal, legal proceedings. It is therefore appropriate that notice should be in writing and not merely a verbal communication. I urge the Minister to accept the simple and straightforward amendment.
  Lord Boardman: In contrast to some of my comments on Law Society amendments, I support my noble friend's amendment. Both amendments are sensible and should be accepted.
  Lord Strathclyde: I was not going to accept either of these amendments; but dealing with the second one first—the requirement for landlords to give their tenants written notice—I have no objection to that. However, the amendment is unnecessary because Clause 88, which relates to notice and makes certain provisions, already requires that all notices under Part I of the Bill should be in writing. Therefore, I do not think this is necessary.
  On the first amendment, requiring 10 days' notice instead of three, my own feeling is that it slows down all the stages which come after the reversioner gives the county notice. As I have explained many times, delay should be in no party's interests, but I can see that ultimately it is a matter of judgment. If the Committee wishes there to be 10 days instead of three, I am not going to object. And, as nobody is going to speak against it, I propose to accept the amendment.
  Lord Coleraine: I am grateful to my noble friend for that sincere and important concession.
  On Question, amendment agreed to.
  [Amendment No. 76 not moved.]
  Clause 15, as amended, agreed to.
  Lord Boardman Lord Boardman moved Amendment No. 76A:
  After Clause 15, insert the following new clause:

  Duty of nominee purchaser to disclose existence of agreements affecting specified premises etc
  .—(1) If at any time during the period beginning with the relevant date and ending with the valuation date for the purposes of Schedule 5—

  (a) there subsists between the nominee purchaser and a person other than a participating tenant any agreement (of whatever nature) providing for the disposal of a relevant interest, or

  (b) if the nominee purchaser is a company, any person other than a participating tenant holds any share in that company by virtue of which a relevant interest may be acquired,

  the existence of that agreement or shareholding shall be notified to the reversioner by the nominee purchaser as soon as possible after the agreement or shareholding is made or established or, if in existence on the relevant date, as soon as possible after that date.
  (2) If—

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  (a) the nominee purchaser is required to give any notification under subsection (1) but fails to do so before the price payable to the reversioner or any other relevant landlord in respect of the acquisition of any interest of his by the nominee purchaser is determined for the purposes of Schedule 5, and

  (b) it may reasonably be assumed that, had the nominee purchaser given the notification, it would have resulted in the price so determined being increased by an amount referable to the existence of any agreement or shareholding falling within subsection (1)(a) or (b),

  the nominee purchaser and the participating tenants shall be jointly and severally liable to pay that amount to the reversioner or (as the case may be) the other relevant landlord.
  (3) In subsection (1)"relevant interest" means any interest in, or in any part of, the specified premises or any property specified in the initial notice under section 11(3) (a)(ii).
  (4) Paragraph (a) of subsection (1) does not, however, apply to an agreement if the only disposal of such an interest for which it provides is one consisting in the creation of an interest by way of security for a loan.").
  The noble Lord said: This amendment amounts to the disclosure of what are called side agreements. The Bill provides that the nominee purchaser who is acting on behalf of the tenants, exercising the right to enfranchise, will pay a purchase price for the freehold based upon the value of the flats of the participating tenants. We may have a discussion as to what that value should be; but there is no doubt that the participating tenants will be able to get their flats at a cheaper price than those paid by the non-participating tenants. As a consequence, the tenants who are participating could suppress the price by limiting the number of qualifying tenants who participate to the minimum number which makes 44.1 per cent.—my noble friend Lord Renton will tell me whether my calculations are not correct—who qualify. They will restrict them to the minimum number required and reach a side agreement with those who wish to buy but who are not necessary in order to achieve the 44 per cent., which will give them a benefit afterwards. The result is that the participating tenants will get the block at a lower price than would otherwise be the case.
  The amendment which I have tabled inhibits the ability of tenants to reach such an agreement by imposing a duty upon them, both upon the nominee purchaser and the participating tenants, to disclose the existence of any such agreement, and then making them liable to the freeholder for any difference in price which results in non-disclosure. If they do not disclose and it is later found that they have not disclosed, they are under that penalty. There is an exception made in the case of loan agreements, quite rightly. In such cases it should not be necessary for them to disclose the terms on which they have raised the finance. Subject to that, I believe the amendment is a necessary one. It may be suggested that I may have a devious mind, but this is certainly a method by which participating tenants could get "on the cheap" the asset by failing to disclose any side agreement they have. I hope that my noble friend will feel able to accept this amendment.
  Lord Strathclyde: On the groupings, this amendment is grouped with several other amendments:
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  105A, 105AA, 108, 148C and 170A. I should like to make sure with the Committee and with my noble friend that it is appropriate that all these amendments should be discussed at once.
  Lord Boardman: The only one standing in my name is 105A, and that is a consequential amendment on Amendment No. 76A.
  Lord Coleraine: I have explained to my noble friend and also to my noble friend the Minister that two of these amendments in the grouping list are in my name. They are Nos. 108 and 148C, but I do not intend to speak to them with this amendment.
  Viscount Dilhorne: I entirely agree with the spirit and intention of this amendment but there are one or two things in it which worry me somewhat. Your Lordships will see from the text that it is not entirely clear that no time limit applies. Subsection (1) says:
  "If at any time during the period beginning with the relevant date and ending with the valuation date … "
  and then you go to the body of the clause below paragraph (b). You will see the words:
  "the existence of that agreement or shareholding shall be notified to the reversioner …".
  Then you get another matter introduced into subsection (2) which says that if—
  "the nominee purchaser is required to give any notification under subsection (1) but fails to do so before the price payable to the reversioner … and … it may reasonably be assumed …".
  Can my noble friend give some further indication as to the extent on which this time limit will apply? It is going to be very difficult to establish that there is a side agreement. There should be a possibility within a greater length of time of going back and saying, "There is this agreement and it should be cut down". It should be cut down after the time ending with the valuation date.
  Subsection (2) does not seem to me to make that abundantly clear, and I think it should.
  Lord Boardman: What I had in mind with this amendment is that any agreement made before the date of valuation is the material one, and of course it should be disclosed before that date. If it is not disclosed and it is subsequently found that there had been a side agreement made before the relevant date, however long afterwards it may be found, then that side agreement should give rise to the purchaser and the participating tenant having to pay the extra sum that they should have paid. That was the intention.
  Lord Finsberg: I speak to the amendment standing in my name, Amendment No. 105AA. At an earlier stage of the Bill when we were talking about valuations, I raised the question of the discount allowed to those tenants buying their own council houses with a particular time limit. I was chided by one Member for saying something that to them was irrelevant; but it links up with the amendment I am now speaking about.
  One of the problems that has come through these debates is the feeling that there is unfairness in the amount of money that an unwilling seller will receive. Nobody can say that it is a willing sale, but that does not matter: that is what the legislation will provide

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  for. Equally, a substantial number of your Lordships have spoken on more than one occasion about windfall gains, and I understand that. I have the privilege of being deputy chairman of the Commission for the New Towns. We have had for many years—long before I joined the Commission—a procedure where, if we grant a lease or sell a property, we retain for a period of up to 20 years what is called a "clawback" so that if the purchaser should get a change of planning permission or any material change, the public purse will get back a percentage of what has been sold.
  That is the purpose behind my amendment, the other way. If there is an unwilling seller, it would be fair that if a sale is made within five years by whoever has purchased the property, a diminishing percentage should be repaid to the original vendor. I have used the words "net profit", and clearly it would be right. In the Bill we call it "marriage value". That is going over and above that in order to cater for the particular problem that has been mentioned frequently about the windfall gain. I appreciate that the amendment is infelicitously worded. I do not expect my noble friend to accept it as it stands. All I do is express the hope that it might perhaps ease some of the anxieties that many Members of the Committee have expressed this evening about what they see to be unfairness in the compensation which an unwilling seller will obtain.
  9 p.m.
  Lord Clark of Kempston: I support my noble friend Lord Finsberg. When the Government introduced the sale of council houses, there was a discount element. If a council tenant sold his house within a certain number of years, part of that discount was repayable to the taxpayer. My noble friend would be well advised to have a look at this matter. There is no question but that if there is a windfall profit to whomsoever it may be because of legislation, that windfall profit should not be allowed to be made in the hands of one person who enjoys the full discount. There should be a clawback. I hope that my noble friend will look at that point.
  Baroness Hollis of Heigham: Perhaps I may say how unhappy we are on this side of the Committee about Amendment No. 105AA, for two reasons. The first is the analogy with discounts on council housing and the sliding scale. My noble friend Lord Williams argued the point earlier and perhaps it is worth reiterating. The analogy is drawn about the repayment because the original price paid was discounted by virtue of long residency. Therefore, there was some qualification for clawback.
  The second example of clawback that I am aware of in local government is when in the past improvement grants have been made and where, for example, somebody has changed tenure; then a percentage may be clawed back to avoid a windfall gain. That is when actual sums of money have been paid from the public purse to a private individual. If the basis of an improvement grant, on which those sums of money
  1312
  were then paid, is not honoured, there is a degree of clawback tapered according to the length of time the person was in residence.
  Those are the two examples I know of clawback through tapering on this analogy. Neither of them applies. The first, on council housing, was on a valuation on a discount on price paid. The second was on a total clawback of public moneys going to a private individual for a purpose which was subsequently changed. Neither of those examples is true here and therefore I would argue on the first point that to make an analogy with council house sales is invalid.
  My second reason for opposing the amendment is that I must ask what we mean by net profit. As I understand it, the enfranchising leaseholder will, first, have bought his or her lease for a tidy sum. Secondly, he will have paid over a sum of money to the freeholder for enfranchisement. Thirdly, he will have split the marriage value—which is the extent to which the sum of the whole is greater than its parts—fifty-fifty, even though many people might regard that marriage value as more properly belonging to the leaseholders as recognition of the declining value of their lease.
  Now it appears that there might be a net profit over and beyond all those three slices of payments. I suggest that if that is indeed the case, it can only reflect rising property values and certainly not in some sense an earned gain which is entitled to go back to the original landlord. If there is a rise in values then it is the leaseholder, who has taken the risk of paying not only for the original lease but for enfranchisement and 50 per cent. of the marriage value, who should enjoy it. It seems to me that the landlord has already been paid three times over. He can surely not be entitled to a fourth payment on something in which he now has no financial interest.
  Lord Finsberg: Before the noble Baroness sits down, I seem to remember certain differences of opinion between the Ministry in which I served and her council over the "right to buy" many years ago. But there is a distinct parallel here. The council tenant purchasing his house at a discount is, in my view, a parallel to the leaseholder getting a property at below market value from an unwilling seller. I am not saying which is right or wrong. I am saying that there is a distinct parallel and I am afraid that I stick to that.
  Lord Coleraine: I hope that my noble friend the Minister will reject the principle behind the amendment which my noble friend Lord Finsberg has proposed. There is no question of the leaseholder buying anything at a discount. The freeholder, if he puts his property on the market, will get a considerably smaller price from putting it on the market than he would get under this Bill when he sells it to his leaseholder. So the argument he puts forward depends on the price not being fair. I submit that in most cases the price is more than fair to the freeholder. He will get more than he would get from anyone else except in a deal arranged in conjunction with his lessee. That is irrespective of whether or not he wishes to do the deal. There may be Members of the

  1313
  Committee who feel that the price is unfair. I think they are very ill advised in doing so. I cannot see that they would be satisfied with anything but the absolute, full marriage value from the lessees.
  Baroness Gardner of Parkes: I think there is a different situation if the freeholder sells at a very reduced price to a tenant. My daughter wanted to acquire a small piece of garden outside her home. She was quoted a price of a good many thousand pounds which she could not afford. The freeholder then came forward. I must pay tribute to it, the John Lyons Trust, which is apparently tied in with Harrow school. The trust came forward and said it understood that she was a young person who would like a little bit of outdoor space. The trust would sell it to her for only £500 instead of £10,000, but if ever the time came when she sold the property on, it would expect to receive a certain percentage. I thought that was very fair. It was giving the equivalent of a huge discount to her and enabling her to have that little garden and enjoy it for many years until the time she sold the property. As the trust said, at that time she would have the money in her pocket and would be able to pay.
  The amendment of my noble friend Lord Finsberg is not parallel. I do not think he suggests any specially reduced price to enable the freeholder later to again have a special increase. It is quite a different situation when one has paid at least 50 per cent. of the marriage value, as suggested in the Bill. One's own capital is then tied into the property and if prices go up or down one carries the profit or loss accordingly. I therefore cannot support the amendment of my noble friend Lord Finsberg.
  Lord Boardman: In trying to move Amendment No. 76A briefly, I obviously did not make clear what I intended. The noble Baroness, Lady Hollis, did not appear to understand my point. The point is that under the Bill the participating tenants must pay part of the marriage value to the freeholder, whether that be a minimum of 50 per cent. or an amount to be negotiated. However, the interest of the qualifying tenants who do not participate, if the block is enfranchised, can be acquired without any marriage value being attached to the price the freeholders receive.
  It is to avoid side agreements being made which would enable participating tenants—the 44 per cent.—to obtain on the cheap the 56 per cent. of the flats which are not being acquired and then make a side agreement with those leaseholders to whom, if they are successful, as they will be under the Bill, they will pay a secret profit. It is that which is mostly unfair to freeholders and which my amendment was intended to obviate.
  Lord Selsdon: It may be something to do with the term "post prandial" but at long last we are getting down to debate and discussion of what might be deemed to be fair and equitable, and much of the tension of opposing sides seems to have disappeared.
  The amendment of my noble friend Lord Boardman is well thought out, although I cannot
  1314
  understand it line by line. The principles of "open book" in situations such as this are healthy and good and have been established in all forms of acquisition throughout time in order to prevent what people may term "concert parties". It is possible, as has happened time and again in the past, that groups of individuals, for whatever motive and normally for profit, take advantage of a situation. For example, one tenant may not be able to afford the cost of enfranchisement and side deals may be done. Those deals are detrimental to the freeholder and possibly also to the other tenants who, in good faith, would be enfranchised.
  I wondered whether there was any precedent for that. By pure chance at dinner I asked the noble Lord, Lord Monson, whether he knew anything about the history of land tenure. He gave me a summary of a note by Savills which said that as a result of a certain unfairness a Court of Chancery was established in the 15th century to establish equitable rules which would not permit any unconscionable injustices to occur in land tenure. If there is no disclosure, an injustice may occur. I therefore support the amendment of my noble friend.
  Lord Monson: I make no comment in regard to Amendment No. 76A in the name of the noble Lord, Lord Boardman. To tell the truth, I find it rather complicated and I suspect that I am not the only Member of the Committee who does so. The noble Lord, Lord Selsdon, indicated as much. On the other hand, I find the amendment of the noble Lord, Lord Finsberg—Amendment No. 105AA—quite admirable in principle even though it may be technically defective in one way or another.
  To the noble Baroness, Lady Hollis, the noble Lord, Lord Coleraine, and the noble Baroness, Lady Gardner, I say this. If there is no profit then there is no clawback. That really answers the question. The profit is not likely to come purely or even mainly from rising property prices, but from the inevitable profit that will occur as a result of the leaseholder having to pay only 50 per cent. of the marriage value—if 50 per cent. is the figure agreed upon. Once the enfranchisement has taken place, he can immediately sell on at a profit which has variously been put at somewhere between 14 per cent. and 18 per cent. That would be irrespective of any rise in the general market value there may be. It is quite equitable that if somebody resells in a short space of time they should repay a proportion of the original sum.
  The Earl of Lytton: I want to see whether I can throw a little light on the particular reference to the amendment moved by the noble Lord, Lord Finsberg. We are dealing mainly with urban properties. One of the characteristics of that is high turnover, alteration over time and the leftover parcels of land that may represent some future prospect. I can well understand the nervousness, when enfranchisement processes take place, to absorb all those little bits and pieces, all those chances, all those avenues for exploitation.
  In compulsory purchase law, as the Minister will undoubtedly be aware, there are precedents for that type of thing, most recently incorporated into the

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  Planning and Compensation Act. Under the Act an acquiring authority invariably acquires a current use value. There is a provision whereby, if an authority sells within 10 years for a use where planning consent has been obtained and a much more substantial figure on resale is achieved, there may be a clawback. One matter that was in the back of the minds of Members of both Houses when that measure was being considered was the business of the Department of Transport selling-off roadside sites for motorway service areas having acquired them at agricultural land values from the riparian owner.
  It seems to me that we have here to consider some very fundamental principles. Marriage value contains a number of different factors. First, there is the straightforward amalgamation on a current use value basis of a freehold and a leasehold. That in itself may produce marriage value. But there are other aspects, including development rights. It is well known that some urban properties have general development order and other rights for extensions which at the time of enfranchisement may not have received planning consent although there may be the realistic prospect by precedent or other factors of getting it in the fullness of time. It is there where I feel that there is a certain degree of justifiable nervousness among freeholders about this artificially-created market—I am particularly referring to flats—in circumstances where no real market for freehold flats has actually existed in the past and where a leasehold valuation tribunal will be faced with effectively creating its own market.
  There are other circumstances where this has happened in the past, but it seems to me that the Minister should look carefully at what is intended to be transferred. If it is a right in a dwellinghouse and a roof over the head of the tenant, the security of either lease extension or the control over that and management through the medium of enfranchisement, that is the point at which the valuation which has to be fixed at a moment of time for existing use purposes can legitimately be said to be set in tablets of stone. It is what happens thereafter that is the undervalued prospect. That is something to which the Government should seriously address their attention. There are precedents. There are precedents in compulsory purchase law. It is a point that needs to be looked at further.
  9.15 p.m.
  Lord Coleraine: I should like to address briefly the amendment of my noble friend Lord Boardman. He consistently asks that the price paid by flat owners should be ratcheted upwards. On this occasion I have to tell him that I think that the point he makes is a fair one. Nevertheless, I do not believe that his approach to it is the right one. I do not see that it is right to involve flat owners in having to disclose all their negotiating positions to their reversioners. I do not think that one can talk in terms of concert parties. The flat owners should be entitled to arrange their affairs to the best of their ability in order to do as good a deal as possible with the reversioner. In the case of chattels,
  1316
  I think that there are statutory prohibitions on doing this kind of thing. But this certainly does not apply to land and interest in land so far as I am aware.
  To try to get the kind of provision that my noble friend is thinking about reduced to suitable legislative form will call for a schedule of intense complexity. That will add one more difficulty in the way of lessees seeking to enfranchise and will add yet one more artificiality to the whole scheme of valuation which runs through the Bill and to which we shall come when we get down to discussing Schedule 5. In my view the correct way to get through this problem is for the Government to take away Schedule 5 and to start again with a commitment to try to come back with a formula which will leave it to the leasehold valuation tribunals to fix the price to be paid for the whole block on the assumption of a sale by a willing seller and with any appropriate valuation assumptions. That is how this kind of matter has been dealt with in previous legislation. It is how it should be done here because we have a whole series of totally artificial valuation methods being used. My noble friend's amendment would only add one more to them.
  Lord Strathclyde: I am glad that we have had this debate because it deals with a most important issue which my noble friend Lord Boardman has raised. This is the calculation of an element of landlord's interest known as "hope value". I understand the anxieties of my noble friends and I have some sympathy with them. The landlord will receive marriage value only on the flats of tenants who participated in giving the initial notice. So I feel that there is some justification in the argument that a group of tenants might seek to keep the costs of enfranchisement down by having only the minimum number of participating tenants. Other tenants might then make side agreements to join in at a later stage.
  It may be helpful if I explain why the Bill gives landlords a share of the marriage value only on the flats of tenants who participate in giving the initial notice. To do otherwise would be very unfair. If marriage value on the flats of non-participating tenants were given too, this could amount to false accounting. The flats of non-participating tenants are not brought under the same control as the freehold and therefore no marriage value is released. The only definite merging of control is between the interests held by the nominee purchaser and the participating tenants.
  Non-participating tenants will have a new freeholder but retain their current lease interest. Many will not wish to join in enfranchisement or will not be able to afford to do so. A landlord could not, in the open market, claim marriage value where none existed. There would be no basis for such a claim and it would be wrong to pretend that there was for the purposes of the Bill.
  My noble friend Lord Finsberg has tabled a most interesting amendment dealing with clawback. It will provide a clawback should a nominee purchaser dispose of his interest within five years. I am sorry to disappoint my noble friend because I have difficulties in supporting an amendment which would give a landlord an ongoing claim against a nominee

  1317
  purchaser. I consider it right that once a purchase has been made the new freeholder should have control of his own property, including the granting of new leases or other interests, without a third party having a claim or interest on that property. I am not sure that my noble friend's amendment would be helpful.
  But my noble friend Lord Boardman has come forward with something which I believe is rather helpful to the Committee. I accept the principle of my noble friend's amendment which is that some element of the hope value, which is the expectation that new leases and other interests will be granted, should be taken into account when the freehold is valued. I understand that in valuation practice that is already calculated.
  I understand from my advisers that the amendment of my noble friend Lord Boardman has been drafted particularly well. Therefore, I propose to accept it. If there are any drafting amendments which need to be changed, then perhaps we can do that at Report. In the light of that, I hope that my noble friend Lord Finsberg will not feel too bad if I ask him not to press his amendment, but say that we accept the amendment of my noble friend Lord Boardman.
  Lord Boardman: I am much obliged to my noble friend.
  On Question, amendment agreed to.
  Clause 16 [Effect of notice under section 11 as respects subsequent transactions by freeholder etc.]:
  Lord Coleraine Lord Coleraine moved Amendment No. 77:
  Page 23, line 12, at end insert ("provided that this subsection shall not apply to a binding contract entered into after due compliance with the provisions of Part I of the Landlord and Tenant Act 1987, which contract is to be completed within 3 months of the relevant date.").
  The noble Lord said: Clause 16(4) provides that where before the relevant date there is a binding contract in force relating to the disposal by the person who owns the freehold of the specified premises of any interest of his which is going to be subject to the enfranchisement then, so long as the initial notice continues in force, the operation of the contract is to be suspended so far as it relates to any such disposal. I understand that if the collective enfranchisement goes ahead, the original contract falls by the board.
  The situation that I am envisaging in the amendment is unusual. It is that a tenant's right to have notice of an intended sale by a landlord under Part I of the Landlord and Tenant Act 1987 results in all the proceedings that are necessary under that part of that Act taking place and eventually a contract is entered into. My amendment would provide that the contract should be excepted from the provisions of the Bill. The provisions of Part I of the 1987 Act had very good intentions but have so far met with very little success in operation. I sometimes hear it said that the only time that that section is used successfully is when the advisers on either side have not been aware of all the defects in that part of the Act. Therefore an exception should be made from this clause in the case of a contract which has successfully arisen out of the provisions of Part I of the 1987 Act. I beg to move.
  Lord Rodger of Earlsferry: I am grateful to my noble friend for the explanation that he has given of the purpose of his amendment. As he explained, it applies in order to except those contracts entered into under Part I of the 1987 Act for the purposes of the doctrine of the right of first refusal. The intention of the amendment is that such contracts should not be suspended by an initial notice under the Bill.
  The Government are in favour of and agree with the thrust of the amendment. However, there is some doubt about whether, as presently drafted, the amendment would be technically successful. Therefore, with your Lordships' permission, I propose that we should take the amendment away and look at it. If it needs redrafting, we shall come forward with a government amendment giving effect to that.
  Lord Coleraine: I am grateful to my noble and learned friend for what he has just said. In reliance on that, I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Lord Coleraine Lord Coleraine moved Amendment No. 78:
  Page 23, line 29, at end insert:
  ("() Where any notice under section 10 or 11 above has been served by a qualifying tenant on the relevant landlord and the relevant landlord is in default in complying therewith then any service charge demanded by the relevant landlord shall (unless the court orders otherwise) be treated for all purposes as not being due from that qualifying tenant at any time when the relevant landlord is in default.").
  The noble Lord said: This amendment intends to provide a simple way of enabling Clauses 10 and 11 to be self-leasing as regards the obligations of the reversioner to comply with the requirements of the clauses. It provides that, so long as the reversioner is in default in not complying with his obligations under the clauses, the obligations of the tenants to pay a service charge are suspended until the reversioner does what he should; and when he does so, the obligation to pay a service charge continues. It is a simple amendment. It would obviate the need for the applications to court about which we heard earlier today. I beg to move.
  9.30 p.m.
  Lord Rodger of Earlsferry: I understand fully the intention behind the amendment. It is largely the same as the intention behind amendments which were moved earlier. Again, I fear that on this matter I must part company with my noble friend. It is important that the timetables set down in the Bill should be followed. That is why Clause 82 contains a carefully worked out machinery whereby those who wish to enforce requirements can take steps to do so in court. The amendment seeks instead to say that if there is a delay, then during that period a service charge should be treated as not being due. That, in itself, would not be self-policing or bring about the completion of the stage. For that, we believe Clause 82 provides the machinery.
  Not only would the proposal contained in the amendment not be an effective way of achieving the desired result, but it would have certain great disadvantages: if the service charges were not paid and were not available to the landlord, that would merely

  1319
  result in the landlord being likely not to carry out essential repairs on the block, and one would find that the block would deteriorate, or the provision of heating to the tenants in the block might be interrupted. Such things might happen. That would have an effect not just on the tenants who were participating in the enfranchisement process, but on other tenants in the block. That would be wholly undesirable. Moreover, because it would also be inefficient, we believe that the amendment, although perhaps good in intention, is undesirable in practice. I reiterate that we believe that we should stick with the machinery contained in Clause 82, and I ask my noble friend to withdraw the amendment.
  Lord Coleraine: I shall obviously read with great care all that my noble and learned friend has said. But at first hearing I find it surprising that he should say that the response of a reversioner, faced with his tenants exercising their rights under the Bill to withhold service charges until the reversioner complies with his obligations, might be to withhold the provision of services that he was no doubt covenanted to provide. I should like to consider this matter at leisure. I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Clause 16 agreed to.
  Clause 17 [Right of reversioner to require evidence of tenant's right to participate]:
  [Amendments Nos. 79 and 80 not moved.]
  Clause 17 agreed to.
  Clause 18 [Reversioner's counter-notice]:
  [Amendments Nos. 81 to 83 not moved.]
  Clause 18 agreed to.
  Clause 19 [Proceedings relating to validity of initial notice]:
  Lord Coleraine Lord Coleraine moved Amendment No. 84:
  Page 25, line 47, leave out ("an order") and insert ("a declaration").
  The noble Lord said: In moving Amendment No. 84 I shall speak also to Amendment No. 85. Under Clause 18 the reversioner may in his counter-notice challenge the participating tenants' right to collective enfranchisement. If he does so the nominated purchaser may apply under Clause 19 for a declaration that they did have that right. That declaration, if made, will contain an order requiring the reversioner to give a further counter-notice.
  The Law Society sees the possibility that the reversioner might in the further counter-notice advance one or more of the grounds put forward in the original counter-notice for challenging the participation. He might do so in conjunction with other grounds. In some cases that might be reasonable; in others it will be done purely to waste time.
  The amendments will give the court power, on the hearing of the application in appropriate circumstances, to direct in effect that one or more of the grounds on which the reversioner made his original challenge may not be repeated if in his further counter-notice he makes a further challenge.
  Amendment No. 85 is the principal amendment in the group. It provides that a further subsection is to be inserted after subsection (3) as follows:
  "An order under subsection (3) above may direct that such counter-notice may not contain any or such one or more of the reasons for not admitting the participating tenants' entitlement to exercise the right to collective enfranchisement previously stated under section 18(2) (b) as may be specified". I beg to move.

  LISTED BUILDINGS AND CONSERVATION AREAS: LAMBETH, ISLINGTON, HAMMERSMITH AND FULHAM
  LISTED BUILDINGS AND CONSERVATION AREAS: LAMBETH, ISLINGTON, HAMMERSMITH AND FULHAM
  IMPERIAL WAR MUSEUM: GOVERNMENT SUPPORT
  IMPERIAL WAR MUSEUM: GOVERNMENT SUPPORT
  GREYHOUND INDUSTRY: CONSULTATION DOCUMENTS
  GREYHOUND INDUSTRY: CONSULTATION DOCUMENTS
  INDICTABLE OFFENCES: YOUNG PEOPLE
  INDICTABLE OFFENCES: YOUNG PEOPLE
  WAR CRIMES ACT 1991
  WAR CRIMES ACT 1991
  COMA DIET
  COMA DIET
  EC REGULATION 2078/92
  EC REGULATION 2078/92
  ANIMALS: PROTECTION DURING TRANSPORT
  ANIMALS: PROTECTION DURING TRANSPORT
  MONTREAL PROTOCOL SUBSTANCES: UK COMPLIANCE
  MONTREAL PROTOCOL SUBSTANCES: UK COMPLIANCE
  COMBAT ARMS FIGHTING COURSE: COSTS
  COMBAT ARMS FIGHTING COURSE: COSTS
  YOUTH TRAINING: RE-ENTRANTS
  YOUTH TRAINING: RE-ENTRANTS
  YOUTH TRAINING LEAVERS: UNEMPLOYMENT
  YOUTH TRAINING LEAVERS: UNEMPLOYMENT
  ST. HELENIANS: BRITISH WORK PERMITS
  ST. HELENIANS: BRITISH WORK PERMITS
  SERB FORCES: GAS ALLEGATIONS
  SERB FORCES: GAS ALLEGATIONS
  IRAQ NUCLEAR WEAPON PROCUREMENT: US REPORT
  IRAQ NUCLEAR WEAPON PROCUREMENT: US REPORT
  GULF WAR: REFUGEES
  GULF WAR: REFUGEES
  UNITED KINGDOM DIPLOMATIC POSTS
  UNITED KINGDOM DIPLOMATIC POSTS
  LONDON UNDERPASSES AND CYCLE LANE PROVISIONS
  LONDON UNDERPASSES AND CYCLE LANE PROVISIONS
  SAFE SEAS POLICY
  SAFE SEAS POLICY
  LONDON CAR JOURNEYS: SURVEY
  LONDON CAR JOURNEYS: SURVEY
  LONDON CYCLE ROUTES: NETWORK
  LONDON CYCLE ROUTES: NETWORK
  LONDON: HEALTH EXPENDITURE
  LONDON: HEALTH EXPENDITURE
  NHS SERVICE IN LONDON
  NHS SERVICE IN LONDON
  DEBENHAMS plc
  DEBENHAMS plc
  ASSOCIATED ENGINEERING plc
  ASSOCIATED ENGINEERING plc
  DISTILLERS: TAKEOVER REPORT
  DISTILLERS: TAKEOVER REPORT
  RETAIL PRICES INDEX
  RETAIL PRICES INDEX
  LOWER YORKSHIRE RIVER DERWENT AND BARMBY BARRAGE LOCK
  LOWER YORKSHIRE RIVER DERWENT AND BARMBY BARRAGE LOCK
  INCOME SUPPORT: YOUNG PEOPLE
  INCOME SUPPORT: YOUNG PEOPLE