Sitting of 13 February 1995

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

    Primary Schools
    Sir David Knox: To ask the Secretary of State for Wales how much was spent per pupil in primary schools in Wales in the most recent year for which figures are available; and what was the figure for 1978–79, at constant prices.
    The Secretary of State for Wales (Mr. John Redwood): In 1979–80, the amount spent per pupil in primary and nursery schools, at 1993–94 prices, was £1,086; the amount spent per pupil in 1992–93 was £1,657. Figures for 1978–79 are not available. That represents a massive 52.5 per cent. increase in real terms, despite the fact that, in practically every year, the Labour party has said that the amount was being cut.
    Sir David Knox: Does my right hon. Friend agree that those are impressive increases in expenditure per pupil in primary schools in Wales? Is he satisfied that those increases have been accompanied by comparable increases in standards?
    Mr. Redwood: In some cases they have, in some cases they have not, which is why my hon. Friends and I have been busy urging all schools in Wales to raise their standards, especially those where results are still disappointing. We have made a massive commitment, through votes in the House, to ensure more money for local government in general and for education in particular. Much extra money is being spent and we should like to see further progress with standards.
    Mr. Simon Hughes: I welcome the general figures, but I reserve judgment about recent years' increases in expenditure. Will the Secretary of State turn his attention to one specific matter affecting the education of primary school children in Wales? Large parts of Wales now have access to S4C, Welsh-speaking television, but not to Channel 4, including its educational programmes. That is a big issue in Gwent, including in Islwyn. [Laughter.] It is true and it is clearly accepted in the House. Will the Secretary of State take steps to ensure that all educational programmes are available to all primary school children throughout the Principality?
    Mr. Redwood: I cannot imagine why the hon. Gentleman is interested in Islwyn at the moment—I wonder whether he has ever been there or campaigned there. The issue is one for my right hon. Friend the Secretary of State for National Heritage and I shall ensure
    646
    that he sees the question and the point behind it. The hon. Gentleman is right to say that some people are worried about access to both television channels in parts of Wales.
    Mr. Ron Davies: I suspect that the party of the hon. Member for Southwark and Bermondsey (Mr. Hughes)—the Liberal Democrat party—has a slightly greater interest in Islwyn than the Secretary of State's party. Given the increase in school numbers of a further 8,000 pupils next year, why has the Secretary of State cut expenditure on education? He has made a complete shambles of the local government settlement. He is browbeating education authorities to spend their balances when each and every one of them is doing just that to protect their education services. He is bullying schools about their balances when all they are doing is following the Government's instructions.
    Is it not now clear that enormous damage is being done throughout our education service in Wales—teachers are protesting, pupils are protesting, parents are protesting, governors are protesting and politicians are protesting? Is it just the Secretary of State's arrogance that makes him believe that everyone else is wrong and he alone is right?
    Mr. Redwood: That long speech fell flat. In 1991–92, there were 26,633 teachers in Wales and in 1993–94 there were 26,752—an increase. Every year, the Labour party—through its councils and in the House—has threatened big cuts in teacher numbers. I am not cutting expenditure. I asked the House to approve increased money for Welsh local government and it did so on 8 February. The hon. Gentleman cannot produce a single shadow pound over and above my settlement.
    Dr. Spink: Does my hon. Friend accept that what matters most is outcomes in education? Does he agree that outcomes in education in Wales are exceptionally good, particularly compared with those in England? Is that not a result of the methods used in Wales, which are often not child-centred or project teaching but whole-class teaching and more traditional methods? Would he recommend those methods to some of our English schools?
    Mr. Redwood: I join my hon. Friend in welcoming traditional methods. I think that too much child-centred learning spoils the child and spoils results. I fear, however, that we have a long way to go in Wales, as in England, in raising standards generally. The pupil-teacher ratio in primary schools has remained the same—22.3—since 1988–89, so there is no evidence of massive cuts in teachers. I hope that governors support them, and that they all get on with the job of raising standards.

    Local Government Finance
    . Mr. Ainger: To ask the Secretary of State for Wales what representations he has received on his local government settlement for 1995–96.
    Mr. Redwood: I have received a number of representations on the settlement, which was debated and agreed on 8 February 1995.
    Mr. Ainger: Is the Secretary of State aware that his claim that schools can meet the teachers' pay rise from their accumulated balances is completely without foundation? Is he aware that this morning I spoke to head teachers of secondary schools in my constituency, each of

    647
    whom said that they would be unable to meet the pay rise without cutting staff and equipment budgets and, in some cases, going into deficit? Does he now accept the argument of the Secretary of State for Education: that unless the teachers' pay rise is fully funded by central Government, it will be disastrous for the education service?
    Mr. Redwood: I think that the hon. Gentleman has probably switched his question. I imagine that he originally intended to ask about the police—a big increase in the settlement took care of that problem—but he is wrong in what he said. There is money in the settlement to pay for good teachers and to meet the increase in teachers' pay that we have accepted from the recommendations of the review body. I identified in the debate a number of ways in which that money can be found, not only from balances in schools, and the hon. Gentleman should remember that the total settlement approved was £87 million higher than in the current year.
    Sir Wyn Roberts: Will my right hon. Friend confirm that, as a result of good settlements in previous years, most local authorities have accumulated substantial balances, which, along with aggregate Exchequer grant, should be very helpful to them?
    Mr. Redwood: My right hon. Friend is right. There are balances in the counties and in the schools, and an extra £600 million, or 30 per cent., has been made available since 1991, which is well above the inflation rate.

    Police Funding
    Mr. Llwyd: To ask the Secretary of State for Wales what representations he has received on the current allocation of money for police forces in Wales; and if he will make a statement.
    Mr. Redwood: I had a number of representations on the police settlement. I am sure that the House will welcome the £15.1 million increase in the settlement as a result of those representations and my reconsideration of the position.
    Mr. Llwyd: I readily acknowledge that the recent settlement is a great improvement for policing. I accept that it is an improvement in north Wales, and that it has been acknowledged to be so.
    I remind the Minister, however, that, unfortunately, there is a great and increasing drugs problem in Wales, and the police officers with whom I spoke recently said that tackling it is beyond their current resources. It behoves the Welsh Office to take a strategic approach to that increasing problem, and to give some direction for police officers to follow?
    Mr. Redwood: The hon. Gentleman is right that there is a worrying drugs problem. The Welsh Office is co-ordinating work on how best to tackle it. The £15 million extra for the police, in addition to the original settlement proposals, is very helpful in that respect.
    I should like to pay tribute to the excellent work of the north Wales police in relation to the Owens family. I am sure that the whole House will join me in saying that we are delighted that the family is reunited and that we are grateful to the police and the medical staff who helped.
    Mr. Sweeney: Will my right hon. Friend note the considerable relief and pleasure in the Vale of Glamorgan
    648
    at the substantial increase in funding for South Wales police? Will he further note that the action taken by him and our right hon. and learned Friend the Home Secretary was necessary because of the deplorable underfunding of South Wales police, and that we are grateful for his action now?
    Mr. Redwood: My hon. Friend is quite right. I had wanted local government to do the decent thing by the police; it had plenty of money to do so, but it chose to spend it on other things, so, with regret, I took the matter out of its hands. The House approved my proposals, which will lead to many more policemen on the beat, especially in south Wales, but perhaps throughout Wales. I think that is what the public want.
    Mr. Michael: Does not the Secretary of State recognise that everyone will regard his regret as lacking in sincerity? The funding shortfall for the police force in Wales—particularly South Wales police—is due to the failure of the Secretary of State and his colleague the Home Secretary to provide the money. Is it not curious that this year, when the need to set an SSA has forced clarity into the allocation of funds, he has finally come up with the money that we have been telling him to allocate for two years?
    Mr. Redwood: There was money in the original settlement that was left to the discretion of local government to spend. I freely accept that it was uncomfortable for me to defend for many months the proposition that Labour local government should do the decent thing and give the right answers when the House had voted freely to make the money available. Local government refused to give that money to the police and wasted it on other things. That is the scandal and I am glad that we have resolved it—although I wish that local authorities had resolved it themselves.

    Inward Investment
    Mr. Nigel Evans: To ask the Secretary of State for Wales what plans he has to encourage further inward investment into Wales.
    Mr. Redwood: I intend to promote Wales vigorously as a centre for inward investment. Low inflation, low interest rates and a skilled and flexible work force are their own advertisements, but I intend to ensure that the world knows about them and that more investors will come to Wales.
    Mr. Evans: Wales has always had a good inward investment record that is envied by all. What does the Secretary of State think would happen to inward investment if Britain went down the cul-de-sac of devolution or signed up to the social chapter and introduced a minimum wage?
    Mr. Redwood: Extra taxes, which could result from devolution, would be extremely damaging to inward investment in Wales as it would go elsewhere in the United Kingdom that was not similarly burdened. It is vital to Britain that we do not have the social chapter. That is why we get more than our fair share of inward investment into the Community and why we wish to carry on in that happy state.
    Mr. Denzil Davies: Are not major proposals for inward investment from abroad dealt with mainly by the Invest

    649
    in Britain Bureau, which is a responsibility of the Department of Trade and Industry, the industry Department for England? Where does the Welsh Office fit into the structure?
    Mr. Redwood: The right hon. Gentleman is misinformed: the bureau helps the whole of the United Kingdom. He should know that the Welsh Development Agency is also strongly involved in the promotion of Wales and that it works closely with British agencies. The success is there for all to see. Why has Wales done so well if the right hon. Gentleman is right in saying that the structure does not work?
    Mr. Jenkin: Does my right hon. Friend think it likely that Britain's failure to participate in a single European currency will threaten the flow of inward investment into Wales?
    Mr. Redwood: The Government have made it clear that we do not foresee a single currency in 1995, 1996 or 1997 and that we would not join one in those years. We obviously do not think that it would damage our inward investment prospects during that time, and that is the Government's clear decision.
    Mr. Ieuan Wyn Jones: Does not the Secretary of State recognise that the continuing deep Cabinet split over the issue of a single currency is extremely damaging to the future of inward investment in Wales? Does the right hon. Gentleman agree with the Chancellor of the Exchequer, who said that it is quite possible to have monetary union without political union, or will he follow the Euro-sceptic line in Wales, wrap himself in the Union Jack and totally disregard our needs?
    Mr. Redwood: I am very happy with the leadership that the Prime Minister has offered in his speeches and interviews on the subject, which made the situation absolutely crystal clear.
    The hon. Gentleman will be pleased to know that it is certainly not putting off inward investors. For example, Ringtel, the first serious Taiwanese investor in 'Wales, announced today that it will create 100 jobs. I hope that he welcomes that news. It shows that inward investors do not take what is written in the newspapers as seriously as Labour Members. Investors recognise that Britain is the right place in which to invest and that we have the right policy for trade with Europe and the rest of the world.
    Mr. Morgan: What will be the impact on inward investment from Europe, now that the United Kingdom, which is supposed to be united, is governed by a Tory party that is clearly disunited? The Secretary of State has come out blatantly as a member of the anti-Europe party within the Cabinet and has made clear his visceral antipathy to anything European—even European investment in Wales.
    Mr. Redwood: I am not sure that there was a question amid that ranting. We are all Europeans. Britain is in Europe geographically and by its membership of various European institutions. We benefit from those institutions and from the strength of our position as world and European traders. I am much in favour of that, as I trust are Opposition Members.
    Lady Olga Maitland: Does my right hon. Friend agree that the Americans are the leading investors in Wales,
    650
    accounting for 25 per cent. of inward investment? Interestingly and by contrast, the figure for the Japanese is 7 per cent.
    Mr. Redwood: My hon. Friend is absolutely right. The American relationship is crucial to our success. The Americans have been the leading investors in Wales for many years, increasingly followed by the Japanese. We welcome investors from all over the world but recognise the importance of the American link to our current and future prosperity.
    Mr. Donald Anderson: Is it not also crucial that the Americans and Japanese see Britain as a continuing member of the European Union? When the Secretary of State is ready to parade his anti-European prejudices, would it not be helpful if he paused and reflected on that fact and perhaps bit his tongue?
    Mr. Redwood: The hon. Gentleman did not quote anything that I have said, so clearly he does not have a juicy quotation to sustain his point, which was of course a non-point. We benefit from membership of the European Union, NATO and, through the EU, GATT. All are important to our security and trading prospects, and we must get the best from them by negotiating for Britain in the right way. Many Opposition Members would give in before negotiating. We want to stand up for Britain and get the right deal, so that inward investors still come to us.

    Planning Policy Guidance
    Mr. Gareth Wardell: To ask the Secretary of State for Wales which planning policy guidances operative in England he intends to extend to Wales.
    The Parliamentary Under-Secretary of State for Wales (Mr. Gwilym Jones)s: My right hon. Friend will shortly issue for consultation draft planning guidance covering PPGs 9, 13, 15, 23 and 24.
    Mr. Wardell: I am delighted to hear that news. In England, the Department of the Environment issued PPG 13, which was a major step forward in strategic planning, in March 1994, but a vacuum has been created in Wales by the Welsh Office? Unless those PPGs are introduced quickly, the people of Wales will have every right to suspect that the Welsh Office is in danger of becoming a second-rate Department.
    Mr. Jones: I am grateful for the hon. Gentleman's welcome, although my announcement is not new. It is common knowledge that, on a point of principle, we should reflect carefully on anything issued by the Department of the Environment before deciding what guidance to issue in Wales. I am sure that the hon. Gentleman does not agree that we should merely replicate every measure taken by the Department of the Environment. I do not know of any evidence to suggest that any Welsh interest has been disadvantaged.
    Mr. Win Griffiths: Why has PPG 9, which was issued in England in October 1994 in time to comply with the European Union habitats directive, resulted in estuaries such as the Rivers Dee and Severn enjoying one mode of protection on the English side of the boundary and different, outmoded protection on the Welsh side? Why is the Welsh Office in effect acting illegally, in failing to apply planning guidance on the EU habitats directive? Is

    651
    it because of the Secretary of State's well-known antipathy to Europe, regulation and the protection of the environment?
    Mr. Jones: I certainly do not accept the hon. Gentleman's wild claims. We have been carefully considering the matter, and draft guidance will be issued shortly.

    Private Rented Housing
    Mr. Thurnham: To ask the Secretary of State for Wales what representations he has received about the role of the private rented housing sector in Wales.
    Mr. Gwilym Jones: We have received expressions of support for the Government's policy.
    Mr. Thurnham: Is my hon. Friend aware that a recent survey showed that tenants much prefer private landlords to public landlords? Is it not time that we encouraged the private rented housing sector, which in Wales accounts only for one third of the average among countries belonging to the Organisation for Economic Co-operation and Development?
    Mr. Jones: I very much share the concern expressed in my hon. Friend's question, but I am happy to reassure him that the issue is being dealt with. In the past four years, we have spent about £19 million in Wales pursuing exactly that objective, which has succeeded in securing more than 1,200 additional new homes.

    Atomic Weapons Establishment
    Mr. Jon Owen Jones: To ask the Secretary of State for Wales what representations he made to ensure that the cuts in the Atomic Weapons Establishment were not disproportionately made in Wales.
    The Parliamentary Under-Secretary of State for Wales (Mr. Rod Richards): My right hon. Friend was consulted before the recent decisions about the Atomic Weapons Establishment were taken. The rationalisation will be made possible by the completion of work on Trident warheads. Cardiff has not been singled out. The Atomic Weapons Establishment in Cardiff will close in 1997, Hunting-BRAE, the operating contractor, will withdraw from Foulness in 1998 and component production at Burghfield will transfer to Aldermaston in 1999.
    Mr. Jones: The Minister should recall that I raised the question of disproportionately low Government defence expenditure in Wales in October. As AWE has announced a 15 per cent. reduction in its work force across Britain and a 100 per cent. reduction in its work force in Wales, how does the Minister intend to advance the cause of Wales against that bias in defence-related industries?
    Another topical issue is the official service residences, over which Sir Sandy Wilson has recently got into hot water. There are 78 such residences throughout the world, yet not one in Wales. What will the Welsh Office do about that bias against Wales?
    Mr. Richards: Rationalisation of AWE was necessary because the Trident programme is coming to an end. It is outrageous that a Labour Member should talk about bias
    652
    against Wales in defence expenditure, because if Labour Members had had their way at any time during the 1980s all those jobs would have disappeared years ago.

    Unemployment
    Mr. John Marshall: To ask the Secretary of State for Wales what are the latest figures for unemployment in Wales; and what was the figure in December 1992.
    Mr. Richards: In December 1994, the seasonally adjusted number of persons on the claimant unemployment count in Wales was 109,000, some 8.6 per cent. of the work force, compared with 133,200, or 10.5 per cent. in December 1992. That represents a fall of 24,200 or 18 per cent.
    Mr. Marshall: I thank my hon. Friend for that answer, which will be welcomed by everyone, except the professional pessimists on the Opposition Benches. Does he agree that that decline would not have taken place if we had had a national minimum wage, if we had signed the social chapter or if we had left the European Union, as recommended by the right hon. Member for Sedgefield (Mr. Blair) in 1983?
    Mr. Richards: My hon. Friend is absolutely right. With his interest in the subject, he will not have failed to have read the latest CBI Welsh industrial trends, which show that new orders are increasing at the fastest rate since they were first published in 1978, that output is well above the UK average at some 6.3 per cent. and that optimism—generally and about exports—is at a record level. Those trends are supported by British chambers of commerce, Dun and Bradstreet and Touche Ross.
    Mrs. Clwyd: Given the well-established link between unemployment and poverty, will the Minister comment on yet another report which shows that, under his Government, the rich are getting richer and the poor are getting poorer? The top tenth of the population are now 60 per cent. better off than they were in 1979, while the bottom tenth of the population are 17 per cent. worse off than they were in 1979. One child in every three is living in poverty. What are his Government going to do about that?
    Mr. Richards: The hon. Lady raises an interesting point: the link between unemployment and poverty. She may care to know that in my county of Clwyd, unemployment fell in the past year by some 15 per cent. yet Clwyd county council, through its Clwyd welfare rights unit, employed an additional seven people in September to give advice on benefits. That unit cost some £800,000 to set up.
    I have with me a glossy leaflet put out by the Clwyd welfare rights unit and published quarterly by Clwyd county council. It describes these seven employees as the Magnificent Seven, and goes on to say:
    "You may have bumped into some of the new officers when they recently took part in a treasure hunt to acquaint themselves with their new surroundings".
    I think that will suffice.

    Wales Tourist Board
    Mr. Simon Coombs: To ask the Secretary of State for Wales how much was spent by the Wales tourist board

    653
    last year under section 4 of the Promotion of Tourism Act 1969; and what is his assessment of the return on this outlay.
    Mr. Gwilym Jones: The payments made in 1993–94 were just under £4.1 million. During the year £5.1 million of assistance was approved for new projects by the Wales tourist board to secure £30.6 million of investment and create or safeguard 525 jobs.
    Mr. Coombs: My hon. Friend is obviously well aware of the significance of the multiplier effect, which turns a relatively small volume of investment into a substantial return to the public purse. In view of that, does he have any plans for boosting the tourism potential of Cardiff following the construction of many the projects related to the Cardiff bay barrage?
    Mr. Jones: I am pleased to acknowledge my agreement with my hon. Friend about the relevance of the multiplier factor, which is important to tourism and to the regeneration of south Cardiff, which is estimated to have achieved the creation of more than 20,000 jobs. I am sure that my hon. Friend joins me in condemning the opposition to that by Opposition Front-Bench spokesmen, who would much rather have the money spent on a Welsh Assembly.
    Mr. Flynn: How does the Minister react to the news today that a publication by the Wales tourist board eliminates many of the main tourist attractions in Wales, including Caerleon in my constituency—one of the top half-dozen tourist attractions? In Caerleon there are Roman baths and barracks. Does the Minister agree about the importance of teaching our children about the time when Europe was united, with a common currency, and how it then went back into a dark age of barbarism when the Euro-sceptics came along with personalities and instincts not dissimilar from those of the Secretary of State?
    Mr. Jones: The hon. Gentleman has got his allusions very wrong—from where I sit, all the barbarians are facing me. At the same time, I readily appreciate the importance of promoting all parts of Wales. That is what I am sure the Wales tourist board is seeking to do.

    Industrial Development, Rhondda
    Madam Speaker: Mr. Rogers.
    Mr. Rogers: Number—whatever it is.
    Madam Speaker: No.11.
    Mr. Rogers: To ask the Secretary of State for Wales when he intends to visit the Rhondda to discuss industrial development.
    Mr. Redwood: The hon. Gentleman is not very alert when inviting me to his constituency. Perhaps after what has been said he has changed his mind about whether he wants me to visit it. I can however assure him that I discussed industrial regeneration in his area on 26 September with Rhondda borough and other local authorities. I would be delighted to take up his invitation to visit—if he still wishes to invite me.
    Mr. Rogers: Those of us who represent valley communities—probably some of the poorest, on any
    654
    socio-economic indicator, in the United Kingdom—certainly recognise the difficulties of attracting industrial units to our areas. But it is still important to create jobs.
    When the Secretary of State comes to the Rhondda, will he take the opportunity to condemn the Welsh nationalist leadership of Taff-Ely council, which bitterly opposes jobs coming to the Rhondda and which has probably used public money to take full-page advertisements to prevent that from happening? Will he come and discuss with us this vicious attack on the people of the Rhondda valleys by the Welsh nationalists?
    Mr. Redwood: I would certainly rather the money was spent on schools and education than on that sort of black propaganda—if that is what they are doing. The hon. Gentleman speaks for his constituents when he says that he wants more investment in the area, and I can assure him that there is no divide across the Floor of the House on this issue. I shall work positively with him and with any local councillors who want to do so to attract more industrial investment to the Rhondda and to other parts of the valleys.
    The hon. Gentleman might like to know that the Welsh Development Agency is currently working on four possible schemes for his area. I just hope that they come to fruition, because I am sure that they would be welcome.
    Mr. Ron Davies: When the right hon. Gentleman visits the Rhondda, will he take the opportunity to discuss with people there the impact that the split in the Cabinet is having on the economic prospects of south Wales? Earlier, he referred to his support for the Prime Minister, but he signally failed to mention his disagreement with the three leading policy makers in the Cabinet—the Foreign Secretary, the Chancellor of the Exchequer and the President of the Board of Trade. Given the deep fissure in the Cabinet, is not the Secretary of State now merely on the outer fringes of policy making, in which position he can be of no use whatever to the people of Rhondda or of Wales?
    Mr. Redwood: The hon. Gentleman is out to lunch again. He is not describing reality. All members of the Cabinet are central to policy making within the Cabinet. The Prime Minister speaks for us all, and extremely well, on the issues that the hon. Gentleman asks about.

    Unemployment
    Mr. Roy Hughes: To ask the Secretary of State for Wales what is the latest figure for male unemployment in Newport, Gwent and Wales in percentage terms.
    Mr. Richards: In December 1994, the unadjusted male unemployment rate in Newport travel-to-work-area was 11.7 per cent. of the work force. The rates in Gwent and Wales were both 12.1 per cent.
    Mr. Hughes: Does the Minister appreciate that Newport needs new jobs but not from Brown and Ferris, the American waste disposal company? Does the hon. Gentleman appreciate, too, that construction of the project is going ahead by stealth, and that the Secretary of State still has the power not to grant the company a licence? Will the Minister tell his right hon. Friend that, if he is so keen on the project, he should take it to his constituency of Wokingham?
    Mr. Richards: All this has been most carefully considered. It is not a matter for me at present. I remind

    655
    the hon. Gentleman that much good news has come to Newport recently, including 200 jobs to Electrotech from Thornbury and the 500 jobs that will come to Newport by 1997 from the Trustee Savings bank.
    Mr. Knapman: Why is it that the areas most addicted to socialism remain the poorest despite having most public money directed to them?
    Mr. Richards: My hon. Friend makes a valid point. We on the Government Benches always demand value for money. We want money well spent on the projects and policies for which it was intended. I have already given an example to the hon. Member for Cynon Valley (Mrs. Clwyd) of what I regard as a waste of money.

    Welsh Development Agency
    Mr. Wigley: To ask the Secretary of State for Wales if he will arrange to meet the chairman of the Welsh Development Agency to discuss the implication of the agency's recently announced strategic plans for local communities in Wales.
    Mr. Gwilym Jones: My right hon. Friend regularly meets the chairman of the agency to discuss a range of matters.
    Mr. Wigley: Is the Minister aware that the WDA's strategic plans for the regeneration of some of the old industrial towns in the valleys, the old slate-quarrying areas and some of the historic towns of Wales are dependent on enough money being available over a period that goes beyond two years? Given that the WDA is being funded by virtue of the sale of its capital assets, will the Minister give a categorical guarantee that the original funding level promised for the agency for the period through to the end of the century will be sustained and that there will be increased moneys from the Welsh Office budget to achieve that?
    Mr. Jones: I can certainly give the hon. Gentleman an assurance that the resources allocated to the WDA, together with the receipts that they will generate, will be most appropriate to achieve what we want. It is in that manner that progress will be made.

    Energy Efficiency
    Mr. Dafis: To ask the Secretary of State for Wales what proposals he has for increasing the investment in energy efficiency in Wales.
    Mr. Redwood: There are a number of initiatives in the public and private sectors to improve energy efficiency, which I widely welcome. There is the Government's home insulation scheme. I am launching a drive to improve energy efficiency throughout the public sector in our own buildings. There are many private sector initiatives to help save money given the considerable energy bill in Wales.
    Mr. Dafis: Does the Secretary of State accept that a proper programme of energy efficiency in homes could produce a reduction in fuel bills of up to 50 per cent. as well as significant reductions in the harmful emission of gases that come from the generation of energy for our homes? Does he accept also that as many as 5,000 jobs a
    656
    year could be created at a cost of £30 million per annum in the process of getting such a programme into operation?
    Does the right hon. Gentleman further accept that it is only through socially useful labour-intensive activity that we can seriously tackle unemployment? Will he undertake, as Secretary of State for Wales, to make such public investment available? While he is at it, will he study the excellent document produced by my hon. Friend the Member for Caernarfon (Mr. Wigley) entitled "100,000 answers", which describes how public investment could transform the unemployment position in Wales?
    Mr. Redwood: I have already studied that programme; indeed, we debated it briefly in the Welsh Grand Committee. If only life were that simple. Unfortunately, the programme is grossly under-costed. We must take into account the impact of rising interest rates and rising public expenditure costs on the economy generally if the programme were replicated throughout the country.
    Of course the Government believe that there are things that can be done under existing programmes. That is why we have a strong programme of energy efficiency measures, which produce work in the public and private sectors. That is very welcome. It may be difficult reducing each household's bill by 50 per cent., but large reductions can be—and should be—made.

    Manufacturing Industry
    Mr. Barry Jones: To ask the Secretary of State for Wales if he will make a statement on the prospects for manufacturing industries in Wales in 1995.
    Mr. Gwilym Jones: Prospects for manufacturing industries in Wales are excellent. Over the past four months, the balance of firms reporting a rise in the volume of new orders in Wales has increased faster than at any time since the Confederation of British Industry, Wales, started its survey in 1978, and at double the United Kingdom rate. About half of Welsh firms say that their order books are above normal levels. Exporters are doing even better.
    Mr. Barry Jones: What can the Government do to assist further the beleaguered Raytheon jet workers in my constituency? Does he accept that Raytheon bought Corporate Jets to merge with Beech? Does he understand that Raytheon bought Corporate Jets so that it could eliminate competition and take jobs to America? How can the Government further assist my constituents?
    Mr. Gwilym Jones: I readily acknowledge the time that the hon. Gentleman—as well as my hon. Friend the Member for City of Chester (Mr. Brandreth) and others—has devoted to this important problem. He, too, will know that his concern is completely shared by the Government, and my right hon. Friend has made considerable efforts to try to support the prospects of the Raytheon plant in north Wales by securing fresh orders. We will continue to make every appropriate effort.

  DUCHY OF LANCASTER

    Disabled People
    Ms Lynne: To ask the Chancellor of the Duchy of Lancaster what proportion of the budget of the Office of

    657
    Science and Technology is devoted to research into new technology geared to improving the lives of disabled people.
    The Parliamentary Secretary, Office of Public Service and Science (Mr. Robert G. Hughes): Some 0.4 per cent., which is more than £4.5 million. That is in addition to the money spent by the Department of Health, the European Union, by healthcare industries, the United Kingdom drugs industry and medical charities.
    Ms Lynne: Is the Minister aware that more funding needs to be given to core research into environmental control systems, which will enable disabled people with very limited muscular movement to switch on gadgets with a minimum of effort? Can he tell me whether the Office of Science and Technology is prepared to put funding into that?
    Mr. Hughes: That is not dissimilar from other questions from the hon. Lady and, indeed, from some Labour Members. Whereas of course I agree with the first part of the hon. Lady's question—about the importance of that research—the fact is that the freedom of the Medical Research Council to determine how best to commit its money and to decide which projects are backed has served it well for 80 years, and I do not intend to change from that.
    Mr. Harry Greenway: Can my hon. Friend confirm that there is very valuable research into assistance and aid systems for disabled people at the Brunel university, which is in the constituency of my hon. Friend the Member for Uxbridge (Mr. Shersby), and that it is low in cost and valuable in terms of production? Will my hon. Friend do all he can to encourage it?
    Mr. Hughes: Yes, indeed. Also being a Member of Parliament for a constituency in north-west London, I recognise the very high reputation of Brunel university. It has had that reputation for a long time. The work is important, because we all know how it can transform the lives of people with disabilities, and it is important that as much money as possible goes into that research.
    Mr. Battle: I am sure that we all agree that there is no better way to promote a positive understanding of the need for basic research in science and for technological development than improving the quality of lives for people with disabilities. Professor Stephen Hawking is an eloquent testimony to the best technology in the service of people with disabilities.
    While the Minister proclaims that that work is important, are not reductions in the Department of Health's budget for near market research, which could enable people to hear, see and move better—not to mention the blocking of the Civil Rights (Disabled Persons) Bill—undermining his best efforts? Where is the Government's overall strategy in that respect?
    Mr. Hughes: One thing has always been clear to me in terms of issues related to people with disabilities: playing to the gallery does them no good whatever. What is more important than that is that, last month, the Department of Health announced a new programme—Medlink—amounting to £8.5 million over five years, with the same amount being matched to that from industry. That is the sort of thing that helps, not the empty rhetoric that we have just heard.

    Research Council Expenditure
    Mr. Gunnell: To ask the Chancellor of the Duchy of Lancaster what proportion of the research councils' budget was spent on basic research in 1993–94.
    The Chancellor of the Duchy of Lancaster (Mr. David Hunt): The relevant information will be published in "Forward Look" in May.
    Mr. Gunnell: I am afraid that that is not particularly helpful. Can the Chancellor guarantee that money for basic research will be made available to each research council; that he has no plans to reduce either the total or the individual amounts made available to research councils for that purpose in the next financial year; and that an appropriate amount of consultation is taking place between his Department, the research councils and the research institutions in regard to basic research?
    Mr. Hunt: It is not for me to criticise the nature of the hon. Gentleman's question; I must simply answer it.
    As for the hon. Gentleman's supplementary questions, he will know that I announced the allocations for the various research councils only a few days ago, in our debate on science. Of course I am strongly committed to maintaining the necessary spending on basic research. It may assist the hon. Gentleman to know that, in 1992–93, 47.4 per cent. of OPSS-funded research and development expenditure went on basic research.
    Mr. Simon Coombs: Is it not a fact that there has been a real-terms increase of 30 per cent. in the science budget since 1979? Is it not also a fact that more than 92 per cent. of the science research councils' budget goes on research, whether basic or strategic? Is this not a good opportunity for my right hon. Friend to join me in congratulating the staff of the research councils whose headquarters are in my constituency on the excellent value for money that they provide in administering their budgets?
    Mr. Hunt: I not only confirm the statistics given by my hon. Friend, but take this opportunity to congratulate him personally on the extensive representations that he makes on behalf of the five research councils situated in his constituency.
    It is indeed a fact that, in 1992–93, 92.3 per cent. of the research and development element of the science budget was directed towards curiosity-driven research. As I have said, 47.4 per cent. of the budget was spent on basic research; 44.9 per cent. was spent on strategic research. That is an important investment for the future of the United Kingdom.

    Chemistry
    Mr. John Marshall: To ask the Chancellor of the Duchy of Lancaster when he last met the Royal Society of Chemistry to discuss the role of chemistry in the economy.
    Mr. Robert G. Hughes: I look forward to opening the society's annual congress in Edinburgh this April.
    Mr. Marshall: Will my hon. Friend congratulate the Royal Society of Chemistry on organising a conference this very day between practical chemists from industry

    659
    and research chemists from universities? Will not that approach help to guarantee the continuation of the £4.4 billion that the chemistry-based industries earn in exports?
    Mr. Hughes: I can certainly congratulate the society. The opening words of the programme for today's workshop are:
    "Chemistry is the lynch pin of one of the most successful sectors of UK industry."
    That is absolutely true, and we want to do what we can to ensure that it continues.
    Mrs. Ann Taylor: Does the Minister not share the concerns of the Royal Society of Chemistry about, for example, the deterioration in university chemistry laboratories, which is preventing students and researchers from reaching their full potential? Science education will be hampered both by that difficulty at university level and by the pending increase in class sizes at school level. Surely the problem will not solve itself. What discussions is the Minister entering into with the Secretary of State for Education, as a matter of urgency, to ensure that the difficulties are tackled and chemistry can continue to maximise its role in the interests of the British economy?
    Mr. Hughes: The hon. Lady has asked a compendium of questions. We regard chemistry as extremely important. That is one of the reasons why we were anxious to increase the amount of money made available to the relevant research council. As for education, the fact that science plays a large part in the national curriculum changes the nature of the facilities needed in schools. There is a large programme of refurbishing science laboratories and adding them to schools, and I have no doubt that that will continue.

    Sick Leave
    Mr. Shersby: To ask the Chancellor of the Duchy of Lancaster what procedures are in place for monitoring the extent of sick leave taken by members of the civil service; to what extent the health of those on extended sick leave is monitored by his Department's own medical officers; and if he will make a statement.
    Mr. Robert G. Hughes: General guidance to Departments and agencies on the control of sickness absence is contained in the management code.
    Mr. Shersby: What financial arrangements apply to members of the home civil service who are compulsorily retired on medical grounds? Is my hon. Friend satisfied that at the present time such arrangements are not subject to any financial constraints?
    Mr. Hughes: To be entirely honest, I do not have the faintest idea, but I shall write to my hon. Friend.
    Mr. Flynn: Does the Minister think that the motive for that question, which he has so abysmally failed to answer, might be to denigrate the work of civil servants? Would it not be far better to improve the morale of civil servants by allowing those who work in the agencies, which will not be privatised but which might be contractorised, to compete on equal terms with private firms which might bid for their jobs?
    Mr. Hughes: This is a hoary old chestnut which has been gone over many times in the House. As the Select
    660
    Committee on the Treasury and Civil Service stated, this is the sensible way to run Government, and will continue to be.
    Mr. Peter Bottomley: Does my hon. Friend agree that, if the average number of sick days taken by Companies House staff is eight times the number taken by staff in the legal secretariat, there is some reason to investigate whether that is due to management, morale or an occupational hazard?
    Mr. Hughes: Yes, I share my hon. Friend's concern. I have asked for some reports from officials. The permanent secretary in my Department has written to heads of Departments and agencies, and he will write again to ensure that they look carefully at the guidelines to see whether they can be tightened. In my judgment there is no excuse for the high rate of absenteeism in a few agencies and Departments.

    Competition
    Mr. Peter Ainsworth: To ask the Chancellor of the Duchy of Lancaster what steps the Government are proposing to increase competition in the provision of services paid for from public funds.
    Mr. David Hunt: They are many and varied.
    Mr. Ainsworth: Can my right hon. Friend confirm that, whereas some Opposition Members seem to have grasped the political advantage of moving away from state monopolies for the provision of public services while others still seem possessed of a union-inspired fear of competition, no such confusion exists among Conservative Members? Will he continue to pursue with vigour his policy to bring down costs and improve services in the interests of the public and not of the public sector unions?
    Mr. Hunt: Yes, I am happy to reply in the affirmative to my hon. Friend. This has been a remarkably successful programme and it has produced cost savings of more than £400 million a year, which is an average of 20 per cent. That is excellent news for the taxpayer.
    Mrs. Roche: In terms of the provision of services and the bringing down of costs through competition, did the Secretary of State's Department advise the Home Office about the contract for Group 4 to run Wolds prison, because Group 4 did not submit the lowest tender?
    Mr. Hunt: In the overall scheme of things, what matters is quality and value for money for the taxpayer. Generally, that can involve improvement in the quality of service. It is important to recognise that many of the savings were achieved as a result of tremendous effort by all the staff involved. That applies particularly where there was an in-house bid. We are in the current year now examining a further £860 million-worth of public services and a programme for another £250 million-with non-departmental public bodies. Value for money and an improvement in quality will result.

    Science Investment
    Mr. Hoon: To ask the Chancellor of the Duchy of Lancaster if he will make a statement about international investment in United Kingdom science.
    Mr. David Hunt: I greatly welcome such investment.
    Mr. Hoon: Does the Chancellor agree with the recent House of Lords Select Committee report, "International Investment in United Kingdom Science", that British companies are driven too much by short-term financial concerns and concentrate insufficiently on long-term research? If he does agree with that report, what does he intend to do about it?
    Mr. Hunt: There has been a considerable improvement in private sector funding for research and development. More remains to be done, and I shall do everything that I can to encourage such investment, particularly in partnership with the Government and the university sector.
    Mr. Fabricant: Will my right hon. Friend acknowledge Unilever's huge investment programme in science in the United Kingdom? Will he wish its new venture, Uniruss, well and in particular, my old college friend Mr. Richard Sutton, a member of the Royal Society of Chemistry—this alludes to an earlier question—who will be heading a division of Uniruss in the former Soviet Union?
    Mr. Hunt: I welcome any occasion on which I can applaud the work of Unilever, a company which started in the Wirral. I greatly welcome the progress that has been made. It is an example of how Britain is fighting to win at the leading edge of technology throughout the world.
    Mr. Skinner: Will the right hon. Gentleman arrange for scientific research into the reason why an increasing number of rats are leaving the sinking ship? It has now reached the stage where Ministers are resigning without being pushed.
    Mr. Hunt: I should be very happy to institute a programme of research into rats, because I recognise that the hon. Gentleman's depth of knowledge cannot be rivalled anywhere in the House.

    Magistrate Applicants
    Sir Thomas Arnold: To ask the Chancellor of the Duchy of Lancaster what is his policy towards interviewing applicants for the magistracy; and if he will make a statement.
    Mr. David Hunt: My advisory committees always try to interview as many applicants as possible.
    Sir Thomas Arnold: May I invite my right hon. Friend to consider increasing, on an experimental basis, the number of members on one or more of his advisory committees so that more applicants can have interviews?
    Mr. Hunt: I shall carefully ponder what my hon. Friend has said, but it is important to recognise that it is necessary to have a balance on any committee. However, as he has raised the matter I shall naturally look into it carefully.

    Charter Marks
    Mr. Spring: To ask the Chancellor of the Duchy of Lancaster what progress has been made in promoting the charter mark programme.
    Mr. Robert G. Hughes: The quality of service offered by charter mark winners speaks for itself and, ahead of this year's launch, we already have more than 500 expressions of interest.
    Mr. Spring: Is my hon. Friend aware of just how much my constituents applaud the award of charter marks to the Suffolk constabulary and the leisure services department of St. Edmundsbury borough council? Can he tell us how customers of public services can be involved in this year's charter mark award scheme?
    Mr. Hughes: Following last year's charter mark awards, many people inquired how they could become more involved and how they could put forward the names of public services in their areas that they knew were doing a first-class job. Therefore, my right hon. Friend the Prime Minister has announced that we will invite nominations from the public for those services that they regard as excellent.

    Appointments (Wyre)
    Mr. Mans: To ask the Chancellor of the Duchy of Lancaster if he has any plans to visit the borough of Wyre to discuss Duchy appointments.
    Mr. David Hunt: I would be delighted to visit Wyre.
    Mr. Mans: When my right hon. Friend manages to visit Wyre, which he has said he would be delighted to do, and speaks to the borough representatives of the Duchy, will he make a particular point of discussing the education policy of Lancashire county council? Is he aware that this year it has cut the delegated schools budget by £18.5 million, but cut its own administrative overheads by only £500,000? In percentage terms, it has cut the delegated schools budget by 5.5 per cent. but has cut transport and social services by 3.5 per cent. or less.
    Mr. Hunt: My hon. Friend has revealed a disquieting state of affairs. I very much hope that, following representations from him and his colleagues in Lancashire, the county council will now reconsider its approach.

    Public Services (Best Practice)
    Mr. Barry Field: To ask the Chancellor of the Duchy of Lancaster what further plans he has in respect of identifying examples of best practice in the delivery of public services.
    Mr. Robert G. Hughes: As well as the customer nominations for charter marks, we will be talking about charter publications, charter quality networks and seminars, publishing White Papers on the citizens charter and next steps agencies, as well as producing departmental efficiency plans.
    Mr. Field: Does my hon. Friend agree that charters have cut waiting times in the health service, improved services and even made the tax man user-friendly? Conservative Members believe that the customer is king,

    663
    unlike Opposition Members, who believe that public services should be run for the sole inconvenience of the public.
    Mr. Hughes: My hon. Friend puts his finger on an especially important point. The only way in which one can know whether a service is matching up to what it should, is if one has the published information on which to make one's decision. Conservative Members are in favour of publishing the maximum amount of information. Every time we put such information before the House—publishing league tables for hospitals, schools
    664
    or any other information—it is opposed by the Opposition. That is the difference between the Conservative party and the others.
    Mrs. Dunwoody: Would the Minister like to have the total agreement of the Labour party by publishing yet another list? Will he publish the waiting list for patients before they get on to the national health service waiting list, because all that is happening with these famous charters is that everyone is fiddling the figures?
    Mr. Hughes: I regret to say that the hon. Lady clearly has not read the new patients charter, which covers that.

Points of Order
3 30 pm
Dr. David Clark: On a point of order, Madam Speaker. May I seek your guidance? As you know, on Friday last, the Secretary of State for Defence published a report on the official service residences, which resulted in the departure of Air Chief Marshal Sir Sandy Wilson. That report was highly sanitised and severely edited. It was a shortened report of a larger one which, I understand, cost £100,000. Obviously, because of the brevity, much was omitted; indeed it might be argued that more was concealed than was revealed.
Of particular import to the House, however, is an admission on page 3 of the report, which states:
"Parliament was given wrong information on two occasions in 1994."
Because of the brevity of the report, no mention is made of the occasions on which the House was misled.
We have checked Hansard since early 1994, and on one occasion, there was an admission that wrong information had been given to the House, but not on the second occasion. As the House was wrongly informed, surely it is this House, and this House alone, that must be given the correct information. Will you, Madam Speaker, suggest to the Secretary of State for Defence that he come to the House and give us advice on the occasions and the details of when the House had been misled?
Madam Speaker: I have not been informed—
Mr. Peter Hardy: Further to that point of order, Madam Speaker.
Madam Speaker: I think that I can clear this up. I have not been told by the Government that they are seeking today to make a statement about the matter, but the hon. Member for South Shields (Dr. Clark) has been extremely helpful to the House. I notice that, on Friday last, he tabled precisely that question to the Secretary of State for Defence, so the entire House will be made aware of the Secretary of State's answer. I am sure that the House will be grateful to the hon. Gentleman for doing that.
Mr. Tony Marlow: On a point of order, Madam Speaker. You will remember that, some years ago, the House debated an important and serious issue, the Single European Act, which was about the transfer of many of the House's powers to international institutions outside this country. One of the subjects that was debated, a very important subject on which we got total assurance from Ministers and the Government, was that immigration policy would be a matter for the sovereignty of the House and this country alone. It now appears that there is some ambiguity about that. If powers have been removed from this House and passed on to foreign institutions as a result of misleading information—and I do not pass any blame on anyone for that—how can this House retrieve that power and that sovereignty for the House and for this country?
Madam Speaker: If the hon. Gentleman considers carefully today's motion, which we are about to debate, he will find—and I draw all hon. Members' attention to
666
this—that the matter can be raised during today's debate, and that an answer can be obtained from the Minister who is responding to it.
Mr. Marlow: Further to that point of order, Madam Speaker.
Madam Speaker: I doubt that there can be a further point of order when we are debating Europe next.
Mr. Marlow: I was asking how, having passed on this power, the House—not the Government—could set about getting it back?
Mr. Dennis Skinner: I'll tell him. [Interruption.] The hon. Gentleman should not have been taken in by Lady Thatcher.
Madam Speaker: I am sure that the hon. Gentleman will pursue the matter by means of questions and debate and, if necessary, by defeating the Government on the issue tonight. That is how the House makes its influence known and that is how it must be done—through the democratic process. Today may be an opportunity for the hon. Gentleman to use his influence in this matter.
Mr. Andrew Mackinlay: On a point of order, Madam Speaker. On 6 February, my hon. Friend the Member for Bradford, West (Mr. Madden) asked the Minister for Railways and Roads about the reported cuts in Transec, the section of the Department of Transport that scrutinises security at ports, airports, the channel tunnel and airports abroad. The Minister said that no front-line security services were to be cut, despite press reports that weekend. Indeed, he made that point twice. He said:
"There is absolutely no impact on front-line security".—[Official Report, 6 February 1995; Vol.254, c.7.]
On Friday, I received a reply to a written question from the Minister for Transport in London to the effect that "inspectorial" and "investigatory staff' were to be cut. Prima facie, that seems to be in complete contradiction to the utterances of the Minister for Railways and Roads earlier in the week. Surely there should be some clarification or a retraction by one of the Ministers so that the House is in no way misled. Has there been any indication from the Ministers that they wish to clarify the position?
Madam Speaker: I have looked at the two instances to which the hon. Gentleman refers, but I do not see that, even inadvertently, the House has been misled. Hon. Members must interpret for themselves what Ministers say and not raise such matters on points of order. If the hon. Gentleman feels that there is an inconsistency, I advise him to pursue the matter with Ministers by means of questions or an Adjournment debate so that he can be clear about the matter if he is not clear at the moment.
Mr. Nick Ainger: On a point of order, Madam Speaker. Has the Secretary of State for Education said that she intends to make a statement to the House about the Student Loans Company, in view of today's revelation that a new company is to take over the running, of the Student Loans Company's computers and will save the taxpayer hundreds of thousands of pounds? Last year, the National Audit Office investigated the Student Loans

667
Company, which was a shambles, especially with regard to the number of students having to wait inordinate lengths of time—
Madam Speaker: Order. I do not know what the point of order is for me. It sounds like a point of politics rather than a point of order, but I am sure that the hon. Gentleman could raise the matter in an Adjournment debate or ask questions of the Secretary of State for Education during Education questions, which come up in about 10 days. I am sure that an attempt will be made to answer them.

STATUTORY INSTRUMENTS, &c.
Motion made, and Question put forthwith pursuant to Standing Order No. 101(3) (Standing Committees on Statutory Instruments, &c.),
That the Local Government (Compensation for Redundancy) (Scotland) Regulations 1994 (S.I. 1994, No. 3068) be referred to a Standing Committee on Statutory Instruments, &c.—[Mr. Lightbown.]

Opposition Day
[5TH ALLOTTED DAY]

Europe and a Referendum
Mr. William Cash: On a point of order, Madam Speaker. You did not indicate which amendments, if any, might be discussed. I tabled a manuscript amendment relating to the issue of a single currency before the intergovernmental conference. Could you please give an indication whether my amendment, or any of the others, is to be considered?
Several hon. Members rose—
Madam Speaker: Order. I am sure that I can cope without any further help. I would always announce which amendments I had selected if, in fact, I had selected any. I am sure that the hon. Gentleman and the whole House knows that. In this case, in order not to waste the time of the House—I am not one to do so—I have not selected any amendments.
3.39 pm
Mr. Paddy Ashdown: I beg to move,
That this House believes that the popular assent of the people of the United Kingdom should be sought through a referendum before any substantial alteration of the present constitutional settlement between the European Union and its Member States.
There are two basic reasons which support this proposition. The first turns on principle and the second on practicality.
First, the matter of principle. Throughout the whole debate on Europe, we have heard much of the importance of the sovereignty of Parliament. But sovereignty does not lie with this institution. It lies with the people of this country. The powers that we have are not ours as of right, to give away as we wish. They are vested in us through the democratic process by the people of this country. Those powers should be redistributed only with the consent of the people from whom they come.
Those who argue the case for the indivisible sovereignty of Parliament seem to believe that sovereignty is an item, a single thing which resides in a single place—in a little box behind the Speaker's Chair, perhaps. But sovereignty does not reside in a single place. The people can vest their power wherever it is of benefit to them to do so. I would argue that there should be much more power at local level, some in Westminster and some—where it is beneficial and to the advantage of the people in the country—in the institutions of Europe. The point is that it is their sovereignty we are dealing with, not ours.
That is why I argued for a referendum before the Maastricht treaty was acceded to, and it is why we argue today for a referendum if there is to be any further shift in the constitutional settlement between Britain and Europe.
The second reason for a referendum on Europe has to do less with principle and more with politics. Anthony Sampson once wrote:
"Britain joined Europe not in a fit of absence of mind, as she was said to have acquired her Empire, but by a process of deliberate deception".
If that is so, it will no longer do. The debate about Europe has been a politicians' debate which has excluded the people whom Europe is supposed to serve.

669
Maastricht was a politicians' treaty, drawn up in the gilded palaces of Europe, couched in language most people could not understand and many Cabinet Ministers did not even bother to read, and passed through the House in a charade of indecipherable late-night procedures and funny hats. Little wonder that many people see Europe as a conspiracy by the politicians and bureaucrats from which they have been excluded.
Those who believe in the constructive continuing development of Europe should, with some humility, recognise that we nearly lost the whole enterprise as a result of that arrogance. Another attempt to take the people of Europe into a process of further integration, either depending on their ignorance or against their will, could be fatal to the whole European project.
Next time, we have to engage our electorates in the debate and carry them with us. If that means that we address their aspirations and anxieties more effectively, so much the better. If it also means that the political classes have to explain the benefits of what we seek to do in terms that they can understand, better still.
Mr. Tony Marlow: The right hon. Gentleman mentioned the future transfer of power, and he has said that people's sovereignty has been transferred by the Maastricht treaty without their being consulted. As a good democrat, does he believe that we should have a referendum now to agree to those powers which have been transferred?
Mr. Ashdown: The hon. Gentleman is a bit behind the times. The Maastricht treaty has been put into effect, and the right time for a referendurn on it was before the treaty was acceded to.
I do not underestimate either the pain or the difficulty which may face us in the process of European integration, not least through the single currency, if that comes—I believe it will. That is why the decisions we make need to be ones which have the positive assent of our people, and not ones which—because they are taken without consultation by one Government—can be as easily reversed by the next when the going gets tough.
We will no doubt hear arguments from all sides during the debate against a referendum. I shall give the most common of them.
First, there is the argument advanced by those who would otherwise share my views on the importance of Europe to this country. They tell me that it will be embarrassing to go into the Lobby with people who wish to use a referendum to wreck Britain's future in Europe rather than enhance it—people such as the hon. Members for Stafford (Mr. Cash) or for Southend, East (Sir T. Taylor). That may be so, but ideas should not be judged by the company that they keep. It is perfectly possible to disagree about Europe, but agree about democracy.
Mr. William Cash: Will the right hon. Gentleman give way?
Mr. Ashdown: I shall give way to the hon. Gentleman in a minute if he will first let me develop my argument a little further.
To tell the truth—and addressing the hon. Gentleman directly—I have a sneaking admiration for him and his hon. Friends. At least they are honestly arguing the anti-European case in which they so passionately believe. That is more than can be said for those shadowy figures,
670
including some in the Cabinet, who share the same views, play to the same audiences and raise the same scaremongering fears, but hide behind the claim that they really support our infinitely flexible Prime Minister and his infinitely flexible vision of "Britain at the heart of Europe". If a referendum flushed out those closet Europhobes, it would be doing us all a great favour.
Mr. Cash: The right hon. Gentleman made a deliberate slur on me. Without in any way taking umbrage at what he said, I must ask him whether he would accept that I voted yes for the referendum in 1975, yes for the Single European Act in 1986 and yes for the European Economic Area. The reason why I would not support the Maastricht treaty and the Act that followed it was simply that they form the blueprint for European government—the sort of thing that we cannot allow in this country without damaging the very things that the right hon. Gentleman talked about at the beginning of his remarks.
Mr. Ashdown: The hon. Gentleman makes his own point in his own way, and I have no doubt that he will seek to elaborate on it in his speech. If I misrepresented his view, I apologise.
What is unquestionably the case is that the hon. Gentleman's view, which is openly and honestly expressed—and with which I passionately disagree—is held in a hidden, camouflaged fashion within the Cabinet and the Government. It is those people—not the hon. Gentleman, who has been courageous in stating his position—who need to be flushed out. We all know where they stand—they are on the same side and hold the same views as the hon. Gentleman, but are less forthright about such matters. They are content, for reasons at which we can only guess, to hide their opinions within the Cabinet of the present Government.
The next argument to be advanced is that such matters are too complicated for ordinary people to understand, let alone vote on. Frankly, that argument tells us more about those who use it than about the electorate, in which they seem to have so little confidence. Do we really have such a low opinion of the British electorate that we believe that they should be denied the right to vote on issues that the Irish, French, Danes, Austrians, Swedes, Norwegians and Swiss have been allowed to decide on?
Then there are those who say that referendums are alien to our parliamentary democracy.
Mr. Ray Whitney: Will the right hon. Gentleman give way?
Mr. Ashdown: If the hon. Gentleman will give me a few more minutes, I shall be happy to give way to him. But I cannot do so at present.
Mr. Roger Knapman: Will the right hon. Gentleman give way?
Mr. Ashdown: If the hon. Gentleman will forgive me, I shall give way to him in a moment.
There are those who say that referendums are alien lo parliamentary democracy. But Britain has had three referendums over the past 20 years without seeming to be much the worse for them. Nearly all democracies, with a few exceptions, have used national referendums at some time or another.

671
Then there are those who say that we cannot have a referendum because it is impossible to frame the question. That ignores the fact that similar questions have already been posed, debated and answered before in this country—just as they have in no fewer than seven other European countries over the past three years.
The matter of the question is, it seems to me, very simply answered. Parliament should first debate and pass any treaty and then that can be put to the British people for their assent. If, whatever the Prime Minister's forlorn hopes to the contrary, constructive steps forward are proposed after the next IGC which substantially alter our constitutional relationship with Europe, the package as a whole should be put to the British people for their consent.
Mr. Donald Anderson rose—
Mr. Ashdown: If the hon. Gentleman will allow me to make a little progress, I shall give way later.
Lastly, some people who, like me, want constructive, sensible European integration to continue, argue that we had better not have a referendum because we would lose it. Nothing more clearly reveals how far on to the defensive the pro-European voice in the country has been driven by weak leadership, the frightened silence of Conservative Europeans and the withdrawal of Britain's business interests from this vital debate.
Several hon. Members rose—
Mr. Ashdown: I give way to the hon. Member for Stroud (Mr. Knapman), who was, I think, first.
Mr. Knapman: In view of all that the right hon. Gentleman says and his enthusiasm for referendums, why did so many Liberals not vote for the referendum proposals during the passage of the Maastricht treaty?
Mr. Ashdown: It was a free vote at that stage. [HoN. MEMBERS: "Oh!"] The hon. Gentleman has some cheek, considering how divided and split the Conservative party is on the whole issue of Europe. However, one thing is unquestionably clear—that the words of the motion are precisely the words on which the Liberal Democrats fought the European elections last year, and we fought them on a united basis, which is more than can be said for any single European policy of Conservative Members. The Conservative party is divided from end to end.
Several hon. Members rose—
Mr. Ashdown: I intend to make a little progress.
The battleground of Europe has been ceded to a tiny minority of the Tory right. What is driving Britain's policy on Europe now is not the long-term interests of the country, but what Lord Howe has recently called—I use his words precisely—the
"short term tactical considerations of party management".
Lord Howe wrote:
"In the search for party unity at any price, UK foreign policy is being dragged into a ghetto of sentimentality and self-delusion."
Exactly. Europe is far too important an issue for Britain for it to be left to an internal spat in the Conservative party and the minor mathematics of the Conservative
672
Whips. The debate must now be widened beyond the confines of the Conservative party, to include the public at large; that is the purpose of the motion.
However, to argue the case for Europe is not to defend everything that Europe does, any more than to be proud of Britain is to defend the archaic, undemocratic way in which the country is governed. Of course Europe can be undemocratic and insufficiently accountable, but it is much less undemocratic and unaccountable than many parts of the quango state created by the present Government since they came to power.
Of course Europe can be too over-centralised, but why does it not stick in the throat of a Conservative Minister who says that, when the Conservative Government have torn the heart out of local government in Britain and refused to allow any form of self-government in Scotland or for Wales?
Mr. Hugh Dykes: The right hon. Gentleman is giving way to quite a few interventions, for obvious reasons, and I am sure that there will be more.
At least the Liberal Democrat party shares with the vast majority of the parliamentary Conservative party, and the Conservative party outside Parliament, a strong enthusiasm for those European developments. Does the right hon. Gentleman agree that many members of the public would accept the second part of his thesis—that, whatever the thoughts about whether there should be a referendum and the effects that it would have on the House, at least the great public debate that would unfold would get us away from the poison against Europe that is seen in The Daily Telegraph, The Times, The Sun and the Daily Star, and we would have a proper, balanced debate, showing the real arguments for Europe?
Mr. Ashdown: I very much agree with the hon. Gentleman, and I admire his courage for making those arguments in the House and outside. It appears that he is almost as unpopular with Conservative Back Benchers as I am, and I feel a certain fellow feeling for him in consequence. I will allow one more intervention from the Opposition side of the House and then I shall not give way again as I wish to give other hon. Members a chance to speak in the debate.
Mr. Donald Anderson: I am grateful to the right hon. Gentleman for giving way. The motion refers to
"a referendum before any substantial alteration".
Who but the Government of the day will decide whether an alteration is sufficiently substantial?
Mr. Ashdown: The answer is: this House. I will now make a little progress with my speech.
Of course, as we have argued on many occasions, Europe's institutions and programmes need reform—starting with the common agricultural policy. But it is sheer hypocrisy to argue one day, as the Government do, that the CAP must be reformed and then to vote the next day against any extension of majority voting to enable that to happen.
There is no such thing as a "steady state" European Union. If the process of European co-operation is not moving forward, it will start to move backwards, as those

673
who seek to block it know very well. Listen to the words of Sir Leon Brittan, who, writing in the Daily Telegraph last week about the single market, said:
"The European market is not an achievement that Britain can assume will never unravel, for the forces of protectionism and narrow national interest will always seek to gnaw away at it".
There is a different, more positive view of Europe, and it needs to be heard more in this country. It is a vision of Europe which is democratic and decentralised and which co-ordinates the things that it should be co-ordinating, such as defence and foreign affairs, rather than interfering where it should not in things that are done better by nations, regions and local communities. It is a Europe which recognises, preserves and celebrates its cultural diversity and its national differences. It is a Europe which is made up of nation states which choose to pool elements of their sovereignty to create something larger because it is in the interests of their citizens to do so.
Perhaps our mistake these last three decades has been to try to sell Europe to our people as a purely economic affair, to be measured solely in pounds and pence, jobs and prosperity. Of course, Europe has brought huge economic benefits for British business and British consumers, as the Chancellor made quite plain only last week. But that purely economic emphasis tends to make people look on Europe as a sort of communal kitty, which we keep eyeing nervously to check that someone else is not taking out more money than we are.
In reality, the European ideal is much bigger than that. For Europe, the idea of European union is the biggest political idea this century and the most important safeguard of our prosperity, peace and stability in the next century. But it is an idea which is now being forced into retreat through weak leadership and the want of people to stand up and defend it.
As nationalism rises within the nations of the European Union and conflict deepens in the collapsed Soviet empire to the east, we will either find the political will to lock ourselves together more tightly in Europe, or we will have neither stability within our borders nor peace around them.
Sir Terence Higgins: Will the right hon. Gentleman give way?
Mr. Ashdown: I am sorry, but I must make progress.
The tragedy is that Europe could be losing its strength and cohesion just at the moment when we need it most. Many of the problems which now confront us in Europe are ones that we cannot solve alone, such as the creation of a safe and clean environment, the preservation of peace, the maintenance of a strong economy in the face of the global market and international currency speculation, and the widening of opportunities for our citizens and our children.
Those who see Europe as merely a collection of co-operating states—as so many do on the Government Benches as well as many in the Labour party—should reflect that that is exactly what they argued for in the 1930s with futile, and ultimately disastrous, consequences.
At the end of a thousand years in which Europe has been the engine and the cockpit for war—first on our own territory, then by export elsewhere in the world—can we find a different way? We began this half-century with Dresden and the gas chambers of Auschwitz. We finish it
674
with ethnic cleansing in Bosnia. The question before Lis—and we had better answer it pretty quickly—is whether we have time to do better than we have done so far. That is why Europe matters. That is why it is time to bring Europe's people into the process of shaping Europe's future.
4 pm
The Minister of State, Foreign and Commonwealth Office (Mr. David Davis): The right hon. Member for Yeovil (Mr. Ashdown) started by saying that his speech would be about principle and practicality. Much of what I heard was simply political opportunism. I will elaborate on that point at some length later. First, I will put the debate in the context of the Government's view of Europe and where we will be in the next year or two.
The Government start with the conviction that membership of the European Union is in our national interest—that we are confidently and constructively part of Europe. Much is said about the European Union's problems and shortcomings, and I would be the last to deny that they exist. I will take the opportunity to set out our approach to some of those problems.
Before I start to do that, we should not forget the justifications for joining the Community and for remaining part of it. As the right hon. Gentleman mentioned at the end of his speech, 50 years ago Europe was a continent of ruined cities, exhausted peoples and broken economies. From those ruins, we have created a Europe that is infinitely safer and more prosperous than anything that our forebears could receive—a Europe in which many of the old conflicts have been replaced by co-operation.
The European Community, NATO and free market economies have ensured that Europe acts now as a magnet to the countries of the east and offers the prospect of extending stability and prosperity throughout our continent. A wider Europe is the best instrument for eliminating instability in central and eastern Europe.
Europe is crucial to our prosperity. We are a trading nation and have been for centuries. The single market has been good for trade and good for Britain. Half our visible trade is with Europe. Companies in Japan, Korea and the United States choose to invest in the UK—including in Derbyshire—and to create hundreds of thousands of jobs, because we're in business in Europe.
Mr. Dennis Skinner: Name one.
Mr. Davis: Toyota.
Mr. Skinner: When Toyota was welcomed into Derbyshire, hon. Members on both sides of the House claimed credit for this, that and the other council attracting that company to the county. I made it clear to the Speaker and to the House on that occasion that I did not welcome Toyota because it would finish up with a single union deal that would result in a lack of union membership. I have been proved right.
It has resulted also in thousands of car workers losing their jobs elsewhere. The Minister must face the fact that he is dealing with a motion from the same Liberal party that in November 1992 allowed the Government to escape. They were on their knees. The Prime Minister was

675
looking around for allies, and "Paddy Backdown" saved him that night and allowed the Government to continue in office.
Mr. Davis: I must admit that there have been times in my ministerial career when I have wished that the hon. Member for Bolsover (Mr. Skinner) was a Member of the European Parliament rather than this Parliament, but today is not one of those days. I am glad to hear that the hon. Gentleman is not interested in jobs for his constituents.
Mr. Skinner: I was not talking about my constituency. The Minister does not even know what he is talking about.
Mr. Michael Fabricant (Mid-Staffordshire): On that very point, is the Minister aware that, only two days ago, Toyota announced the employment of an additional 1,300 people, many of whom will come from the constituency of Bolsover?
Mr. Davis: My hon. Friend makes my point very well.
Mr. Andrew Mackinlay: Is the Minister going to mention the referendum?
Mr. Davis: Indeed.
There are other areas where acting together has enhanced our influence in the world. Above all, it provided the collective strength for success in trade negotiations with other big players such as the United States and Japan. That strength clinched us the Uruguay round deal in 1993, which was a real breakthrough in trade liberalisation, opening countless doors for British business.
Not everything is right with Europe—far from it—but, unlike the Opposition parties, who seem to accept everything in Europe uncritically, we recognise that fact. I make the odd exception for some Opposition Members. We have to do two things. First, we must set out our vision of the European Union and secondly, we need to develop a detailed approach to the particular issues facing Europe today.
We have a clear view of how we want to see Europe developing over the coming months and year. The Prime Minister set out our views eloquently in his Leiden speech.
Mr. Donald Anderson: How can the Government claim to be at the heart of Europe if, in advance of the intergovernmental conference, they have said, "No, no, no, no," to the issues to be debated?
Mr. Davis: Perhaps the hon. Gentleman should wait and hear precisely the point that I am about to develop.
The Prime Minister set out our views eloquently in his Leiden speech. We want a Europe that does not impose undue conformity, but one that encourages flexibility; a Europe capable of including more than 20 nation states. We want a Europe that is built by nation states, not designed to supersede them; a Commission that is the servant of the Community, not its master; a European Parliament with a defined role which is complementary to national parliaments, not in competition with them. That
676
is why subsidiarity is important. It means that the Community and its institutions work with the grain of history, with the grain of national interest, not against it.
Mr. Marlow: I am very pleased to read that my hon. Friend is on the threshold of becoming a member of the Cabinet, because I think that he would make a very good Cabinet Minister. It is the rule with Cabinet Ministers that they all have their own particular spin on the European issue, especially the single European currency. Would it be possible, to use the Prime Minister's words, to be part of EMU and, at the same time, to have flexibility?
Mr. Davis: I wonder whether my hon. Friend was complimenting me when he said that he thought I was on the threshold of the Cabinet. It is not necessarily clear. Also, I am not entirely clear what my hon. Friend means by flexibility within EMU. Does he mean within monetary union?
Mr. Marlow: My hon. Friend says that the Prime Minister says that the sort of Europe we want is one in which nation states have flexibility. Would that degree of flexibility be consistent with Britain participating in economic and monetary union?
Mr. Davis: That is the classical hypothetical question, which, as the Prime Minister has said, since my hon. Friend is referring to his words, will not be addressed in this Parliament and quite possibly will not be addressed in the next Parliament.
Dame Elaine Kellett-Bowman: Did my hon. Friend have the pleasure of hearing the disagreement between Labour Members on the 1 o'clock news, during which Mike Elliott, the Labour spokesman in the European Parliament, appeared to be recommending a common immigration policy and the hon. Member for Blackburn (Mr. Straw) immediately slapped him down and disowned him, and said that Mr. Elliott misunderstood the situation? Can anybody enlighten us about where Labour stands on this very important subject?
Mr. Davis: If my hon. Friend will wait—
Mr. Mackinlay: When are you going to mention a referendum?
Mr. Davis: If all hon. Members will wait, I shall come to that issue.
We want a Europe that is outward-looking. Enlargement to the east will underpin stability, prosperity and democracy in central Europe. [Interruption.] I note that those on the Front Bench below the Gangway do not think this important, but it is one of the key issues that will dictate the peace of our generation and of subsequent generations. We need to open our markets to our neighbours to the east, and to others around the world. That is because importing their goods is the best way of exporting stability; and exporting our goods is the best way of modernising their economies.
We want a Europe which the ordinary people of Britain can understand and feel comfortable with. That Europe is built on a Conservative vision. It is a Europe committed to free trade and fair competition: a Europe flexible enough and robust enough to encompass the nations to the east. We want a Europe that can advance by co-operation to achieve shared objectives and shared aims.

677
As the Labour party is making so much fuss, I might add that the Conservative party needs no lecturing about Britain's interest in a successful Europe. I shall take no lectures from Labour Members, given that their leader, in his 1983 election address, called for Britain to pull out of the European Union.
While he was performing somersaults, we pressed hard and successfully for the single European market. We won the argument for bringing our continent together by enlarging the European Union. We helped the EU to throw its weight behind free trade in the agreement on Gatt. Our efforts have helped to bring the EU's spending under better control. We enshrined, for the first time, the principle of subsidiarity in the Community's work, and we set the Community on the long road to reform of the common agricultural policy.
Mr. Dykes: Does my hon. Friend agree that one of the striking features of the creation of the single market was the fact that Britain was in the forefront of advancing those policies and, quite rightly, of insisting on the use of majority voting? That was the only way to get through the decisions necessary for harmonisation of the single market. Should not the same mechanism apply to other main areas of decision making?
Mr. Davis: The first half of my hon. Friend's comments was correct. That was precisely why Margaret Thatcher supported the idea of allowing QMV—to push past the protectionist road blocks in the way of a single market. My hon. Friend will find that I return to his second point in a moment.
These achievements have been of major benefit, not only to Britain but to Europe, too. Our domestic debate often shrouds those successes in fog, but when the fog clears, we shall see that most of the significant landmarks of this age will have our fingerprints on them.
These successes have been won by a mixture of hard graft, tenacity and skilful negotiation, and by confidence in ourselves and in our case. They have meant digging in and taking some flak—the right hon. Member for Yeovil should understand that. There may be occasions when we need to do so again: that is not the end of the world. It is called negotiation. It is what all Governments do, and what the British people expect of their Government. Negotiation means arguing hard for our point of view and building alliances where we can. It does not mean biting our tongues for fear that others may disagree with us.
Against this background, let us look at the substance of the Liberal Democrat motion. The 1996 IGC is at the crux of that motion, so it may help if I start by setting out the likely timetable. A study group of representatives of Foreign Ministers will prepare the ground for the IGC. I shall represent the Foreign Secretary. Spain will chair the group's first meeting in Messina on 2 June, and we expect it to meet regularly throughout the second half of this year.
678
The group will have before it reports from the Council, the European Parliament and the Commission. Others are, of course, free to put their views to the study group. I hope that Committees of this House will do so—
Mr. Mackinlay: Are you going to mention a referendum?
Mr. Davis: We expect the study group to report to the Madrid European Council in December, which in turn may well convene the IGC, to start early in 1996 under the Italian presidency.
The evidence of past IGCs is that mastery of complexity is a key to success in the negotiations, as our Prime Minister has demonstrated. We shall therefore review carefully all the various policy options within our objectives between now and the IGC.
It is a paradox that we are debating vital issues on such an irrelevant motion, albeit a paradox and an irrelevance only too characteristic of the Liberal party. The motion calls for a
"referendum before any substantial alteration of the present constitutional settlement between the European Union and its Member States."
Such a substantial change would require the assent of every member state, and it would not get it.
I shall quote what my right hon. Friend the Prime Minister had to say during "Breakfast with Frost" in January:
"I do not believe anything is going to happen in that conference that would remotely justify a referendum, I do not think it is going to deal with constitutional matters … if anything that involved significant constitutional change were raised in the 1996 Intergovernmental Conference, we, the British, would not accept it, so the question of a referendum would not arise."
Sir Norman Fowler: I accept what my hon. Friend has said about the IGC, but would he accept that different factors apply to a single currency? Will he confirm that the option of a referendum on any decision on a single currency remains open to the Government?
Mr. Davis: I was quoting my right hon. Friend the Prime Minister, and I shall continue to do so. He said on another occasion—this is 1994—
"I made it clear that I did not rule out a referendum. One will have to wait and see precisely what the circumstances are. I think it is wise to wait and see precisely what those circumstances are. I have indicated that in certain circumstances it might be appropriate to have a referendum, and if they are, we will."—[Official Report, 12 December 1994; Vol. 251, c. 620.]
Mr. Menzies Campbell: If the Minister is so concerned about paradox, perhaps he will explain to the House the paradox between the views of the Chancellor of the Exchequer about a single European currency and those of the Chief Secretary to the Treasury.
Mr. Davis: I shall put an alternative paradox to the hon. and learned Gentleman. During the Maastricht debate, the leader of the Liberal party, the man who is proposing the case that is set out in the motion, said that he did not support the opt-out on European monetary union. Had that opt-out not been available, the question would not have been capable of arising. I hardly think that that is an easy paradox.
Mr. Barry Legg: I am interested in my hon. Friend's references to the comments

679
of my right hon. Friend the Prime Minister during his interview with David Frost. In the interview, on 8 January, my right hon. Friend went on:
"I would certainly keep open the option of a referendum in 1996. But the only reason for anybody offering a referendum on the IGC in 1996 would be if they were prepared to accept constitutional change in the negotiations."
My right hon. Friend then listed examples of constitutional change. Among them was a
"firm commitment to a single currency."
Will my hon. Friend confirm that the Government still stand by what was said in the Frost interview—that the option of a referendum is still open on a single currency, and that the Government regard a single currency as a matter of constitutional change?
Mr. Davis: It is a pretty easy question when a Minister of State is asked whether he agrees with the Prime Minister. I think that that is the case still—[Interruption.] It bears on what the Liberals are up to. How is it that, in the midst of the real debate on Europe, they can find such a non-motion on a non-issue? I suppose that the answer lies in the point made by my hon. Friend.
Mr. Mackinlay: Will the Minister give way?
Mr. Davis: I shall do so shortly.
My right hon. Friend the Prime Minister said that anyone offering a referendum would do so only if he were prepared to accept such constitutional change. That is what the Liberals want. They want a great leap forward to a federal future. That is not what we want, and we are not negotiating for that. It is not what the British people want. The irony is that the Liberals want a referendum to save themselves from themselves.
The Liberal Democrats' unthinking federalism is not just limited to constitutional reform. They would renounce our opt-out on the social chapter. They would increase the cost and burdens on business. Jacques Delors said that the opt-out on the social chapter would make the United Kingdom an investors' paradise. The Liberal Democrats' policies would have precisely the opposite effect. There is little doubt how the British people would react to such a portfolio of policies. It would be less a referendum than a rejection slip—and rightly so. The Government's targets for 1996 do not include that at all.
Mr. Mackinlay: We heard from the hon. Member for Milton Keynes, South-West (Mr. Legg) and the right hon. Member for Saffron Walden—[Hors. MEMBERS: "Sutton Coldfield"]—(Sir N. Fowler). Sorry—scout jamboree 1957. The Minister was challenged to clarify whether the Prime Minister's utterances earlier this year are still operational. We listened carefully to what he said; he said, "I think so".
That really will not do. Can the Minister assure us that, when a Minister replies this evening, the position of the Prime Minister will be clarified, as to whether the promise of a referendum is still on the cards, in the circumstances outlined by the hon. Member for Milton Keynes, South-West? Can we have that clarification this evening?
Mr. Davis: I read to the House the words of the Prime Minister in December 1994. Those words still apply.
680
I have never heard my hon. Friend the Member for Saffron Walden (Mr. Haselhurst) referred to before as the hon. Member for the scout jamboree 1957.
The Government's targets for 1996 include entrenching the role of the nation state, through better balanced weighting of qualified majority voting, through developing subsidiarity, through enhancing the role of the national Parliaments.
On qualified majority voting, we need a system that better reflects the population levels of the member states. There is a growing recognition throughout the Union that the existing arrangements are undemocratic. Why should each Belgian vote in the Council represent 2 million people, while ours represents 6 million?
We have made good progress on subsidiarity. In 1990, there were 185 new legislative initiatives. Last year, there were just 47. All new Commission proposals must pass tough subsidiarity tests. The extensive programme of repealing and amending existing legislation is progressing well. We are considering how the process can be moved further in the right direction in 1996.
Mr. Simon Hughes: I am concerned that the Minister may not mention referendums at all unless we pursue him a bit and prompt him to give us some answers. I want to ask him the constitutional question.
Given that it may be the case that having a common European currency is of such importance that we may, according to the Government, have a referendum, and the Government are not quite sure, does the Minister accept on behalf of the Government that if—as is inevitably part of the European constitution—powers are handed over from this place to a European decision-making body, it is better that they are handed over with the assent of the people by vote rather than by a decision made, behind closed doors, by representatives of Ministers, who currently take the decisions regularly to transfer powers from this country to Europe as a whole? Is it better that the people decide or that Ministers decide? That is the constitutional question, irrespective of whether we are applying to the single currency or any other specific agenda item this year, next year or over the next decade.
Mr. Davis: The hon. Gentleman's memory is becoming incredibly short. That is why my right hon. Friend the Prime Minister said:
"I made it clear that I did not rule out a referendum."—[Official Report, 12 December 1994; Vol. 251, c. 620.]
My right hon. Friend the Prime Minister said in his speech at Leiden last September:
"People will continue to see national Parliaments as their democratic focus. It is national parliamentary democracy that confers legitimacy on the European Council".
This House, probably more than any other in the European Union, knows how important it is that Ministers in the Council are accountable to their national Parliaments. But we should also be looking at ways to ensure that we can involve parliaments more directly in the Community process. We want the voices of national Parliaments to be heard clearly in the democratic functioning of the Union.
Mr. Charles Kennedy: May I follow the Minister's earlier comments about the referendum to their logical conclusion? The more

681
slavishly he sticks to the text of the Prime Minister's various speeches, which hinted at different things in different places, the more confused he seems to become.
The Minister described today's debate as something of an irrelevance, saying that the referendum issue would not come up. It would not come up because the Government would not accept any package at the intergovernmental conference that they considered to be of constitutional import. Is the hon. Gentleman saying that, if the Government do not get their way, and there are constitutional implications, the referendum will be off the agenda on grounds of irrelevance? What would the Government do in such circumstances? Would they leave open the option of exiting from the European Union on the present membership basis?
Mr. Davis: The hon. Gentleman pretends to be the Liberals' spokesman on Europe, but he does not realise that we have a veto on treaty changes. That is the point with which we embarked on this issue, and it brings me neatly to what I want to say next. We shall always push Europe in a decentralised, intergovernmental direction, which is the opposite of the thrust of Liberal Democrat policy.
Mr. Cash: Will my hon. Friend give way?>
Mr. Davis: In a moment.
If the Liberal party were in power—which is, admittedly, a scenario imaginable only in a world of fantasy politics—it would deliver a European policy unequivocally federalist in tone, strategy and content: a policy that, directly and indirectly, would funnel power away from the nation state and towards supranational institutions.
Let us look at one or two of the Liberal party's policies. Let us consider its policies on national vetoes and sovereignty. The Liberals have made a number of attempts—including some today—to confuse the issue on the question of the national veto; so let me quote from a speech made by the leader of the Liberal party in Torquay little more than a year ago, in December 1993. I am sure that the right hon. Gentleman remembers it well. He said:
"We want to see the European Parliament catch up with the Council of Ministers in power, with equal law-making rights over more issues. And we want the Ministers to make decisions in public without single nation vetoes."
Nothing could be clearer. Now, however, the Liberals try to cover up what they know is an unpopular policy. They talk of a double majority—a mechanism that would make little difference.
Mr. Ashdown: We are used to the present Government saying contradictory things, but the Minister cannot say two contradictory things in the space of five minutes. A few moments ago, he told us that he wanted the veto to take into account populations in Europe. The double veto is designed to do precisely that. Do we take it that the Minister is rejecting the idea, or that he is accepting it? So far, he has said both within five minutes.
Mr. Davis: That was another wonderful demonstration of the Liberal party's ignorance. One option relates to qualified majority voting, to which the veto, by definition, does not apply; the other relates to circumstances in which the common consent of all nations is necessary, to which
682
the veto does apply. One involves majority voting, while the other involves the veto. They are clearly very different.
Mr. Spearing: At the beginning of his speech, the right hon. Member for Yeovil (Mr. Ashdown) referred eloquently to matters relating to the will of the people. If qualified majority voting operates—as it does—in regard to all matters relating to agriculture and fisheries, and if the Liberals wish to extend it, it may be impossible to execute the will of the people, the will of the Government or the will of our Parliament.
Does the Minister agree that a veto is not a veto if the treaty compels the taking of action by common accord—and thus, an obligation to take action, which no one can prevent, although it may be possible to prevent a specific method of implementing it?
Mr. Davis: As ever, the hon. Gentleman's facts are correct. The veto is, however, the only way in which the Government can, and always do, exercise their rights on behalf of the people.
Mr. Cash: Does my hon. Friend agree that one of the main reasons for a referendum on this issue is that, in the Maastricht treaty, we did not veto economic and monetary union and a single currency? Parliament was whipped through on this issue. The Government were unable to arrive at a satisfactory conclusion, and that has put the British people in this mess and in the confusion that has followed. Therefore, it follows that the matter must be referred back to the people to allow them to make up their minds.
Mr. Davis: No, I do not agree with my hon. Friend. He was referring to a single European currency, which was the point of the opt-out. We shall return to Parliament with that point in future.
Mr. Dykes: These are important points, and we must be clear on them. Would my hon. Friend crystallise this matter again? We expect the other member states to come up with proposals for the further steps under Maastricht at the intergovernmental conference which will involve constitutional change and certification of the move to a single currency. Is my hon. Friend saying that the Government will formally veto those suggestions?
Mr. Davis: I am saying that we will maintain our stance against centralising measures at the intergovernmental conference. We will block them if they come up.
Several hon. Members rose—
Mr. Davis: I should like to make some progress.
The Liberal Democrat party has tried to cover its line on vetoes. We have already heard about the rather strange notion of the double majority and Liberals talk about vetoes on executive decisions as if legislation did not matter. The Government want to entrench the position of the nation state, and the Liberal Democrats want to undermine it. When we press a little we discover why that is the case.

683
Perhaps the House would like to know where the right hon. Member for Yeovil stands on the issue of the United Kingdom's sovereignty. Speaking in, I think, the Maastricht debate, the right hon. Gentleman said:
"I do not believe that the nation state is anything other than a relatively recent historical invention. I do not believe that it will always remain … throughout this decade and the next century the importance of notion of the nation state will decline, …At the same time, advanced democracies will witness the rise in the importance of community and regional identity and supranational institutions."—[Official Report, 20 May 1992; Vol.208, c. 292.]
There we have the view of the Liberal party. [HoN. MEMBERS: "Hear, hear."]. Liberal Democrat Members obviously agree.
On "The Frost Programme" in May 1994, the right hon. Gentleman was more succinct. [Interruption.] In that case, this is probably appropriate. He simply said:
"I don't believe in the sovereignty of Parliament."
It would be astonishing for a junior Member to say that, let alone the leader of a once great party which he has reduced to an irrelevant splinter group.
Liberal Democrats know that these policies are unpopular, and that is why they obfuscate and equivocate over them. They try to conceal unpopular policies behind the populist gambit of the referendum.
Liberal Democrat policies are not just unpopular: they are wrong. Liberals are transfixed by an outmoded and increasingly irrelevant commitment to full-blooded federalism. That that commitment is outmoded is not just my opinion, because it was reiterated by the Prime Minister of France only a month or two ago. When he was asked, "Should Europe move towards a federal system?", he answered:
"Its time has passed: an enlarged Europe comprising a greater number of states could not be federal."
The Liberals are not just out of touch in Britain: they are out of touch in Europe too. The motion is relevant only if Liberal policies were to be carried out, which is a notion based not just on a hypothesis but on a virtual impossibility.
Labour is little better. Like the Liberals, Labour Front-Bench spokesmen blindly accept whatever is in vogue in Brussels. We know, because they failed to hide it during the European elections, that they would negotiate away our veto. We also know, because the right hon. Member for Sedgefield (Mr. Blair) has told us, that Labour would blindly opt for the single currency. Labour Members never cease to remind us that they would join the social chapter at the first available opportunity. What a choice to put before the British people in a referendum. That is not a question the Labour party wants to be asked, let alone to answer. That is not the price it wants to pay for staying in the European Union.
The changes would not take long to enact—just a few simple signatures on a few simple documents and the next Labour Government, or even a Lib-Lab Government, would be the last British Government who were responsible to this House and the people of the United Kingdom who sent us here. That is a proposition that the British people will never support and it is why they will back the Conservative party and the Prime Minister not in a referendum, but at the next general election.
4.35 pm
Ms Joyce Quin: The motion is curious and ill-defined; it is as notable for what it does not say as for what it does say. Having listened to the right hon. Member for Yeovil (Mr. Ashdown), I am still confused about some of the motion and about what it means in practice.
As my hon. Friend the Member for Swansea, East (Mr. Anderson) said in an intervention, the motion refers to substantial changes but does not define them. It would be good to hear from the authors of the motion what exactly they mean by substantial changes.
It is clear that, in introducing the motion, the Liberal Democrats have shied away from the debate on a single currency. The motion does not make clear whether a single currency would be the subject of a referendum. Perhaps the right hon. Member for Yeovil would like to tell the House whether it would be included.
Mr. Charles Kennedy: I can clarify that point—indeed, I clarified it last Wednesday with the shadow Foreign Secretary when I showed him the proposed wording of our motion. We wanted to achieve as much support as possible in the House, so I said that the wording could be altered if necessary. He specifically asked me the same question as the hon. Lady has just asked: whether the motion ruled out a referendum on a single currency. I gave the clear answer, "Of course it does not." I do not know whether the shadow Foreign Secretary passed on that information to her. Perhaps he did not, which would explain why she is confused today.
Ms Quin: The confusion arises from the fact that I have had at least three different answers from Liberal Democrats on whether a single currency would be the subject of a referendum. That confusion among Liberal Democrats certainly existed throughout the weekend and this morning.
Sir Norman Fowler: If the motion did include a single currency, what would the Labour party say? Would it support a referendum?
Ms Quin: Our position is clear. We believe that people should be consulted. Whether that would be through a referendum or an election would depend on the timing. This is one reason why the motion does not accord with Labour party policy, a point that I had intended to make later in my speech.
Mr. Marlow: Supposing that, by some mischance, the Labour party won the next election; supposing that the issue of a single currency had not been resolved by that stage; and supposing that two years later there was a proposal for a single currency, would the then Labour Government say that there should be a referendum?
Ms Quin: Three supposes in a row make a tall order. Obviously, we will look at the position when and if it arises—[Interruption.]
Mr. Deputy Speaker (Mr. Geoffrey Lofthouse): Order. Hon. Members must settle down and listen to the hon. Lady.
Ms Quin: What I said is good sense, because we do not know what the outcome of these matters will be. It

685
would be difficult to commit ourselves in advance on what consultation there should be, although the Liberal Democrats seem prepared to do so.
Mr. Peter Shore: My hon. Friend has been given the thankless task of explaining why the Labour party is not operating a three-line Whip this afternoon. It will not do to say that Labour's position is, as it were, an option between a general election and a referendum, and we all know why. We have been through this so many times before that it hardly needs reiterating, but a general election is, inevitably, about a hundred and one issues, including the record of the Conservative Government in the past 15 years. It is not about a single currency or major constitutional changes. Only a referendum can address that issue. In all intellectual honesty, my hon. Friend should admit it.
Ms Quin: I must be a masochist, because I welcome the opportunity to explain Labour policy on these matters. No great change may result from the 1996 intergovernmental conference, and the only change may be that of a Labour Government to take us into the social chapter. As that would be a clear issue between the two main parties at the general election, there would be no need for a referendum on that issue. An awful lot depends on what comes out of the IGC process. Although I sympathise with the idea of holding referendums on these issues, I have explained Labour party policy. I do not have the authority to stand at this Dispatch Box and change policy on the hoof, even if I wanted to.
Some interesting discussions have taken place between various members of the Liberal Democratic party on the tabling of the motion. Some are obviously keener on referendums than others. Some are keener on having one on the single currency. There are differences of view. That is why the motion is ill-defined and why a bit of a fudge has been presented to us today.
Ms Liz Lynne: Is the hon. Lady saying that her view on the referendum is different from her party's?
Ms Quin: No. Often, there can be good reasons for holding referendums. That is my party's view, but it has not committed itself necessarily to holding a referendum on the outcome of the IGCs, as we are talking about conferences that will begin next year and may last up to 18 months. We do not know what its outcome will be.
Mr. Dykes: The hon. Lady has confirmed finally and conclusively that Opposition Front Benchers support the Government's position, stating that there may be a referendum, depending on what is proposed. That is 100 per cent. support for the Government's position. Why did not the Labour party do the same thing when the Maastricht treaty went through the House, so that we could have avoided the terrible turmoil in the House and outside about divisions that are sometimes artificial?
Ms Quin: I confirm the position as I have explained it to the House. That does not mean that the Labour party agrees with Government policy on Europe. Its agreement with the Government is of a strictly limited variety. One of the difficulties of holding a referendum on the Maastricht treaty was that two versions of the treaty were available—the treaty that was available to all other European countries except the United Kingdom, and the version that had been negotiated with two opt-outs by the
686
Prime Minister. That made the treaty a difficult subject to submit to a referendum. That is one of the arguments that I should like to deal with later if I can make some progress.
Several hon. Members rose—
Ms Quin: It seems as if progress will be difficult.
Many aspects should be taken into account in relation to what sort of referendum we should hold, and what sort of questions we should raise. Many of those aspects need to be decided before dealing with a motion such as this.
Mr. Legg: Will the hon. Lady confirm that Labour's position is that it supports the opt-out from monetary union, which the Prime Minister negotiated at Maastricht?
Ms Quin: We believe that the opt-out did not create any advantage for the Government; it made them seem semi-detached from Europe. No doubt exists in my mind that the nature of the economic opt-out negotiated by the Prime Minister was one of the reasons, if not the principal reason, why London was not successful in its attempt to attract the European Monetary Institute. [Interruption.] I hear some dissent to that proposal, but it was reported on German television on the day that it was announced that the European Monetary Institute would be sited in Frankfurt.
Mr. Tim Renton (Mid-Sussex): Is the hon. Lady saying, in answer to my hon. Friend the Member for Milton Keynes, South-West (Mr. Legg), that the Labour party would prefer there not to be an opt-out on the single currency? Is that her position and that of Opposition Front Benchers?
Ms Quin: We have said that, if we had been in government at that time, we would have negotiated our views on the way forward in relation to economic and monetary union. Obviously, we would have taken a different line from the Government. As we know, they talk a great deal about flexibility and other such concepts, but they have done little to tackle unemployment or to try to promote economic growth in Europe.
We wanted those conditions to be attached to moves towards European monetary union. As we have the opt-out—[interruption.] I hope that Conservative Members will give me a chance to explain my views rather than constantly interrupting. Obviously, they are interested not in answers but in making political points.
The Labour party believes that, when it takes office, it will be able to negotiate with other countries on some of its economic priorities, which are laid out in our policy document entitled "Prosperity through Co-operation". I recommend that Conservative Members read it as it would answer the questions that they keep raising and as they seem incapable of understanding the responses that I have already given.
Sir Teddy Taylor rose—
Ms Quin: If the hon. Gentleman will forgive me, I shall not give way, as I should like to make some progress with my speech. I have given way many times already, and my original speech has hardly begun. Therefore, I shall endeavour to make some quick progress.
If the Liberal Democrats had wanted to maximise support for the motion, they would have gone about things differently. As from last Wednesday, when the shadow

687
Cabinet said that it would not support the motion, Liberal Democrats knew that they had a problem, yet nothing seems to have been done to resolve it. I know, through contacting some of the other minority parties in the House, that little progress was made in trying to get their support. I spoke to the hon. Member for Newry and Armagh (Mr. Mallon) just an hour or so ago. He said that, to his knowledge, the Liberal Democrats had made no contact with his party, and that he had had no information about the motion.
Mr. Charles Kennedy: I would not normally intervene twice in the hon. Lady's speech, but the conjecture that is being dredged up as something to do with parliamentary debate is bizarre. Will she confirm that the essential problem that the Liberal Democrats faced in the past few days, in framing the motion and in seeking as much support as we could get for it, was that her party, which has far and away the largest number of Members of Parliament who can contribute to the cause, is the obvious place from which to gain more support? People outside will not understand why, after the shadow Foreign Secretary said last Monday, "We must take every and any opportunity to inflict defeat on the Government, not least over European policy," the Labour party, when the opportunity arises, officially sits on its hands.
Ms Quin: The hon. Gentleman confirms what I said—that contact, if any, with other parties was strictly limited. I can only repeat that the Social Democratic and Labour party told me that this afternoon.
Mr. Skinner: I have a copy of today's Evening Standard. There is further confusion. It has been admitted that a memorandum has been drawn up by the foreign affairs spokesman for the Liberal party, who was angry that he was getting the blame for not having taken part in proper discussions with my hon. Friend the shadow Foreign Secretary. It is reported in the Evening Standard that the Liberal spokesman has made it clear to the Liberal party leadership that he has been misled because he was told not to raise the referendum issue with my hon. Friend the shadow Foreign Secretary
"until Russell Johnston and Roy Jenkins had been squared."
That says one hell of a lot. I support the referendum.
Ms Quin: I am grateful to my hon. Friend for quoting extensively from the article in today's Evening Standard. The two members of the Liberal party to whom he referred are not, shall we say, terribly enthusiastic about the idea of a referendum, which explains quite a bit in the report.
Sir Teddy Taylor: Does the hon. Lady agree that one of the problems with having a referendum is that the scene is constantly changing? Only a few moments ago, I received notification from Brussels that plans to ban all passport controls between European countries, including Britain, will be tabled by the Commission later this year. Is she aware that, if Britain objects in any way, we shall face a challenge in the European Court of Justice. The argument is that article 7a of the treaty states clearly that a single market is an area without internal frontiers in which freedom of movement of people is guaranteed.
Does it not mean that the scene is constantly changing when only this morning some of our bright chaps were saying that there was no problem and nothing would
688
happen, while I have here an unambiguous statement to the effect that proposals will be considered to abolish passport controls within the European Union and that, were we to object, we would be taken to the European Court of Justice? The hon. Lady knows what would happen if we were taken to the European Court of Justice on this issue—we should not have a hope.
Mr. Deputy Speaker: Order. I have been very tolerant about mini-speeches disguised as interventions. I know that this is a very important debate but I shall now expect interventions to be brief and to the point.
Ms Quin: Proposals have to be agreed, and I think it is rather doubtful that the ones to which the hon. Gentleman refers will be agreed in that form. When I was travelling recently on the continent, I had to show my passport several times, so it seems that border controls are a long way from being removed. Indeed, I hope that many of the safeguards, which the hon. Gentleman and I would probably think are important, will remain in place.
There are times when the Opposition parties are able to join together effectively to defeat the Government. My hon. Friend the Member for Bolsover (Mr. Skinner) rightly referred to some of the opportunities that arose during the Maastricht debate, when we did not always receive the support of the Liberal Democrats. There have been occasions recently when the Government have been threatened on their legislative programme or in respect of their adherence to international treaties.
Such an occasion arose just before Christmas, when we debated increased contributions to the European Union budget. More recent examples occurred when we debated the European fisheries policy and, of course, when the Government were defeated over value added tax on fuel. We believe that we should take opportunities of this kind, but they nevertheless need to be better prepared in future.
Labour's position on the motion is that we believe that it is essential for people to be consulted on any major shift in our relations with the European Union. We accept that the most likely occasion for such a shift to occur will be at the outcome of the intergovernmental conferences. Such consultation may take the form of a referendum, but, because of the uncertain timing of the next general election and the fact that we do not know whether an election would involve a widespread debate on any significant change in our relationships with the European Union, we are not at this stage committing ourselves firmly as to whether a referendum will be necessary. It is something that we are clearly duty bound to keep under review.
Several hon. Members rose—
Ms Quin: I am not going to give way; I have done so many times already.
We are sensitive to the fact that people must not feel left out in the cold over the debate on Europe. After all, it was the Labour Government who gave people the previous referendum. After the high-handed way in which the Conservatives have run the country for the past 15 years, we can particularly appreciate the dangers to our political system of ignoring public opinion on such a fundamental issue.
Although this debate is about Europe, it is also about referendums and the role that they can play in our democracy. The right hon. Member for Yeovil said that

689
some think of a referendum as an alien concept that is not a usual part of the British political system. It is certainly true that referendums have been much more widely used in Europe than in our country, which is rather ironic as so many of the people who are especially keen on the idea of a referendum at the moment are those who distrust European traditions.
However, we need to consider the role of referendums and whether we want increasing use to be made of them and, if so, why. Perhaps we should have a referendum on whether we should have recourse to referendums in future. There are arguments for changing our democracy and for having a different approach.
I do not know whether any other hon. Members listened to "Analysis" on Radio 4 yesterday. People were discussing the revolution in information technology and how it theoretically makes it possible for us to have a more participatory form of democracy—for example, by using technology to give people a say and a vote, either in a consultative way or in a binding way on the Government of the day. That is certainly a very interesting idea. Do we want to follow Switzerland and have referendums with considerable frequency, or do we want to copy the example of California, where there have been many difficulties with the frequent use of referendums?
Mr. Mackinlay: Does my hon. Friend understand that many in the new Labour party would see it as a virtue if we said that people should be consulted on major constitutional issues? What is wrong with that? It was not part of British culture to allow working class people to vote until we changed that in this place. Nor were women allowed to become Members of Parliament until we changed that in this place. It would be a good idea to allow people to decide major constitutional issues as a matter of course.
Ms Quin: I am more than willing for that to be discussed widely within the Labour party. My hon. Friend will know that our democracy commission is examining such issues at the moment. None the less—
Mr. Marlow: Will the hon. Lady give way?
Ms Quin: I have already given way to the hon. Gentleman and to many others, and many hon. Members want to speak.
It is much too early to say whether the IGCs and their conclusions should be the subject of a referendum. We do not yet know whether the IGCs will lead to substantial changes, although some people feel that it is unlikely. There is some merit in that line of argument, partly because the European Union has recently been enlarged to include 15 countries and the new countries are still adapting to the European Union. Indeed, the transition process will not have been completed by the time of the IGCs.
We are also talking about enlarging the European Union to include the countries of central and eastern Europe, about which my party is very enthusiastic. I believe that such enlargement commands widespread support in the House. It would be disastrous—certainly for political reasons—if we sent a negative political signal
690
to the countries of central and eastern Europe and, having encouraged changes in those countries, seemed to be turning our backs on them.
Mrs. Gwyneth Dunwoody: Is my hon. Friend seriously saying that she expects the countries of eastern Europe to be able to meet the convergence terms, which are not only part of the next IGC but automatically part of the arrangements for our move towards a single currency?
Ms Quin: It is unlikely that most of them could meet the criteria, but the Czech Republic, for example, has said that it thinks it might be in a position to do so. There is no uniformity among the countries of central and eastern Europe which are very different and have different traditions.
Several hon. Members rose—
Mr. Deputy Speaker: Order. The hon. Lady has made it clear that she will not give way.
Ms Quin: The Labour party has hopes for the outcome of the intergovernmental conferences, and I shall briefly refer to them. Obviously we are keen on the idea of an enlargement of the European Union that would include not only the countries of central and eastern Europe, but Cyprus and Malta. I think that that was the point that the hon. Member for Lancaster (Dame E. Kellett-Bowman) wanted me to make.
Existing applications are not thought to raise any economic difficulties, and progress should be possible with them. The Labour party also hopes that we can achieve the reform of the common agriculture policy in the discussions about the IGCs.
Sir Teddy Taylor: No chance.
Ms Quin: The hon. Gentleman shouts from a sedentary position, but he will know that the consequences of trying to adapt the existing common agriculture policy to the countries of central and eastern Europe are so mind-boggling that it would be simply impossible for that policy to continue along the same lines. Therefore, we have a huge opportunity at the IGCs to put forward ideas for a new type of agricultural system in Europe.
We also believe that the IGCs could give a boost to the social dimension in the EU, and that will be far easier in the future with a Labour Government than it has been in the past under the Conservatives. We believe progress can be made also on environmental issues and the economy—crucially on jobs and on promoting economic growth—and that that can be done with a Government who take a different view from the present Government. The programme that we would propose to the IGCs would be positive and realistic, and it would be very much in Britain's interests.
It is impossible to say what the Government's approach will be while the battle is raging between the Europhobes and the Europhiles, even within the inner sanctum of the Cabinet. The Secretary of State for Employment has apparently said that three things have been decided in respect of the IGCs by the Cabinet. The Government will say no to any change in the unanimity rules, there will be no worsening of the formula for qualified majority voting, and no new powers will be given to the European institutions.

691
I do not know whether the Minister can confirm that that is the official view of the Cabinet, but I questioned the Foreign Secretary on the matter and he seemed to suggest that that was not so. I have written to the right hon. Gentleman to try to get a formal response to clear up some of the confusion arising out of the pronouncements of the Secretary of State for Employment.
The hon. and learned Member for Fife, North-East (Mr. Campbell) mentioned the difference of view between the Chancellor and the Chief Secretary to the Treasury. I noticed in one of the newspapers today that the Chancellor is asking the panel of wise men to come up with answers about the implications for Britain of a single currency. I know that the original wise men brought welcome gifts with them, but I am not sure that the outcome of the deliberations by the six wise men will be welcomed by the Chancellor. One thing is true: if it is welcome news for the Chancellor, it will not be welcome news for the shadow Chief Secretary—for the Chief Secretary, rather. [Laughter.] I suppose that something which pleases the Government is very unlikely to please us.
The divisions within the Conservative ranks may be entertaining, but they are profoundly bad news for Britain. I believe that Britain has been isolated and marginalised, and that it is losing out as a result. All the events of the past few weeks—indeed, the past few years, as far as the Tory divisions on Europe are concerned—provide ample reason why we need not only a change in strategy towards Europe by the Government, but a change of Government.
5.3 pm
Mr. Tim Renton (Mid-Sussex): I confess that I have found the debate rather disappointing so far. The Observer yesterday carried the exciting headline:
"Bring down the Tories tomorrow".
Under that headline was an article by the right hon. Member for Yeovil (Mr. Ashdown), which contained most of what he said to us in his speech earlier this afternoon. A sense of impending doom brought me hurrying to the Chamber to make quite certain that I registered my vote—faithfully, as always—with the Government.
In looking to see those who have been rallied by the article to support the Liberal Democrats in their attempt to bring down the Tory Government, we see that, at the last count, there were 11 Labour Members present. So much for the concern of the Labour party to bring down the Government. So much also for the thought that the parties opposite have any common policy at all on the issue of the Common Market or on referendums.
We heard a typical little spat between the right hon. Member for Bethnal Green and Stepney (Mr. Shore) and the hon. Member for Gateshead (Ms Quin), in which some of the divisions in the Labour party became clear.
Mr. Robert Maclennan: Will the right hon. Gentleman give way?
Mr. Renton: No, I am not giving way. Lots of hon. Members want to speak, and I am sure that Mr. Deputy Speaker would like me to make progress with my remarks.
692
My position is quite clear. I have always been opposed to national referendums. I made a speech on the subject in the House on 22 November 1974—the first time that I won an Adjournment debate on a Friday—and I still recommend its contents to colleagues. The speech contained good historical examples of the way in which referendums have been distorted in other countries, often by the way in which the question was phrased or distorted to get the answer that the Government of the day wanted to achieve.
The hon. Member for Gateshead asked why so many other countries have referendums more frequently than we do. The answer is because they have referendums written into their constitutions. In Ireland, Denmark and Australia, the need to call referendums is a constitutional matter contained in a written constitution.
Mr. Mackinlay: Very good it is, too.
Mr. Renton: What the hon. Gentleman says is fine if we wish to have a written constitution. I do not, for the simple reason echoed by Enoch Powell in a debate in April 1972 on the original European Communities Bill, when he said that the sole responsibility of the Executive is to Parliament and of Parliament to the people. I believe strongly that hon. Members are elected as representatives of a sovereign people to take difficult decisions on their behalf. If we—in the eyes of the sovereign people—get those decisions wrong, they can throw us out at the next election. That is the basis on which our Parliament is formed.
In the years I have been in the House—
Mr. Marlow: Will my right hon. Friend give way?
Mr. Renton: No. I congratulate my hon. Friend on the number of times he has intervened in the debate during the past two hours, but I do not propose to give way to him. I hope that he will have a chance to catch your eye, Mr. Deputy Speaker.
Sir Teddy Taylor: What about Scottish devolution?
Mr. Renton: I shall come to Scottish devolution in a moment, if my hon. Friend can wait.
All of us who have been in the House for a long time have taken difficult decisions on many issues. Those include moral issues, such as capital punishment and changes in the abortion laws, and constitutional issues such as the treaty of Maastricht, the Single European Act 1986 and—before I came here—the treaty of Rome. I agree strongly with Burke, who when speaking to the electorate of Bristol said:
"Your representative owes you not his industry only, but his judgment. And he betrays, instead of serving you, if he sacrifices it to your opinion".
That is not a popular view. [Interruption.] It is obviously not popular with the hon. Member for Thurrock (Mr. Mackinlay), who keeps intervening from a sedentary position. The hon. Gentleman would run in front of people and in front of the opinion of the day, and that is wrong. If the House is to retain respect, we must have the courage at times to follow our own judgment and, having listened carefully, not to be swayed from that.
On the matter of the referendum in 1975, I remind the House that the noble Lord Wilson made it plain when that referendum was introduced—the only national referendum which we have had—that it was not to be

693
treated as a precedent, and that it would be considered as an isolated referendum—required, of course, to bring unity to the Labour party of the day.
Mr. Cash: It did not.
Mr. Renton: It did not, but that is what it was hoped to achieve. I remember a constituent who was opposed to referendums saying, in plainer language than that we use in the House, "If you have a dog, you don't bark yourself."
Against that background of my opposition to referendums, I should like to talk about one or two instances of what would happen were the Liberal Democrat motion passed today—if there were to be, in the words of the motion,
"any substantial alteration of the present constitutional settlement between the European Union and its Member States"—
in which case, a referendum would be required.
There is one issue over which, under the terms of the motion, a referendum should be required, and which has not yet been touched on in the debate. It involves what Liberals, Labour and Scottish nationalists are currently saying about their determination to have a Scottish Parliament. The current constitutional arrangements—the treaty of Rome, the Maastricht treaty and the Single European Act—are between the United Kingdom, as a unitary state, and the European Union. It is clear that the current argument among Opposition Members is about how much power should be devolved from the House to a Scottish Parliament. It is not a question of whether that should happen, but how much power should be devolved.
As we heard in the debates over the weekend, the Labour party says that it should be possible to hold the line at a Scottish Assembly. The Scottish nationalists are, more realistically, saying that a Scottish Assembly would be only the first step and their ultimate aim would be full independence for Scotland. Either way, those devolution arguments signify a substantial change in the present form of the United Kingdom—as a unitary state. That devolution should therefore be subject to a referendum.
As that devolution would affect everyone on this island, it is clear that the referendum on it should be a national one, not just for the Scots but for the English, Welsh and Cornish as well. Why? Because the Liberals and Labour are both committed to some form of regional government in England that would mean devolution to the English regions to match the devolution to Edinburgh. Logically, they have to be committed to that, because it is the only way of answering the famous question by the hon. Member for Linlithgow (Mr. Dalyell) about why Scottish Members of Parliament who are unable to vote on many Scottish matters should, once matters have been devolved to an Edinburgh Parliament, vote in Westminster on comparable matters affecting the English.
The only logical answer—as is certainly realised among some Labour Members—is that comparable powers have to be devolved to English regional Assemblies comparable with those that are passed to an Edinburgh Parliament. However, the Labour party shrinks from saying that because it knows that it would be deeply unpopular. [HON. MEMBERS: "Some of us are saying it."] I am delighted if some Labour Members are—I certainly read in yesterday's edition of The Independent on Sunday that the shadow Home Secretary, the hon. Member for Blackburn (Mr. Straw), was to announce that devolution
694
in England would only involve English councillors sitting on regional bodies—they would not be elected. That would simply create another discussion body like the European Parliament. It would be seen as a fudge and as a means of getting the Labour party off the hook in terms of Scottish devolution.
Mr. Mackinlay: That has nothing to do with the issue.
Mr. Renton: Indeed it has. It is about constitutional change—from a United Kingdom as a unitary state to a United Kingdom that is split into three, four or more regions. The logical conclusion is that the introduction of English regional authorities with powers equal to the Scottish Assembly would constitute a constitutional change that must, under the terms of the Liberal Democrat motion, be subject to a national referendum. I trust that that will be Liberal Democrat policy.
Mr. Charles Kennedy: The right hon. Gentleman seems to be talking about what he wishes the Labour party's policy was rather than what the Liberal Democrat policy is—but that is a different matter. I shall pursue the logic of what he is saying about holding a UK-wide referendum for constitutional change affecting any of the constituent parts of the existing United Kingdom—the obvious one being Scotland and devolution.
The right hon. Gentleman must surely recognise that Scotland has a distinct legal system that creates a different state of affairs. Is he saying that, if the peace process in Northern Ireland leads to a referendum—as the Prime Minister has indicated—such a referendum would have to be balloted in Wales, Scotland and England to decide whether the settlement, if reached—we all hope that it will be—is acceptable? That is the logic of the right hon. Gentleman's argument.
Mr. Renton: The hon. Gentleman is deeply ignorant of the politics of Northern Ireland. Before Stormont was abolished, Northern Ireland had its own legislature and its own Prime Minister. We know perfectly well that it did, and to make a comparison between what is currently being discussed in Northern Ireland—where Stormont has not sat for 22 years—and the situation in Scotland—where two Parliaments were bound together between Scotland and England under the Act of Union of 1707— is to show an astonishing lack of knowledge of the history of the United Kingdom.
Mr. Iain Duncan Smith: Will my night hon. Friend give way?
Mr. Renton: No, I cannot give way. I am sure that my hon. Friend will be able to make his own speech later.
The other issue that I shall touch on relates to a referendum on what I can only refer to as the Cabinet's friend: single currency. Obviously, there is already a European Monetary Institute, to which the United Kingdom makes financial contributions. That will probably lead to a European central bank—that is all in hand under the provisions of the Maastricht treaty. We may regret that, although the early stages of the Maastricht treaty passed through the House with a large majority. Those are not key issues of constitutional change—they will happen in any event.
I congratulate my hon. Friend the Minister of State on dancing so elegantly on the point of a pin when addressing the House earlier. I congratulate him on his wisdom in

695
frequently repeating the words of my right hon. Friend the Prime Minister that the issue revolves around our option to join the single currency some time after 1997. As hon. Members have said that is not a matter for today, but for three years' time.
I understand that, were the motion to be agreed, we could be having a discussion on that subject and a consequential referendum in about 1998. I do not think that we should be too horrified at that prospect; the details of the effects of a single currency are not yet known. As my right hon. Friend the Prime Minister has repeatedly said, it would be foolish to take decisions about that until we have seen the shape of the decisions taken as the European Monetary Institute gets to work in the years and months ahead.
One or two of the probable consequences of an inner core of European countries joining the single currency are that long-term interest rates for those who join will fall by at least 1 per cent. [Interruption.] I expected that remark to be popular with some hon. Members. The German long bond rate—
Sir Teddy Taylor: Remember all the promises given when we joined the Common Market.
Mr. Renton: If my hon. Friend will be quiet for a moment, I shall explain to him and he will, hopefully, understand.
The German long bond rate is currently 1.5 per cent. lower than the British long-term gilt rate because there is thought to be no fear of the German mark devaluing. If, and when, a long ecu bond is established, there will be no risk of devaluation to it, and therefore, it is thought—of course it is only a hypothesis at the moment—the long-term interest rate for people who use that ecu bond will be at least 1 per cent. less than the rate of a sterling bond—
Mr. Marlow rose—
Mr. Renton: I will not give way. I told my hon. Friend that I would not.
Mr. Legg: Will my right hon. Friend give way?
Mr. Renton: My hon. Friend also has plenty of time to make his own speech.
Once an independent European central bank is established, that is also likely to lead to lower inflation for its members.
My right hon. Friend the President of the Board of Trade said in the House last Wednesday that he reckoned that, in the last year for which figures were available, almost 100,000 jobs had been created or saved in this country by the flow of inward investment into this country. If we were to join a single currency—it is only a hypothesis—that inward investment would continue.
As for the ordinary tourists, they at least would be aware that, when they went abroad on holiday, if they had ecus in their pockets they would not have to change their money into foreign currencies, and change it back again; they would avoid Thomas Cook or American Express's commission and the difference between the buying and selling rate. [Interruption.] I was expecting those remarks to be well received behind me. That could save them 4 or 5 per cent. on the cost of their holidays.
696
So when the question is asked in the referendum—if that ever happens—if the question were summarised, "Would you like to join a single currency in which interest rates are 1 per cent. lower, inflation is lower, there are 100,000 new jobs in this country every year and you will save 5 per cent. on the cost of your European holiday each year?" it is quite possible that the majority would vote in favour. Certainly that would be a possibility.
I leave hon. Members with the following thought. That would be a particular possibility at a time when Westminster—as we read in the newspapers—is held in very low esteem and it is quite feasible that the electorate would not worry too much about power passing from this Chamber over such issues as money supply to an independent central bank, on which we were represented, of course, but which would be well outside the daily reach and control of politicians.
Mr. Duncan Smith: Will my right hon. Friend give way?
Mr. Renton: I am sure that my hon. Friend will have plenty of time to catch your eye, Mr. Deputy Speaker.
In conclusion, I remain opposed to referendums, as I said at the beginning of my remarks, but when we are able to put all the facts, in two or three or four years' time, about single currencies before the British people, I believe that the arguments of lower inflation, lower interest rates, higher employment due to inward investment and the value of an independent central bank may well win the day.
5.22 pm
Mr. Tony Benn: One of the reasons why the House is held in low public regard is that, during a debate of this type, which is of major importance, the place is empty. One of the reasons why the place is empty is that we have not told the public the truth about the issue in Parliament. The truth is that all the party leaders agree about it.
The Liberal party has always been enthusiastic for a federal Europe; the Labour party, as far as I can make out from the latest lunchtime broadcasts, is also very much in favour of a federal Europe; the Government are pretending not to be, in order to deal with certain difficulties that they have, but does anyone really doubt that, if a Conservative Government were in power when the question of a common currency came along, a Conservative Government would go along with it? Therefore, let us not pretend that there is any difference.
On the other hand, there are wide differences of opinion in all parties. We should discuss those seriously because, when we discuss the future of Europe, we are also discussing the way in which Britain is governed. If we change the relationship between the electors, Parliament and the Community—or the Union, as it now is—we alter the rights of the electors, and that is what this debate should be about.
I am deeply disappointed that the Labour party has decided to abstain on the matter. In 1972–23 years ago—I moved, on behalf of the Opposition, an amendment to the European Communities Bill calling for a referendum. Actually, I go back to 1968, when I first mentioned the electronic possibilities for representation that were mentioned by my hon. Friend the Member for Gateshead, East (Ms Quin).

697
The Liberal party was opposed to a referendum then, but I do not make a point about that, because the truth is that people are moving now to a different opinion about the rights of the electors in respect of their Government, and I welcome that; but I am disappointed that the Labour party has decided to abstain tonight, because the Labour party introduced the referendum.
Fifty members of the Labour party who were in Parliament when I moved the amendment in 1972 remain in Parliament. I went through that Division Lobby. The deputy leader of the Labour party and the previous, deputy leader of the Labour party, my right hon. Friends the Members for Kingston upon Hull, East (Mr. Prescott) and for Derby, South (Mrs. Beckett), voted for a referendum—and so, I might add, did Roy Jenkins and one or two others, because they were then members of a Government that had come out in favour of it.
I wish to say something else about the disgraceful way in which this debate is reported in the press, and commented on in the House, as though there were Europhobes and Europhiles. I was born a European; I shall die a European; I lost relatives and friends in both world wars and I want to see peace in Europe as much as anybody else, and I bitterly resent the idea that. if one objects to the Maastricht treaty and the way in which it transforms the government of Britain, that makes one a Euro-sceptic, any more than hostility to the present Government makes one an Anglo-sceptic. Is it not possible to have a different opinion of the way in which Europe should be governed? I shall discuss that in a moment.
The truth is that a common currency and a central bank would fundamentally alter the constitution of Britain. Why do we call the Prime Minister the First Lord of the Treasury if the Treasury is not at the core of Government? The Chancellor of the Exchequer is only No. 2; he is a Minister of State in the Treasury. If there is to be a central bank, the First Lord of the Treasury will be in Frankfurt. For anyone to suggest that having the First Lord of the Treasury in Frankfurt would not alter the constitution of the country would be deliberately to mislead the public.
Of course, as a result of that, there will be rate capping from Frankfurt, because people in Frankfurt will determine the interest rates, the amount of borrowing and the levels of taxation. I am not working hard for a Labour Government so that the leader of the Labour party, instead of being First Lord of the Treasury, will be the chairman of the British municipal corporation, pleading with Frankfurt to obtain permission to do something about unemployment.
We should consider the matter not only in theoretical terms. The right hon. Member for Mid-Sussex (Mr. Renton) said that, if one goes on holiday to Spain, one will not have to change one's currency. There are 4 million unemployed people in Britain who cannot contemplate going to Spain. The reality is that, if we lose control of tax rates, borrowing and interest rates, we cannot tackle unemployment.
The single currency in Britain has not solved the problem of unemployment in Britain. I might just say to those who think that the single currency is a miracle that we have always had a single currency since the United Kingdom came into being. We have had terrible areas of mass unemployment—what used to be called the "depressed areas", which we changed to the "development
698
areas"—all with a single currency, all with a central bank. So let no one think that a mechanism for handling a currency automatically solves the social problem.
Finley Peter Dunne was right when he said:
"One of the strangest things about life is that the poor, who need money the most, are the very ones that never have it."
It is a question of distribution of wealth; that is how to tackle unemployment.
I know that this is not primarily an economic debate, but it is a very important debate bearing on economics. Unemployment is the discipline of a capitalist system. It is different in other countries. In Islam, for example, if one breaks the law, one's hand may be cut off; in Russia, one was sent to the Lubyanka or Siberia; but unemployment performs an essential function in a capitalist society. It lowers wages, undermines the unions, boosts profits, limits imports and prevents unemployed people from going abroad to spend foreign currency. Unemployment is the instrument.
We are told that a common currency will somehow bring about full employment. Unemployment benefit in this country costs the electors £26 billion a year in tax. No Government would spend £26 billion a year on unemployment benefit if unemployment was not absolutely central to their policy. A former Chancellor once said that it is a "price worth paying". He meant that it was worth paying £26 billion to the unemployed tf it would frighten other people into doing what they were told.
I am from a generation—I make no apology for i t—which remembers hearing the voice of Hitler on the radio. When I was a young man I heard him speaking from Nuremberg; I saw Mosley march in the streets of London one Sunday in 1935. Unemployment is the seed bed of fascism. If there is mass unemployment, people will turn on Jews—we have seen the Auschwitz tragedy—and they will turn on trade unions, socialists, communists and gays. Governments try to divert people's attention from the fact that unemployment means that the system is wrong.
We are told that there are 20 million unemployed people in the European Union today. In 1975 I said that, if Britain joined the European Community, there would be higher unemployment, and Roy Jenkins said that it was not possible to take me seriously as an economic Minister. There are now 20 million people unemployed in the European Union. Anyone who thinks that that problem can be solved by taking power away from Mr. George and the Chancellor and sending it to Frankfurt needs his or her head examined.
How will we secure jobs for everyone? We have had full employment—I return to my recollections of the 1930s and of the war. How did we achieve full employment when so many people were unemployed in the 1930s? We did not achieve it through market forces. The Government took unemployed people off the dole and put them into factories to produce guns, tanks and ships. Instead of receiving the dole, people earned a wage and paid their taxes and, along with a little borrowing, that paid for the war. Market forces were not involved granny never bought a tank, my dad never owned a Spitfire and my aunt never owned a Sten gun. The Government spent money to achieve full employment.
Think of the things that need to be done in Britain today—homes need to be built, school books need to be printed and teachers, nurses and doctors need to be

699
recruited. Why can we not use untapped human resources to meet unmet need? But that is not profitable, and if it is not profitable it is not done. That is why the word "customer" is used so widely. People who have no money cannot be customers. The people who live on the Embankment in cardboard boxes need houses more than anyone else, but they are not "customers" because "customers" must have the cash to turn their human need into economic demand.
Unemployment was also dealt with in a very interesting way during the war. When I was nearly 17 I received a letter from the Government—I probably have it among my papers—which said, "Dear Mr. Benn, will you please turn up on your 17th birthday and we'll give you free food, free clothes, free training and free accommodation if you will learn to kill Germans." The Germans had a similar youth training scheme: "If you turn up on your birthday, Herr Braun, we'll give you free clothes, free food, free accommodation and free training if you will learn to kill the British". If we can use planning mechanisms for the purpose of killing, why, in God's name, can we not use them to meet need in our country? We cannot do it unless we drop the philosophy of putting capitalist profit before people.
I turn to a serious political question. If the Labour party comes to power and adopts a common currency and a central bank—as I deeply believe that it intends to do—how will I explain it to my electors in Chesterfield? I have just been reselected as the Labour candidate for Chesterfield; I am only a prospective candidate, but I hope to live to complete my 50 years in Parliament in the year 2000.
What will I say to the people of Chesterfield before polling day? I am bound to say, "Whoever you vote for, you cannot change our trading policy, our agricultural policy, industrial policy, environmental policy—or, if my party has its way, our foreign or defence policies either". What will the electors of Chesterfield do? The principle of parliamentary democracy is that, by voting, people can change the policies of the incoming Government.
The right hon. Member for Mid-Sussex (Mr. Renton) made a very entertaining and inconsequential speech, as is his wont, but I ask him to address that question. As a Conservative candidate, he must tell his electors that, whoever they vote for, they cannot change the policy of an incoming Government. As a consequence, many people will not bother to vote. Why should they, if the members of all three Front Benches agree and their vote will not change anything?
Alternatively, as Lord Tebbit said the other day, the people may riot. Rioting is the historic way in which the disfranchised drew injustices to the attention of Governments who were not responsible to the people through the ballot box. We are striking a deadly blow at this Parliament and everything that it stands for—all the things about which we boast when we show children around this place.
A common currency and a central bank is the ultimate privatisation. Government is privatised because it is handed over to bankers who are not responsible to the people in their power. I believe that a new political class is taking over Europe which does not have confidence in the public and which believes that Commissioners, bankers, civil servants, Foreign Office officials and, dare
700
I say, Members of Parliament know better than the public. The arrogance of that assumption will ultimately lead to real trouble.
The Council of Ministers is the real European Parliament. I served on the Energy Council for five years and I was its president during the British presidency in 1977. It is the only Parliament in the world which meets in secret and which makes laws in secret. I think that, like the Privileges Committee, it should meet in public; but I will not go into that now. Ministers are reduced to petitioners when they go to Brussels because everything has been sewn up by the Committee of Permanent Representatives.
I hope that hon. Members will not misunderstand me when I say that they could not run communism from Moscow and they cannot run capitalism from Brussels. Both systems will break down. If that happens, I fear that we will return to the sort of nationalism that I do not want to see. It will not solve the problems of nationalism.
One has only to look at the cover of The Sun and its headline "Up yours, Delors" to see what I mean. I know Jacques Delors; I met him about 20 years ago at the British embassy in Paris when he was out in the cold and I was a Minister. We had a friendly talk. I fully understand his current position. Why should we blame Delors when we assented to a structure that gave him more power than our Prime Minister?
We see that in the Spanish fishermen issue and in the export of live animals: we are blaming the foreigners instead of blaming the loss of democracy which we conceded. It is not as if the Union comprises a democratic united states of Europe. If the Union was like the United States of America, the first thing that we would do is abolish the Commission. Would the Americans agree to be governed by 15 Commissioners instead of by a President, a Senate and a House of Representatives? Would this country agree to be governed by commissioners representing Scotland, England, Wales and Northern Ireland rather than a Cabinet? Of course we would not. But I suppose that if we preferred to be governed by our own Parliament, we would be called Anglo-sceptics.
The Union does not even comprise the whole of Europe. There are about 50 countries in Europe and the little gang of 15 which is trying to catch them one by one does not constitute Europe. The idea of a convergence between the Albanian economy and the British economy is absolutely mad—although if the Government continue their present policies it may eventuate. Can we imagine a European Parliament where the balance of power is held by the Hungarian greens? Would we accept that? The whole idea is absolutely ridiculous.
Europe needs a new structure. We must harmonise by consent, taking account of the different cultures, histories and religions of Europe. A European assembly should produce conventions to which member states adhere. My right hon. and hon. Friends on the Opposition Front Bench—crowded as it is during this great debate—must think very carefully about what will happen when a Labour Government are elected. The assumption that the Labour party is united on this issue is totally false. The

701
Labour party and the trade unions look favourably upon Brussels because they now receive better treatment from Brussels than from Downing street.
Mrs. Dunwoody: They think they do.
Mr. Benn: They do. But when we are there, imagine how trade unions and the Labour party will react when Labour Ministers say, "We're not allowed to do that. We don't have the power. We've been prevented." There will be major opposition, because it will not be acceptable to the Labour party for a Labour Government to make the sort of excuses made by the Minister of Agriculture, Fisheries and Food over the export of live animals.
In Opposition, the Conservative party will become what is fashionably known as Eurosceptic. The Conservatives have the funny idea that Europe is a socialist conspiracy. If it were, I would not favour it—and it is not anyway. Released from the responsibilities of office and the hopes of patronage, many more Conservative Members in Opposition will see difficulties in a federal Europe, as steered through by my hon. Friend the Member for Gateshead, East (Ms Quin).
The leader of the Liberal party made a speech about the rights of the electorate. I do not need to repeat it because I said the same myself when I moved an amendment in 1972, and I was denounced by Jeremy Thorpe.
Powers are only lent to us. If I am chosen as the Labour candidate for Chesterfield, I will have to tell people there that I will not vote for a common currency or central bank. Whatever my view might be, I cannot do so because I have no moral authority to come to the House and hand over the powers of the electorate. I have said in the past and say again: that would be a theft of public rights.
I want the electorate to know how things stand before a general election. For all I know, after tonight's Division there might be an early election. One never knows—I always live in hope that the Labour party might come to power in the House to which it has been elected. If there is an early election, every right hon. and hon. Member must ask, "Do you regard a general election as a substitute for a referendum, when all the party leaders agree?" How could that argument possibly be made? If the parties disagree, it might be an arguable proposition. It is important to make that clear.
We talk so much about democracy but never discuss it. One principle of democracy is that no Parliament can bind its successor. A new Parliament once could repeal all the laws passed before—but not now. If an outgoing Government assented in Brussels to a law, either against their veto or by voting for it, an incoming Government could not change that law. Tom Paine said that the dead have no right to control the living.
Mr. Renton: What about Edmund Burke?
Mr. Benn: Do not give me Edmund Burke. He was my predecessor as a Member of Parliament for Bristol for six years and visited it four times. His great contribution to democracy was to call the public "the swinish multitude", and that remark prompted Tom Paine to write "The Rights
702
of Man." If the hon. Gentleman wants to make an historical allusion, he should go away and read the national curriculum, and then he might know more.
Mr. Marlow rose—
Mr. Benn: I shall not give way, because I do not want to detain the House—and I have reached the last passage of my speech, which I hope will be better even than the earlier ones.
When I was born in 1925, 20 per cent. of the world was governed from this Chamber. I supported all the anti-colonial movements that were nationalist movements, not because I believed in nationalism as a form of xenophobia but because the upside of nationalism is democracy—you govern yourself, which I favour. I will not sit and watch the House, out of a crisis of self-confidence, hand over its functions to others.
We are told that we are a nation of tradition, and traditionally we have always been governed by foreigners. In 55 BC, we were governed by a Roman—Julius Caesar. He had a common currency in the £sd—libri, solidi and denarii. My hon. Friend the Member for Hemsworth (Mr. Enright) is a Latin scholar and will correct me if I am wrong. The Romans stayed for 665 years and then we got rid of them.
We then had William the Conqueror, who was a Frenchman.
Mr. Giles Radice: He was a Norman.
Mr. Benn: Norman, but a Frenchman in modern parlance. After that, we had William of Orange, who was a Dutchman, and the Hanoverians from Germany. Recently, we have had Jacques Delors, who is also a Frenchman. Is there something about this country that denies us the confidence that we can build a society and work with others in Europe?
The only future for Europe is a recovery of self-confidence in Britain, France, Germany and everywhere else. The lack of self-confidence as well as lack of employment led to fascism. Until we rediscover enough self-confidence to govern ourselves and to work co-operatively, constructively and willingly with other European countries, what we are doing today and will do at the intergovernmental conference will be to dig a great grave and put Parliament in it—so that tourists can come to see it and still be told what it once did, although we shall know in our hearts that it is not doing it any more.
5.44 pm
Sir Terence Higgins: That was a vintage Chesterfield speech. Unlike wine, the more recent one of the right hon. Gentleman's speeches, the more vintage it seems to be.
The motion before the House is as premature as it is cynical. It could not be more premature, because my right hon. Friend the Prime Minister made it absolutely clear that there is no question of anything of a constitutional nature being decided at the intergovernmental conference. In any case, that is some time away. It is not a matter on which we need to decide tonight. None the less, points of principle should be clearly stated.
Even the leader of the Liberal Democrats seemed uncomfortable on realising that he might secure allies from this side of the House or the other who might reasonably be described as Euro-sceptics. I will say more

703
about that later. What is the touchstone of the right hon. Gentleman's sincerity? He appealed in a populist way to consult the people, but he did not make it clear, despite his profound enthusiasm for and commitment to Europe, what he would do if the referendum result was not one that he liked.
Mr. Charles Kennedy: As democrats, we would accept the decision of the people. That is included in the whole exercise. We would be disappointed, but we and the House would have to work within the parameters that then existed.
Sir Terence Higgins: That is an extraordinary view. Is the hon. Gentleman suggesting that a Member of Parliament, having analysed the right answer, consulted his constituents, weighed up the arguments and become profoundly convinced of a particular view, should than accept a referendum that goes the wrong way? That would totally undermine the approach that we as elected representatives should take, which is why I believe that a referendum is fundamentally wrong.
Mr. Austin Mitchell: Will the right hon. Gentleman give way?
Sir Terence Higgins: No, I want to deploy more arguments first.
Some people are passionately anti-European and are in favour of a referendum because they believe that the result would go their way. Having lost the argument on the analysis, they see a referendum as their best hope of effecting a policy change. The Liberal Democrats are fundamentally undermining the basis of the House.
The right hon. Member for Chesterfield (Mr. Benn) referred to Edmund Burke. We are right to take his view that we come to the House as representatives, not delegates. If a referendum goes a particular way, it is not for us to say, "I've been delegated to vote that way." It is our role to analyse the issues and to take into account our constituents' views. Then, we have a duty to make up our minds. Incidentally, Edmund Burke made his famous statement after he was elected to Parliament, not before—which perhaps undermines it.
We are not here to function as a surrogate calculating machine, to vote the way that our constituents would if they could all press a button. We have a much greater responsibility—to consult our constituents and listen to their arguments, but it is the strength of the argument and not the number of people who make it that is important. Then, we must weigh up the arguments and vote as our constituents would if they had the advantage that we do of listening to debates and analysing the issues.
In introducing the motion, the right hon. Member for Yeovil (Mr. Ashdown) effectively read an article which he published in a Sunday paper yesterday, in which he said:
"We could, at the same time, win a right for the British people to have a part in determining our country's future in Europe."
That is what I do all the time. I have a massive mail bag, I consult my constituents, I have interview nights, I attend innumerable constituency functions, and my constituents have an opportunity to express their view. That is a far more sophisticated way in which to assess public opinion
704
and weigh up arguments than an over-simplified referendum, requiring a simple yes or no response, in which the question is always debateable.
Indeed, it is likely that people would not vote about a single currency, for example, in a referendum on the subject. They would vote a straight yes or no on whether we should be in Europe. That is another reason why some of my hon. Friends favour a referendum. The single currency is a highly complex issue, but, nevertheless, it is suggested that one of the issues on which we should have a referendum should be a single currency.
A point that I was going to make has been a little undermined by the speech of the right hon. Member for Chesterfield. I was going to say that, if one went outside and asked people whether they could tell the difference between a single currency and a common currency, I doubt that one in 10 or one in 50 could do so, even though the difference is crucial. I am little unnerved because the right hon. Gentleman, clearly by a slip of the tongue—although he said it two or three times—does not know the difference between a single currency and a common currency. There is a vast difference. It is crucial to realise that the idea that a referendum is a sensible way in which to achieve a real view on such an issue is quite wrong.
In the article yesterday, the right hon. Member for Yeovil said:
"Other opponents claim the question is too complicated for British people to understand."
Of course, one would sound very elitist if one were to take that view. But we are sent here to do that job; to take into account such complicated issues, to take a view and to vote in the House. That is what is meant by representative parliamentary democracy.
Mr. Legg: I refer my right hon. Friend to the views that he propagated in the House on 30 October 1990, when he referred to the single currency. He said:
"The imposition of a single currency … would rule out for all time the most effective means of adjusting for national differences in costs and prices … that in turn would cause widespread unemployment, which would probably exist on a perpetual basis, and very serious financial imbalances."—[Official Report, 30 October 1990; Vol. 178, c. 878.]
By any standard, those seem to be the words of a Euro-sceptic and someone opposed to a single currency. If a Conservative Government sought to impose a single currency through a three-line Whip in the House, would my right hon. Friend defy the Whip?
Mr. Deputy Speaker: Order. Before the right hon. Gentleman replies, may I remind the House that I have already drawn lengthy interventions to its attention. Many hon. Members want to catch the Speaker's eye. Interventions of that nature will mean that some hon. Members will be unsuccessful.
Sir Terence Higgins: My hon. Friend quotes my previous remarks, on which I do not renege for one moment. I agree entirely with what I said. However, I think that I made the qualification at the time that it must depend on the degree of convergence. It is absolutely true, as I said then, that we would be giving up for all time the major means of adjusting for differential movements of costs and prices. There is nothing in what I said then inconsistent with the point made by the Governor of the Bank of England the other day, nor—I believe—does it differ from the position of the Prime Minister.

705
If one goes for a single currency without an adequate degree of convergence, to which I shall refer in a moment, one of three things is likely to happen. We shall have either endemic unemployment on a greater scale in certain parts of the Community, or substantial subventions from one part of the Community to another, or migration from one part of the Community to another.
I am not reneging on the sentiments of the words that my hon. Friend quoted, but all that would follow if one went ahead before adequate convergence. However, it will be a long time before there is such adequate convergence. A referendum in which we asked the first 50 or 100 people in the street what they thought about the convergence criteria would produce some pretty funny answers.
Mr. Spearing: Irrespective of the merits of a referendum, surely the right hon. Gentleman would agree that, even if convergence were statistically achieved, subsequent divergence could occur, creating the very problems that the hon. Gentleman mentioned? So we would be legislating now for people who come after us. I do not believe, and I hope that the right hon. Gentleman does not believe, that we have the right to do that.
Sir Terence Higgins: That is why it would be no good if the criteria happened to converge at a particular time and we were to say "snap" and go for a single currency. We must be clear that convergence is likely to be sustained. If, in fact, it could not be sustained, we would, of course, experience the three consequences which I enumerated earlier. So convergence would have to be maintained for a considerable period. At what stage Opposition Members suppose that we should have a referendum, I am not at all clear.
If one took the plunge and went ahead with a single currency at some point when all the convergence criteria and, perhaps, some others, had been met for a reasonable period of time, as my hon. Friend so helpfully reminded us, as I said in 1990, it would be irreversible. How one gets out of a single currency is not the least bit clear. I presume that we would suddenly start printing pound notes again, which would be rather inflationary and a little uncomfortable.
We must recognise that we are considering a very serious issue which should be dealt with in the House. Whatever the referendum is on, the decision will be taken in the House. I was somewhat horrified by the intervention of the hon. Member for Ross, Cromarty and Skye (Mr. Kennedy), who said that, if the result of the referendum went contrary to all their profound beliefs, they would none the less go the way of that referendum, even though a referendum, as an instrument of ascertaining public opinion, is fundamentally flawed in the way that I have just described.
The point of timing was raised by the hon. Member for Newham, South (Mr. Spearing). I have already said that we are discussing matters of the future. We may achieve sufficient convergence in a comparatively small number of countries, which may or may not include this country. It is inconceivable that in the next 15 years or less—probably many more—we shall achieve a degree of convergence throughout the entire enlarged Community, which would enable that Community to have a single currency. The problem depends on how large an area
706
convergence covers. The bigger the area, the more difficult it is to achieve a single currency without the consequences and dangers which I have already outlined.
I suspect that a two-speed Europe is inevitable. We will not achieve a single currency that covers all the expanded area in the foreseeable future, even though it may be achieved among a hard core. In that case, a further difficulty arises of whether we are better off being in the hard core or outside it because countries outside it may find that their economic circumstances are significantly better without a social chapter, and so on. However, I am probably straying a little from the motion.
Some say that a referendum can unite political parties. I do not know whether the right hon. Member for Bethnal Green and Stepney (Mr. Shore) would agree that a referendum would be a terribly effective means of achieving that objective. I am not sure whether the previous referendum succeeded in immediately and totally uniting the Labour party.
These are difficult issues. I stress that there are timing problems in respect of a referendum. Would it be held before or after an election, or before or after the IGC? My deeply held conviction is that the idea of a referendum is wrong in principle. It is an alien notion, although some have queried whether it is. It is alien in the sense that although there are some precedents in this country, they are not a tradition here—and for a simple reason which my right hon. Friend the Member for Mid-Sussex (Mr. Renton) pointed out.
Some countries use referendums as part of their constitutions; they have not been part of ours. I believe in our system of representative parliamentary democracy, with Members representing their constituents and taking into account their views. That system is vastly superior. One can understand why a number of countries favour referendums: some of their Members of Parliament do not even represent constituencies. Perhaps some countries in Europe feel that they are better governed from Brussels than from home. Not so with us.
I believe that we should defend our representative system of parliamentary democracy. The idea of a referendum is fundamentally inconsistent with it.
6 pm
Mr. Peter Shore: The last two speeches have done much to raise the tone of the debate, in their seriousness, passion and quality of argument. They have come none too soon, because until then the debate had been irrelevant, trivial and, from the point of view of the great majority of people in this country, sickening. Those people have seen the point scoring and the pretence of serious opposition as between the parties as they advance their views and justify their manoeuvrings on this European question.
Today's is an important debate, on which I congratulate the Liberal Democrat party and the right hon. Member for Yeovil (Mr. Ashdown). He has made it possible for us to debate whether the British people should be allowed a vote in a referendum before any further significant transfer of power from the British people, their Parliament and their Government to the European Union is allowed.
My amendment, while endorsing the principle of a referendum, would go a step further by calling for a vote before any further transfer of constitutional power. We

707
have done quite enough of transferring powers, and we should have had a referendum before we accepted the Maastricht treaty a year ago.
I shall have no hesitation about voting for the motion at 10 o'clock tonight. True, we do not yet have a totally clear picture of what constitutional changes await us. What horrors will emerge from the 1996 intergovernmental conference we can as yet only guess at, but one thing is already crystal clear, and it has been a major theme in this debate. The single European currency proposal is written into the Maastricht treaty, and although we have an opt-out, the decision to join or to stay out will be taken no later than 1999.
A single currency and economic and monetary union with Europe, as the right hon. Member for Worthing (Sir T. Higgins) made clear, and as my right hon. Friend the Member for Chesterfield (Mr. Benn) made even more clear, would mean surrendering the Government's and Parliament's powers to determine our interest rates, our exchange rates, our public expenditure and our public borrowing.
In particular, this surrender would mean—I ask my own party to listen carefully to this—the loss of precisely those macro-economic powers that are essential to reducing unemployment and to fostering economic growth, and which are the centrepiece of Labour's economic policy. I refer here to the recent constitutional resolution passed with a two thirds majority at our annual conference, and accepted by the leadership of the Labour party.
I simply do not understand why we do not have a three-line Whip tonight. First, this is an opportunity to force the Government to make a clear choice between the Euro-elitists who want a single currency and are not prepared to allow the electorate a voice or a vote, and—if I may use the term—the Euro-realists, including the Euro-sceptics, who understand that this is a great constitutional issue that cannot be resolved without popular consent. I have no doubt that we could have defeated the Government on this motion tonight.
My second reason for not understanding the position of my party is as follows. Agreement to this motion will ensure that the British people are granted what the vast majority of them want: the right to determine their own future. I have seen many polls—I expect that others have, too—but not long ago the Financial Times conducted the largest poll ever taken of British attitudes to a single currency. The questions were asked not just in Britain but in other European countries too.
People here were asked whether Britain should hold a referendum on whether the European Union should introduce a single currency; 64 per cent. supported the idea of a referendum, and 25 per cent. were against it. I could quote dozens of other opinion polls that make the same point.
The third reason why I cannot understand our position is that there is only a hair's-breadth difference between the meaning of today's motion and statements made repeatedly and recently by Labour party leaders. Speaking in Brussels on 10 January of this year, my right hon. Friend the Leader of the Opposition said:
"The need to close the gap between governors and governed in Europe is now urgent, and we have made clear that where important constitutional arrangements are at stake the people must have their
708
say. As we have said over and over again, if a referendum is necessary for that to happen we will consider it. We can only move forward if we carry the people with us."
The shadow Foreign Secretary has committed himself more recently still either to a general election or to a referendum before adopting a single currency—the same position taken by my hon. Friend the Member for Gateshead, East (Ms Quin) earlier today. She will understand that the shadow Foreign Secretary is far too intelligent not to realise that it is impossible to hold a general election on this issue. There would have to be a referendum for many reasons, including those put by my right hon. Friend the Member for Chesterfield. There is such unanimity between the leaderships of the parties that, in a general election, we could never achieve the expression of opposition necessary to satisfy the needs of our people and of their democracy.
Mr. Duncan Smith: Does the right hon. Gentleman agree that the problem with a referendum would not even arise if there were a clear distinction between the major parties in this House? The public remain confused because they are getting confused messages from the two sides of this House. If that confusion were cleared away, the purpose of this place would then become clear, and its sovereignty would become clear, too.
Mr. Shore: Perhaps, but that would involve our being given a free vote so as clearly to express whether we are in favour of or against the proposition.
Mr. Marlow: Even from my peripheral position, I can guarantee that the Conservative party will not go into the next election with a commitment to a single currency. We would dearly love it if the right hon. Gentleman's party went into the election with such a commitment—but it will not. Thus, as neither of the major parties will go into the next election committed to a single currency, is it not inevitable that, even if the Labour party won the election, it would hold a referendum on a single currency?
Mr. Shore: I wish I thought it was inevitable. I think that it has to be argued for and then accepted. Unfortunately, it has not been accepted by the House of Commons today.
I am glad to see the right hon. Member for Sutton Coldfield (Sir N. Fowler) in his place. This morning he had this to say in The Daily Telegraph:
"I cannot be the only Tory MP who supports our continued membership of the EC but who also believes that there has now developed an overwhelming case for giving the British people the opportunity to vote."
I detect much more sense and wisdom in the right hon. Gentleman's remarks—he has carried heavy responsibilities in the Conservative party—than in those of the Minister this afternoon.
I move on to the basic argument advanced by the right hon. Member for Worthing. There are two overwhelming reasons why a referendum should be granted, the first of which he did not mention. It is that we have an unwritten constitution. We have no special safeguards when constitutional changes, even of the greatest magnitude, are proposed. Countries with written constitutions have entrenched provisions that allow for specially large majorities when there is voting for constitutional change. We have none.
I know that there is a difficulty—we have all faced it before—in adequately defining what is a constitutional issue and what is not. I think we accept, however, that an

709
issue that is not constitutional, in the sense in which I am using the word, is one that comes within our political process in the sense that the decision made upon it can be changed following a change of Government if that be the wish of the people.
A constitutional issue affects the framework of democracy, including the rights and powers of Parliament itself. I put it to the right hon. Member for Worthing that, when we developed our doctrines of an unwritten constitution and the acceptance of simple majority rule in the House, no one in Britain imagined that we would ever turn ourselves into a sort of province of a new state emerging in Europe. That would never have been allowed to happen without a massive entrenchment of the rights of the British people to preserve the British state. which is conterminous with democracy in Britain.
I turn to my second reason for saying that a referendum is essential. There is vast and still growing cynicism among the British public in their attitude to politicians, and to Government and Parliament in their handling of European issues. There is a deep suspicion that there is a virtual conspiracy not to tell the British people the truth either about what has already been surrendered or about further demands that are known already to be in the pipeline.
I shall not bore the House with the contradictory statements on the meaning and significance of a single currency that have been made by many members of the Government, who have followed one another in the bedlam that we have heard over the past week or so. I shall, however, seek to explain why the cynicism is serious, and why we must deal with it by referring to some recent and important matters that have affected the British people. They were touched on by my right hon. Friend the Member for Chesterfield, in his excellent speech.
Did anyone in Britain imagine until the decision was made about the Irish box that there was no power left for the British Government to determine or maintain our right of access to the seas round our island? Did anyone know that we were simply, by a majority vote in the European Council, to have taken from us hundreds of square miles of fishing rights that we had previously enjoyed? Did the British people know that? Did British fishermen know that when the treaties were signed? The answer is no.
An appalling situation has developed over the export of calves for veal. There are many who find it obnoxious that calves should be exported to certain European countries, which treat them in a pretty dreadful way. The Minister of Agriculture, Fisheries and Food shares that feeling. Instead of saying, "I propose to introduce a small piece of legislation under which we shall prohibit the export of British calves to those countries that do not give them humane and decent treatment", he says, "I cannot introduce legislation. I have no power to do so. Please"—
Mrs. Ray Michie: The Minister does have the power.
Mr. Shore: That is arguable. He says that he does not, because the Europeans have legislated in that area and their directive has precedence over any power possessed by Parliament to put things right. As a Cabinet Minister, he urges the protesters to protest in Brussels, Rome and Paris—everywhere except London. It is a disgrace.
710
My third illustration is more complicated in some respects. The House will be aware that the hon. Member for Bexhill and Battle (Mr. Wardle), who resigned his position in government two days ago, raised the important issue of what is to be the future of control of immigration as it affects the United Kingdom. The people did not have the faintest idea that our immigration policy—or, much more important, access to the country through the free movement of labour—was as it is in the relevant treaty.
The hon. Member for Bexhill and Battle was drawing attention to the muddle in which we find ourselves over immigration policy because we have abandoned the right to maintain our frontiers against about 300 million fellow Europeans. Under the Single European Act, which passed through the House so precipitately, there is article 8A. A famous sentence reads:
"The internal market shall comprise an area without internal frontiers in which the free movement of goods, persons, services and capital is ensured".
That is a Europe without frontiers.
Article 8a of the Maastricht treaty contains the following provision:
"Every citizen of the Union shall have the right to move and reside freely within the territory of the Member States".
If we open our gates and doors to 300 million fellow Europeans regardless of whether there is a job waiting for any of them at the other end, we cannot let them in and keep others out except on the crudest basis of the colour of their skin, which makes them look different from others who come across the channel by sea or to Heathrow by air.
The words that I have quoted from the treaties are unknown to the people. They are not in favour of a vast swilling of people across the continent of Europe in search of jobs. They rest on the belief that it is better to bring work to people than to cause people to leave their own countries to look for work wherever it may be. That is my third illustration. I could give many more, but I shall not do so.
Mr. Donald Anderson: The bogus nature of my right hon. Friend's third illustration is that citizens of the European Union can already cross frontiers. Indeed, they have been able to do so for some time. The fact that they do not come to the United Kingdom tells us something about our unemployment and the comparative social benefits that they enjoy on the continent.
Mr. Shore: My hon. Friend is mixing up two things. We have always been open to people coming to visit our country. Long may that continue. At the same time, we have clear principles about asylum and the uniting of split families, for example. We are absolutely clear about those issues.
I am talking about a treaty that gives every citizen of a member state the right to reside in another member state, regardless of whether a job is available. That will lead to a continuous search for the best forms of social benefit that are available for the unemployed peoples of Europe. It is the wrong approach. We should be trying to deal with unemployment by stimulating European economies so

711
that jobless totals are reduced. We should be trying to bring work to the workers, not leaving workers to go in search of work.
Mr. Whitney: Will the right hon. Gentleman give way?
Mr. Shore: No. I am coming to a conclusion.
I have mentioned only some elements of the treaties which we have signed which are now coming, as it were, before the British people. It is now inconceivable that we can sign another treaty that transfers any further powers from the House, from the Government and from our people to European institutions, without a clear and precise referendum that gives a chance for our people to say yea or nay.
6.19 pm
Mr. William Cash: The amendment that I tabled today, in manuscript form, dealt with a referendum in the context of a single currency and a federal Europe. I did that quite deliberately, because I wanted it on the record that it is not just a question of what the Liberal Democrat and the Labour proposals amount to, but rather the sovereignty of this place, as addressed—if I may say so—rather inaccurately by my right hon. Friend the Member for Worthing (Sir T. Higgins).
The bottom line is whether we will be able to govern ourselves. That is the key question. When people come to read the speech of the right hon. Member for Chesterfield (Mr. Benn) without prejudice, they will note that he made some significant points.
The difficulty with the argument made by my right hon. Friend the Member for Worthing is that it begs the question about the continuing existence of our own Parliament. If driven by the Whip—as we were in the Maastricht debates—and if without a free vote we are to be told that we can no longer govern ourselves in principle because a single currency is on the agenda, and if we have not agreed in the protocol that deals with the third stage that we will never veto these matters as regards the rest of the European Community, the reality is that we are back to the question that I put to my right hon. Friend the Prime Minister during the confidence motion, when he was good enough to attend for my speech.
I said to him, "What you have done through the Maastricht process is to present to the British people the unnecessary question of whether we must leave the European Community in 1996 or 1999." That is the key question. My right hon. Friend the Member for Worthing is simply repeating the old notion that those who call for a referendum would undermine the parliamentary sovereignty that they say they want to defend.
Exactly the opposite is our case. What we must consider is this. If we allow a single currency and a central bank, and all that goes with that, in principle within the European Community, and allowing for the assumption that we do not want to leave the European Community if it is possible to avoid doing so, we must not undermine the very basis on which we are here by handing over those powers to central, unelected, unaccountable bankers and bureaucrats in the Commission.
We cannot possibly, in my judgment—when one considers the referendum in 1975 and looks at the young people today, who have not been given an opportunity to
712
consider any aspects of these matters within the context of a referendum framework—avoid the fact that 37 per cent. of today's voters have not had an opportunity to express their view. The fact, therefore, is that we are undermining the very people by whom we were elected to this House.
Furthermore, people say that Members of Parliament—my right hon. Friend the Member for Worthing also made the point—would effectively be abdicating their responsibilities. But the fact, as he knows, is that, in order to have a referendum, there must be an Act of Parliament. There is no question of a referendum being foisted on us. It is endorsed by the House beforehand. Hon. Members have the opportunity on 24 February—I hope that hon. Members will turn up to debate the Bill of my hon. Friend the Member for Billericay (Mrs. Gorman)—to express their view on the principle whether the House will allow a referendum to go ahead.
Looking back over past decades, I find that Conservative Governments have been in favour of referendums. For example, Balfour, in 1911, proposed a new clause to the Liberal Government's Parliament Bill. On that occasion, he said:
"in the Referendum lies our one hope of getting the sort of constitutional security which every other country but our own enjoys".
He was relying on a referendum to support his argument with respect to that Bill.
Sir Terence Higgins: That Conservative amendment was defeated. Does my hon. Friend think that the consequences of that defeat were serious?
Mr. Cash: I do not think it matters. We are talking about the principle whether a Conservative Government—or Conservative Opposition—have or have not from time to time considered the principle of a referendum on a major constitutional issue.
In 1972, in Northern Ireland, there was the border poll. Then there was the Labour Government in respect to the European Economic Community. Ministers on both sides—Cabinet and shadow—participated in those debates. They did not turn away and say, "We are not going to have anything to do with this." Then there was the question of the reform of the House of Lords. In 1978, there was the question of devolution in Scotland and Wales.
I do not believe that, in the past 25 years, there has been a single major constitutional issue facing our Parliament that has not been finally resolved by a free vote or a referendum. Not once have we had such a constitutional issue without there being either a free vote, a referendum or both. But, of course, not with Maastricht. As The Times said at the time of the Maastricht debates:
"Parliament can never be undermined by a referendum, since it is Parliament that decides to call one and Parliament that decides to be bound by the result."
That is conclusive.
A further point arises out of the Sheffield university survey, which is getting a good deal of currency at the moment. It was conducted on a private polling basis of Members of Parliament involved in the Maastricht debates. There were a number of questions—21 in all—that dealt with the central issues arising out of Maastricht.
On a national referendum, a question was put that whether there should be a national referendum before the United Kingdom enters a single currency. Some 55 per

713
cent. stated that they strongly agreed, or agreed, with that proposition. On whether Britain should never permit its monetary policy to be determined by an independent European central bank, 61 per cent. of Conservative Back Benchers said that they strongly agreed, or agreed. On whether economic and monetary union was not desirable, the figure was 61 per cent.
That rather makes my point with respect to the argument made by my right hon. Friend the Member for Worthing, because if those are the opinions of our colleagues when they are whipped, what would their position have been had there been a free vote? If they were denied a free vote, one must question the manner in which the whole matter of the fundamental constitutional issue of Maastricht was handled. Was it not just simply, as I said the other day, based on the knowledge, "I know that I am right"?
Is not that now being discovered to be fundamentally flawed, as one decision after another flows in the wake of that treaty? The reality is that only by a referendum can we go back to the people as a matter of principle, whether or not one is in favour of the answers to the question that one will put, and discover what the people outside really think.
There is confusion in the Cabinet. My right hon. Friend the Member for Sutton Coldfield (Sir N. Fowler), today in The Daily Telegraph, advocated a referendum on a single currency. He and I have had many arguments about that question, but he is being driven to the inevitable conclusion that it is essential. My right hon. Friend—ex-party chairman that he is, having held all the important positions, as Secretary of State in God knows how many different Departments—has come to the conclusion that our Cabinet is so severely divided that we must go out and ask the people the answers to those questions.
That is not particularly exceptional. Indeed, I presented a petition during the Maastricht process, when I was joint chairman of the Maastricht Referendum Campaign. In those days, there was much vilification of our arguments. I do not mind that. Part of the process here is to be able to take a knock or two when they come along. But the reality is that I presented a petition to the House, with 250,000 names on it, which came from every quarter of the United Kingdom. People feel strongly about the matter; indeed, they feel much more strongly about it than they did then.
We can take a European view of the position. I remember the Maastricht referendum in France, when I helped Mr. Seguin and Mr. de Villiers. The vote in favour squeezed through by 1 per cent., but there is no chance that that would happen now: it would be at least 60 per cent., or even 65 per cent., against—which would have meant no Maastricht. Would that mean that the French would leave the European Community? These are seminal questions.
When I met Hans Tietmeyer recently, he told me that 60 per cent. of German business men opposed the idea of a single currency. We now learn from Der Spiegel that 64 per cent. of the German electorate are against it.
My right hon. Friend the Member for Worthing and others have referred to the state of affairs in the City of London, and my right hon. Friend the Member for Old Bexley and Sidcup (Sir E. Heath) constantly rabbits on about the attitudes of people there. He should consult the Harris survey published a few weeks ago, which showed that, of 250 City executives, 69 per cent.—I think that I
714
am right; it may have been 66 per cent., but it was certainly well over 60 per cent.—said that they wanted a referendum on the single currency.
Those are the arguments on which we are relying. People want to be consulted—and I have considerable sympathy with people who find that they, their Government, their attitudes, their traditions, their businesses and their jobs are being put at risk by a massive experiment. For what purpose is all that taking place?
Mr. Nigel Forman: I believe that, not only tonight but on other occasions, my hon. Friend has advocated a referendum on the principle of a single currency before the Government decide anything about British participation. That obviously deals with a hypothetical situation with important constitutional implications. Given that my hon. Friend is clearly as committed to the future of the House of Commons and our Parliament as I am, however, would it not be simpler to arrange a free vote in the House?
In circumstances that are not hypothetical—that is, when the Government have already adopted and negotiated a position—should there not be a whipped vote? The Government have a right to expect their supporters to support the actions that they have taken.
Mr. Cash: I have often advocated a free vote on these issues. I put the point to the present governor of Hong Kong. I said, "At the party conference, you keep saying, `Trust the people'; why do you not at least trust your Members of Parliament?" In fact, the Government had not the slightest intention of giving us a free vote, any more than they had the slightest intention of giving us a referendum on Maastricht. They were frightened silly that we might win. I do not believe that we might win; I am absolutely certain that we would.
Yes, I believe that there ought to be a free vote. I have argued that any referendum should take place before the next intergovernmental conference, however. As my right hon. Friend the Member for Sutton Coldfield has rightly made clear, the critical issue concerns the single currency: it is the fulcrum of so many arguments about stage 3, the central bank, unaccountability and the survival of our democracy—and thence, by inversion, the status of the House of Commons. That brings us back full circle.
As I said in an intervention on the Minister's speech, our fatal mistake was not vetoing economic and monetary union—which is the single currency in its fulness—when I suggested that we should. My hon. Friend the Member for Carshalton and Wallington (Mr. Forman), who served with me on the manifesto committee, will recall my arguing that, if we did not veto EMU at that stage, we would be marginalised.
He may also remember that, at the end of the proceedings, a summary was produced, featuring the words "We are a European Community of independent sovereign states." Someone turned to me—it may have been my hon. Friend—and asked, "Are you satisfied with those words?" I said, "Yes, I am." Then someone—it may have been my hon. Friend, but I would not wish to accuse him of it—said, "I think that we should take those words out."
I said, "You think what?" A Minister was present. I said, "You are going to take those words out of a summary of a draft Conservative party manifesto?" The

715
answer came, "We are going to take them out." I said, "In that case, we shall have a vote." My recollection is that I was the only person who voted to keep those words in.
People may wonder why I am so keen to ensure that we do not lose our sovereignty, but that is what happened in the innermost precincts of the Foreign Office. My hon. Friend the Member for Carshalton and Wallington has a nice smile on his face, but I must tell him that the smile is now on the face of the tiger. We are not going to give in, irrespective of the agenda that has been set by others.
It is continually put to us, and particularly to me, that it would be foolish now to say what we are going to do. Let us face it: in fact, we shall be spun along until the intergovernmental conference takes place, and then the moment will come. Everything will be wrapped up in the negotiations, and the fundamental argument about monetary union will be conceded. Why? We shall be told, "We made these decisions a long time ago. Now is not the time for us to make a further decision; the matter was decided at Maastricht." I can hear it now.
The real point is that we were deceived over the Maastricht treaty. It may not have been deliberate, but it may well have been fatal. The one thing that the treaty did not do was preserve our ability to remain in the United Kingdom while preserving the integrity and powers of the House of Commons.
I recently had the pleasure—I will describe it as that—of meeting five members of the Bundesbank. They came here at the behest of Chancellor Kohl; they were friends of Mr. Karl Lammers, who tells us repeatedly that sovereign states are no more than an empty shell. They told us that monetary union was at the top of their agenda for the intergovernmental conference. We are being told that it is not on the agenda. Why? Because the Maastricht treaty has already been passed. That is why I want a referendum on the single currency before the next intergovernmental conference.
What do those people propose to do? They propose, they say, not merely to consider the implications and the operational activities, but to build on economic and monetary union. They want a single state based on a single currency. That is the fundamental issue that was dodged at Maastricht, and the fundamental problem that we are dodging through the collusion of those on the two Front Benches. It causes me deep anxiety to find that the position is so fragile.
Then there is the question of the infighting in our own party. I believe that, if we had to make a clear decision—a leadership decision—on a question of this kind, we would resolve it. I dare say that some Conservative Members would be extremely upset if the Prime Minister said no to a single currency now, or said that a referendum would take place. It must be said, however, that, following our membership of the exchange rate mechanism and its debacle, the argument has moved so strongly in our favour that my hon. Friends might reasonably consider that it is time not to redouble their efforts at counter-attack but to subject the arguments to an objective analysis.
I hope and believe that, in my speech to the Young Conservatives on Sunday, I rebutted most of the arguments advanced by my right hon. and learned Friend the Chancellor of the Exchequer. It is mere camouflage to suggest that monetary union and political union are not effectively one and the same.
716
When my right hon. Friend the Prime Minister returned from the Maastricht negotiations, he made a statement in which he put a number of propositions to the House. I seem to remember that he said that it was game, set and match. He said:
"Let me set out the main provisions of the agreements we reached. The treaty covers economic and monetary union and political union. It follows the structure for which the United Kingdom has consistently argued."—[Official Report, 11 December 1991; Vol.200, c.859.]
In October 1990, when my right hon. Friend was Chancellor of the Exchequer, he said that we would not have a single currency imposed upon us, that we were opposed to that.
However, by February 1992 the then Minister of State at the Foreign Office, my right hon. Friend the Member for Watford (Mr. Garel-Jones), said that the Government did not reject a single currency or the institutions that go with it. Those changes of policy have caused the confusion and the uncertainty, and those problems could be resolved by a referendum.
Mr. Peter Bottomley: Many of us who heard my right hon. Friend the Prime Minister and my right hon. Friend the Member for Watford (Mr. Garel-Jones) did not find their statements incompatible. The Prime Minister said that we would not have it imposed upon us, and that Maastricht gave us an opt-out, and my right hon. Friend the Member for Watford said roughly the same thing. What they said was perfectly compatible and logical, and was in this country's interests.
Mr. Cash: I repeat for the benefit of my hon. Friend that, by not vetoing economic and monetary union at Maastricht, we put ourselves in a difficult and dangerous position. The momentum towards a single currency, the political union for which Karl Lammers and Chancellor Kohl repeatedly call, and the monetary union and single currency which Mr. Balladur says there will be by 1997, show precisely what is going on elsewhere in the European Community. The balance of the argument is substantially in my favour, as is the proof of my resistance and that of some of my hon. Friends to the exchange rate mechanism. Look what that did for us.
Mr. Walter Sweeney: The difficulty for the House is that, although, as my hon. Friend says, the balance of the argument rests with the Euro-sceptics in all parts of the House, the views of the majority of those who participated in the debate on the Maastricht treaty were overruled by party diktat and the party Whip. How would a referendum reverse the ratchet effect of European integration?
Mr. Cash: If we are denied the opportunity to make up our own minds in line with the assumptions—the wrong assumptions, I am afraid—of my right hon. Friend the Member for Worthing, there is no option. We have no right to hand over our Parliament, or rather their Parliament. That is the point, and we have no right to hand it over when that issue arises in principle, as it does on this question in the context of running the economy. Public expenditure on defence, hospitals and schools and

717
other matters will be allocated according to priorities that will be laid down by unelected bankers who have no definition of price stability and cannot guarantee anything.
Mr. Derek Enright: Which bankers are elected? I have not come across any recently.
Mr. Cash: I am delighted that the hon. Gentleman should mention that. I do not say that elected or unelected bankers should run the system. The proper decisions on economic priorities should be taken democratically by those who live in a country such as ours. In one general election after another, the British people have shown their will by exercising their free choice. I am arguing not about whether there should be elected judges or bankers, but about the inherent rights of people in a democratic country.
Mr. Legg: Does my hon. Friend accept that the key point is that these bankers would be unaccountable?
Mr. Cash: That is absolutely right. They are unaccountable, and they may not deliver. All our reserves would be transferred to such people. That is unbelievable, and nobody would know that it was happening, were it not for the fact that it is set out in the Maastricht treaty.
I am concerned that a referendum would turn on a single currency, but after six weeks of debate, people would understand what it was all about. They understand it only too well as it is. Anyone who gets into a taxi or enters a pub will find that people know perfectly well what it is about. I say to my right hon. Friend the Member for Worthing that people do not like being told that they are too thick to be able to understand it. They are not.
Sir Terence Higgins: I said no such thing.
Mr. Cash: My right hon. Friend says that he said no such thing, but he was extremely close to it. I was paraphrasing: I shall apologise slightly, although not too much. My right hon. Friend says that, as a Member of Parliament, he has the right to make these decisions, and that, effectively, the average Mr. Joe Public does not. Although we have an important responsibility to discharge, we should also listen to what is being said outside, and opinion polls on referendums are crystal clear.
In general elections, people are asked to vote Conservative or Labour. Do we think that they have examined every detail of our manifestos? The short answer is that, in deciding questions of this kind, people are capable of making up their own minds, and it is extremely patronising for us to suggest otherwise.
Mr. Toby Jessel: I remind my hon. Friend that referendums were held in Denmark, France, Ireland, Norway and Austria, among other countries. Surely it cannot be argued that the British are intrinsically more stupid than the Irish, the French, the Danes, the Norwegians and the Austrians?
Mr. Cash: I am extremely grateful to my hon. Friend. I could not have put it better. Of course, he is right. The Konrad Adenauer Siftung publishes a monthly paper called "German Comments". When the Danes said no on the first referendum, that paper published a carefully considered editorial which said that a dangerous situation was developing in Europe in that elections were being used as a form of protest.
718
I found that about as difficult to accept as I found the remarks a few days ago of, I think, Mr. Karl Lammers, who said that he thought monetary union was "the purest form of integration." I get a little edgy when I hear people talking about political systems and purity in the same breath. We should be careful about the language we use in that context.
On 5 December last year, a MORI opinion poll showed that 65 per cent. of the British people wanted a referendum. The issue of a single currency should be dealt with in a referendum before the intergovernmental conference. The Government on their own have no right or authority to make such a decision. I shall vote with the Liberal Democrats, although I do not agree with every word of their motion. However, I agree with the principle that underpins it.
6.48 pm
Mr. Donald Anderson: It is a privilege to follow the last three speakers: the hon. Member for Stafford (Mr. Cash), and my right hon. Friends the Members for Chesterfield (Mr. Benn) and for Bethnal Green and Stepney (Mr. Shore). Their views are well known and consistent and they always seek to take the high ground. I felt rather challenged by my right hon. Friend the Member for Bethnal Green and Stepney, who said that one should not become involved in party points and details. When I heard that, I felt like scrapping half my speech.
The principles have been set out. I accept that the hon. Member for Stafford is against the European Union as it is and as it develops. Even if sacks of ecus were delivered personally by Mr. Santer to the hon. Gentleman's constituency, he would reject them because he sees the matter as political and relating to sovereignty. That is a road down which he does not wish to go. I confess that I detected a certain messianic quality in his speech—there was "conspiracy"; there was "deceit"; it was absolutist; we were being let down; it was almost a dolchstoss; they were not listening to us. It was almost, "Let the people speak and they will reject it."
I wonder how far the hon. Gentleman's populism and wish for a referendum would go. Is he willing to listen to the people on capital punishment? He may say that he is not. Is that patronising?
Mr. Sweeney: Surely there is a fundamental distinction between the two issues. One is a constitutional issue, which is irrevocable; the other is something that a subsequent Parliament could repeal or amend at will.
Mr. Anderson: Perhaps the distinction is not as clear-cut as the hon. Gentleman would wish. His point about capital punishment might be true, but what about devolution? If a Parliament were established in Scotland and an Assembly in Wales, is he suggesting that, in practice, it would be possible for any future Government to go back on that? Those changes would have generated their own vested interests in Scotland and Wales.
Does the hon. Gentleman want a referendum on devolution? My understanding is that his party does not. Indeed, Lady Thatcher, whom he admires so much, spoke strongly and voted against referendums for Scotland and Wales in the 1970s. There is always a danger that we might slide from looking at the issue from a point of principle to looking at it in whatever way happens to suit our particular views.

719
I concede immediately that in the 1970s I was critical of my Government's views on devolution. I and others grasped the idea of a referendum not necessarily because we had thought through the principle, but because at the time it seemed the best and last weapon that we could use. Although my party sees no case for a referendum on devolution now, there is a powerful case that needs to be argued. On balance, I would come down against a referendum on devolution.
My point is that there is no easy dividing line—there is a continuum on that and on other issues. The hon. Member for Stafford tends to see everything in capital letters and in black and white, whereas many of us would prefer to step back a little and accept that there may be an argument for a referendum on a matter as fundamental as a single currency because of the effect it would have on a whole series of economic levers that might be taken away from us. However, that would apply when the rules of the game were being changed, and we would need to go back to seek a wider legitimacy than could be attained purely from the votes in this House. Of course the issue is not as simplistic as hon. Members have suggested.
Mr. Duncan Smith: The debate is getting caught up on the principle. There has been a great deal of debate on that and is all too airy-fairy. The key factor is that this place is effective only when there is a clear difference between the parties—for example, the Opposition oppose and the Government propose. Where there is no such difference, matters become rather difficult. That difference has disappeared on the matter of Europe. There may be certain issues in the middle of the debate, but nothing across the board. Surely that is the sector about which the hon. Gentleman might say there is some issue principle.
Mr. Anderson: The essential principle is that, although the great mass of our people are ready to criticise Europe in the particulars, they accept that our future lies in a closer relationship with the continent. They do not want to be part of a marginalised, off-shore island, despite the arguments that have been made. Where, in that continuum, come the various issues such as a single currency or immigration is a matter for judgment.
I am wary of many of the points that have been made, partly because I am concerned about the motives of some of the Liberal Democrats who introduced the motion. I well understand that they wish to be seen in the driving seat—at least, they want the headlines for today. However, on the question of accountability, it is a matter of record that the right hon. Member for Yeovil (Mr. Ashdown) produced his own views on a referendum out of a hat. They caused considerable surprise to the then Liberal Democrat spokesman on foreign affairs and also to the Liberal Democrat leader in the House of Lords. There was not much consultation—
Mr. Charles Kennedy: I must correct the hon. Gentleman on a point of fact. The motion states that we want a referendum if any major constitutional change is proposed. That is based on a policy document that has been through all the usual machinery and it was debated and approved at our party conference. It is not fair of the hon. Gentleman to suggest that the party has been
720
bounced; that is not so. As he knows, we do not always win the vote at the party conference, but we did manage to win on this issue.
Mr. Anderson: The point I made was that the fons et origo—the origin—of the Liberal Democrat change of policy resulted not from consultation but from a diktat by the party leader, which surprised many of those who claimed to be speaking on behalf of the party.
My other doubt on the principle of referendums is that traditionally, with the exception of Switzerland, it has been a device used by right-wing or populist Governments—
Mr. Malcolm Bruce: Harold Wilson.
Mr. Anderson: I shall deal with that comment in a moment.
First, let us consider the Californian vote on the rights of immigrants. At the time of those referendums it will be the media moguls who will have an interest in, and an influence over, the result. Therefore, we must be wary about the accuracy of the picture a referendum might give of the views of the people at any one time. As the hon. Member for Gordon (Mr. Bruce) said, referendums have been used to cover up divisions. That was certainly the case with my party in the 1970s. Indeed, when there was an agreement to disagree, those who lost did not suddenly say that they had been convinced of the case; they kept up the fight.
If a referendum on a single currency went against the hon. Member for Northampton, North (Mr. Marlow) and others, they would not say, "The people have spoken, long live the people"; they would keep on fighting—and good luck to them. They disagree with a single currency on principle. It is absurd to suggest that somehow we can turn to the people and consult them like an oracle at Delphi and then say that now the people have spoken we can fold our tents because the decision has been made.
Mr. Marlow: If there were to be a referendum on a single currency and if the people were to say yes, they wanted a single currency and the massive loss of sovereignty that would go with that, that would be their decision and, as a democrat, I would have to accept that. However, above and beyond that, is not economic and monetary union irrevocable? If we were part of a single currency, would it ever be possible to come out of it, whatever I might feel?
Mr. Anderson: The hon. Gentleman and others who lost the referendum in 1975 have consistently fought against Europe since then, as has been their right. There is no finality in such arguments. There are objections of principle to referendums. For example, they are but a snapshot of public opinion at any one time. The view could alter in a month or so. There is no finality.
Mr. Forman: Does not history show that there is nothing irrevocable about any political decision, whether made by a Parliament or by the people through a referendum? Is that not a sobering realisation?
Mr. Anderson: Yes. Any future Parliament, whatever the technical and legal position, can, if it so wills, decide to withdraw. That is the reality of any decision. We should also consider the inflexibility that comes from referendums. A formula will be reached—perhaps, let us hypothesise for a moment, on a single currency—in 1997

721
or so. If, after negotiation, that formula and package deal is put to the people and the people go against it, what happens? Will it be renegotiated? One cannot negotiate with public opinion.
Denmark faced that problem when, by a small majority, it went against the package. People woke up to the danger of being marginalised. A second referendum had to take place, with a rather spurious inclusion of the Edinburgh package, and the Danish people changed their minds. Inevitably, inflexibility exists. One can negotiate only with a Government. One cannot negotiate with public opinion and have a series of referendums to see whether the result achieved was just about right. In any international negotiation, any national Government achieve the best package that they believe they can achieve at any one time.
As I have said, a referendum, in effect, solves nothing. There is no finality. People advancing both sides of the argument will continue to make their arguments. I agree with the three previous hon. Members who have spoken. The elites of Europe have gone far ahead of the public opinions of Europe—that is one of the great problems and real issues that must be faced. That was part of the problem at the time of Maastricht.
The people who negotiated in Brussels had not bothered to take into account the constraints imposed by public opinion. A number of them either nearly had a black eye, as in France, or had a black eye, as in Denmark. We must deal with that problem as Europeans.
Like the hon. Member for Stafford, I was involved in the French referendum. I suspect that we were on different sides at the time, but I hope that he will at least agree about this matter. I think that it was President Mitterand who said, at the time of the referendums, that the French always answer the wrong question.
In that great debate in France, the Maastricht treaty was hardly mentioned. A great feeling of disillusion existed. The geography of the votes showed that people on the fringes of France felt that they were not being consulted. The farmers were against Brussels because of the agricultural policy, which was not an aspect of the Maastricht treaty.
A general feeling existed against immigrants. After the French referendum, it was reported in Le Monde that 85 per cent. of the people who voted no were against further immigration into France. The forces of stability, people who felt that they had been marginalised, and the alienated, voted at a time when they could—
Mr. Austin Mitchell: So what?
Mr. Anderson: The point that I am making is that the questions posed in the Maastricht treaty were addressed by hardly anyone in that debate. Other people saw the referendum as a means of voting against President Mitterand. It was a vote against the President.
Who can doubt that, in the previous referendum in 1979, part of the response of the people of Wales and Scotland was based on the unpopularity of the then Labour Government, rather than on a true appreciation of whether a case existed for or against devolution? All those other extraneous factors come into it. To pretend that we can have an instant democracy and that the question, "Maastricht or not?" can be put to, and decided by, the people is an illusion, because the answer will depend on who puts it, when it is put and how the question is put.
722
I accept that those are real difficulties. I very much accept the genuine point made by the hon. Member for Stafford and by my right hon. Friends the Member for Chesterfield and for Bethnal Green and Stepney that there must be ways of addressing the malaise in Europe. People at the helm in Europe must ask, so far as they can, how they relate to the real concerns of Europe. We must avoid the tirade in our popular press, where, alas, the diet over the years has been straight bananas and all the absurdities that arise. It never considers the big issues.
I am confident that the Prime Minister and his friends are doing the country a great disservice. They claim that we can be at the centre and at the heart of Europe, when all their policies seek to marginalise us. If we are to pull our weight in Europe, we must be seen as part of a team. We must be seen properly to understand the issues, fighting our corner, as others do. Europe, however, will neither stop nor go away. Even if the Government pretend, for internal party reasons, that they can muddy matters, and if they play the populist card because of the unhappy conjunction of the next election and the intergovernmental conference, they will do this country a great disservice.
We shall have to accommodate ourselves to that great market and that force on the continent. It will not change and we delude ourselves if we think it that will—self-delusion is the worst of all illusions and delusions—and if we pretend that we can, in isolation, somehow change that Europe, which, with all its faults, is dynamic and will move forward.
7.6 pm
Mr. Ray Whitney: I hope that I will not appear too derogatory to the hon. Member for Swansea, East (Mr. Anderson) or to the House if I say that I have the feeling that we are participating in the umpteenth episode of a long-running soap opera, in which the themes, the arguments, the low audience ratings—judging by the attendance in the Gallery—and almost all the actors are the same. One does not speak in such debates only if one resigns from ministerial office or if one is promoted to one of the Front-Bench teams. The rest of us soldier on, putting our views.
If we are really honest, we must admit that the kaleidoscope of the normal displacement in the House has again been shaken up into a different form. It goes across the House and, sadly, across all the parties. We have the same position this evening, which has been achieved by the Liberal Democratic party, for its own reasons, with its motion. Those reasons have been analysed but the motion has produced another manifestation of weird alliances. They started after the Maastricht Bill was given a Second Reading. The cornerstone of the House's true position on Europe will be seen in that Second Reading debate, after which the Bill was given a massive and overwhelming majority—I think that 244 hon. Members were in favour of it.
Mr. Duncan Smith: My hon. Friend said that the only key test was the vote on Second Reading, but surely the point is that the Bill was discussed line by line in Committee and people then began to understand it. Surely the key point is what developed as a result.
Mr. Whitney: My hon. Friend confirms the overwhelming view on Second Reading. He pre-empts me. We got into trouble in Committee, but why? The

723
House, led by the Labour party, started playing political games. It would say, "Why not? We are in politics to play games." That is fair enough. I accept that point to a degree, but that is the cause of the problem and the reason why my hon. Friend and other hon. Friends were able to have such an influence.
Night by night and on issue after issue, a motley collection of hon. Members traipsed into the Division Lobby—a collection of people who were united only in opposition to the Government and to each proposition—as the Committee worked its way painfully through consideration of the Maastricht Bill over 18 months, or over whatever time it took, but it seemed like 18 months.
Thus, those in the Labour party who professed to be in favour of the Maastricht treaty voted against it and the standard anti-Europeans in the Labour party happily voted against it. The Liberal party, which is very pro-European, also voted against it. [HON. MEMBERS: "No, we did not."] There are two sections in my party—those who honestly and openly profess their opposition to Europe and those who say that they are in favour of Europe, but not a Europe that anyone else seems to recognise.
Mr. Denis MacShane: I was not a Member of Parliament during the debates on Maastricht and I clearly missed something, although I am getting a re-run now, for which I am deeply grateful. However, I followed the debate very closely from outside. The difference was that the Europe that the other 11, or the other 14, wanted was not that proposed by the Government. Of course, I was delighted that the two main Opposition parties, which, I think, were united on this issue, spoke for all of Europe while the Government spoke for a crazy, opted-out, marginalised version. [Interruption.] I speak for sensible Opposition Members.
Mr. Whitney: As the hon. Member acknowledges, he was not a Member of Parliament at the time. I shall not take him through all our debates, but the two main issues were matters of tactics. The fundamentals professed by members of the two main Front Benches are very clear. The performance which occurred night after night, and which I have described, gave rise to the trouble with which we are all now labouring.
Mr. Charles Kennedy: The hon. Gentleman has a reputation for fair-mindedness. I am sure that he would not want to mislead people, especially those who may have missed some of the grinding, delightful minutiae of the Maastricht process, which the occupant of the Chair probably remembers in far more vivid detail than any of us.
The hon. Gentleman should confirm that, during votes on the 10 o'clock motions when we were debating the paving measure, we took a public pasting for supporting the Government but not for being prepared to go along with Labour's tactics. We supported the Conservatives in order to make progress in debates on the Maastricht treaty. The only issue on which we opposed them was the social chapter.
Mr. Whitney: If the hon. Gentleman is asking me to say that the Liberal Democrats' record is less black than that of the Labour party, I am happy to do so. However, this evening's paradox is due to the Liberals. The point that I tried very hard to point out to the leader of the
724
Liberal party, who is no longer in his seat, was outlined by the hon. Member for Swansea, East (Mr. Anderson). If referendums are of such great value and have such democratic validity—I shall not challenge the notion now but shall return to it briefly later—they cannot be a way of picking and choosing.
I do not accept the distinction that some hon. Members have attempted to make in relation to capital punishment. If the Liberal party and other enthusiasts for referendums say that we must listen to the people, it is perfectly fair to ask where they draw the line. There has been an attempt narrowly to define what is constitutional and what is final, but it is pretty darn final if one is on the wrong end of a judgment of capital punishment. That is another demonstration of the paradoxes involved in debating European issues, and especially referendums.
Another paradox, which has been mentioned, is that many of the people who are now very keen on the referendum device are the very ones who defend and, I might almost say, prate about the sovereignty of Parliament. We witnessed a little exchange of this kind earlier involving my hon. Friend the Member for Stafford (Mr. Cash), who is not here at the moment.
My hon. Friend goes around talking all the time about the sanctity and sovereignty of Parliament but wants to use the demagogic device of the referendum, which at a stroke undermines the sovereignty of Parliament. His defence is that he faces terrible pressures, punishments and torture from the Whips. However, that does not seem to have stopped a number of my hon. Friends. One certainly gets the impression that my hon. Friend is optimistic that it is a lever that can be used to his advantage.
If only all the parties acted responsibly in the fundamental matter of our relationship with our European partners, we could have a free vote; but there could not be a free vote for one party and not for another. However, I am confident that, if there were a free vote, there would be no contest—the vast majority of the House wants Britain at the heart of Europe. That has been proved again and again.
Mr. Fabricant: Many people would not argue that we want to be at the heart of Europe, but the question is, what sort of Europe? Are we talking about the free trading body that we thought we had joined or a European Union into which we fear we have fallen?
Mr. Whitney: We have to offer the people the sort of Europe with which the other 14 members would also live. It is not a great deal of use outlining a concept of Europe shared by one or two hon. Friends and perhaps 50 or 60 Opposition Members but not by our 14 partners. The European Union is a partnership. I should be happy to find the highest common denominator—I might even say the lowest common denominator—that would join us to Europe while keeping in mind the fact that we should go a long way to safeguard the interests of Britain at the heart of Europe. I should like the issue tested on a free vote. Most hon. Members have studied the issues in detail and I believe that they would reach the conclusion that I have reached—Britain has to be at the heart of Europe. The minority view would be routed in such a test.
I claim to be a traditional Conservative but I do not wholly share the traditionally Conservative views expressed so elegantly and eloquently by my right hon. Friends the Members for Worthing (Sir T. Higgins) and

725
for Mid-Sussex (Mr. Renton), although I recognise the force of what they said. Any hon. Member who is tempted by the idea of a referendum should consider their remarks carefully. We are all familiar with the dangers of finding the right question, but how can one find a question that does justice to the complex issues? One could make it appear bogusly simple. For example, one could ask, "Are you in favour of Maastricht, yes or no?" In fact, that is a very complicated question.
It was not enough simply to have read the Maastricht treaty—as we are often reminded, even senior members of Government found it hard to find time to read it—because every other paragraph referred to the treaty of Rome, which one had to read, too. Are we seriously expecting the 50 million or so people in this country to read the treaty of Rome? That is not a patronising question; I am stating the facts.
Let us consider the views of the right hon. Member for Bethnal Green and Stepney (Mr. Shore), who is no longer here to give us his views, and those of the right hon. Member for Chesterfield (Mr. Benn). The noble Lord Wilson called a referendum not because he believed in the sanctity of a referendum, but as a practical device because of the embarrassing state of the Labour party in 1975. For people like me, the result was good. Two to one were in favour of Britain being in the European Community. Did that stop the right hon. Members for Bethnal Green and Stepney or for Chesterfield? Of course it did not. Would defeat stop some of my right hon. and hon. Friends? Of course it would not.
Examples have been quoted frequently of European countries with their own traditions of referendums. The hon. Member for Swansea, East pointed out that the voting in France was only tangentially related to Maastricht, and was much more related to other matters. It must be recognised that referendums are dangerous and can lead to demagoguery, and reference has been made to the issues in California. We could end up—not surprisingly—with referendums on this and that which would be mutually conflicting. The question could be "Do you want to spend more on schools and health?", to which the answer would be yes. Another question could be "Do you want lower taxes?" Again, the answer would be yes.
Dr. Lynne Jones: Does the hon. Gentleman accept that there is every difference between referendums on issues that he has just been talking about—as take place in California—and on constitutional issues that are irreversible by any future Government?
Mr. Whitney: I have covered that point, and I am sorry that the hon. Lady was not listening. There are distinctions, but there is not a clear line between one and the other and we must approach the issue of a referendum with great care.
By instinct, I have sympathy with my right hon. Friend the Member for Worthing. When we can get the right circumstances and some reasonably satisfactory answers to the problems to which I have referred—such as the nature of the question—there could be a tactical advantage in looking favourably at the possibility of a referendum. Damage has been done to the national attitude to Britain's membership of the European Union by a concerted campaign by so much of the media and by a small minority in this House. That minority has been
726
given the facilities of the media, and their voices have been magnified to give the impression that their views carry so much weight.
The media's fixation with straight bananas, the complete misrepresentation tonight from the right hon. Member for Bethnal Green and Stepney about the real significance of the fisheries dispute, the latest flurry on the common agriculture policy and—most recently—the matter of immigration are examples of what has happened. Immigration has nothing to do with the European Union. As has been said, the suggestion that 300 million residents of the European Union will start flooding into Britain is—if I may use the word—baloney.
It is crucial that the people of this country are again brought to understand the massive benefit of Britain having a positive relationship with our continental partners. They voted for it by a majority of 2:1 in 1975, and the benefits and arguments for us being in Europe in 1995 and onwards are far greater than they were 20 years ago. It is up to those of us—from whatever party—who understand the issues to make sure that the people of this country understand that again, and that they turn away from the negative path down which they are being led by the media and by some Members of the House.
7.24 pm
Mr. Malcolm Bruce: I shall place my remarks on the importance of a referendum in the context of monetary union. The issue—despite speeches to the contrary—has gone beyond just being a party-political spat. We are in serious danger of permanently damaging Britain's long-term economic future because of the serious divisions within the Government. It is apparent that there are divisions in the Opposition which might be important if they were to be in government.
Our immediate problem, however, is that the conference next year will determine how this country will progress, and the Government are totally incapable of talking in public or in private in any coherent or comprehensible way about exactly what Britain's interests are, let alone how they will defend them.
It is apparent that any possibility of unity within the Government is totally shattered. The Cabinet is at war, and the party is lining up behind respective champions within the Cabinet. Nobody is talking in code or pulling punches, and the arguments are out in the open. The only real way in which the national interest can be resolved is for the debate to be addressed on the specifics and for us to allow people the freedom to develop arguments according to different points of view.
I wish to divert the suggestion that the Liberal Democrats are somehow being opportunistic in the motion. I see nothing wrong with a socialist or new Labour member being opposed—or committed—to the further development of the European Union. Similarly, I see nothing wrong with a Conservative who believes—or does not believe—that we should go further into the European Community. That is a perfectly legitimate

727
debate, and it should be let out of the constraints that it is currently under, because it is doing, and will do, the country considerable damage.
Mr. Forman: Is the hon. Gentleman implying that he and his party would strongly support and seek to deliver a genuinely free vote if some of the great issues of principle were to come before the House of Commons?
Mr. Bruce: We, as a party, have a free vote and we do not have the same constraints of the Whips system. On the particular point about the referendum, my hon. Friend the Member for Ross, Cromarty and Skye (Mr. Kennedy) stated our belief that it is in Britain's interests to help shape further integration within Europe, and we must be a part of that. We wish to have a referendum, and we would campaign to persuade people to say yes. Our objective would be to win. If we lost, however, having secured the principle of the consent of the people for a referendum, we clearly could not be seen to reject it, despite it being our party's intention. I hope that that is a clear answer to the hon. Gentleman. We mean what we say.
There should be genuine consultation, and we should listen to people. That is where the right hon. Member for Worthing (Sir T. Higgins) got into some difficulty. He argued the case for a representative Member of Parliament as if there was no such thing as party discipline and the Whips system. It is exactly because of that discipline that the Government are in such a mess.
Sir Terence Higgins: Is the hon. Gentleman saying that we should have a mandatory referendum, as that is the clear implication of what he has just said?
Mr. Bruce: We are suggesting that there should be a referendum to present to the British people the significant constitutional changes, if they are agreed by the IGC, on the basis of whether they support the changes and Britain's involvement—yes or no. To go to the people in those circumstances and then to suggest that Parliament should disregard the result would be a hopelessly cynical exercise, and we would not propose it on that basis. We accept that we would abide by the decision.
Mr. Duncan Smith: The hon. Gentleman has been talking about the principle of referendums somehow deciding the great issues without all of the divisions which we have, and I take his point. I cannot quite understand how that runs with his party's motion, because the reference to "substantial alteration" is a key problem. We would have to have a big debate before we got anywhere near a referendum about what is substantial and what is not. Should not there be a tighter definition, such as "any alteration, change or decision"?
Mr. Bruce: The issues that we are discussing, such as monetary union, share much common ground. They are significant—the changes and the mechanisms that would be required to make a single currency work are, by any definition, significant. Significant changes are to be made and it would be up to the House to determine them. In our parliamentary democracy, if we are to introduce the doctrine of referendums, short of having a written constitution and many other reforms—which I may
728
support, but which we shall not see between now and next year—all that can be determined is that the issue should be determined in the House and put to the people.
Mr. Spearing: Will the hon. Gentleman give way?
Mr. Bruce: I am sorry, but I should like to make progress.
We are discussing significant changes that have constitutional implications, which is where the Prime Minister has got himself into some degree of contradiction and confusion.
I shall put the fundamental economic issue into context—it sometimes goes by default, but it seems worth stressing. Since 1972, this country's trade with Europe has expanded dramatically. Exports to the other member states of the European Union increased between 1972 and 1993 from 33 per cent. of our total to 53 per cent. and, at the same time—
Mr. Duncan Smith: Will the hon. Gentleman give way?
Mr. Bruce: No, I have already given way to the hon. Gentleman.
At the same time, our imports have increased from 36 per cent. to 50 per cent. Our trade has expanded substantially and has moved slightly favourably. Those are significant figures.
The City of London clearly has an important role within Europe, and the impact of the development of a single currency will have considerable implications for the City of London. One of those implications has not been widely discussed. There is some debate on whether the development of a single currency would weaken the role of the City of London as a major international financial centre and whether Britain's participation in that would have a significant effect.
We have already sold the pass to some extent because we fought so hard for what the Prime Minister is so proud of, but many of us are ashamed of—his opt-out clause on monetary union. The Prime Minister has effectively ensured that Frankfurt has the opportunity to become the headquarters of any European central bank, should a single currency be decided on. That was not the likely outcome when the debate started three or four years ago.
I can speak with some small degree of authority as a member of the Select Committee on Trade and Industry. When we visited the financial centres of Europe to discuss the implications of the single market on financial markets and financial institutions we were told by numerous people in Frankfurt—including senior officials in the Deutsche bank—that the right place for the central bank for a single European currency was the City of London. We know that they have, to some extent, acted in accordance with that judgment.
Those in Frankfurt expected the British Government to fight for that and did not expect any of the other member states seriously to object to it. They said that if we were foolish enough to suggest that we were not willing to fight for that or did not regard it as a major pitch, they would be more than delighted to take the opportunity presented to them. That is exactly what has happened and what the British Government have done. The Government have already seriously damaged Britain's financial interests and the City of London's role.

729
The next stage that one must consider is that, i f there were a single currency involving the major economies of Europe—with Britain exercising its right to opt out of that single currency—that might lead to, not necessarily the shift of influence from the City of London to Frankfurt, but the fragmentation of London's role as a market across several European financial centres. That would be to the severe detriment, not just of London, but Europe as a whole.
Mr. Fabricant: The hon. Gentleman implies that he is speaking for the City of London, but has not the Governor of the Bank of England spoken out about the disadvantages of a single currency?
Mr. Bruce: The hon. Gentleman should allow me to complete my speech. I am not suggesting that there are no issues to be addressed. Nor did I claim to be speaking on behalf of the City of London; I was simply describing what I saw and heard, and the implications that it seemed legitimate to draw from that.
The other factor that arises out of our role as a trading nation is the benefit that a single currency could bring in a number of specific ways, one or two of which have already been mentioned. First, it would contribute to the reduction of transaction costs. I know that some people will say that that is not a significant factor for large companies, which are able, one way or another, to reduce costs by speculating on the markets to hedge their bets. They would be less able to do that if there were fewer markets in which to speculate.
However, it has been estimated that the overall transaction costs of trade within the European Union is 0.4 per cent. of gross domestic product—not much short of the entire cost of the common agricultural policy. To suggest that that is not significant and to shrug off 0.4 per cent. of the largest market in the world is to forget that small percentages in European terms are large sums of money. We must ensure that we take advantage of them.
There is a much bigger advantage to be gained from the possible efficiency of a single currency: the dynamic that it creates in terms of encouraging trade, increasing trade efficiency and strengthening Europe's competitive edge over its trading partners across the world. It is estimated that that is possibly worth 10 to 15 per cent. of our GDP across Europe. It would be phenomenal if the truth turned out to be even a fraction of that.
Another factor that is forgotten when one talks about small transaction costs for large businesses is the large proportion of transaction costs for small businesses that are trying to export. In the House during debates on trade we continually bemoan the lack of performance, particularly by many of our smaller companies. There is no doubt that the uncertainty of exchange rates and the cost of exchanging is a deterrent for a small business that does not have the resources to absorb that risk and that operates on tight margins. The benefit to trade for small business is much greater than it is for big businesses which, in itself, is something that we should consider.
Mr. Dykes: Against that background, and without wishing to be unpatriotic, it is sobering to reflect that the pound sterling has lost 90 per cent. of its value against the deutschmark since the war. We would avoid those weaknesses in the future if there were still weaknesses in the British economy. Does the hon. Gentleman agree that one of the great advantages would be for consumers? We
730
talk about the elite, a central bank and the City of London, but it would be a great advantage for consumers to be able to tell immediately the price of consumer durables, services, products or goods—
Mr. Marlow: My hon. Friend is yesterday's man.
Mr. Dykes: The heckling is in inverse proportion to the intelligence of the contribution.
I am sorry if my intervention is longer than I intended. It would be a great advantage for the consumer in any city, village or town in the European Union to be able to tell the price of a service or product.
Mr. Bruce: The hon. Gentleman is right. It is not just a matter of improving consumer performance. It would increase the dynamics of the marketplace. People will know the price and what it means. It will enable them to make rational economic decisions. Many of the arguments advanced against the single market are irrational or conveniently ignore the benefits that can be perceived by anybody who travels, not just abroad, but even around these islands. We can go to Scotland and use Scottish notes, to Ireland and use Irish notes. People understand the face value, which enables them to understand the transactions.
Mr. Marlow: Will the hon. Gentleman give way?
Mr. Bruce: No; I shall make a little more progress.
I shall return to some of those economic factors, but it is important that one takes on board the issue that I believe that the British people would be willing and able to tackle if they were given the chance to do so, and were treated in the responsible manner in which they are entitled to be treated.
People sometimes speak about sovereignty as though it were an absolute quality, a bit like virginity, which you can give once and never have again. It is nothing of the kind. It is something that every one of us, as individuals, in personal terms, compromises every day, because that is what life is about. It is about how one subordinates one's individuality. Even to have a conversation with someone, by definition, is a compromise: if one does not stop talking, one will never hear the reply, so there is no conversation.
Mr. Menzies Campbell: That happens in the House, too.
Mr. Bruce: My hon. Friend is perfectly right. One does not have to be a Member of the House for long to know that that is one of its major weaknesses.
Mr. Spearing: The hon. Gentleman is repeating an old saw, because obviously, in common life, one has to maintain a compromise, but we are discussing legislation. Does he agree that it would be illegal, and out of kilter with the treaties, for the House, or anyone, to propose any law that was contrary to the legislation and the requirements of the treaties, as they now are, and as they will be in future? Is not that a loss of sovereignty?
Mr. Bruce: Of course it is a loss of sovereignty, and we have already had an example of it in the House with the Merchant Shipping Act 1988, which is the first British Act of Parliament that was declared illegal because it contravened our treaty obligations under the treaties of Rome and Paris. However, it is a question of what one

731
receives in return for that loss of sovereignty. It is not a matter of—[Interruption.] The heckling from behind me completely misses the point that there is obviously no point in diluting one's sovereignty for no purpose, but where there is a purpose, where there is a benefit, where it enlarges and enriches in every sense—
Mr. Spearing: It is only speculation.
Mr. Bruce: We have been in the Common Market and in the Union for more than 20 years, and it is not speculation to say that we have achieved benefits. It may be a matter of opinion; one can quote some objective facts as well, and I did, but the hon. Gentleman did not choose to take account of them.
The reality, nevertheless, is that it is not an absolute matter; it is a matter of the balance and the judgment of the benefit that one obtains from sharing one's sovereignty with people with whom one has twice been to war in living memory. It is not unimportant to keep sight of that fact.
I often say to people who express a xenophobia, sometimes in disturbingly racist terms, saying that they do not wish to be kicked around by the Germans or the French and so on, that the Germans, the French and all the other member states of Europe will be there whatever we do. They will not go away. They have been there longer than we have. Most of us came from there, originally, or via that route—there was no other way to get to this country.
Given that that is the case, we need to appreciate that we have the opportunity to participate in institutions whereby we can influence what they do and ensure that they take some account of our interests. When we did not have those institutions, we finished up fighting one another into the ground on the bloodstained battlefields of Europe. Many of us regard that as well worth avoiding, and we should therefore aspire to play a much more positive role in those institutions.
The Prime Minister has got himself into a complete bind. I find it interesting that the obvious line from Conservative central office is that, if one is unfortunate enough to speak for the Government in some capacity on the issue, and one finds a microphone before one's nose or a camera in front of one's face, one should say, "I am totally in support of the Prime Minister's speech." There is no comprehensive coherence in the speech, and indeed the Minister who replied to the debate had some considerable difficulty proving otherwise.
Let us take the simplest argument. The Prime Minister said that Britain's position should be at the heart of Europe. That was his starting point, but he has now said that there is, in the context of the intergovernmental conference, no need to be concerned about any implications of constitutional change, and therefore no need for a referendum, because there will be no constitutional change as a result of the IGC. He will not accept it. No one believes a word of that, not least the Prime Minister.
We know one of two things. The Prime Minister will either capitulate on things such as the single currency, which he has opted out of helping to shape, which Britain should be at the centre of shaping, or he will try to use a veto, which will result in other member states saying, "We
732
will not allow one member who has not taken part in the process to hold us back", and we shall simply be pushed to the sidelines. We shall suffer either from the consequences of a single currency from which we are excluded, the consequences of which will nevertheless affect us, or from having to sign up for it, having opted out of shaping it.
It is a matter of concern, not just to the United Kingdom, but to the whole of Europe, that the country that has the major financial centre in Europe, and which has a great deal to contribute to the operation of a single currency, including legitimate reservations about timing and adjustments that need to be taken into account, should be marginalised. It is not in our interest or Europe's interest.
It is high time that the Government recognised that it is our duty, never mind in our national interest, to be in there, trying to ensure that the shape of a single currency is one that takes clear understanding of Britain's knowledge, expertise and, yes, national interests. All those things are relevant to the other member states.
If, some time in the near future, there is agreement among the French, the Germans, the Benelux countries, possibly Sweden and perhaps one or two other countries, that they will have a single currency, whether that agreement occurs in 1997—which I think is unrealistic, and I am not sure that anyone seriously accepts that we shall be in that position then—or 1999 or 2001, the question then arises: will Britain opt in or opt out?
Those people who say that we need not sign up to a decision now have an obligation to tell us what options they envisage. If they believe that there is a realistic possibility of our saying that Britain will not be part of that European monetary union—because we want to take the decision to be outside it—we need an explanation of the way in which the City of London will develop, the way in which Britain's trade will develop, the way in which investment will develop, the way in which it will positively benefit the British economy and the alternative arrangements that we can or will make.
Those people also need to explain how we shall benefit from losing out on the advantages that a single currency is designed to bring. Several assertions have been made—for example, that it should help to benefit us in the cause of keeping inflation and interest rates down. I noticed some scepticism among the sceptics about the relevance of that.
Let us first note that although inflation in Britain may be relatively low at the moment, hardly anyone believes that it is under control. The figures that were issued today demonstrate that the upward pressure on inflation is becoming not insignificant. Three and a half per cent. is the underlying rate of inflation, which we expect to come through with substantial additional upward pressure in the system. In those circumstances, Ministers who give the impression that a miracle has happened and inflation is under control because we have managed to keep it low for a couple of years, should read the speeches of previous Conservative Chancellors of the Exchequer who have claimed economic miracles that did not last even until the following election.
We can all benefit from a single currency. Interest rates in this country have been historically, on average, 1.5 per cent. greater than those in Germany. If there is a single

733
currency, there is a fair chance that interest rates will be lower in Germany and lower still, relatively speaking, here.
That is one of the advantages of a single currency. One reduces the pressure for speculation and consequently one does not need to have such high interest rates to maintain currency stability. The once-proud claim that Britain never devalued under a Conservative Government is no longer sustainable. Britain has secured the current recovery entirely on the back of a 15 per cent. devaluation of our currency. As a result of that devaluation, and the fact that we have no membership of any external arrangement at the moment, many people realise that the pressure on our currency is such that we are forced to maintain higher interest rates than would otherwise be the case. There are therefore real benefits of being part of a single currency.
I wish to comment on the economic implications of the comments of the hon. Member for Bexhill and Battle (Mr. Wardle), who, according to what I saw on the media at the weekend, implied that immigration policy was such that 15 million people were waiting to come into this country because we had ineffective immigration controls.
There is no question of the European Union's external immigration controls being lifted, but there is a desire to ensure genuine mobility of people and capital to effect the proper working of the single market. The hon. Member for Bexhill and Battle is deluded if he thinks that free movement in Europe will see people queueing to enter a Britain which has opted out of the single currency and the social chapter. I think it is much more likely that, if they can speak French or German, they will queue in Dover to cross the channel to reap the benefits of opting in. It is a preposterous argument.
Mr. Spearing: What about a referendum?
Mr. Bruce: I am confident that the British people will respond to the arguments in favour of a positive vision of Britain in Europe if they are presented in a grown-up and intelligent manner. At the moment, those arguments are not being presented with any leadership or vision. Our fundamental national interests are being sold down the river by a Government who are led by a Prime Minister with no vision—he is interested only in whether he will make it through the week. He is not willing to risk anything within his party—even if it means putting the nation's interests in second place. That disappoints and depresses me and the Liberal Democrats.
I have taken part in a great many debates in the House and it is not often that I see so much real debate about an issue which people clearly feel strongly about. Hon. Members have had the opportunity to express their views honestly with the gloves off. We should take the issue to the people, rather than conduct a rarefied debate which offers them a confused diet of misinformation, half-truths and misrepresentation.
A simple majority in the House can be achieved by winning a minority of the popular vote in circumstances where there has been no adequate consultation following a general election that has been fought on the basis of dozens of issues. The Liberal Democrats believe that a referendum is the only way to ensure that the issue is addressed in an adult fashion which gives everyone an opportunity to have their say.
734
After proper debate, the British people will recognise that they are in Europe, that they want to be in Europe and that they would like their Government to play a much more positive role. Of course, we must fight to defend our interests in the same way as other countries do. But we will not do that by opting out, by letting others make the rules and then signing up afterwards to what they have shaped. That is not sensible democracy, diplomacy or politics, and it is a disaster for Britain's economic policy. That is why I commend the motion to the House.
7.52 pm
Sir Teddy Taylor: Although the hon. Member for Gordon (Mr. Bruce) is obviously living in daydream land, I will not reply to all the issues that he raised. Hon. Members' speeches tonight have been far too long and I will try to speak for only a few minutes.
If the hon. Gentleman sincerely believes that inflation and interest rates will suddenly decrease if we adopt a single currency, I ask him to read the speech by the Governor of the Bank of England. If we agree to convergence, there will be a flow of capital and it will cost a great deal of money. Once we have secured that magical convergence by dropping pound notes all over the place, how on earth will we maintain convergence? That will be very difficult.
On immigration, I hope that the hon. Gentleman will wake up to reality; he must know the facts about the events in Brussels this afternoon. It is not simply a question of whether the residents of Germany and France will come to Britain; the problem is that, under Brussels's plans, if people gain access to Europe they will gain access to Britain also. People who wish to maintain good relations within the Union are concerned about that fact. I will not take up the time of the House debating it now, but I hope that the hon. Gentleman will wake up and read the speech by the Governor of the Bank of England, who knows something about the matter.
The Liberal Democrats have done us a service in enabling us to debate the referendum issue tonight. Although the motion is not terribly significant because it obviously does not cover the issue of a single currency, which was in the Maastricht treaty, and although it is unlikely that any progress will be made at the next conference, we are talking about a significant issue of principle.
It is a sad day for democracy when both the major parties issue a one-line Whip. Those conscientious Members of Parliament who are present know that a one-line Whip does not constitute a free vote; basically, it means a day off. Hon. Members are told, "Please don't come and talk about the issue, just go away." It is sickening that both the major parties have decided to apply a one-line Whip to an issue of this magnitude and significance.
I do not wish to politicise the issue, but it is scandalous that the Labour party decided, before the motion was even published, that its members did not need to attend for the debate. I do not wish to single out Labour Members. It is shocking and disgraceful that hon. Members are dragged here on three-line Whips to debate matters which are of no great significance, yet there is a desire that they should not debate a referendum over Europe.
I was pleased to have a cup of coffee with three Conservative Members of Parliament this morning. I asked what we should do about the Euro-issue and they

735
answered, "Please stop talking." That is a dangerous attitude. Unless we think about the problem, talk about it and seek some solutions, we will not make any progress. Ministers are not dishonest, but both Labour and Conservative Front-Bench spokespeople become trapped and the public are deliberately misled. They become very angry when they discover that has occurred.
During the debate on the Single European Act, Ministers assured me time and again—I am sure in all sincerity—that everything would be all right. The news from Brussels this afternoon is that plans to ban all passport controls in European Union countries, including Britain, will be tabled by the Brussels Commission later this year. If we object to those plans, we will go to court and Ministers know that our chances of winning are very slim.
This is not an issue of little significance. We are talking about the removal of border controls which will apply not only to all residents of the EC, but to all people who visit the EC and to all of those who enter the EC at some time. I believe that, through no fault of their own, people have been misled about that issue.
They have also been misled over a single currency. There is great debate in the Conservative party which I am sure will result in a referendum on a single currency. A decision about a single currency will have the same significance as deciding whether to keep a Scottish £1 note. By that time, convergence will have taken place and we will be linked to the European currency. We will have to decide whether to have a coin bearing the Queen's head, or an ecu.
The people have been misled time and again over agricultural policy. The Euro-enthusiasts—there are even one or two in the Labour party—have told us that the policy will be reformed. However, it gets worse all the time. Hon. Members will be aware that the budget this year will exceed the legal expenditure limits. People have been misled and they are very angry. We should all be concerned about certain tension points in society. People are concerned about corruption. The structure in Europe is riddled with corruption, waste and mismanagement. However, all we do is set up new Departments, organisations and consultancies. The people are helpless to do anything about that situation and that makes them very angry.
The structure of the European institutions and policies invites fraud and corruption. We should be concerned about what is happening to Britain's poor. We often argue about who is to blame for poor people getting poorer. EC policies have a devastating effect on the poor. Hon. Members must recognise that value added tax is a tax on the poor.
Mr. Malcolm Bruce: The hon. Gentleman should not blame me.
Sir Teddy Taylor: I do blame him. I blame all hon. Members who voted for a system that does not allow VAT to be reduced. The hon. Gentleman is an expert on Europe and must know what is meant by the amended 6th directive and what we shall be obliged to do.
We should worry also about young people. Hon. Members should go around the country and hear what they are saying. The people who are agitated about the
736
EU are not the elderly but the young. The effect on our democracy should also cause concern. The public are growing terribly angry because there is nothing that they can do. This appalling paper, the Evening Standard, published an article today headed
"The law, not the mob, must prevail".
In it, the Home Secretary says that people should protest properly and legally, not break any laws, because that is our long-standing tradition. It was a long-standing tradition for people to protest and for something to be done.
Recently in Coventry, the funeral was held of the young lady crushed to death by a lorry because she wanted to protest against the export of live animals. Some people think that such protesters are silly, but they are not. They feel passionately, but there is nothing that they can achieve through the democratic system. They can write to their Members of Parliament—whether or not they are Liberal Democrats—about something that they think is important, but nothing can be done. Wait until 1 January 1996, when there will be terrible problems in the fishing industry. British fishermen are desperately angry, because everyone else seems to be breaking the law.
There is also the issue of the different European courts—not just the Common Market court but the human rights court. The House should appreciate that the public are made angry that poll tax protesters who were sent to prison are to receive massive compensation. What are the thoughts of people who struggled to pay their tax? What about the drug dealers who are using technical points of law to argue retrospective action and then receive compensation?
Mr. Quentin Davies: Does my hon. Friend concede that the European Court of Human Rights has nothing to do with the European Union, which is the subject of this debate? We acceded to it in 1950, long before the European Community was ever thought of, and presumably we could resile from it now if we wished, without compromising our membership of the European Union. It is a complete red herring to introduce the European Court of Human Rights in a debate on the EU.
Sir Teddy Taylor: If my hon. Friend reads Hansard, he will find that I mentioned the Common Market court—the European Court of Justice—and the European Court of Human Rights. My hon. Friend's remark does not help. If he walks through the streets of his constituency and talks to people, he will find that they are angry at the decisions of the European Court of Justice and of the European Court of Human Rights.
Let us take the other court. How do my hon. Friend's constituents feel when they discover that female Army officers who became pregnant are to receive substantial compensation, while female officers who decided against having children and suffered consequential distress—or who even had abortions and suffered psychological damage—are to receive nothing? My hon. Friend tends to make flippant remarks. He should wake up to the fact that the public are annoyed. When democracy is abolished, the same always happens—things happen in a rush, and that makes people angry.
The answer is a referendum. It is desperately important to give the public the chance to express their views on how to proceed. The tragedy is that almost everything has

737
gone. Present policies are creating misery and substantial unemployment. Seeking public opinion is also important for the Conservative party, with which I used to be associated, which now forms the Government.
The Prime Minister is a decent. respectable and honourable person, but he has been placed in an impossible position. He has people banging and screaming at him from both sides. It is difficult to move without upsetting someone, making them angry cm being asked silly questions. What can the Prime Minister do? If the public expressed their clear and concise view in a referendum, that would give the Prime Minister the authority to sort out the rebels on either side, and that would be the end of the internal debate.
The House should not think that that problem is only for the Conservative party. If Labour came to power, they would have exactly the same problems—perhaps more. Although Conservative Members are able and colourful, Labour Members probably have more beliefs and are more passionate because of the way that they grew up. Therefore, a Labour Government would face greater problems. The divides are the same, but they care about people.
Today's debate is desperately important. We must wake up to the fact that there is a serious problem. The only way out is to give the people the chance to express their opinion on the question, "Do you want to carry on this way, or do you want to get out of it? Do you want a separate relationship, or do you want the EU developed as the Liberal Democrats would like?" Once that is done, the present debate will be over and the country can get on in a sensible and united way. The present division is damaging the Government and country, and greatly damaging our democracy.
8.5 pm
Mr. Austin Mitchell: It is a reflection of the state of public opinion that in today's debate, the Euro-enthusiasts are, broadly speaking, against a referendum, whereas the Euro-sceptics have argued passionately and strongly for one. The view advanced by the Euro-enthusiasts is that people are not worthy to make the fine, exalted judgments that those committed to Europe are qualified to make.
Mr. Malcolm Bruce: I did not suggest that.
Mr. Mitchell: The hon. Gentleman should not jeer yet because I wish to pay him a compliment.
The only consistency is to be found in the speech of the right hon. Member for Worthing (Sir T. Higgins), who opposes monetary union and a referendum—which would be a means of blocking monetary union—and in the Liberal Democrat position. No party can be more enthusiastically, naively and foolishly pro-European. The Liberal Democrats are prepared to prostrate themselves before Europe as though it were a branch of the international Scout movement, yet they support a referendum. It does them credit, to say that the people must be consulted. Criticisms of the Liberal Democrat position are unfair, and I commend that party for tabling its motion and giving the House the opportunity to debate it.
I am in favour of a referendum, as the motion says. As honesty is the name of the game, I admit to taking that position partly because I believe that a referendum would defeat those aspects of progress towards European union
738
to which I object. That apart, I still strongly support a referendum, not on every policy issue—which has been held out—but on basic constitutional issues, such as whether we should change to proportional representation, regional government, or Scottish and Welsh devolution. People have a right to a say on such issues, particularly on whether sovereignty—which sounds a technical word but means the people's ability to control the Government and make them accountable—should be dismantled, shipped to Europe and abandoned. The people must be consulted on such a basic issue. We cannot give sovereignty away on their behalf.
All parties—even the Liberals—are split on Europe. It is childish and silly to pretend that we are united, and on that basis to push European matters through the House on the back of a three-line Whip. When the parties are disunited, a referendum is the only way of deciding. It is illegitimate to push through such proposals on a three-line Whip—using the discipline of the Whips, the lure of career, the quiet word that it will not enhance an hon. Members parliamentary career prospects to vote against the party line, and other covert means to secure a majority for Europe. We all know that such tactics are deployed, and we know they are wrong. It is imperative to allow people to speak because the only way to clarify the issue is through them. It is not the power of Parliament versus the power of the people. The power of the party is being used in a three-line Whip and that is illegitimate.
The sovereignty which we are being asked to give away is not ours to give; it belongs to the people not to us. Indeed, had the people been consulted right at the start of the whole venture on entry into Europe, when the right hon. Member for Old Bexley and Sidcup (Sir E. Heath) promised the whole-hearted consent of the British people, and had they been consulted over Maastricht, we would not have faced such difficulties, which have undermined our relationship with Europe from the beginning. Decisions have been imposed on the people without them being consulted, which has been corrupting. The people have been dragged along grumbling, reluctantly and unenthusiastically behind the elite—the elite have constantly said that Europe was good for them—without getting their consent.
Mr. Spearing: Does my hon. Friend agree that that relationship is also not good for those who advocate a partnership—as they call it—in the Union, because the people of Britain have not been given the chance to say yes? Does he recall that the former Prime Minister, the right hon. Member for Old Bexley and Sidcup, to whom my hon. Friend referred, said that we would negotiate—no more and no less? He went into negotiations and none of the three treaties involved has received a mandate from the Government who put them through.
Mr. Mitchell: I agree with my hon. Friend. It has been corrupting. It has been destructive of democracy, and destructive of commitment to the institutions of this country to misuse them in such a fashion. Membership has been defended and advocated on what amounts to a litany of lies, half-truths and distortions.
The problem is that Euro-enthusiasm—commitment to Europe—is an elite preoccupation, an elite disease in this country. The elite middle class—[Laughter.] My hon. Friend the Member for Durham, North (Mr. Radice) may laugh, but he is one of the proponents of that point of view. The middle-class, cosmopolitan elite, which feels

739
itself to be European and international, has a vague contempt for the institutions and the people of the country, especially British industry and its workers who have never been quite good enough. The elite are well-off and in cushioned, insulated jobs so that they do not feel the same threats to jobs or food prices as do the people.
Mr. Radice: Will my hon. Friend give way?
Mr. Mitchell: I welcome an elite point of view.
Mr. Radice: How does my hon. Friend square his view with the fact that the British trade union movement is in favour of being in the European Union and, indeed, in favour of Maastricht?
Mr. Mitchell: I said that it was an elite preoccupation. The leadership has been persuaded that doors will be open to them in Brussels which are closed in Downing street, and they have been persuaded, especially by the visit of Jacques Delors to their conference, that they may advance their cause through Europe. However, that enthusiasm is not felt by the mass of trade union members, which bears out my point.
This elite disease is highly infectious. It has infected large sections of the media. Europe is the lingua franca, one might say, of the media, especially among the pundits. They like a nice, distant position—say, Brussels—from which they can be contemptuous because it gives them a degree of distance from Britain.
Such an elite is characteristic, too, of political parties. The higher one goes up to the leadership of both main parties, the greater the degree of Euro-enthusiasm. It is stronger in the Cabinet than it is in the 1922 Committee. It is stronger in the 1922 Committee than it is in the rank and file Tory associations. However, the same is true of the Labour party. The further one goes down the pyramid, the lower the flame of the Euro-enthusiast candle burns and the more people know the consequences and the damage that is being done by the European institution and the more they feel resentful about not having been consulted about it.
That is why there is a constant need to deceive and trick people with a litany of lies into believing that damage is success; that failure is triumph; that we are getting our way in Europe; that the institution, which is so good for the elite, is also good for the people. We are told that we must be in there to shape the institution. We have been trying to reshape the common agricultural policy for 20 or 30 years, and what shape is it in now? We spend more money on it now than ever before. We are told that we cannot be left behind in Europe—the argument of the educationally subnormal lemming. We are told that we must be there in the rush over the cliff of monetary union.
We are told through an argument of fear and manipulation that if we do not go along, we shall be on our own and left out. What a terrifying vision of having to decide things for ourselves and not being able to run with the mob. We are told that we shall lose out—after all the damage that this institution has done so far.
Given such arguments and the litany of lies and deceit, it is sad, indeed, barmy that the Labour party has not supported the Liberal Democrat motion on a three-line Whip because we could have defeated the Government and we could have supported the people. The argument is
740
right in principle. We should not now appear cool on a referendum. My hon. Friend the Member for Gateshead, East (Ms Quin) mentioned a referendum or an election. An election is no substitute for a referendum on such an issue. In an election, a hundred issues or more are considered and it could never be focused on a single issue such as monetary union.
Since the instruments to improve the economy will be taken away from us, the Labour party especially should ask the people's opinion on monetary union before we agree to it in principle. I am happy that the Labour party is moving crabwise towards a referendum. It is right that we should do so. We will get there, but we could have got there a lot quicker if we had supported the motion.
A referendum on monetary union, is especially important because the monetary union argument is being urged forward as a way in which to build European unity without the consent of the people. This drive in Europe to build a stronger, central set of institutions is not legitimate, but inevitably comes from the bureaucracy and the people in power at the centre. They want to see the centre strengthened. However, most of the paths towards that unity are blocked.
They cannot go down the path of getting the consent of the people, because in a referendum or in any other means of attaining consent, the people would refuse to give it. Indeed, the people came very close to refusing it in Denmark and France, where the yes and no votes were within two percentage points of each other. If the question did not receive the whole-hearted consent of the people, it could not therefore be put to them. Unity cannot be achieved by agreements among Governments because that builds a camel, rather like the European Union we have under Maastricht. We shall never achieve agreement among Governments on some effective democratic federal institution with a powerful centre.
Therefore, the democratic roads to union are closed to those aspiring to union. The only path left open is to try to build union through monetary union, which builds union from the top down; through economic forces without the consent of the people. It builds union in a way that no other set of nations have ever done before. Normally, nations achieve political union before monetary union. Monetary union is impossible—effectively—without political union.
If we go down the path that Europe wants, we shall be imposing on the back of monetary union a central bank to operate the finances, a Committee of Ministers at the centre to manage the economic policies and there will have to be one economic policy and one interest rate. What is more, monetary union breaks the mainspring of a national economy on which the nation rests. It builds union covertly—secretly—without the consent of the people. That is the agenda which is now at issue.
In this situation it is essential that people be consulted, because although the elite may find the damaging economic consequences tolerable—because they are testimony to our enthusiasm for Europe: a step towards unity—and they are prepared to put up with them, the people, on whom the sacrifices and the economic dislocation will fall, must be allowed to give their consent first.
There is no way of building monetary union which is not damaging to the mass of the people, especially in this country. It is rather like the state of perfect virtue—we are all in favour of it, it sounds very nice, especially with

741
regular brushing of teeth, motherhood and apple pie. But how do we get to the reign of perfect virtue? The same applies to monetary union: the process of getting there is so damaging that it rules out any benefits to be had from it.
The only way to achieve monetary union is to cross the exchange rate mechanism bridge, which means putting the nation's head back into the furnace which lost us 1.2 million jobs, most of them in manufacturing. That took place in the period after that tough, dynamic, abrasive Prime Minister of ours forced that poor, weak, wilting woman, his predecessor, into the ERM, consequently inflicting so much damage on the people of Britain.
Either we return to the ERM, which involves a gradual and irrevocable linking of currencies; or we attempt to go to monetary union overnight. If we do the latter, the stronger economies will inevitably rip apart the weaker ones. That was what happened in east Germany—although, heaven knows, it had the benefit of enormous aid from the west. Germany wanted to destroy east Germany's economic system the better to absorb it into that of dominant west Germany.
These, then, are the choices: long-term ERM anorexia or instant east Germany. They are the only two ways of reaching monetary union.
May we impose either alternative on the British people? Do we not have an obligation to tell them what is likely to happen—in my view, what is certain to eventuate—and to ask them whether they want it? The British people already have experience of the ERM. The elite Euro-enthusiasts remained enthusiastic about the exchange rate mechanism right to the bitter end—right to the day when George Soros, who has done more good for the people of this country and for its economy than the past three Chancellors combined, forced us out of the ERM in such humiliating circumstances.
People have also seen the benefits that have attended our being forced out. If they looked at Italy, they could see even more such benefits. The Italian economy has done much better than ours. Not only was its devaluation greater, but the Italians had the astute idea of destroying confidence and devaluing the lire still further by sending so many of their politicians to gaol. I commend that idea to the Prime Minister; his party looks as though it needs the same treatment in some respects.
In any case, the consequences for Italy of leaving the exchange rate mechanism and devaluing were that it has been able to turn a hefty balance of payments deficit into a massive balance of payments surplus in just over two years. Fiat is now in profit, and Italian manufacturing and exports are doing well.
Mr. Fabricant: I have some sympathy with the hon. Gentleman's argument, but surely he is not suggesting that devaluation is the panacea—or is Labour party policy still the same as it was in the 1970s?
Mr. Mitchell: I am saying that one cannot make the maintenance of an externally determined exchange rate the be-all and end-all of economic policy in a democracy. To do so, one must sacrifice every other instrument of management to maintain the exchange rate at a particular level. That applies whether a country enters with its currency overvalued or at a competitive rate, because circumstances change and exchange rates have to change with them; if they do not, they strangle the economy.
742
The fact that our exchange rate was so overvalued and maintained by high interest rates for so long crucified British manufacturing industry, which recovered only when the process was stopped. The Euro-enthusiasts did not tell us that that would happen. They complained when it did, but until it did, they—particularly the Liberals—urged us to move to the narrower bands. I remember the right hon. Member for Berwick-upon-Tweed (Mr. Beith) leading huge mobs up and down Whitehall shouting, "Narrower bands now." The popular response was immense.
I shall conclude soon, Mr. Deputy Speaker, as I can tell from the way that you are leaning forward how passionately interested you are in what I am saying.
Monetary union may never happen. The European Union may have enough sense to avoid it, but if it does happen we shall hear the usual bleat from our Euro-enthusiasts, "We can't be left behind; we must be in there to shape this monstrosity."
That is the prospectus of what we might give away, which is why the people must be consulted. In monetary union, we would give away our ability to run our economy in our own way for the purposes of our people—not for the purposes of the wealthy or of the central bankers with their mystique of stable prices, which exist only in graveyards. It is for our people that we have to retain the ability to control our interest rates, exchange rates, money supply, borrowing and public sector deficit or surplus. The only way we can manage the economy for our people is by having a Government who are accountable to them and whom they feel they can throw out.
The ultimate argument for this motion tonight is that the House must consider what the people want. The people are fed up with being deceived and bamboozled and with not being consulted. They are fed up with having Europe imposed on them willy-nilly. They have shown at the polls that they want to vote on and be consulted about this issue. I ask the House to think of the alienation that will result if, once again, we impose on them the panacea of Euro-medicine—higher unemployment, more massive deflation and so on. The people tell the pollsters repeatedly that they want to be consulted. We in this House cannot take a decision, split and divided over Europe as the parties are. Let the people speak.
8.27 pm
Mr. Barry Legg: This evening's debate has moved without hindrance to the issue of a single currency and a European central bank. The last few speakers have all focused on those issues; the House is right to focus on them. The establishment of a single currency, a single interest rate and a European central bank is an issue that goes to the heart of democracy in this country, and to the heart of our constitution.
Time is running short for Her Majesty's Government to say clearly where they stand on this issue. Hitherto, the policy has been to wait and see, but that cannot go on for ever. There will be a single currency—of that I have no doubt. The Maastricht treaty provides for it to be established on 1 January 1999. It will go ahead, with a certain number of states participating. If a country wants to join the single currency, it will have to make the decision no later than 1 July 1998.

743
At the start of the year, my right hon. Friend the Prime Minister made some helpful statements. I think particularly of his interview on 8 January with David Frost. As I said earlier when I intervened in the speech of my hon. Friend the Minister of State, Foreign and Commonwealth Office, my right hon. Friend made it clear that he was keeping open the option of a referendum. He said also that he considered that a firm commitment to a single currency was a major constitutional change.
When my hon. Friend the Minister of State responded to my intervention, things were slightly less clear cut. He said, "I think that is the case still." Some ambiguity seems to have crept in. I hope that it will be made clear later this evening that the Government still believe that the single currency is a major constitutional issue, and that they are keeping open the option of having a referendum on the issue.
Why should doubts have crept in? Were the comments made last week by my right hon. and learned Friend the Chancellor of the Exchequer, when he sought to play down the political aspects of monetary union, something to do with the hesitancy that we saw on the Government Front Bench earlier today?
When my right hon. and learned Friend the Chancellor recently gave evidence to the Select Committee on the Treasury and Civil Service, he seemed to get to the heart of the matters that we are discussing. When he was asked whether there had been a movement in the balance of power between himself and the Governor of the Bank of England in setting domestic interest rates, he did not agree. He said:
"the power"—
that is, the power to set interest rates—
"lies with the Chancellor because the Chancellor is accountable to Parliament and I do not think Parliament would allow the Chancellor to surrender that power."
There we have it. The position is set out clearly by the Chancellor. My right hon. and learned Friend dealt with the importance of a British Chancellor being able to set interest rates and being accountable at the Dispatch Box to the British Parliament. He went on to press the point even harder. He said:
"I think actually one thing which we have retained which, I do not want to get flippant about, is that nobody is arguing that we have thrown parliamentary accountability because I come here and I answer for the decision."
That is what most of us on the Government Benches want to see continuing. We want a Chancellor setting interest rates with the Governor of the Bank of England and being accountable to the House for his decisions.
The provisions set out in the Maastricht treaty would not allow that process of accountability to continue. The establishment of a European central bank clearly takes the relevant powers away from the Chancellor. The European constitution could not be clearer.
It could not be clearer also from reading that constitution that monetary union is not a purely technical and economic matter. Instead, it is of fundamental constitutional importance. It creates a central bank that is unaccountable. The constitution of the central bank has been described as being even harder than the Bundesbank, and we know that the Bundesbank constitution contains
744
provision for the bank to take into account German economic policy—the policy of the German Government—when setting interest rates.
In the constitution for the European central bank, which we passed some 18 months ago, the only criterion is price stability. The running of the bank is placed in the hands of unaccountable officials. Six officials are elected to the executive body of the bank. They are chosen by the Governments that decide to go ahead with monetary union. Once the six officials have been elected, they are no longer accountable. They have an unrenewable term of eight years.
The governors of the domestic central banks join the six officials to set interest rates. However, the governors of the domestic banks, as I think Lord Kingsdown remarked, are really no more than members of a country branch of the European central bank. Power will lie with the six elected officials.
Article 3 of the Maastricht treaty sets out clearly the responsibilities of the six men. They will have responsibility for monetary policy, which means setting interest rates. How will those rates be decided? That will be left to a simple majority of the members of the governing council. The six will have the power to conduct foreign exchange operations. They will also have the power to hold and manage the official reserves of the member states and to promote the "smooth operation" of the payment system. Power will be put into their hands. They will be able to call upon minimum reserves from the credit institutions across the member states of the monetary union.
The six men will be responsible for setting interest rates and monetary policy as a whole. Anyone who considers the constitution behind the European central bank in a pragmatic and sensible way will say that it is not a feasible way in which to run European economic policy. Our lessons from the exchange rate mechanism, to which the hon. Member for Great Grimsby (Mr. Mitchell) referred, should still be clear in everyone's minds.
Politicians deciding upon arbitrary exchange rates and expecting their domestic economies to fit in with the rates they have fixed will damage their economies. We need freely floating exchange rates throughout the European Community if we are to get the best that we can from the prosperity of the Community.
The hon. Member for Gordon (Mr. Bruce) talked of small businesses gaining from a single currency. I think that he is out of touch with what businesses are like these days. I visited a medium-sized business in my constituency which has a turnover of £10 million a year. The company trades throughout the world, with customers in 34 countries. It is a global business.
If the British exchange rate is artificially linked to the deutschmark and irrevocably fixed, the business is at risk. That is what the managing director told me. He said that, if the United Kingdom had not left the exchange rate mechanism in September 1992, he faced ruin in his business. British businesses are global, and they need flexibility. They cannot afford to have the British exchange rate locked irrevocably to the deutschmark.
Currencies are important as shock absorbers to allow countries to adjust to continually changing economic circumstances. In his speech on Thursday night, my right hon. and learned Friend the Chancellor of the Exchequer sought to play down the political and constitutional

745
implications of a single currency. I think that he did a disservice in doing that. He gave two examples of countries that he believed had retained their sovereignty but had linked their currency to another state.
What were the two countries that he selected? The first was Austria, which had linked its currency to the deutschmark. I must tell my right hon. and learned Friend that the size of Austria in economic terms—its gross domestic product—is just under a tenth of the German economy. My right hon. and learned Friend's second example was the Republic of Ireland, which has linked its currency to the pound sterling. Again, I must tell my right hon. and learned Friend that the economy of Ireland is less than 5 per cent. of the UK economy.
It is possible for very small economies that are dependent on other economies to link their exchange rates to those larger economies.
Mr. Sweeney: As an Irishman, I am well aware that, for many years, the Irish pound and the British pound were worth exactly the same. Is it not significant that, despite being a small economy, Ireland chose to separate its pound from the British pound, thereby demonstrating the desire of a particular nation for the symbol of nationhood which its own currency represents?
Mr. Legg: I was just coming to that point. Eventually, Ireland detached its currency from sterling. It can be argued that Ireland's best economic interests were not served by tying itself to sterling, as the nature of the Irish economy, which was largely agriculturally based, did not equate to the nature of the United Kingdom economy.
It is possible from time to time for smaller economies to link their currencies to much larger economies. Hong Kong does it with the United States. We did it during the Bretton Woods period. It is possible to do it with very large economies for a certain time, but it is not viable to link economies of medium-sized states, because they will experience quite different shocks to their economy. We cannot make the decision to lock our currency to another medium-sized economic power, and—what is more—make a decision that is irrevocable. If we accept monetary union, we are making an irrevocable decision.
Mr. Bernard Jenkin: Is not the crucial difference between the so-called monetary union between Austria and Germany, or between the Republic of Ireland and the United Kingdom, not only that they were revocable but that they retained separate central banks, separate foreign currency reserves, separate gold reserves and total independence? The choice to link their currency was a decision for each of those sovereign stales, whereas that arrangement bears no relation to what is set out in the Maastricht treaty, which is a legally binding irrevocable monetary union?
Mr. Legg: My hon. Friend has hit the nail on the head. Those countries had the flexibility to change their currency if they so wished. They retained their own central banks, and the democracy and economic opportunity that went with that. Ireland, as my hon. Friend the Member for the Vale of Glamorgan said, made that change, but we are being called on to make an irrevocable decision on which we cannot go back.
One can think of more and more factors that one might take into account in judging whether convergence is taken into account. For example, one might look at the tax
746
burden of each state, its overall balance of trade, the percentage of trade that it conducts across the world, its investment percentages across the world. It might just be conceivable that, at some point, convergence might take place, but politicians are notoriously lacking in the ability to pick that moment, as we have seen from our own recent economic history.
But even if we did pick the right moment, that convergence could not continue for ever and a day. That is the point. We would have given up our currency and our economic flexibility, with the objective of achieving something that I believe would be deeply damaging to the British people and our economy.
Mrs. Teresa Gorman: Is it not true that, in a way, we already have a common currency with the dollar? More people use it voluntarily than probably any other currency. More people use the pound sterling as a type of common currency than the deutschmark, so to link ourselves to the deutschmark, which is foreign in its nature to most people, is quite ridiculous.
Mr. Legg: I agree with my hon. Friend. One of the great problems we had when we were in the exchange rate mechanism was that our link with the deutschmark took us to $2 to the pound. For anybody in Britain trying to do business with the United States—many of our companies do—at such an exchange rate, that just was not on. The hon. Lady is right to say that the dollar is a very important currency. However many conditions we come up with for monetary union, at the end of the day we must accept that, under the Maastricht treaty, a political decision will be made on whether there is a single currency. It will not be done just on economic factors.
Many hon. Members may remember the Madrid conditions, which Professor Alan Walters came up with to please the Prime Minister of the day. He believed that they were impossible to achieve, so tough were the conditions. What happened? The Madrid conditions were never fulfilled, but we entered the ERM, with the problems that ensued.
I ask hon. Members not to put all their faith in economic conditions and convergence criteria, because at the end of the day they can go by the board.
Mr. Nick Harvey: Is the hon. Gentleman aware that politicians all over Europe who are committed to the idea of a single currency are artificially manipulating economic indicators to ensure that the convergence criteria are met? Is it any satisfactory indication of anything?
Would it not be better for us to see whether convergence criteria that have been met could be sustained through a complete economic cycle, because those who build their house of straw will rapidly see it come unstuck when their economies at home hit a downturn? The fact that they can achieve that happy convergence at one point is no indication of anything that could be a foundation for a future currency.
Mr. Legg: The hon. Gentleman makes a valuable point. Some 12 months ago, I visited Germany. Having had discussions there about the convergence criteria and the level of debt, I learned that the level of debt that the German Government disclose to meet the 60 per cent. debt criteria does not include the East German debt that they inherited.

747
The hon. Gentleman is entirely right: politicians who have the political objective of achieving monetary union will dilute and tamper with the conditions to achieve their political objectives. We should not be surprised about that, because they have been very open with us.
Chancellor Kohl has been very open. He said that of course one gets political union with monetary union; it cannot operate in any other way. He must be right. If one thinks about what it means to have one interest rate and one currency, one sees that one must have fiscal transfer values to try to make the system work. The safety valve has been taken away, so one needs to transfer tax revenues to the regions that are not doing very well.
As hon. Members on both sides of the House have said tonight, that is precisely what happens in the United Kingdom with the single currency that we have here. That is precisely what would happen with a European single currency. Taxes would have to be raised and transferred to the regions that were doing badly because they had lost flexibility.
Mr. Marlow: Is not my hon. Friend setting out a rather exciting prospect: a bunch of countries in the European Union will fudge the convergence criteria and will join some single European currency? They will have got it wrong. There will be massive transfer payments and massive social payments, so that part of Europe will become increasingly uncompetitive, with increasingly higher interest rates and inflation, and we in the United Kingdom, with Thatcherite economic policies, driven by our desire to make our industry and trade prosper, will be the rich men of Europe.
Mr. Legg: My hon. Friend has outlined what some might consider a golden scenario. It is certainly a prospect to warm many of our hearts. It is so reminiscent of what we were told when we were in the exchange rate mechanism. We were told then that, if we left the ERM, interest rates would have to rise; tonight we have been told that, if we had a single currency, interest rates would be lower.
When we came out of the ERM, despite what we had been told by the Chancellor of the Exchequer, we suddenly found that we could cut interest rates to the level that was required domestically. There is no guarantee that a single currency would produce lower interest rates or lower inflation. As politicians, we shoulder a grave responsibility in making the decisions that we are making now.
Mr. Whitney: My hon. Friend seems to see no difference between the single currency and stage 2 of the exchange rate mechanism.
Mr. Legg: I do see a difference: the single currency would be much worse. At least we could come out of the ERM. As the hon. Member for Great Grimsby pointed out, George Soros could come and rescue us, and with one bound we were free. We can never come out of the single currency. The position will be irrevocable. Having given up our currency and transferred our reserves to the European central bank, we shall have banished the option of having a currency of our own and setting interest rates in accordance with domestic monetary conditions.
748
I think that most hon. Members understand the magnitude of the issues and policies that we are discussing. Surely it is time for the British Government to make their position clear. The decisions governing whether we enter a single European currency will have to be made—
Mr. Peter Mandelson: In 1998.
Mr. Legg: The hon. Gentleman is right. The Prime Minister has already ruled it out for 1996 and 1997, however, and I believe that ruling it out for 1998 will be just one more small step.
The Government cannot put off this decision. They will have to explain whatever they decide to the British people in the next general election campaign; they cannot hope to fight an election in 1997 saying, "We do not know whether we shall go for a single currency in 1998." They must either rule it out or promise a referendum. I hope that, when he winds up, the Minister will begin to clarify the Government's position on a vital issue that is crucial to the British economy and the British people.
8.52 pm
Mr. Giles Radice: I wish to return to the subject of the motion. I share many of the views of the right hon. Member for Yeovil (Mr. Ashdown) on the European Union. For many years, I believed that it was in the national interest to co-operate and, if necessary, integrate with our European partners—
Mr. Austin Mitchell: At any cost.
Mr. Radice: My hon. Friend has had his say, at considerable length. Perhaps he will allow me to make a three-minute speech.
The European Community has achieved a great deal for this continent. It has helped to keep peace in Europe, and it has helped to create unparalleled prosperity. [Interruption.] It certainly has, as anyone who had studied a little history and viewed the past from a slightly wider perspective than the past three or four years would know. It is essential to the future of the continent, which is why so many countries want to join the European Union: three of the four EFTA countries that held referendums voted to join. I agree with the Prime Minister that Britain ought to be at the heart of Europe.
That is not what we are discussing, however. We are discussing whether there should be a referendum. I strongly support the idea of involving the people more in major European decisions, because we are a Europe of the peoples rather than a Europe of the elite. I agree with my hon. Friend the Member for Great Grimsby (Mr. Mitchell) that that means that the people should be consulted on such decisions; the question is how they should be consulted.
That consultation need not necessarily take place by means of a referendum. It could take place in a general election, if there were a major difference between the views of the two parties. The Conservative party is changing so rapidly that it is not beyond the bounds of possibility that it will fight the next election on an anti-European ticket, although I hope very much that it will not. Those in the Conservative party who speak for

749
the European cause have a responsibility in that regard, and I am glad to say that they are just beginning to wake up to it.
Mr. Marlow: There are not many of them.
Mr. Radice: There are indeed. Perhaps they should speak a little louder; then we would not hear quite so much from the hon. Member for Northampton, North (Mr. Marlow).
If there are no strong differences between the parties, however, there will be a case for a referendum. I do not agree with the right hon. Member for Worthing (Sir T. Higgins) that a principled objection can be advanced: it is possible to believe in parliamentary democracy while supporting the idea of a referendum on constitutional issues. In 1975, we had a referendum on whether we should leave the common market. We did not hear much about that from my hon. Friend the Member for Great Grimsby, but that is probably because he did not like the decision; certainly he never accepted it.
I voted yes in that referendum, as did the majority of British people. Other countries have had more frequent referendums on European issues—especially France, Spain and Denmark—to decide not just questions of accession, but other questions. There is, however, a problem with ad hoc national referendums, which are often decided on national issues. As my hon. Friend the Member for Swansea, East (Mr. Anderson) pointed out, the French referendum was decided partly on the basis of whether people were for or against President Mitterrand. I know, because I was involved in that referendum—on the yes side, unlike others who have spoken.
The first Danish referendum was decided partly as a result of the unpopularity of the Conservative Government of the time. The second was won partly because there was a new Social Democrat Government who were able to present a new broom. The Swedish referendum could not have been carried by the Conservative Government, who were very unpopular at the time. That Government had the good sense to wait until they had been defeated at the polls, and it was a new Social Democrat Government—who were quite popular at that stage—who were able to carry the referendum.
I believe that we should hold European-wide referendums on major issues, and that they should take place on the same day. They would be decided on a national basis, but at least such a process would iron out some of the purely national issues and focus people on the European issues. I hope that the European nations will consider that at the 1996 intergovernmental conference.
I do not share the view of some of my hon. Friends that somehow we would lose in a referendum. Some of my hon. Friends gave away the fact that their support is cynical. They think that they can win it and that that is the only way in which they can stop Europe going forward. I do not believe that. The British people are sometime reluctant Europeans but they do not want to be left out of what is happening. My hon. Friend the Member for Great Grimsby may want to be left out but the British people do not. They showed that in 1975 and if there is a referendum they will show it again. I am certainly not against the principle of a referendum, but it would be a question of what would have to be decided at the time.
I am aware of Liberal Democrat policy and I do not blame the party for putting down the motion. It was perfectly fair for it to do so and we have had a good
750
debate on the issue. However, it cannot be said that it is a serious attempt to defeat the Government because if it were there would have been wide consultation with the Labour party. The Liberals would have asked Labour to write the terms of a resolution. If they had really wanted to defeat the Government with the support of the Labour party, that is the way they should have gone about it.
They did not consult the other minority parties, either. I do not criticise them for that, but they should not pretend that the motion is a serious attempt to defeat the Government. It is a legitimate exposition of Liberal Democrat policy which contains some sense, and it has provided us with a good debate. I congratulate the Liberal party on that. If there is to be a coalition of ideas there will have to be give and take and there has not been quite enough of that in the debate.
Mr. Charles Kennedy: Given the hon. Gentleman's forthcoming role in the European movement, on which I congratulate him, he will have some influence in that give and take. May I correct the hon. Gentleman as I did earlier? His account is factually incorrect, I am sure not wilfully, but he is wrong.
Mr. Radice: I think that there are different versions, of what happened.
Mr. Spearing: Or what did not happen.
Mr. Radice: Yes, but there was no attempt to say to the Labour party, "You write the thing and support—"
Mr. Ashdown: That is give and take!
Mr. Radice: If the Liberal Democrats were interested in defeating the Government, that is what they would have done. The Liberals were interested in having a good debate and perhaps hoped to raise their profile, with which they have had some difficulty in recent months. That is perfectly legitimate and I do not complain about it, but let us not pretend that the motion is a serious attempt to defeat the Government.
Mr. Ashdown: My hon. Friend the Member for Ross, Cromarty and Skye (Mr. Kennedy) told the hon. Gentleman that he was factually wrong. Clearly, he was not prepared to take that, so perhaps he will accept some of the details. He rightly said that this requires give and take. But his definition of that is that we give and they take.
I shall tell him exactly what happened. The words were drawn up and there was widespread consultation with other Opposition parties, including the Labour party. Labour Members were shown the words and offered the opportunity to change them or at least suggest how they might be changed. The offer was not taken up; there was no response from Labour. Far from the situation being as the hon. Gentleman describes, the truth is that all this is a charade and a farrago, because right from the start there was no intention of voting in favour of the motion.
Mr. Radice: It would be a pity if the debate were just a squabble between the Labour party and the Liberal Democrats. The Conservative party would like that very much. I shall not quote the Evening Standard or the memorandum by the hon. and learned Member for Fife, North-East (Mr. Campbell) because that would not be sensible. The leader of the Liberal Democrats may have

751
read it and may know what is in the Evening Standard, but let us not have that kind of detailed claim and counter claim.
Mr. Bernard Jenkin: Will the hon. Gentleman give way?
Mr. Radice: No. I said that my speech would be short and I am coming to the end of it.
I am in favour of a referendum, if necessary, on major European issues. I should prefer to have it on a European basis because that is a much more sensible way to go.
9.3 pm
Mr. Michael Fabricant (Mid-Staffordshire): This has been an interesting, thought-provoking and revealing debate, because it has demonstrated that the undoubted divisions are not just in one party. When Hansard is analysed tomorrow it will become clear to everyone that the Labour party is divided, as are the Liberal Democrats, as we heard earlier.
The whole thrust of the debate is to discuss a future referendum. I want to examine the possibilities for that and to make some predictions—not just for two or three years hence, as many hon. Members have done, but for a little further into the nation's possible future.
Some hon. Members have already said that a referendum should be called on greater integration, but that begs the question of degree. Every statutory instrument, every Act whose genesis was in Brussels, is yet another step on the road to greater European integration. Since our earliest treaty with another power, such as that with Portugal in the 16th century, there have always been times when there has been a loss of some sovereignty, but that has been outweighed by the greater benefit. Therefore, a surrender of sovereignty is not always against the interests of the state. The advantages must always be weighed against the disadvantages; it must always be a question of degree.
Bilateral treaties can be initiated only by the British Executive, with the approval of Parliament, under the Ponsonby rule. That is not the case with legislation emanating from Brussels, especially that which is subject to a majority vote in the Council of Ministers—that is, not subject to unanimity. Nevertheless, I welcome some European legislation set out in the Maastricht treaty, especially that which gives power to the courts to ensure that rules rigorously applied in Britain are also applied in other European countries that have—how shall we put it?—a more flexible approach to the enforcement of national legislation.
However, let us be clear—not all integration is in this nation's interest. I shall expand on that later. First, I shall return to the subject of our debate, which is whether or not to hold a referendum. It was in 1890 that the Liberal Unionist constitutional lawyer Dicey wrote a pamphlet called "Ought the Referendum to be introduced into England?" At the time, he was concerned with home rule for Ireland. Some 105 years later, it is again the Liberal Democrats, and, it must be said, others, who pose the question whether we should use a referendum to solve a problem that divides Parliament, and not across party lines. Let us make no mistake, views on Europe are as diverse on the Opposition Benches, as we have heard this evening, as they are on the Government Benches.
752
I believe that referenda—I say "referenda" and not "referendums"—are a surrender of the responsibilities that we, as parliamentarians, have fought for over the years. To those who might say that a referendum is a useful tool as a means to an end, I would say that the outcome of referenda are not always predictable. For while it might be assumed that a referendum on Europe would reject greater integration, I believe that if, during a referendum campaign, enough industrialists and others were to predict mass unemployment—wrongly in my opinion—as a consequence of no greater integration, for fear of jobs and general well-being, a referendum might well come out in favour of greater European integration—hardly the result desired by many who are arguing today for a referendum.
The current vexed question is whether a single European currency or fixed exchange rate, for they are the same thing, is an integration too far and a surrender of our constitutional right to government. Is that, too, a question of degree? I think not. I believe that this is one of those rare occasions when there is a clear line to be drawn; when reality is not a shade of grey and it is only the politician who sees it simplistically in black or white.
Although my right hon. and learned Friend the Chancellor was right to say that a single currency is not explicitly a surrender of sovereignty, any economic or historical model would say that implicitly it must be so. When Germany formed its customs union in the 19th century, it led to economic and political union. That worked for Germany in economic terms, although historians might argue that over 70 years it also led to three European wars—but that is not the point.
Political union worked in Germany because the Lander were culturally similar, sharing a common language system, a similar legal system and, on the whole, populations whose lifestyles and personal goals were similar. Garibaldi's unification of Italy's city states, however, has not been so successful. Although the language and legal systems are similar, Italy's population varies greatly between the north and south and that is not simply a function of economic activity. Italy's instability lies with its huge cultural differences.
If there were a referendum on a single currency, would we be voting for a European political union? The answer would definitely be yes. That is not demonstrated only by historical models, for without control of interest rates and other mechanisms, the state would have to surrender its sovereignty on all economic policy, if it were not to be subject to social instability arising from resultant unemployment and falls in living standards.
Mrs. Gorman: I notice that my hon. Friend has tipped a lot of pound coins on to the Bench. Of course, once upon a time, we used to have coins that were more valuable. What will happen to the pound in our pockets if we go into a single currency? Will it be anything like decimalisation, where the value of money halved and the price of everything doubled?
Mr. Fabricant: Many of the pounds in my pocket, or, in this instance, on the Bench, would be diverted to the "Club-Med" countries, especially countries such as Greece and Portugal, which would need sustaining if we were to have economic union.
Who can doubt that if sovereignty were not surrendered in favour of a single political entity, the most powerful economy in any monetary union would be the dog that wags the tail—the tail in this case being all the other

753
member states. To take that metaphor further, the dog wags the tail in the interests of the dog and not of the tail. The only possible course of action for the other member states would be to join a single political state with its dominant former partner to mitigate the effects of monetary union.
If a future referendum were to decide on monetary union, even assuming that the convergence criteria were met by all 15 member states, political stability would be short-lived without political union. Full economic union across states and across peoples as varied as the Greek hill farmer and the German factory worker would lead to huge divergent stresses and strains which would pull the union apart again. If that is the case now, how much more unstable would be a union of states including those from eastern Europe, whose economies are even more diverse? Are they to be excluded with other states from an inner-European hegemony? Believe me, it will not only be the common agricultural policy that would be unfundable and unworkable.
As we have heard, Eddie George, the Governor of the Bank of England, has graphically pointed out some of the uncontrollable strains and movements of peoples which would be a natural consequence of monetary union. Only a super-state could have any hope of controlling those. There could be no turning back. No sophisticated economy could recreate its own currency once it has been absorbed into a greater whole. Thus, if we were to have a referendum on the question of monetary union, it would be a logical consequence that we would also be voting on an inevitable political union and virtual super-state.
That raises a further question. If, in a world, perhaps in the near future, of huge trading blocs, it were deemed necessary for Britain to enter into a monetary union, I personally would rather Britain's union were with states with whom a commonality of cultural and political interest existed, for only then could such a union be stable and enduring. I do not see it as a prospect within the next 20, 40 or 60 years, if ever, but I speculate as to whether Australia's dissatisfaction with her Pacific rim neighbours, and the United States of America's discomfort with her neighbours to the south, might lead to the conclusion that, as the USA and the old Commonwealth share a common language, culture and legal system, mutual integration might be a logical progression.
This might be the only union as enduring as the 288-year-old Union of Great Britain, despite the fact that the Labour party seems determined to break that Union. What of the distances between these countries with mutual self-interest? Do they create impenetrable barriers? I think not. Modern technology and the nature and content of international trade make distance far less relevant, and this will be even more so in the future.
In summary, I am not enthusiastic about referenda per se. They are unpredictable and are a rejection of the powers of Parliament but, if we were to have a referendum on Europe, the questions must be clear. Do we want greater integration? Do we want monetary union, which will inevitably lead to political union and absolute loss of sovereignty? Do we want union which would be intrinsically unstable, with a mixture of peoples with different goals and different dreams?
When I was in business, immersed in international trade—much of it in Europe—I would have welcomed a fixed exchange rate, a single currency, but I would not
754
have done so at the expense of higher taxation and potential political union introducing socio-business legislation through a socialist back door. By maintaining our opt-outs won for us at Maastricht, we would still, without monetary union, have access to the European markets so needed by our business men as well as those investing in Britain from outside Europe. Does the spectre of the future lighten a different vision?
I am not a Euro-sceptic but a Euro-pragmatist. Unlike some hon. Members, I have lived and worked in many countries in Europe and speak three European languages other than English. I welcome a free trade area in Europe among nation states and the power to enforce it through the courts. However, should we ever need to seek monetary union—I hope that we do not—should we not do so with different partners, partners who are from far beyond our European borders but who share the same dreams and aspirations and who could, in a democratic confederation—should this be necessary—realise the spirit of a new English-speaking nation whose limitless potential could finally be snatched from what is, in effect, a loveless and barren European marriage of convenience?
9.16 pm
Mr. Andrew Mackinlay: I rise to speak primarily because I am enthusiastic about referendums as a device for securing a legitimate mandate from the electorate and because, more generally, as a candidate in five parliamentary elections I campaigned for parliamentary and constitutional reform. I am therefore pleased to have this opportunity to speak for the greater use of referendums in the United Kingdom, and not only for the narrow question of further integration in the European Union.
One issue that has not been raised in the debate is the undemocratic way in which we ratify treaties. It is time that we followed the example of other democracies where, when the Government sign treaties, those treaties are confirmed by an Act of Parliament at the very least. In this country, the royal prerogative is used, which is profoundly wrong.
The Maastricht legislation, which has preoccupied many of us since the general election, was not to ratify a treaty but to deal with the consequential legislative arrangements that flowed from our having signed the treaty. I want Parliament to confirm treaties by Acts. If major constitutional implications follow thereafter, they should be put to the people in referendums.
I speak as someone who has been described as a Euro-supporter. That is a crude and rather stupid term, like left wing and right wing. I have been a member of the Labour party for 29 years. For 28 years of those years, I have been described as a right winger. This year, I have noticed that I am described as a left winger. I have not shifted an inch—other people have passed me by. The terms left wing, right wing, Euro-sceptic or Euro-supporter are meaningless.
I do not believe that it would be feasible, practical or in the best interests of the United Kingdom to contemplate withdrawing from the EU, but it is probably time that Parliament checked public opinion. It certainly should do so after the IGC conference because, whether or not some of us are comfortable in the EU, there is clearly a need to reaffirm policy with the electorate. That can only be done by a referendum for the reasons that have been canvassed

755
this afternoon: that there are differences across the parties and that one must deal with so many other issues at general elections.
A referendum would be democratic and appropriate, and it would also mean that the ambivalence and hostility to the EU would have to be combated by the people who wish to promote Europe. There is no real debate about Europe, and a referendum would allow both sides to focus on the issues. That is not happening at present, and therefore I would welcome a referendum.
Speaking as a voter, I am uncertain about how I would vote in 1997 or 1998, but we should have the opportunity to vote. The issues should be thoroughly explored.
Mr. Fabricant: Will the hon. Gentleman give way?
Mr. Mackinlay: No. I have listened to a lot of claptrap today, and I want to have my say. It is an important issue to me for the reasons I explained a few moments ago. I have fought five general elections—more than a lot of Members—and this is one of the things on which I campaigned on each occasion.
The right hon. Member for Worthing (Sir T. Higgins) reiterated an argument made by other hon. Members: that these are complex issues, the implication being that the ordinary elector could not understand or comprehend them. That is a deeply insulting argument, and it is also baseless. That argument was advanced by people who resisted the Reform Act 1832, because they believed that the middle classes could not possibly understand the complex issues involved in running the UK.
The same argument was advanced by those who resisted the franchise for those who were no doubt deemed "the great unwashed", or working-class people. It was thought that they could not possibly understand the complex issues. The argument was also used by those wishing to prevent women from having the right to vote. It is nonsense, and deeply insulting to the electorate, to suggest that they cannot comprehend such matters.
Members of the House voted for a referendum in the 1970s because it suited politicians on both sides, and primarily the Labour Government. I am opposed to having referendums a la carte to get over political differences, and that is why there should be a constitutional referendum Act which provides how and when major constitutional issues should be put to the people. Those include an elected second Chamber—which I support and which I hope my right hon. and hon. Friends will be able to introduce when they form the next Government—electoral reform and fixed-term Parliaments. Those issues need to be put to the electorate after the principal Act has been passed.
We are misreading the views of the electorate. A great deal of harm may result if, when we accede to treaties or accept constitutional changes, we dragoon people without the full-hearted consent of Parliament and of the people. It is undemocratic and foolhardy in the extreme, because the dam eventually breaks. I speak as somebody who can be probably described as more of a Euro-supporter than Euro-sceptic. It seems profoundly foolish to dragoon the British people into change when there is no mandate to do so. If there was a proper debate, the matter could be settled.
756
The argument has been advanced that people such as my hon. Friends the Members for Newham, South (Mr. Spearing) and for Bow and Poplar (Ms Gordon) never accepted the last referendum. That is not fair—subsequent treaties were acceded to, so the debate was, legitimately in their view, reopened. If there was a referendum and it was decided to accept constitutional change or a surrender of sovereignty, I suspect that the hon. Members for Milton Keynes, South-West (Mr. Legg) and for Southend, East (Sir T. Taylor) and others would accept the voice of the people. Those hon. Members have said that they would do so. I too understand that spirit and accept it.
It is time that we in the House started to think of a referendum as being a virtue and being highly desirable in our developing democracy. I look to my hon. Friends who will form the next Government to be bold and to start saying that we will have constitutional innovations—not to get us out of political difficulties, but because it is right. If there is a Division, I shall be obliged, and will wish, to support the motion.
9.25 pm
Mr. Walter Sweeney: As so often, the Liberal Democrats' motion, on which we may vote this evening, looks both ways. Most, if not all, of the Liberals seem to believe in a united Europe, but most Liberals have enough nous to realise that they are out of step with the views of the British public who, while in favour of membership of the European Union, were against the surrender of sovereignty that resulted from the Maastricht treaty and are against any further surrender of sovereignty.
The Liberals are trying to have it both ways. They are being pro-European—indeed, ardent federalists—but are saying to the great British public that, if things go wrong a few years down the road, do not blame us as we were the party that called for a debate in Parliament advocating a referendum.
The motion looks as though it has been cobbled together. The debate has shown the variety of opinions across the House in all three major parties. The hon. Member for Swansea, East (Mr. Anderson) referred to the inadvisability of holding a referendum because it would establish a precedent and would encourage referendums on other topics, such as the death penalty or devolution in Scotland or Wales.
The fundamental distinction between a vote on the death penalty and a vote on an issue of constitutional importance is clear. Once we had acceded to the treaty of Rome or the Maastricht treaty, we had taken an irrevocable step, limiting Parliament's sovereignty and placing ourselves in a position from which we could not turn back. If Parliament were to reintroduce the death penalty for murder—it could, because the death penalty still exists in law for treason and, I believe, for arson in the Queen's dockyards—and a future Parliament disapproved, there would be nothing to stop that later Parliament repealing or amending the legislation. However, the issue that we are discussing today is quite different.
A referendum should not be used as a cop-out to salve Liberal Democrats' consciences on the destruction of the United Kingdom or as a means of making a spurious appeal for people to vote for them. A referendum should not be used simply to stitch together, artificially, differences in the Government as occurred in 1975. A

757
referendum should not be used as a device to exempt the present Parliament from the responsibility of having a debate on fundamental constitutional issues, with a free vote at the end. Parliament and the Conservative Government erred in not having a referendum before implementing the Maastricht treaty. Where there is a fundamental and irrevocable change to the constitution, the Government are not only justified in presenting the issue to the public but have a duty to do so.
That duty is even more strongly held if no clear choice is offered at a general election. When the Conservatives took Britain into the European Economic Community in 1973, they did so following a general election at which the Conservatives supported entry and the Labour party opposed it. The public had a choice, as Enoch Powell so graphically illustrated when he, as a staunch Conservative, suggested that people should vote Labour to prevent Britain's entry into the EEC.
At the most recent general election, the public had no such choice. The public knew that if they were Euro-sceptically minded they had to vote Conservative, because at least the Prime Minister had attempted to negotiate certain opt-outs at Maastricht and they preferred the thought of that to the thought of Maastricht with bells on, which we would undoubtedly have received if the Labour party had won that general election.
In short, it is vital that we should recognise that a referendum may be appropriate, indeed necessary, under certain circumstances, but not under the circumstances envisaged by the Liberal Democrats—[interruption.]—as they say that we should have a referendum before any substantial alteration of the present constitutional settlement between the European Union and its member states. That means that if, by some miracle, the Government were able to negotiate some reversal of the ratchet effect of Maastricht, we would need a referendum to return us to the status quo prior to Maastricht. That would be ridiculous, because we were not given a referendum on ratifying the Maastricht treaty. Why should we need a referendum to throw it out of the window?
9.31 pm
Mr. Charles Kennedy: As they say, "follow that!" An extremely interesting debate took on slightly different proportions with the final two speeches from the Conservative Benches, which I will not attempt to follow. The hon. Member for the Vale of Glamorgan (Mr. Sweeney) was perhaps slightly too Machiavellian in the motives that he ascribed to us for initiating the debate, and the hon. Member for Mid-Staffordshire (Mr. Fabricant) perhaps came out with the quote of the day, saying that what he disliked about referendums was the fact that they tended to be unpredictable.
Mr. Fabricant: I did not say that.
Mr. Kennedy: I shall have a look at the Official Report, but I am sure that the hon. Gentleman used words very much to that effect.
I congratulate the hon. Member for Thurrock (Mr. Mackinlay) on his excellent and lucid exposition of the crux of the case in favour of extending the referendum principle generally to constitutional issues. That was our main motivation in tabling the motion.
758
I shall not revisit any of the parliamentary or party political controversy—especially across the Opposition side of the House—that has helped frame the context of today's debate. Throughout the debate, the eagerness to engage both sides of the argument from the Back Benches has not exactly been matched by either of the two Front Benches. Indeed, I was left with the strong impression that the Minister and the Labour shadow spokesperson, the hon. Member for Gateshead, East (Ms Quin), would far rather have been anywhere than in the Chamber, having to discuss the European dilemmas and issues that they endeavoured to explore this afternoon.
It is extraordinary, in an Opposition day debate, to find the Government of the day unable or unwilling—or both—to table an amendment of their own, and to give any sign of their position in the Division Lobby. I wonder why that might be. It is equally extraordinary that there is no formal Labour amendment to the motion. It appears that, in a different sense, we have two opt-out parties in terms of the respective leaderships of the Conservative and Labour parties towards the debate and what has been suggested.
Leaving aside the principle of consulting people about constitutional matters, which goes beyond the issue of party politics and the lifetime of any Parliament, the reason for moving towards a referendum must be the rather depressing reality of British politics, certainly since the last general election and perhaps since the Maastricht negotiations which preceded that election. The Government have failed to provide leadership on the European issue because of internal divisions and a lack of purpose in confronting those divisions effectively and coherently. I shall return to that point in a moment.
As one Conservative Member said, on the European question—not least the matter of a single currency—it seems that Labour and the Conservatives essentially occupy much the same ground. They do not appear to rule out entirely the case for a referendum, but at the same time they are being delphic about the desirability of a single currency.
It is fair to let the Leader of the Opposition use his own words to characterise Labour's position on the issue. In The Times on Saturday he wrote:
"But I am clear about the direction in which I wish to lead the Labour Party. If convergence can be achieved, and if other countries go ahead with a single currency, it would be folly not to recognise the dangers of exclusion. In principle, if there is such real convergence, then clearly there could be benefits to our participation given the increasingly global nature of the economy in which we live. My guess—and it is only that—is that a single currency among any European countries is unlikely by 1997, possible by the end of the century and probable at some point in the not-too-distant future after that".
I hope that, in the not-too-distant future between now and the next election, we will have a crystal clear idea of exactly what the Labour party proposes. We will obviously have to look at the conditions and the convergence criteria; that is the sensible thing to do. If it comes to a referendum, it behoves all political parties to give a clear idea to the public about exactly which direction the debate will move in.
Mr. Alex Salmond: I am enjoying the hon. Gentleman's speech and I agree with him about the Labour party's abdication of responsibility in not either sponsoring an amendment or joining the Opposition parties in the Lobby this evening. Is it not true that, when

759
we last discussed the Maastricht referendum issue in April 1993, which could have seen the Government defeated, the Labour Front-Bench spokesmen voted with the Government and half the Liberal party voted with the Government and half voted against the Government?
Mr. Kennedy: I appreciate that the hon. Gentleman may have had to attend other engagements in Scotland earlier today and he missed the discussion of that point at the outset of the debate. My right hon. Friend the Member for Yeovil (Mr. Ashdown) placed on record—as I did when I spoke during that debate when I voted for a referendum on Maastricht—the fact that we treated that issue as a free vote. I am sure that my right hon. Friend will agree that, if there had been a free vote on some of the issues affecting the progress of the Maastricht treaty and the referendum, we would have achieved Maastricht via a referendum.
The debate on the referendum issue has drawn some very revealing comments from senior Conservative Back Benchers. Time does not permit me to refer to them all. However, I pick up the remarks of the right hon. Member for Mid-Sussex (Mr. Renton), who has apologised to the House for having to leave the debate early. He spoke of contributing to the debate in order to demonstrate his loyalty to the Government. I could not help but reflect that, in his final incarnation in government, he was Chief Whip to the previous leader of the Conservative party, and his loyalty on that occasion did not exactly guarantee her long-term success in that position. Perhaps the Government should not feel too sanguine about his expression of support this afternoon.
The right hon. Gentleman drew several different distinctions. There is a significant difference between a vote on capital punishment, euthanasia or abortion—which are conscience issues, where we must exercise individual conscience and discretion—and a constitutional issue. Even if a constitutional change cannot bind or entrench all future Parliaments, it clearly goes beyond party and influences future Parliaments in a way that decisions that can be revised do not.
The right hon. Member for Worthing (Sir T. Higgins) made the standard argument that a referendum is an alien concept, which it is not. There have been referendums on different issues in Scotland, Wales and Northern Ireland—and there may be another in Northern Ireland before long.
The right hon. Gentleman spoke of the importance of Members of Parliament exercising personal judgments rather than being beholden to a decision of the electorate. That would carry more force if we did not have the brutalised three-line Whip in the Government and official Opposition. When the right hon. Gentleman was pressed to say whether he would vote against a three-line Whip on the introduction of a single currency involving sterling, he did not answer. We were not to know his personal judgment, faced with that dilemma.
The most unacceptable and ludicrous criticism of a referendum was, "What would you people do if you lost—if you didn't get your way?" It was suggested that would make a mockery of Members of Parliament and of politics. Norway has not come to a standstill because the people of that country reached a decision not in keeping with a large section of the political establishment. One
760
must accept the outcome. One must do as hon. Members on both sides of the House did in the 1970s—campaign gamely against Britain reconfirming her membership of Europe, and campaign year in, year out thereafter to change public opinion. That cannot be a serious criticism of the electoral and democratic process.
The Government are on a hook, but if there was a change of Government now, the new Administration would be impaled on exactly the same problems from its own Back Benches—as we heard and was confirmed this afternoon. The big issue is that the business of politics and the Westminster establishment is becoming more disconnected on this and too many issues from the people. On Europe, not least on Maastricht, we saw that difficulty reflected in other countries.
The political elites and chattering classes have moved too quickly ahead of their respective electorates and have forgotten the basic lesson for us all—we must carry people with us in sufficient numbers if we are to progress in a particular political direction. In a nutshell, that is the case for a referendum.
Mr. MacShane: Will the hon. Gentleman give way?
Mr. Kennedy: No, I must conclude.
The problem is that we do not know the Government's direction. The Prime Minister said that the Maastricht criteria
"are a necessary but not a sufficient condition to justify a single currency"—
and that when those were met,
"we shall then consider whether it would be appropriate … to proceed".
The Chief Secretary to the Treasury said:
"I don't want to see a single currency, period, for as far as I can possible foresee. I would hesitate for an eternity before I came out and said I would vote for a single currency."
The Foreign Secretary said:
"To say either yes or no now to the option which might occur in, say, 1999, would be quixotic and unnecessary. 'Never' is as foolish a word as 'now' in this context."
The Secretary of State for Employment, when Chief Secretary to the Treasury, said:
"A single currency would mean giving up the government of the UK. No British Government can give up the government of the UK. That's impossible."
The President of the Board of Trade said that, if Britain did not take part in work on a single currency,
"the French and Germans will design arrangements in their interests and not ours".
The Chancellor of the Exchequer said:
"It is quite possible to have monetary union without political union. It is a mistake to believe that monetary union need be a huge step on a path to a Federal Europe."
The Chancellor of the Duchy of Lancaster provides the greatest quote of all:
"Our position on Europe is absolutely clear".
We must accept that, with the Conservatives, we are offered variety in the marketplace. There is no doubt about that. The bad news for the Minister of State, Foreign and Commonwealth Office, who opened the debate—he may not have had the chance to see the 6 o'clock news—is that the clip that the BBC extracted from his speech showed perhaps the most revealing exchange of all. In a devastating intervention, the hon. Member for Milton Keynes, South-West (Mr. Legg) simply asked the

761
Minister if he agreed with the Prime Minister's statement during the Frost interview, which has become a constitutional event all on its own. The Minister was quoted as saying:
"I think that that is the case still".
A week is a long time in politics and it may not be too long before the Minister's position is being described as unassailable by the Euro-sceptics.
T. S. Eliot wrote:
"In a minute there is time for decisions and revisions which a minute can reverse."
The problem with this Administration is that there are too many minutes, too many decisions and too many reversions and revisions and we do not where the Government stand. I am afraid that Labour has been pretty delphic as well.
The quicker that we get this debate away from this place, where it is harnessed and shackled by divisions and internal politics across and within the parties, and get it outside to let the people decide on any constitutional changes, the better. All the pro-Europeans, as Conservative Members have rightly identified, who make up the majority in this House, would be free from the constraints of parliamentary nonsense and party Whips.
If we argued the case outside this Chamber, we would receive a positive response. It would be good for politics in this country and a lot better for Britain's future in Europe. I commend the motion to the House.
9.47 pm
The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Tony Baldry): We have had an interesting debate in which no fewer than eight of my right hon. and hon. Friends have made informed, robust and principled speeches. Although the Liberal Democrats have seemingly paraded and dressed up their principles, it has not been a principled debate. It has been a tawdry and ham-fisted attempt to score short-term party-political advantage. [Laughter.] Hon. Members may guffaw but the truth of that was. given by the leader of the Liberal Democrats yesterday in The Observer. His article was not headlined in any way to suggest that we should have a principled debate about giving people power—not at all.
The headline in yesterday's edition of The Observer, under the name of the right hon. Member for Yeovil (Mr. Ashdown), was
"Bring down the Tories tomorrow".
It said nothing about the principle of giving power to the people through a referendum. The right hon. Member said about the Government:
"Tomorrow, the opposition parties could join forces to defeat them, widen their splits over Europe, and hasten their demise."
Are the empty Opposition Benches a sign of what the Liberal Democrats think that they can do?
As the day unwound, we discovered more of the unprincipled nature of what all the ham-fisted charade was about.
"A vicious row has broken out within the Liberal Democrat leadership over a failed attempt to team up with Labour and defeat the Government tonight.
The party's bid to deliver a body-blow to John Major in a Commons vote on a referendum collapsed after Labour said it would not back the move."
762
We heard of some of the discussions which did not take place, or were alleged to have taken place, between the Liberal Democrats and the Labour party. How the attempt to set up a Lib-Lab alliance fell through is unveiled in an extraordinary memo of complaint to the leader of the Liberal Democrats—
Mr. Mackinlay: What about the referendum?
Mr. Baldry: I shall come on to the referendum, but it is important for the hon. Gentleman to realise that Liberal Democrats, who seem to treat the matter as one of considerable amusement for the House, have used one of their supply days to propose a debate on a referendum. The House is entitled to consider their motivation for that.
Their motivation has absolutely nothing to do with referendums. Their motivation was simply short-term political advantage. They thought that they could cobble together a deal with the Labour party. It is a measure of the incompetence of both parties that they are totally incapable of cobbling together any deal whatever. The House and the country are entitled to know that the Liberal Democrats' debate has nothing to do with principles and that it is all about short-term, party-political gain.
Mr. Mackinlay: Can we talk about the referendum now?
Mr. Baldry: I promise that I will talk about the referendum when the hon. Gentleman lets me make progress on this point. It is clear that a memo was sent by the Liberal Democrat foreign affairs spokesman—[HON. MEMBERS: "Oh!"] It is interesting that Liberal Members do not deny that such a memo exists. In it, the hon. and learned Member for Fife, North-East (Mr. Campbell) claimed that he had been made the scapegoat for this evening's fiasco.
Mr. Menzies Campbell rose—
Mr. Baldry: I shall give way in a moment. It will be interesting to see whether even the Liberal Democrats can get all their Members into the Lobby this evening.
Mr. Campbell: Can the Minister tell me whether in that memo, a copy of which appears to have been stolen from the desk of my assistant, the word "scapegoat" appears anywhere?
Mr. Baldry: I am glad that the hon. and learned Gentleman does not dispute that the memo exists. It says:
"I am a little concerned that in the analysis of the events surrounding our Supply Day on Monday 13 February it seems to be accepted that I misunderstood my `instructions' in relation to what I was to advise Robin Cook."
Let us therefore have none of this charade about today's debate being a discussion of a political matter of principle. It was about the Liberal Democrats thinking that they could embarrass the Government by cobbling together a deal with the Labour party. That they have lamentably failed to do.
Coming now to my promise to the hon. Member for Thurrock (Mr. Mackinlay) to deal with the referendum, that point turns on a very narrow compass. From our point of view it is quite straightforward; the Prime Minister put it in a straightforward way:
"I do not believe anything is going to happen in that conference that would remotely justify a referendum, I do not think it is going to deal with constitutional matters … if anything that involved

763
significant constitutional change were raised in the 1996 Intergovernmental Conference we, the British, would not accept it, so the question of a referendum would not arise."
As we all know, the only possible reason for anyone offering a referendum on the 1996 IGC would be if the party in question were prepared to accept constitutional change in those negotiations. Such constitutional change might include ending the veto, extending qualified majority voting, giving massive new powers to the European Parliament or providing a firm commitment to a single currency. The Government's position could not be clearer. We do not think that significant constitutional matters will be discussed at the 1996 IGC. If they were discussed, we would not accept them, so the question of a referendum would not arise.
Today's debate, however, was never intended to be about a referendum. The Liberal Democrats simply thought that they might find something with which to entice the Labour party into the Lobby with them. In that, they lamentably failed.
Mr. Marlow: The IGC and the single currency have both been mentioned a great deal. The Minister who opened the debate said that the Prime Minister wanted a flexible Europe. Can my hon. Friend tell the House whether a flexible Europe is consistent with a single currency?
Mr. Baldry: My hon. Friend put that question earlier in the debate. We have made our position on a single currency very clear. It is unlikely that anyone would want to go ahead with a single currency in 1996 or 1997. If anyone did so, the United Kingdom would not be with them.
In the longer term we have been concerned to point out that a single currency, launched in the wrong conditions, could tear the European Union apart—
Madam Speaker: Order. I should like to see the Minister's face rather more often.
Mr. Baldry: Sorry, Madam Speaker, I was trying to answer my hon. Friend's point.
Madam Speaker: Through the Chair, please.
Mr. Baldry: There has been a danger throughout the debate of trying to deal with hypotheses. Perhaps I may make it clear beyond peradventure to you, Madam Speaker, that, for the Government, this evening's motion turns on an extremely narrow compass. It is about a referendum. We do not see that circumstances are ever going to arise in which a referendum will be needed for the 1996 IGC because, as we have made clear, no substantial constitutional issues will arise. If they do, we shall vote against them.
For the reasons I have set out, we do not consider that it is worth voting on the motion. It has been brought forward for short-term, party political gain, and I advise my right hon. and hon. Friends to abstain.
9.55 pm
Mr. Nigel Spearing: It is unusual to have the opportunity to speak at this time when the House is debating a motion. I think that the opportunity should be taken for a number of brief reasons.
764
First, the emphasis tonight has been placed on people. That is absolutely right because Parliament—all of us—refer to the people for power, and that power is a trust. Tonight, in Dresden, they are talking about what happened in Coventry. Many people, both inside and outside the House, look to the treaties that we have been discussing—[Interruption.] Perhaps those sitting in front of me will listen to my remarks, because I am addressing them especially.
There are many who look to the treaties as a means of ensuring that Dresden and Coventry do not ever happen again, and that people in all the nations of Europe and all parts of Europe live together in a degree of harmony. That is what all of us and all our constituents want.
The problem is that many think that the treaties that are before us, and on which there could be a referendum, are not the way forward. The treaties confine us in our choices. The choice of the people in future will be denied when it comes to a balance of private and public enterprise, the borrowing requirement or what Chancellors of the Exchequer can do. Narrow, nasty nationalism, both here and in other parts of the European continent, is likely to be fanned and inflamed rather than prevented. I believe that profoundly because of the constitutional analysis of the treaties.
It is unfortunate that there has not been sufficient information about any of the treaties which Conservative Members and their friends have passed without reference to the people. The treaties are with us because of an election during which the issues were not put to the people. The right hon. Member for Old Bexley and Sidcup (Sir E. Heath) and his successors had no general election mandate for the treaties. Any matters of this sort that we are called upon to deal with in future must be accompanied by absolutely full information.
The Government have not even rewritten and republished the treaties that we are talking about. The so-called Maastricht treaty was a treaty on union. The treaty that preceded it, the Single European Act, and the original treaty of Rome form a uniform and entire volume. The Government have not printed it. They are suppressing information at almost every stage. Everyone who is in favour of the treaties wants them not to be understood.
Once they are understood, the chances of a peaceful and prosperous Europe that we all want to see—I helped to rebuild Hamburg after the war and the terrible fires there—will be much less good. There must be co-operation and no coercion. There must be consent, not coercion by political and economic forces, which is implicit in the treaties. The treaties must be examined in far greater detail than we have been able to do this evening or on previous occasions when they have been debated.
Question put:
The House divided: Ayes 47, Noes 3.

Division No. 71]

[10.00 pm

AYES

Alton, David

Bruce, Malcolm (Gordon)

Ashdown, Rt Hon Paddy

Campbell, Menzies (Fife NE)

Barnes, Harry

Cash, William

Beith, Rt Hon A J

Chidgey, David

Bendall, Vivian

Corbyn, Jeremy

Benn, Rt Hon Tony

Davies, Rt Hon Denzil (Llanelli)

Bennett, Andrew F

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

765

Ewing, Mrs Margaret

Michie, Mrs Ray (Argyll & Bute)

Field, Frank (Birkenhead)

Mitchell, Austin (Gt Grimsby)

Foster, Don (Bath)

Rendel, David

Gill, Christopher

Salmond, Alex

Gorman, Mrs Teresa

Shore, Rt Hon Peter

Grant, Bernie (Tottenham)

Simpson, Alan

Harvey, Nick

Skinner, Dennis

Johnston, Sir Russell

Spearing, Nigel

Jones, Lynne (B'ham S O)

Taylor, Matthew (Truro)

Jones, Nigel (Cheltenham)

Taylor, Sir Teddy (Southend, E)

Kennedy, Charles (Ross,C&S)

Tyler, Paul

Livingstone, Ken

Walker, Bill (N Tayside)

Lynne, Ms Liz

Wallace, James

Mackinlay, Andrew

Wilkinson, John

Maclennan, Robert

Williams, Rt Hon Alan (Sw'n W)

Madden, Max

Tellers for the Ayes:

Maddock, Diana

Mr. Archy Kirkwood and

Mahon, Alice

Mr. Simon Hughes

NOES

Hicks, Robert

Higgins, Rt Hon Sir Terence

Tellers for the Noes:

Rathbone, Tim

Mr. Tony Marlow and

Mr. Andrew Welsh

Question accordingly agreed to.
Resolved,
That this House believes that the popular assent of the people of the United Kingdom should be sought through a referendum before any substantial alteration of the present constitutional settlement between the European Union and its member states.
Mr. Charles Kennedy: On a point of order, Madam Speaker. Despite the abstention of Labour and Conservative Front-Bench speakers, which one assumes was based on collusion for their own purposes, the House has unambiguously voted by a clear majority in favour of the motion moved by my right hon. Friend the Member for Yeovil (Mr. Ashdown). Would it be in order during tomorrow's business to have a statement from a Minister telling us how the Government intend to give effect to the recorded wishes of the House?
Madam Speaker: If a Minister wishes to make a statement tomorrow, I shall, of course, permit such a statement.
Mr. Streeter: Further to that point of order, Madam Speaker. As the Division was unwhipped, can we be sure that everyone has left the Aye Lobby? I am particularly concerned that the hon. and learned Member for Montgomery (Mr. Carlile) and the right hon. Member for Tweeddale, Ettrick and Lauderdale (Sir D. Steel) might still be there, because they have not voted for their own motion. Could you look into that, Madam Speaker?
Madam Speaker: I do not look into the way in which hon. Members vote, but when I was a Whip I was what was called a sweeper and I ensured that everybody was swept out of the Lobby before the Doors were closed.
Mr. Skinner: On a point of order, Madam Speaker. Before this shambles is over, we should have it recorded that the person who moved the motion for the referendum, for which I voted, was not in the Lobby. When I went in I could not find the leader of the Liberal Democrat party at all.
Madam Speaker: That is not a point of order. The way in which hon. Members vote is not a matter for me.
Mr. David Harris: Further to that point of order, Madam Speaker. Surely it is contempt of the House for the leader of the Liberal Democrats not to be here for the declaration of the outcome of the Division. I do not know whether he was in the Aye Lobby because I was not in that one. The right hon. Gentleman was not here when we had an important vote on the future of the common fisheries policy. He certainly did not vote on that occasion.
Madam Speaker: No point of order arises. The whereabouts of hon. Members is not a matter for me.
Mr. Salmond: Further to that point of order, Madam Speaker. There was a serious point of order containing an allegation of collusion between the Labour and Tory parties. Seemingly it falls short of collusion to deny the House the right to vote on a motion. Is that the sort of matter on which you have powers to investigate—deliberate collusion between Labour and Tory Front-Bench spokesmen to deny the House a vote on this matter?
Madam Speaker: Internal politics or politics between one party and another is not a matter for me. When a Division is called, Members should be here to vote as they wish. I am not interested at all in inter-party warfare, inter-party rivalry or inter-party loving because we are now close to St. Valentine's day.
Mr. Marlow: Further to that point of order, Madam Speaker. We have just had a vote on a referendum and the House has voted by a far larger majority for that referendum than it did for the Maastricht treaty. Would it be in order to have a referendum on the Maastricht treaty?
Madam Speaker: I do not deal with matters in retrospect.
Mr. Bill Walker: Further to that point of order, Madam Speaker. I seek your guidance. I am desperately concerned about Scottish affairs. The Scottish National party appears to be voting in two ways—its leader votes one way and its Whip another. That gives me cause for concern about the future of Scotland and the possibility of referendums on Scottish matters.
Madam Speaker: Order. The hon. Gentleman has been here long enough to know that that is not a point of order, but a point of view. It should be expressed on another occasion, not through an abuse of the House on a point of order.
Mr. MacShane: On a point of order, Madam Speaker—the first point of order that I have raised since I have been a Member of the House. I am very much wearing my L' plates.
Madam Speaker: That is why I called the hon. Gentleman. I knew that it was his first point of order.
Mr. MacShane: Can you, Madam Speaker, give me some guidance on whether a vote that commands only 6 per cent. of the Members of the House has any validity

767
and whether if, as I hope, one day there may have to be a referendum on Europe, you will encourage more than 6 per cent. of the population of this country to take part?
Madam Speaker: Referendums in this country have absolutely nothing to do with me. I am concerned only with ensuring that Divisions in this House are carried out properly and correctly, and this one was.
Mr. Andrew Welsh: Further to that point of order, Madam Speaker. Would it be in order to have a teach-in so that the hon. Member for Tayside, North (Mr. Walker) can understand the difference between being a teller and actually voting and, further, understand how being a teller can show the collusion between the Labour and Tory Front Benches, acting together to prevent a fair vote in the House?
Madam Speaker: I thought that I had dealt with that point, but if I did not do so adequately the hon. Gentleman has just done so.
Several hon. Members rose—
Madam Speaker: Order. How many more points of order are we to have?
Mr. Harry Barnes: Further to that point of order, Madam Speaker. As some hon. Members believe that it is highly significant that the House has just carried a vote by a majority of 44, which may require a statement from the Leader of the House, was not Friday's business also very significant in that the majority was four times larger for the Civil Rights (Disabled Persons) Bill. Should not that also require a statement to the House?
Madam Speaker: I do not think that that is a point of order for me. The House makes its own decisions on these matters.
Mr. Peter Bottomley: Further to that point of order, Madam Speaker. The hon. Member for Angus, East (Mr. Welsh) questioned whether tellers counted in the vote. Can you confirm that the requirement to have 40 hon. Members present and voting means 36 hon. Members plus the tellers and that, in fact, those who are tellers count as having voted?
Madam Speaker: The hon. Gentleman is absolutely correct.
Mr. Don Foster: Further to that point of order, Madam Speaker. As you raised the point about sweeping, may I point out that I was sweeping in the Aye Lobby and I can assure you that no one was left in the Lobby? Those of my right hon. and hon. Friends who were referred to earlier were, in fact, absent with the permission of our Chief Whip—but, as was quite clear, their presence was not necessary as we had a very large majority without them.
Madam Speaker: I am delighted to hear that the hon. Gentleman follows my example of being a very good sweeper.

Ordered,
That Mr. Robert B. Jones be discharged from the Liaison Committee.—[Mr. Willetts.]

Devon and Cornwall
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Willetts.]
10.17 pm
Mr. Matthew Taylor: Whatever the issues being debated earlier in the Chamber, I am delighted now to be raising the single most pressing issue facing Cornwall and Devon, which is how we can create jobs and build economic prosperity in one of the most deprived areas of the United Kingdom.
Many people, not least Members of Parliament, seem to be surprised to hear the far south-west described as one of the most deprived areas of the UK. It is a cliché to say that the area is more often thought of in terms of its reputation for beauty and long childhood holidays on our beaches and moors. However, local people cannot live on holidays alone, or even on the income from other people's holidays. The fact is that, on any measure, the area is exceptionally deprived.
In the past, claims about the relative deprivation of the region have been met with some disbelief. There has been a tendency to see that as insular moaning or just a few more wild claims by the Liberal Democrats—all the more so when we have argued that, in contrast to our high deprivation, we have suffered from low Government economic support.
However, any such sceptics—ministerial or otherwise—should have been firmly answered last year by the two Coopers and Lybrand reports commissioned by the Westcountry development corporation. Those reports put our case firmly on an independent, non-partisan basis. It is those reports and the case for a fair deal from the Government that I want to put to the Minister tonight, and on which we look for Government action.
The first report was published in June last year. It sought to compare both the needs and resources of Cornwall and Devon with those of the other regions of the United Kingdom. It spelled out starkly the reality of the deprivation to which I have referred, and the way in which the region's position had become steadily worse in relation to the rest of the United Kingdom since the early 1980s at least.
Let me take some of the report's key indicators one by one. The proportion of Cornwall and Devon with a high unemployment level is substantially higher than any other region in the UK. Outside the tourist season, my own county has several areas in the top 10 unemployment black spots in the UK. In December 1993, our unemployment levels were the third highest of any counties in the UK—higher than Teesside, Tynesicle and all Welsh and Scottish counties.
Moreover, between 1990 and 1993, the proportion of long-term unemployed increased by 75 per cent. in the UK, but by 110 per cent. in Plymouth, by more than 150 per cent. in 16 out of the 24 travel-to-work areas in our region, and by 200 per cent. in five travel-to-work areas locally.
Even for people in work, the picture is not much better. Average full-time male earnings in Devon are 7 per cent. below the regional average. In Cornwall, they are 16 per cent. below, the second lowest in the UK. Moreover, between 1981 and 1991, the south-west increased its gross domestic product per head relative to the UK average, but the figures for Cornwall and Devon fell to just 83 per
770
cent. of the average. The figure for Cornwall fell to just 72.9 per cent. of the average. People in our two counties, therefore, are not just poor; they are falling further and further behind the rest of the UK.
In most areas of low income and high unemployment, there is at least the relative compensation of low costs of living, especially housing costs. A number of factors combine in our area, however, to reverse that natural state of affairs. First, high population growth has occurred from two sources: retirement from the south-east, and families seeking the good life that they expect on the basis of remembered summer holidays during their childhood. With houses to sell in London and the south-east, they have had the money to bid up house prices locally to some of the highest levels outside the well-paid areas of the south-east.
Secondly, the Government's policy of privatising the public utilities has led to high charges for those services, caused by the relative expense of supplying a far-flung, sparsely populated area. Privatisation led to the abandonment of national charging structures. As a result, the cost of water in Cornwall and Devon is more than 50 per cent. above the national average. The cost of electricity is 7 per cent. more than the national average.
That means, as the Coopers and Lybrand report shows, that the average cost of living, including housing, for manual households in Devon and Cornwall has consistently been 7 to 10 per cent. above the national average, even after the effects of the recession. Those figures are comparable with those for Hampshire, Berkshire, and Buckinghamshire, where wages are certainly not up to 16 per cent. below the national average, and where unemployment is not higher than in Teesside, Tyneside Wales or Scotland.
The final critical group of factors highlighted by the Coopers and Lybrand report are the so-called demographic ones. First, both Devon and Cornwall are areas of rapid population growth, for reasons that I referred to earlier. Cornwall's population growth has been in the top six in the UK. That ranks it with areas such as Buckinghamshire, Cambridgeshire, Northamptonshire, Berkshire, Dorset and Suffolk. The difference is that all those areas had high economic growth, and so the jobs to match. We did not.
Mr. David Harris: Is there not a paradox? The hon. Gentleman rightly mentions the population increase, but why have those people come to Cornwall? I do not argue against the case he is making; I agree with it. However, is there not some merit in the argument that at least some of those people are coming to Cornwall, and boosting its population growth, to be unemployed for the reasons that he has stated—it is a pleasant place to live, and they enjoy all sorts of other benefits from coming to Cornwall.
Does he agree that the position is not as clear cut as his assessment might suggest, although I am not arguing against the case that he will make about a fairer share for Cornwall?
Mr. Taylor: The hon. Gentleman must have seen the detailed statistics that I have seen. The overwhelming majority of people are from the two groups to which I referred—they have retired and are therefore not coming to Cornwall to work; or they tend to be families who are under the misapprehension that the area is relatively wealthy. That is what they remember from their childhood

771
holidays. I am sure that, like me, the hon. Gentleman has at surgeries met people who have often moved to the area without a job, found it virtually impossible to obtain one and then come to us to help them get back to in the area from which they came. Secondly, the high proportion of elderly people impacts on expenditure for local health, social security, housing and personal social services.
If the Coopers and Lybrand report merely set out those problems, it would be useful but hardly dramatic, hardly news. Whenever Members of Parliament, business people or others have in the past pressed the case for Cornwall and Devon with Ministers, we have used similar arguments, but Ministers have always replied—I expect that the same will happen tonight—by stating the levels of Government assistance to the region. For example, Ministers point to the funding for the Plymouth development corporation, the increase in assisted areas and support for European funding eligibility for the region.
No one is suggesting that there is no support—we do not disagree with Ministers in that respect—but the question is, how does it compare to that given to others, and how does it compare to the scale of the problem? The Coopers and Lybrand report draws up a balance sheet to compare the needs of Cornwall and Devon with those of other regions of the United Kingdom and the comparative levels of assistance. It is in the latter respect that the difference is stark.
Figures for overall central Government expenditure per head for all English regions between 1987 and 1992 show that the south-west receives the third lowest amount. Only the east midlands and East Anglia get less, but they have fewer elderly and unemployed people, and stronger local economies. Overall, identified levels of Government spending in the region have averaged up to 10 per cent. lower than the average for all English regions. Indeed, Government expenditure per head of population in the south west was below the average of all English regions for every Department.
In comparison to Wales and Scotland, which face a similar range and intensity of economic problems, our revenue from central Government was exceptionally low. Scotland received £530 million, or more than £103 per head; Wales received £187 million, or more than £64 per head; but Devon and Cornwall received just £51 million, or just £31 per head. I remind the House, however, that, according to most data, we are worse off than Wales or Scotland.
The extent of the underfunding to our two counties relative to our needs is further illustrated by reference to some specific programmes. Despite the fact that Cornwall ranked third and Devon 21st out of the 64 counties in the unemployment league in 1993, DTI and Department of Employment regional spending was more than 25 per cent. less than the average English norm.
Regional development grants to Cornwall and Devon accounted for 2 per cent. of regional development corporation spending yet the two counties accounted for 3 per cent. of the United Kingdom's assisted area population. Even if Devon and Cornwall received all the south-west region's allocation of urban programme funding, we would still have received less than half the
772
allocation that we would have received had it been handed out across the country on a per head basis, irrespective of need.
The conclusion of the report is clear. Not only do we suffer especially great economic problems in the region, but
"Devon and Cornwall in particular, receive significantly lower levels of Government spending than other parts of the UK".
Mr. Nick Harvey: At the beginning of his speech, my hon. Friend mentioned the importance of tourism to the two counties of Devon and Cornwall. Is he aware that more than six times as much per head of population is spent promoting tourism in Scotland than in our area? Can he cast any light on the comment by the Prime Minister when he visited our region, that people inherently know that the south-west is there when they are considering going on holiday, but that, for some reason, Scotland, Wales, the lake district and other areas need promotion?
Mr. Taylor: My hon. Friend is right about the figures, but I am sorry that I cannot explain the Prime Minister's comments. I can only imagine that they were made in an effort to undermine the support of the remaining Conservative Members in the region. That was certainly the effect they had among those in the tourist industry.
Mr. Gary Streeter: Like the hon. Gentleman, I have read the Coopers and Lybrand report, and I have drawn similar conclusions from it. How does he think the imbalance should be redressed? Should the Government give less funding to Scotland and Wales? Is that what the Liberal Democrat party thinks? Is the hon. Gentleman asking the Government to make more money available for the west country in addition to what is spent in Scotland and Wales? I should be glad to know what the Liberal Democrat policy is.
Mr. Taylor: Since the hon. Gentleman agrees with the report, it would be interesting to know what he thinks. Presumably he thinks that funding should come from other areas, since he is not in favour of any increase in spending. My view, as a south-west Member of Parliament, is that I want to get a fair deal for the area so we are not disadvantaged.
Mr. Harris rose—
Mr. Taylor: Let me finish answering the hon. Member for Plymouth, Sutton (Mr. Streeter). I said that he asked his question on behalf of the hon. Member for St. Ives, and the hon. Gentleman must let me answer it.
The simple fact is that I want to see a level playing field, so that the area is not disadvantaged. If that means that other areas get cuts in their funding, so be it. However, The Liberal Democrats have put forward costed policy programmes which would see increased investment in getting people back to work. We would argue that ultimately taxes can be lower and everyone can be more prosperous if we get people back to work and paying taxes. That is the best way of cutting the budget deficit.

773
If the hon. Member for Sutton does not want see more Government investment—I suspect that that is the case—the conclusion must be that some money currently spent in other areas would have to come to our area.
Mr. Harris rose—
Mr. Taylor: Perhaps the hon. Member for St. Ives will explain whether he is in favour of cutting funding for other areas, or whether he believes that the Government should be spending more than the present Budget.
Mr. Harris: I am glad that the hon. Gentleman has touched on this point. Do the Scottish Members of his party agree that help that is given to Scotland and Wales—particularly Scotland—should be cut? Do all the Scottish Members say that Scotland should have less so that the south-west can have more? That is certainly my view.
Mr. Taylor: The hon. Gentleman did not listen to my answer. In our costed programmes—we are the only Opposition party which puts forward costed programmes—we have argued for increased investment, so it would not be necessary to make cuts. I believe that we should make cuts in other areas if that is the only way to even spending. I assume that the hon. Member for St. Ives takes the same view.
Mr. Harris: Certainly.
Mr. Taylor: I do not know whether the hon. Gentleman has asked the Secretary of State for Scotland about that. I would expect the Secretary of State for Scotland to defend his own area, just as I expect Scottish Liberal Democrat Members to defend their area. I am not sure what point the hon. Gentleman thinks he has made at the end of that tortuous interchange.
The conclusion of the report was clear, and it was presented to the Prime Minister last July. He asked the regional director of the Government office in the south-west to produce further reports for him. That request led to the second Coopers and Lybrand report, this time prepared in conjunction with the Government office. I stress that it was prepared in conjunction with the Government regional office, just in case doubts remain in the Minister's mind about the probity of its findings.
Briefly, the report focused in more detail on the economic indicators. Most of them were familiar from the first report, but it added that Cornwall and Devon could face the seventh highest fall in agricultural employment of any of the 181 European regions; the increase in the region's work force between 1991 and 1997 is likely to outstrip employment growth by a factor of three, among the highest in the UK and Europe; and the region received the lowest level of foreign inward investment among all of the UK regions from 1982–1983 to 1993–1994. All the problems which I have identified in the present policies from the Government will worsen in the coming years.
Most crucial of all is the conclusion of the second report, drawn up in co-operation with the Government's own regional office. The report said:
"In terms of resource allocation the July 1994 report concluded that, because of the rapidly increasing levels of need in Devon and Cornwall over recent years, there appeared to be a strong case for the area to receive increased levels of Government assistance. We believe the issues documented in this report reinforce this case, which needs to be addressed at an early date if the area's regeneration is to take full advantage of the upturn in the economy more generally."
774
The message to the Minister tonight from the south-west is simple. The fact that Devon, and particularly Cornwall, have special economic problems is irrefutable. That case has been agreed by Conservative Members, although they attempted to make some party-political points while agreeing. Those problems are spelt out by the Government's figures.
We acknowledge the support that we receive in the region for tackling those problems, but, as the report makes clear, the support does not match that given to other regions with comparable problems. We get far less support than many regions that have far fewer problems—so much so, that one of the greatest concerns among the farmers who came here to meet us a week or so ago, among businesses, among the Devon and Cornwall training and enterprise council and among those in the Westcountry development corporation, is that we cannot even afford the matching funding demanded by the European aid that we are now entitled to after Europe recognised the problems that we face.
Let me be clear: we believe that we can be successful in Cornwall and Devon. As the report states, we have an exceptional environment, high levels of educational achievement, good labour availability—naturally—with high-quality skills. We have a tradition of local entrepreneurship and innovation, with the highest levels of self-employment in the country. We have a core of high-quality businesses in both manufacturing and services, and a public sector committed—under the Liberal Democrats—to regeneration and developing a significant track record of working in partnership with the private sector.
We are prepared to help ourselves—as we have shown—through a wide range of innovative local initiatives. I shall quote from the Westcountry development corporation again:
"If there was a level playing field for economic development, the combination of the opportunities and a region prepared to help itself could put Devon and Cornwall in the forefront of regional prosperity. But there is not a level playing field".
That is the point.
When Howard Davies, director general of the Confederation of British Industry, visited Plymouth n January, he said:
"I think the business community here feels that Government support—if we look at the profile of Government support for the region—is relatively low.
There is a strong argument for that to be higher and they would like that argument to be pressed more vocally by Members of Parliament."
Tonight, that argument is being pressed.
The south-west wants to hear just one thing tonight. Will the Government promise action to give us, not a special deal, but at long last, at least a fair deal?
10.36 pm
The Parliamentary Under-Secretary of State for Corporate Affairs (Mr. Jonathan Evans): I am grateful for the opportunity to respond on behalf of the Government to the report on the economic needs of Devon and Cornwall. As my right hon. Friend the Prime Minister has said, we welcome any analysis of this sort that helps us to gain a clearer perspective of the needs of a region. I assure the hon. Member for Truro (Mr. Taylor) that the needs of his region are very much in the Government's mind.

775
The Government regularly receive representations from Members in the south-west, and I note that many of them are present in the House tonight. My hon. Friends the Members for Cornwall, South-East (Mr. Hicks), for Plymouth, Sutton (Mr. Streeter) and for St. Ives (Mr. Harris) are present. I have also received representations from my hon. Friend the Member for Falmouth and Camborne (Mr. Coe). It was a recognition of the Government's concern for the area that lay behind our decision to set up an office specifically for Devon and Cornwall in Plymouth last year as part of the Government office for the south-west.
The Coopers and Lybrand report suggests that various programmes across Government inadequately reflected the needs of the region. That is the thrust of the remarks of the hon. Member for Truro. That thesis is based on an analysis of various data and a number of comparisons with other areas. Let me make it absolutely clear that I do not suggest for one moment that there are not areas of need in parts of Devon and Cornwall, but I believe that we need also to ensure that we get all the facts straight, so I shall make a number of observations.
The report claims that the gross domestic product for Devon and Cornwall is one of the lowest in the country. However, more than one in five of the population of the region are over the age of 60—that is the second highest figure for any region in Europe and necessarily distorts any calculations on GDP. The unemployment data, which were mentioned by the hon. Gentleman and were presented in the report, are selective and rather dated. The figures given for travel-to-work areas are from 1993.
The report makes another significant omission. Between December 1992, when there was peak unemployment, and December 1994, Cornwall achieved a reduction in unemployment of 19.4 per cent. and Devon fared even better, with a reduction of 20.4 per cent.
I turn to the issue of inward investment. We want to encourage competitiveness and promote inward investment. By doing so, we aim to maximise the economic potential of the region and to increase prosperity. It is worth recording that 1993–94 was a record year for inward investment in Devon and Cornwall, with nine successful projects. The current year will exceed that, with no fewer than 17 successful projects, resulting in at least £46 million of investment and almost 1,400 jobs likely to be created or safeguarded.
I turn now to some of the things that the Government are currently doing to stimulate the economy of Devon and Cornwall. First, as the hon. Member for Truro rightly said, in relation to European funding, the Government, in partnership with local organisations, successfully negotiated substantial amounts of aid for the area from the European Union. More than £200 million of European funding will be available to Devon and Cornwall in the next six years. That is about £140 for every person in Devon and Cornwall. All of Cornwall, and much of Devon, is now eligible for objective 5b funding.
The objective 5b programme for rural areas will provide about another £170 million and, bearing in mind the remarks that the hon. Gentleman made about Wales, an area that I am not altogether unconnected with, it is
776
worth saying that that figure is greater than all the spending in all of the areas subject to objective 5b status in the Principality.
Mr. Robert Hicks: In the case of Wales, in which my hon. Friend's constituency lies, most of the funding is direct grant aid, but in the case of Devon and Cornwall, it is matching money. As we do not have large industry, it is naturally very difficult for the private sector to match the potential availability of funding to which my hon. Friend refers. So it is not valid to compare Wales with Devon and Cornwall.
Mr. Evans: I mentioned the matter specifically in the context of objective 5b spending, but my hon. Friend is absolutely right that there is no comparison in context of the levels of support given to Wales and Scotland and to England.
I think that my hon. Friend well recognises that Government programmes are drawn up on the basis that there is, to start with, a split of funding between Wales, Scotland and England, and then within England, on the basis of agreed formulae. However, I mentioned the matter in relation to objective 5b status because it is a valid argument, although I am not suggesting—I think my hon. Friend understands that—that the south-west receives the same type of deal as Wales does. No one suggests that that is the case.
Mr. Harris: In fact there is nothing much between, if I may say so, the Members representing constituencies in Cornwall from either side of the House on that matter. Our grumble is that we are not obtaining in Cornwall the same type of deal that Wales, which my hon. Friend represents as a constituency Member of Parliament, obtains, and that we feel that the way in which those things are organised goes against the interests of Cornwall.
Will my hon. Friend discuss the question that I asked the hon. Member for Truro (Mr. Taylor)? Surely it would be wrong to increase the total of aid given. We want a level playing field so that we in Cornwall are treated in exactly the way that Members with constituencies in Wales are treated. Does my hon. Friend accept the argument that there must be a fair way of dealing between those of us in Cornwall and those in Wales specifically?
Mr. Evans: As I have made clear, the way in which public funding is arranged is that there are different allocations in relation to Wales, Scotland and England. In the case of England, as many of the larger programmes are formula-based, the view of the Government has been that, until such time as other information is available from my hon. Friends and from Members of Parliament from the region—
Mr. Matthew Taylor rose—
Mr. Paul Tyler rose—
Mr. Evans: With respect, the view of the Government has been that funding has largely been based on equal criteria throughout England. Therefore, I think that it is important to consider the report in that context. My hon.

777
Friend mentioned the correlation with the situation in Wales, but I think that it is recognised that the situation is different.
Mr. Matthew Taylor: I am grateful to the Minister for giving way. I am conscious of the fact that there is not much time left, and I do not wish to embarrass the Minister by pushing the point about Wales.
As I made clear in my speech, there are comparisons with the rest of England which raise similar questions. The Government have received the report, but they have made no formal response to it. Do the Government plan to publish any kind of formal response? Will the Minister meet hon. Members from Cornwall and Devon to discuss the issue, because I think that there is cross-party concern about it, and therefore such a meeting would prove useful?
Mr. Evans: The time and the number of interventions that have occurred during both the hon. Gentleman's and my speech will prevent me from explaining the wide range of points to which I wanted to refer. It is absolutely clear—I have seen the correspondence between the Government office in the south-west and Mr. Boxall, who is the chief executive of the Westcountry development corporation—that there has been on-going dialogue for some time.
A letter written by the Government office on 7 December 1994 makes it clear that Mr. Leonard outlined the steps to be taken in another letter at that time. A letter of 19 December 1994 from the Westcountry development corporation to Mr. Leonard refers to the fact that the issue
778
might be raised in an adjournment debate in the House once Mr. Leonard's report had been supplied to the Government.
So far, the Government have not received Mr. Leonard's report, although we have received the report from Coopers and Lybrand. The Government are very concerned to analyse and to consider the contents of the report, but this debate has taken place before the report has come from the Government office in the south-west.
Mr. Tyler: I am grateful to the Minister for giving way. Will he confirm that, when he has all the information in front of him, he will be prepared to meet hon. Members from both counties in order to examine the formula that we are concerned is simply not giving us a fair deal or providing an even playing field?
Mr. Evans: The correspondence that has taken place and the subsequent discussions with my hon. Friends to which I referred earlier indicate that there is on-going dialogue between the Government and hon. Members. The office of the Department of Trade and Industry is always open to hon. Members to discuss those matters.
However, I make it clear that at this point the Government have not received the report that is referred to in the correspondence. When it is received, the door of the DTI will be open to anyone who wishes to raise further points about it.
The motion having been made after Ten o'clock, and the debate having continued for half an hour, MADAM SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
Adjourned accordingly at thirteen minutes to Eleven o'clock.

LORD CHANCELLOR'S DEPARTMENT

  Advertising
  Mr. Malcolm Bruce
  To ask the Parliamentary Secretary, Lord Chancellor's Department what was the total expenditure on all forms of advertising by his Department and its agencies for each year since 1979, in 1994 prices.

  Mr. John M. Taylor
  Expenditure on all forms of advertising prior to 1987–88 could be provided only at disproportionate cost. Expenditure on advertising for each year thereafter is shown in the table. In 1993–94, the way in which expenditure is recorded changed, so the figures for 1993–94 and 1994–95—to December—include all forms of publicity. The Lord Chancellor is responsible for three agencies: Her Majesty's Land Registry, the Public Record Office and the Public Trust Office. As the hon. Member's question concerns specific operational matters, on which the chief executives are best placed to provide answers, I have accordingly asked the chief executives to reply direct.

  Year

  £

  1987–88

  6,990

  1988–89

  5,117

  1989–90

  6,745

  1990–91

  5,893

  1991–92

  24,324

  1992–93

  16,450

  1993–94

  78,541

  1994–951

  80,096

  1 To December

  Note:

  1993–94 prices—adjusted by the GDP deflator published 29 November, 1994.

  Letter from Sarah Tyacke to Mr. Malcolm Bruce, dated 10 February 1995:
  I have been asked by the Lord Chancellor's Parliamentary Secretary to reply to your question about advertising.

  1. The Public Record has spent the following sums (at 1994 prices) on staff recruitment advertising:

  1986–87: nil

  1987–88: nil

  1988–89: nil

  1989–90: nil

  1990–91: £28

  1991–92: £20,666

  1992–93: £10,326

  1993–94: £77,392

  2. In addition to the above figures, since 1991–92 the Office has spent approximately £1,500 per annum advertising its own products for sale.

  3. Information for earlier years is not held centrally and could be obtained only at disproportionate cost. However, I am confident that any expenditure on advertising in the earlier years would have been occasional and very small.

  476
  Letter from John Manthorpe to Mr. Malcolm Bruce, dated 10 February 1995:
  I have been asked by the Parliamentary Secretary, Lord Chancellor's Department, to reply to your recent question concerning total expenditure by HM Land Registry on all forms of advertising for each year since 1979. I can provide the following information:

  Year

  Total advertising costs at 1994 Prices £

  1979–80

  59,340

  1980–81

  12,254

  1981–82

  14,329

  1982–83

  9,296

  1983–84

  5,795

  1984–85

  6,792

  1985–86

  11,609

  1986–87

  19,112

  1987–88

  47,020

  1988–89

  94,278

  1989–90

  45,719

  1990–91

  24,327

  1991–92

  6,932

  1992–93

  15,770

  1993–94

  16,558

  The Registry major expenditure on advertising has been for staff recruitment, particularly to meet the property boom of the late 1980's; for advertising in connection with the registration of high value transactions (until 1980); and to give effect to a continuing statutory requirement concerning the replacement of Land and Charge Certificates.

  I do hope that this answers the points raised with the Parliamentary Secretary but please contact me if I can be of any further assistance.

  Letter from Julia C. Lomas to Mr Malcolm Bruce, dated 10 February 1995:
  The Parliamentary Secretary of the Lord Chancellor's Department has asked me to reply to you as part of the Lord Chancellor's response to your parliamentary question listed on 9 February 1995, regarding expenditure on all forms of advertising since 1979.
  The Public Trust Office does not have a policy of advertising its services and there has been no expenditure on advertising since 1987/88.
  The office is only obliged to keep expenditure accounts for six years and if any spending took place on advertising prior to 1987/88 this could only be ascertained if available at disproportionate cost.

PRIME MINISTER

  Advertising
  Mr. Malcolm Bruce
  To ask the Prime Minister what was the total expenditure on all forms of advertising by his Office for each year since 1979, in 1994 prices.

  The Prime Minister
  None.

NATIONAL HERITAGE

  Cardiff Bay Opera House
  Mr. Morgan
  To ask the Secretary of State for National Heritage what assessment he has made of the impact on funding from the millennium fund of the
  477
  proposed Cardiff Bay opera house of (a) breaches in the rules of the competition organised by the Cardiff Bay opera house trust and (b) breaches of the planning permission of the local planning authority; and if he will make a statement.

  Mr. Dorrell
  [holding answer 20 January 1995]: This is a matter for the Millennium Commission. I shall reply to the hon. Member in my capacity as chairman of the commission and place a copy in the Library of the House.

TREASURY

  Privatisation
  Mr. Booth
  To ask the Chancellor of the Exchequer what executive agencies formerly in the civil service will soon be privatised.

  Sir George Young
  The Government have announced plans to transfer the following executive agencies to the private sector: the Transport Research Laboratory; the National Engineering Laboratory; the Laboratory of the Government Chemist; ADAS, in part; the Natural Resources Institute; and the Accreditation Services, part of the National Physical Laboratory.

  Public Expenditure
  Mr. Jenkin
  To ask the Chancellor of the Exchequer what is public expenditure per head in Wales in the current financial year; and what is the equivalent in England, Scotland and Northern Ireland.

  Mr. Aitken
  I refer my hon. Friend to the answer my right hon. and learned Friend the Chancellor of the Exchequer gave to the hon. Member for Gosport (Mr. Viggers) on 2 February,Official Report, column 1199.

  Expenditure Review
  Mr. Darling
  To ask the Chancellor of the Exchequer if he will make a statement about the redundancy terms offered to staff in his Department following the Treasury's fundamental review of expenditure.

  Mr. Nelson
  The Treasury's fundamental expenditure review is still continuing. At all but the most senior grades the precise staff levels required have not yet been finalised. If there is a surplus of staff at any level, it will be managed by means other than redundancy, where possible.

  The financial terms in the event of redundancy are those set out in the civil service compensation scheme. This scheme—formerly section 10 of the principal civil service pension scheme—which applies throughout civil service, was laid before Parliament on 20 December 1994.

  Capital Gains Tax
  Mr. Leigh
  To ask the Chancellor of the Exchequer what estimates the Treasury has for the annual costs to companies and members of the public of accounting for and paying capital gains tax.
  478
  Sir George Young
  The Inland Revenue is not aware of any recent studies of capital gains tax compliance costs.

  The deregulation task force chaired by Francis Maude is looking at capital gains tax as part of its efforts to reduce compliance costs for businesses. We shall consider carefully any recommendations the task force may make in due course.

  European Monetary Institute
  Mr. Denzil Davies
  To ask the Chancellor of the Exchequer, pursuant to his answer of 6 February,Official Report, columns 63–64, about the European Monetary Institute, what period of time is intended to be covered by the institute's budgeted expenditure for which the total capital requirement is 615.6 million ecu.

  Mr. Nelson
  The capital resources will be used to generate an income necessary to cover the expenditure of the European Monetary Institute until its liquidation, in accordance with article 1091 of the EC treaty. The Council of the EMI intends to review the size of the resources three years after the establishment of the EMI, at the end of 1996.

  Income Tax Evasion
  Ms Lynne
  To ask the Chancellor of the Exchequer how much money his Department estimates was lost through income tax evasion in each year from 1990 to the latest year for which figures are available.

  Sir George Young
  No reliable estimates are available.

  Company Shares
  Mr. Redmond
  To ask the Chancellor of the Exchequer what plans he has to amend the tax law regarding the buy-back of company shares.

  Sir George Young
  The current Finance Bill contains no proposals relating to the tax treatment of the purchase by a company of its own shares, but, as with a wide range of tax issues, the position is kept under review.

  Clearing Banks (Charges)
  Mr. Llwyd
  To ask the Chancellor of the Exchequer when he last met representatives of the clearing banks to discuss charging policies and the need for openness with customers; and if he will make a statement.

  Mr. Nelson
  My colleagues and I meet the chairmen and other representatives of the clearing banks from time to time to discuss a wide range of issues. Bank charges for business customers were looked at in reviews of the financing of small firms published by the Bank of England in January 1994 and January 1995. Neither highlighted charges as a significant problem. For the retail sector, the code of banking practice, introduced by all the major banks, already encourages greater openness between banks and their customers. All the major banks have now introduced, or are introducing, pre-notification of charges.

  Civil Servants
  Mr. Battle
  To ask the Chancellor of the Exchequer if he will list the numbers of staff with science, engineering and technology qualifications employed in the civil service by grade in(a) 1979, (b) 1983, (c) 1987 and (d)

  Sir George Young
  This information is not held centrally. Below the open structure, there are civil servants employed in the professional and technology group and the science group. Details of the numbers and grades of these staff are available in table 4 of "Civil Service Statistics" for each of the years. Copies of "Civil Service Statistics" are available in the Library.

  Mr. Galloway
  To ask the Chancellor of the Exchequer what the Government's policy is on relocating civil service jobs to areas of high unemployment and low opportunities.

  Sir George Young
  Departments and agencies should review the location of their work with the intention of securing cost savings, and wider employment and economic development benefits, including consistency with Ministers' wider regional and inner-city area policies.

  Departments considering relocation liaise closely with other Departments, the Government offices for the English regions, local authorities and the training and enterprise councils over their proposals for change.

  Ecu
  Mr. Andrew Smith
  To ask the Chancellor of the Exchequer what work the Government have undertaken to facilitate the use of the ecu.

  Mr. Nelson
  [holding answer 6 February 1995]: Since 1988 the Government have issued ecu denominated debt. In addition to widening the options for management of the United Kingdom's reserves, this programme shows the importance the Government attach to providing further opportunities for the development of the private ecu markets in London.

  Home Owners (Benefit Entitlement)
  Mr. Raynsford
  To ask the Chancellor of the Exchequer, pursuant to his oral answer of 2 February to the hon. Member for Warrington, North, (Mr. Hoyle)Official Report, column 1201, what advice he has received from the Council of Mortgage Lenders about the likely effect of the changes he proposed in the Budget to income support for home owners' mortgage interest payments on the number of repossessions.

  Mr. Nelson
  [holding answer 7 February 1995]: The Department of Social Security has on-going discussions with the Council of Mortgage Lenders and will continue to do so throughout the consultation process. The council has expressed concern about the possible impact of the proposals. The Government are listening carefully to its concerns but believe that the proposed changes will result in the development of comprehensive quality insurance which will provide better protection for all home owners against repossession, not just those who currently receive income support mortgage interest.

LORD PRESIDENT OF THE COUNCIL

  Advertising
  Mr. Malcolm Bruce
  To ask the Lord President of the Council what was the total expenditure on all forms of advertising by his office and its agencies for each year since 1979, in 1994 prices.

  Mr. Newton
  The Privy Council Office incurred no expenditure in respect of advertising over the years in question. I am not responsible for any agencies.

SCOTLAND

  NHS Trusts
  Mr. McAllion
  To ask the Secretary of State for Scotland what(a) guidance and (b) direction he has issued to NHS trusts in Scotland relating to local pay bargaining; and if he will place copies of these documents in the Library.

  Lord James Douglas-Hamilton
  NHS in Scotland employers are aware of the Government's policy. Responsibility for devising pay arrangements should be delegated wherever possible to those who are responsible for managing the delivery of services. NHS employers in Scotland are responsible for taking appropriate steps to develop and implement local pay.

  Public Bodies
  Mr. Patten
  To ask the Secretary of State for Scotland if he will list those public bodies for which he retains departmental responsibility; which of these bodies have been identified as suitable for placing in the private sector; and by when it is expected each of these bodies will enter the private sector.

  Mr. Lang
  The Cabinet Office publication "Public Bodies 1994", a copy of which is available in the Library of the House, lists non-departmental public bodies, nationalised industries, public corporations and NHS bodies. None of the bodies listed as being sponsored by my Department has been identified as suitable for placing in the private sector. Non-departmental public bodies are subject to review every five years, at which time consideration is given inter alia to the possibility of privatisation. The position of the other bodies is also considered regularly.

  Next Steps Agencies
  Mr. Kaufman
  To ask the Secretary of State for Scotland why he has not yet provided the information about next steps agencies requested by the right hon. Member for Manchester, Gorton in his question of 20 January.

  Mr. Lang
  I apologise for the delay in answering the right hon. Member's question, which was in fact answered on 8 February,Official Report, column 336.

  Dundee Port Authority
  Mr. McAllion
  To ask the Secretary of State for Scotland how much public investment in the form of Government and European grants has been given to Dundee port authority in each of the last 10 years.

  Mr. Norris
  I have been asked to reply.

  No Government grants were paid to the authority for port-related developments over this period. Payments from the European regional development fund were:

  Year

  £

  1985

  104,957

  1986

  80,178

  1987

  Nil

  1988

  1,389,300

  1989

  874,200

  1990

  Nil

  1991

  353,905

  1992

  178,270

  1993

  47,491

  1994

  520,679

  1995 (to date)

  Nil

  Total

  3,548,980

  Mr. McAllion
  To ask the Secretary of State for Scotland what discussions he or his officials have had with Dundee port authority in relation to proposals for privatising that authority.

  Mr. Norris
  I have been asked to reply.

  Dundee port authority's chairman has met my noble Friend Lord Goschen, and with his professional advisers has had a number of meetings with officials of the Department.

TRADE AND INDUSTRY

  Advertisements
  Ms Corston
  To ask the President of the Board of Trade on how many occasions and in what circumstances in the last five years advertisements have been placed in newspapers or periodicals which have been described as being issued by, or on behalf of, Ministers in his Department rather than on behalf of Her Majesty's Government.

  Mr. Heseltine
  Within the framework of collective responsibility there is no practical distinction between publicity described as being issued by a single Minister or Her Majesty's Government.

  Centrally produced DTI advertising does not refer to either Her Majesty's Government or an individual Minister, but generally includes the DTI logo and its descriptor.

  Insolvency Service
  Mr. Cousins
  To ask the President of the Board of Trade what assessment he has made of the effect of his proposals for the Insolvency Service on the rights of the employees of the service to transferred rights and conditions.
  482
  Mr. Jonathan Evans
  In the absence of any decision to contract out the work of official receivers, it is too early to consider the issue of Transfer of Undertakings (Protection of Employment) Regulations 1981, the implications of which may not become clear until the nature of proposals in any bidding process could be assessed.

  Mr. Cousins
  To ask the President of the Board of Trade (1) what adjustments to the spending plans for his Department he has made following his proposals for the Insolvency Service;

  (2) what provision he has made for redundancy costs arising out of his proposals for the Insolvency Service.

  Mr. Jonathan Evans
  I refer the hon. Member to the announcement my right hon. and noble Friend Earl Ferrers made on 10 October 1994,Official Report, column 94. No early retirement or severance provisions have been made by my Department, as the preparatory work on increasing private sector involvement in the work of the official receivers is still on-going, nor has my Department made any adjustments to its spending plans.

  Insolvency Practitioners
  Mr. Cousins
  To ask the President of the Board of Trade what steps he proposes to take to remedy the criticism of insolvency practitioners made by the National Audit Office.

  Mr. Jonathan Evans
  The reports of the National Audit Office and of the Public Accounts Committee contained recommendations that the Insolvency Service should seek to improve the quality and timeliness of reports submitted by insolvency practitioners concerning unfit conduct of directors in insolvent companies.

  The Insolvency Service has issued revised guidelines to insolvency practitioners which emphasised the need for timeliness of reports and the adequacy of evidence to support allegations of unfit conduct. These guidelines are being reinforced by the newly constituted joint insolvency monitoring unit set up by the insolvency profession to raise standards of its members. In addition, the Insolvency Service has commenced a programme of visits to practitioners who have a poor record of reporting, backed by prosecution in extreme cases.

  Steel Imports
  Mr. Austin Mitchell
  To ask the President of the Board of Trade what were the levels of steel imports into the United Kingdom for each three-month period since January 1993 from(a) the United States of America, (b) France, (c) Germany, (d) Korea and (e) Japan.

  Mr. Needham
  The information is in the following table:
  483

  United Kingdom imports of steel1

  000 tonnes

  United States of America

  France

  Germany

  South Korea

  Japan

  1993

  Q1

  10.0

  83.7

  312.6

  0.3

  14.2

  Q2

  12.7

  79.6

  354.7

  0.3

  14.3

  Q3

  8.9

  94.1

  315.9

  3.4

  17.5

  Q4

  11.8

  415.3

  358.8

  0.2

  16.9

  1994

  Q1

  9.1

  185.2

  359.7

  4.2

  10.0

  Q2

  8.8

  191.6

  391.6

  0.2

  17.5

  Q3

  11.5

  191.4

  381.4

  2.1

  8.4

  Source:

  Iron and Steel Statistics Bureau.

  Note:

  1 Products of the steel industry in the Standard Industrial Classification (1980), Groups 221, 222 and 223.

  Shipbuilding
  Mr. Sheerman
  To ask the President of the Board of Trade what action he is taking to encourage United Kingdom shipbuilding yards to develop their capacity to produce floating oil and gas platforms.

  Mr. Eggar
  My Department established a working group on floating production systems last year and the group has made positive proposals to strengthen the competitiveness of UK yards and other suppliers in this sector. Its recommendations are being pursued with the industry and a report will be published shortly.

  Oil Companies (Equipment Purchases)
  Mr. Sheerman
  To ask the President of the Board of Trade what action he is taking to encourage United Kingdom oil companies to purchase equipment from United Kingdom producers.

  Mr. Eggar
  My Department helps oil companies in the UK and overseas to identify competitive UK suppliers and supports initiatives to help the suppliers improve their competitiveness.

  Ferrybridge
  Mr. O'Neill
  To ask the President of the Board of Trade what allowance was made in the liabilities of PowerGen's accounts for the flue gas desulphurisation of Ferrybridge power station when the company was privatised; what is his estimate of that sum in 1995 prices; and how much has been spent on flue gas desulphurisation of Ferrybridge station.

  Mr. Eggar
  The expectation that investment in 4 GW of flue gas desulphurisation equipment at PowerGen's coal-fired plant would form part of its capital expenditure programme was taken into account at privatisation. The 1991 prospectus for the sale of PowerGen gave an estimated cost of £250 million for the fitting of flue gas desulphurisation equipment at Ratcliffe power station. PowerGen had applied for planning permission to fit flue gas desulphurisation equipment at Ferrybridge C. This permission has subsequently been granted. Information on expenditure on particular capital projects is a matter for the company.

  Her Majesty's inspectorate of pollution is required to review the conditions of integrated pollution control authorisations granted to power stations and may impose new conditions to prevent or reduce emissions of
  484
  pollutants subject to the application of BATNEEC—best available technique not entailing excessive cost.

  My right hon. Friend the Secretary of State for the Environment has power to direct whether specific conditions should or should not be imposed.

  Cars (Distribution)
  Mr. Wallace
  To ask the President of the Board of Trade what representations his Department has received on EU proposals to restrict the block exemptions governing the distribution of cars; and if he will make a statement.

  Mr. Jonathan Evans
  The European Commission has published a draft regulation—OJ 379/16—intended to replace Commission regulation 123/85. This regulation governs the selective and exclusive dealership agreements for motor vehicles, and is due to expire in June 1995.

  My Department has consulted interested parties representing United Kingdom manufacturers, dealers, trade associations, consumer groups and legal bodies to obtain their views on the draft. It has received representations from, or held discussions with, some 40 companies and representative organisations.

  N. M. Rothschild and Son Ltd.
  Mr. Byers
  To ask the President of the Board of Trade, pursuant to his answer of 2 February,Official Report columns 760–61, if the contract awarded to N. M. Rothschild was for a fixed fee; which tender was recommended to the then Secretary of State for Energy for acceptance by the interdepartmental group; and when the contact is expected to end.

  Mr. Eggar
  [holding answer 9 February 1995]: The contract was awarded on the basis of hourly rates. The then Secretary of State for Energy acted in accordance with the advice he received from officials. The contract will end once the privatisation of the British coal Corporation, including the non-mining activities, is completed.

  Military Equipment Exports (Indonesia)
  Mrs. Clywd
  To ask the President of the Board of Trade if he will list military equipment that has been refused export licences to Indonesia on the grounds that such equipment might be used for internal repression
  485
  between 1 January 1991 and 31 December 1993 and between 31 December 1993 and 1 February 1994.

  Mr. Ian Taylor
  [holding answer 7 February 1995]: It has been the practice of successive Governments not to reveal details of export licences or applications for licences unless the requirements of confidentiality are outweighed by the public interest.

  In this instance, I believe that the public interest is served by disclosing the following information:

  Three applications were made in the first period for licences to export military equipment which were ultimately refused.

  The goods were night vision goggles, an HF transceiver station together with battery charger, cable and ancillaries, and a thermal imager with laser range finder and teleconverter lens.

  No applications for licences made during the second period were refused.

  Recent rejections have been riot guns and CS cartridges for the Indonesian Police and pump action shotguns for the prison service.

  The potential for the use against the civilian population was one of the factors taken into account during the processing of the applications.

ATTORNEY-GENERAL

  Witnesses (Disabilities)
  Ms Jowell
  To ask the Attorney-General how many prosecutions by the Crown Prosecution Service have been dropped within the last five years on the grounds that the principal witnesses or victims have a hearing difficulty or suffer from mental illness.

  The Attorney-General
  The Crown Prosecution Service maintains no central records regarding witnesses or victims of crime. The information is recorded on individual case files, and could be obtained only at disproportionate cost.

NORTHERN IRELAND

  Waste Sites
  Mr. Beggs
  To ask the Secretary of State for Northern Ireland if he will list the domestic waste dump sites in Northern Ireland where environmental problems have arisen, indicating the type of problem which has arisen at each site.

  Mr. Moss
  At present, 28 landfill sites are authorised to receive domestic waste. Twenty-six are operated under district council control and two are operated by the private sector, but regulated by statutory authorities. Prior to 1980, landfill sites were used without proper design and building plans. Since then, authorised sites are engineered to deal with and contain leachate and gas emissions. Environmental problems associated with landfill sites can be litter, smell and bird invasion.

  The degree to which any of these problems may be found at a particular site will depend upon a range of factors such as location, the engineering technology used in design and operation of the site and on-going site management.

  Visual Disability
  Dr. Hendron
  To ask the Secretary of State for Northern Ireland if he will make it his policy to redefine the term blind so that a person who is unable to pass the vision test associated with the driving test should be regarded as being unable to do any work for which eyesight is essential.

  Mr. Moss
  No.

  Dr. Hendron
  To ask the Secretary of State for Northern Ireland what consideration he has given to abandoning the system of two categories of registrable visual disability.

  Mr. Moss
  The system of distinguishing between blindness and partial sight assists in service planning as the needs of blind and partially sighted people are not identical. Fewer people might be willing to register with social services departments if doing so meant they were required to accept the label "blind". We have no plans to change the present system.

  Dr. Hendron
  To ask the Secretary of State for Northern Ireland what proposals he has to instruct Department of Health officials to issue new guidelines to approve consultant ophthalmologists to certify all persons with a visual acuity of 6/18, or less, as blind and registrable in that category with social services.

  Mr. Moss
  None.

  Dr. Hendron
  To ask the Secretary of State for Northern Ireland what assessment he has made of the practice in other countries of having only one category of registrable visual disability.

  Mr. Moss
  None. The system in use throughout the United Kingdom has been established over many years enabling trends in causes of blindness and partial sight to be monitored. There are no plans to amend the system.

  Public Bodies
  Mr. Patten
  To ask the Secretary of State for Northern Ireland if he will list those public bodies for which he retains departmental responsibility; which of these bodies have been identified as suitable for placing in the private sector; and by when it is expected each of these bodies will enter the private sector.

  Sir John Wheeler
  The public bodies for which the Secretary of State retains departmental responsibility are set out in the Cabinet Office publication "Public Bodies 1994", copies of which are available in the Library. Since "Public Bodies 1994" was published, the Northern Ireland Blood Transfusion Agency was established.

  None of these bodies has been identified as being suitable for placing in the private sector.

  NHS Trusts
  Mr. Milburn
  To ask the Secretary of State for Northern Ireland if he will list the termination payments made to chief executives and general and senior managers in each NHS trust since its inception, indicating the size and number of individual payments.

  Mr. Moss
  This information is not held centrally and could be obtained only at disproportionate cost. Consideration is being given to the collection of data on termination payments in Northern Ireland.

  Advertising
  Mr. Malcolm Bruce
  To ask the Secretary of State for Northern Ireland what was the total expenditure on all forms of advertising by his Department and its agencies for each year since 1979 in 1994 prices.

  Sir John Wheeler
  The information requested is listed:

  Year

  Expenditure £ (in 1994 prices)

  1979–80

  1,146,986

  1980–81

  999,033

  1981–82

  1,159,163

  1982–83

  2,731,538

  1983–84

  4,821,516

  1984–85

  4,360,906

  1985–86

  6,004,314

  1986–87

  5,651,684

  1987–88

  5,719,217

  1988–89

  6,100,684

  1989–90

  6,393,354

  1990–91

  6,769,594

  1991–92

  7,953,941

  1992–93

  7,770,377

  1993–94

  6,046,557

  1994–95

  15,241,690

  1 Consists of estimated expenditure or expenditure to date for Departments.

DUCHY OF LANCASTER

  Advisory Board for the Research Councils
  Mr. Austin-Walker
  To ask the Chancellor of the Duchy of Lancaster if he will make a statement about the final recommendations of the disbanded Advisory Board for the Research Councils.

  Mr. David Hunt
  The final recommendations were in December 1993 and consisted of advice on the then science budget. I have placed copies on the Library.

  Government-funded Research
  Ms Eagle
  To ask the Chancellor of the Duchy of Lancaster what was the total spending reduction in Government-funded research which took place when near-market research was abandoned.

  Mr. Robert G. Hughes
  Over the period—1987–88 to 1991–92—there was a cash increase of 19 per cent. in total Government-funded R and D expenditure.

  Mr. Mackinlay
  To ask the Chancellor of the Duchy of Lancaster by what method he is kept informed as to scientific developments and breakthroughs that warrant funding and other support from Government; and if he will make a statement.

  Mr. David Hunt
  Many different methods.

  Space Funding
  Mrs. Gillan
  To ask the Chancellor of the Duchy of Lancaster what discussions he has had with the Department of Trade and Industry on funding of space science.

  Mr. Robert G. Hughes
  I met my hon. Friend the Minister with responsibility for space last November, to 488
  discuss the funding of space science and our two Departments continue to work closely together.

  There is continual contact between the Particle Physics and Astronomy Research Council, my Department and the British National Space Centre at an official level, through which we are currently looking in detail at the cost-effectiveness of the UK's participation in the European Space Agency's science programme.

  I recognise fully that our space scientists have an excellent reputation and we will continue to support our best space science research.

  Large Hadron Collider
  Mr. Dalyell
  To ask the Chancellor of the Duchy of Lancaster, pursuant to the letter from the hon. Member for Harrow, West (Mr. Hughes) to the hon. Member for Linlithgow, what discussions Her Majesty's Government are having with CERN partners on ways in which the original timetable for the large hadron collider and associated developments in particle physics can be adhered to.

  Mr. Robert G. Hughes
  The timetable of the large hadron collider project agreed by member states in December 1995 foresees full operation in 2008. This can be achieved within known existing resources. Completion before this date will require significant additional. contributions from non-member states.

  The CERN director general is taking the lead in discussing with potential partners the terms on which they might participate scientifically and financially. He has the full support of the UK and other CERN member states. We stand ready to give the director general every assistance to help these discussions reach a satisfactory conclusion. Any proposal for the participation of non-member states will be discussed by member states in the CERN council.

  Market Testing
  Mr. Henderson
  To ask the Chancellor of the Duchy of Lancaster if he will name the companies which have been successful in obtaining contracts to provide services for Government Departments as a result of the market-testing process; and if he will list them by Government department.

  Mr. Robert G. Hughes
  For information on the contracts awarded by the Office of Public Service and Science, I refer the hon. Member to the answer I gave to the hon. Member for Darlington (Mr. Milburn) on 12 December 1994,Official Report, column 455. Other Ministers provided similar information on their Departments to the hon. Member for Darlington. Their answers were published in the Official Report between 12 December and 16 December. The Ministry of Defence provided a full list of contractors in an answer to the hon. Member for Leeds, Central (Mr. Fatchett) Official Report, 30 January 1995, columns 546–48.

OVERSEAS DEVELOPMENT ADMINISTRATION

  Somaliland
  Mr. Worthington
  To ask the Secretary of State for Foreign and Commonwealth Affairs what plans he or
  489
  international organisations have to restart mine clearing operations in Somaliland.

  Mr. Baldry
  We have no plans. We understand the UN has been unable to agree a programme for mine clearance work with the regional authorities, which include adequate systems for monitoring, reporting and accountability.

  Mr. Worthington
  To ask the Secretary of State for Foreign and Commonwealth Affairs what assessment the ODA co-ordinator in Hargeisa has made of the priorities for British and European assistance to Somaliland.

  Mr. Baldry
  North-west Somalia's needs are extensive. Britain's priorities remain support for programmes to help re-establish basic health and education services and help for those displaced by the recent fighting. EU assistance includes support for the livestock sector; water and sanitation and income generation. We agree with the NGO liaison and support officer's judgment that these remain priority areas for assistance.

  Wealth Distribution
  Mr. Simon Hughes
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the statistical impact made by his Department's programme in the relative distribution of wealth between the world's 20 richest and 20 poorest countries.

  Mr. Baldry
  [holding answer 9 February 1995]: Twenty-nine per cent. of the United Kingdom's total bilateral net official development assistance disbursements in 1992 went to the 20 countries listed as poorest in GNP per capita terms according to World bank information. The only countries with a higher percentage than the United Kingdom were Norway, Denmark and Finland, all of which had lower total disbursements to these countries in volume terms.

  However, it is not possible to isolate the statistical effect of aid disbursements to these countries—let alone disbursements by a single donor—from other factors when examining their economic growth.

EMPLOYMENT

  Domiciliary Care
  Mr. Hinchliffe
  To ask the Secretary of State for Employment what steps he is taking to monitor the suitability of employment agencies offering domiciliary care provision; and how such agencies are monitored in terms of conduct and suitability.

  Miss Widdecombe
  The Employment Agencies Act 1973 and its associated regulations require all employment agencies to abide by specified minimum standards of conduct. Inspectors from the Department's Employment Agency standards offices investigate all complaints and other indications of breaches of the standards of conduct and undertake random checks.

  South Thames Training and Enterprise Council
  Ms Harman
  To ask the Secretary of State for Employment how much money was owed by South Thames TEC to Southwark college(a) for work
  490
  undertaken before 7 November 1994 and (b) for work undertaken after 7 November 1994.

  Mr. Paice
  I am as yet unable to assess the financial impact of the receivership of South Thames training and enterprise council on Southwark college. Money owed by South Thames TEC to Southwark college before 7 November 1994 is a matter for the receiver, who is still establishing the total amount involved. The Department has processed invoices from the college for 7 November 1994 to 1 January 1995 to the value of £133,209.55 and these will be paid to the college by the end of next week.

  Ms Harman
  To ask the Secretary of State for Employment if he will make a statement on the financial impact of the receivership of South Thames TEC on Southwark college.

  Mr. Paice
  I am as yet unable to assess the financial impact of the receivership of South Thames training and enterprise council on Southwark college.

  Jobseekers
  Mr. McCartney
  To ask the Secretary of State for Employment what criteria will be used to assess an individual's skills, qualifications and experience for the purposes of entering into the jobseeker's agreement.

  Miss Widdecombe
  [holding answer 6 February 1995]: The employment officer and the jobseeker will seek to draw up a jobseeker's agreement. The terms and conditions of the agreement have to be such that if the jobseeker complies with the agreement he will satisfy the conditions set out in regulations on availability and actively seeking work.

  Mr. McCartney
  To ask the Secretary of State for Employment what criteria will be used by the adjudication officer to determine what is reasonable for purposes of deciding whether a claimant for jobseeker's allowance considers the agreement as a condition of entitlement to be unreasonable.

  Miss Widdecombe
  [holding answer 6 February 1995]: Adjudication officers will be expected to have regard to the legislation and any relevant caselaw. They will be assisted by guidance issued by the chief adjudication officer.

  Mr. McCartney
  To ask the Secretary of State for Employment what procedures will apply when the adjudicating officer charged with deciding whether the agreement as a condition of entitlement for jobseeker's allowance is reasonable, rules it(a) to be reasonable and (b) to be unreasonable.

  Miss Widdecombe
  [holding answer 6 February 1995]: (a) If the adjudication officer determines that it is reasonable to expect the jobseeker to comply with the terms and conditions of a proposed agreement, the jobseeker can accept his determination or appeal to a social security appeals tribunal.

  (b) If the adjudication officer determines that it is not reasonable he may give directions as to the terms and conditions on which the employment officer is to enter into an agreement with the jobseeker. If the jobseeker does not consider the adjudication officer's terms reasonable, he can appeal to another adjudication officer, and if he is still not content he can appeal to a social security appeals tribunal.

HOME DEPARTMENT

  Prisons
  Mr. Litherland
  To ask the Secretary of State for the Home Department how many people have died in prison from natural causes in the past five years.

  Mr. Michael Forsyth
  Responsibility for this matter has been delegated to the Director General of the Prison Service, who has been asked to arrange for a reply to be given.

  Letter from Derek Lewis to Mr. Robert Litherland, dated 13 February 1995:
  The Home Secretary has asked me to reply to your recent Question about how many people have died in prison from natural causes in the past five years.
  A total of 147 people have died from natural causes whilst in custody during the last five years.

  1990: 37

  1991: 20

  1992: 32

  1993: 31

  1994: 27

  Mr. George Howarth
  To ask the Secretary of State for the Home Department whether decisions relating to the searching of category A prisoners and their visitors are policy or operational matters.

  Mr. Michael Forsyth
  The power to search prisoners and their visitors is set out in the prison rules, which are made by the Secretary of State. Decisions relating to the rules themselves and changes to them are policy matters.

  The actions which are taken to implement the rules, including the procedures for searching category A prisoners and their visitors, are operational matters, as are the day-to-day decisions to search individual prisoners or visitors.

  Mrs. Roche
  To ask the Secretary of State for the Home Department what cuts to its budget have been proposed by the Prison Service; and what new equipment and materials have been cancelled.

  Mr. Michael Forsyth
  The Prison Service has not proposed any cuts to its budget and no new equipment and materials have been cancelled.

  Data Centre, Bootle
  Mr. Cohen
  To ask the Secretary of State for the Home Department, pursuant to his answer of 23 January,Official Report, column 50, for what reasons the transitional and restructuring costs in the contract between his Department and the Sema Group in respect of the privatisation of the data centre in Bootle remain in confidence now that the contract has been agreed; what proportion this element of the contract was of the total contract amount; if any part of the agreement prior to the contract being signed required such commercial secrecy; if permission of Sema is required to publish the figure; and if he will make a statement.

  Mr. Howard
  It is not the usual practice to publish commercially sensitive information about contracts particularly where that would involve the disclosure of details of the pricing arrangements or structure of competitive bids and this applies both before and after a contract is let. The purpose is to preserve the legitimate business interests of competing companies who may wish to bid for future contracts. This consideration applied to 492
  the contract between the Home Office and Sema Group plc and I continue to regard information about the proportion of the contract costs which relate to transitional and restructuring activities as commercially confidential. If it was considered appropriate to disclose commercially sensitive information from tender or contractual documents. I would regard it as necessary to discuss the matter in advance with the contractor concerned.

  Mr. Cohen
  To ask the Secretary of State for the Home Department, pursuant to his answer of 23 January,Official Report, column 50, how many people were employed at the data centre in Bootle prior to its privatisation; how many of those employees (a) have been and (b) will be made redundant as a result of the Sema Group's proposals; and if he will indicate the type of staff, and the number in each category, made redundant.

  Mr. Howard
  Following the award of a contract for the supply of Home Office administrative information technology services, staff in the undertaking were transferred to Sema Group plc under the terms of the Transfer of Undertakings (Protection of Employment) Regulations 1981; this included 272 staff based on Merseyside.

  Although subsequent redundancies by Sema Group are a matter for it, we understand from the company that, in order to make efficiency savings identified following an operational review of business requirements, it invited applications for voluntary redundancy in November 1994 from staff on Merseyside. As a result, 92 former Home Office staff on Merseyside have been accepted for voluntary redundancy under terms equivalent to those which would have applied if they had remained civil servants. I understand that all of these were formerly administrative grade civil servants in the grades administrative assistant to grade 7.

  Mr. Cohen
  To ask the Secretary of State for the Home Department, pursuant to his answer of 23 January,Official Report. column 50, what is the expected percentage level of overspend or underspend for the estimated total payments from his Department for the Sema Group's transitional and restructuring costs against the amount allocated for these costs in the contract.

  Mr. Howard
  Payments to Sema Group plc to cover transitional and restructuring costs are expected to be at the level set out in the contract. Sema Group's bid contained an element for such costs, a proportion of which were estimated because they were dependent on the outcome of an operational review which they would conduct if awarded the contract. However, the contract specified a maximum to be paid by the Home Office on the basis that any costs over that amount would be melt by Sema Group. It is expected that the level of payments from the Home Office to Sema Group will be at that maximum level, which was the level assumed in evaluating the bid.

  Public Bodies
  Mr. Patten
  To ask the Secretary of State for the Home Department if he will list those public bodies for which he retains departmental responsibility; which of these bodies have been identified as suitable for placing in the private sector; and by when it is expected each of these bodies will enter the private sector.
  493
  Mr. Howard
  The following non-departmental public bodies presently fall within my Department's responsibility:

  Alcohol Education and Research Council

  Commission for Racial Equality

  Community Development Foundation

  Criminal Injuries Compensation Authority

  Fire Services Examinations Board

  Gaming Board for Great Britain

  Horserace. Betting Levy Board

  Horserace Totalisator Board

  Office of the Data Protection Registrar

  Police Complaints Authority

  Police Promotions Examinations Board

  National Lottery Charities Board

  Advisory Board on Restricted Patients

  Advisory Committee on Service Candidates

  Advisory Council on Race Relations

  Advisory Council on the Misuse of Drugs

  Animal Procedures Committee

  Central Fire Brigades Advisory Council

  Firearms Consultative Committee

  National Board for Crime Prevention

  Parliamentary Boundary Commission for England

  Parliamentary Boundary Commission for Wales

  Parole Board

  Poisons Board

  Police Negotiating Board

  Criminal Injuries Compensation Board

  Criminal Injuries Compensation Appeals Panel

  Data Protection Tribunal

  Horserace Betting Levy Appeals Tribunal for England and Wales

  Interception of Communications Tribunal

  Misuse of Drugs Advisory Body

  Misuse of Drugs Professional Panel

  Misuse of Drugs Tribunal

  Police Arbitration Tribunal

  Police Discipline Appeals Tribunal

  Security Services Tribunal

  Boards of Visitors to Penal Establishments

  These NDPBs are subject to a rolling review every five years, the first stage of which includes an examination of prior options, including the scope for privatisation. At present, none has been identified for privatisation.

  Police and Prison Services (Radio)
  Mr. Booth
  To ask the Secretary of State for the Home Department what is the cost of running the Home Office supply service for radio and high technology equipment to the police and prison services.

  Mr. Howard
  The police and prison services now purchase their radio and high technology equipment directly from suppliers. The Department, through the radio frequency and communications planning unit, undertakes frequency regulation and management functions and provides strategic advice and technical guidance on radio matters to the police, fire, prison and 494
  other Home Office Departments. The cost of this service is approximately £940,000 in 1994–95.

  Parkhurst
  Ms Janet Anderson
  To ask the Secretary of State for the Home Department who advised him that the installation of geophones in the perimeter fence at Parkhurst would have to wait until building work was complete.

  Mr. Howard
  After the escapes from Parkhurst which took place on 3 January, I was informed by the Prison Service of the reasons why geophones had not been installed, as I explained to the House in my statement on 10 January, column 34.

  Advertising
  Mr. Malcolm Bruce
  To ask the Secretary of State for the Home Department what was the total expenditure on all forms of advertising by his Department and its agencies for each year since 1979, in 1994 prices.

  Mr. Howard
  Expenditure on television, radio press and poster advertising by my Department and its agencies, except the Forensic Science Service agency, for each year since 1979 is as follows:

  1993–94 prices (using the GDP deflator)

  £

  1979–80

  7,131,352

  1980–81

  3,422,914

  1981–82

  3,470,771

  1982–83

  3,456,974

  1983–84

  4,659,770

  1984–85

  5,243,644

  1985–86

  5,037,696

  1993–94 prices using the GDP deflator

  £

  1986–87

  7,395,028

  1987–88

  6,599,918

  1988–89

  7,107,320

  1989–90

  6,766,316

  1990–91

  6,524,067

  1991–92

  7,797,182

  1992–93

  7,569,370

  1993–94

  9,345,196

  The projected spend for 1994–95 is £10,178,074.

  The above figures do not include the marginal advertising spend for the Forensic Science Service since it became an agency in 1991. The agency does not have data to separate advertising spend from general publicity. Its systems will be modified to provide a breakdown from 1995–96.

  Live Animal Exports
  Mr. David Young
  To ask the Secretary of State for the Home Department (1) what has been the cost of policing the demonstrations against the export of live calves;
  495
  (2) if he will require commercial organisations to pay the full cost of policing their commercial operations.

  Mr. Maclean
  The policing of recent demonstrations against the export of live animals has arisen from the duty of the police to uphold the law and I should not expect charges to be made for this.

  Information on the total costs of policing demonstrations against the export of live calves is not available, and could be obtained only at disproportionate cost.

  Drugs
  Mrs. Roche
  To ask the Secretary of State for the Home Department how many and what proportion of prisoners were estimated to be drug users(a) when they entered prison, and (b) when they were released from prison in (i) womens' prisons and (ii) mens' prisons in each of the last 15 years.

  Mr. Michael Forsyth
  Responsibility for this matter has been delegated to the Director General of the Prison Service, who has been asked to arrange for a reply to be given.

  Letter from Derek Lewis to Mrs. Barbara Roche, dated 13 February 1995:
  The Home Secretary has asked me to reply to your recent Question on how many and what proportion of prisoners were estimated to be drug-users on entering and upon release from prison for both male and female establishments for each of the past 15 years.
  The information currently available on the prevalence of drug misuse among prisoners does not enable me to provide you with the information that you requested. However, the Prison Service will be introducing mandatory drug testing for prisoners. As part of the mandatory drug testing programme prisoners will be required to participate in random drug testing. This will provide statistical information on the extent of drug misuse in prison.

  Bathing Beaches
  Mr. Hinchliffe
  To ask the Secretary of State for the Home Department if he will make it his policy that monitoring shall be carried out of the number of accidents and fatalities resulting from the use of bathing beaches.

  Mr. Nicholas Baker
  No. But I would refer the hon. Member to the work of the Royal Society for the Prevention of Accidents and, so far as concerns fatal accidents, to the reply which I gave to his question on 25 January, column 236.

  Prevention of Terrorism Powers
  Mr. Madden
  To ask the Secretary of State for the Home Department how many non-United Kingdom nationals in each year, to date, have been(a) excluded from the United Kingdom, (b) are currently excluded from the United Kingdom and (c) have had exclusion orders withdrawn under the Prevention of Terrorism (Temporary Provisions) Act 1989.
  496
  Mr. Howard
  [holding answer 7 February 1995]: Only persons who are not British citizens may be excluded from the United Kingdom under the 1989 Act: 14 persons are currently so excluded. Figures for each year since 1989 are shown in the following table:

  Persons excluded from the United Kingdom

  Orders in force on 1 January

  New orders made during year

  Orders renewed during year

  Orders revoked/lapsed during year

  1989

  35

  —

  4

  5

  1990

  30

  4

  2

  12

  1991

  22

  3

  6

  7

  1992

  18

  1

  4

  1

  1993

  18

  —

  4

  1

  1994

  17

  1

  5

  3

  19951

  15

  —

  —

  1

  Note:

  1 As at 7 February.

HEALTH

  National Blood Authority
  Mr. Illsley
  To ask the Secretary of State for Health if she will make a statement on the relationship between the National Blood Authority and the promotion of national prune week.

  Mr. Sackville
  This is a matter for the National Blood Authority.

  RAF Hospital, Wroughton
  Mr.Illsley
  To ask the Secretary of State for Health what representations her Department made to the Ministry of Defence regarding the implication for the NHS of the closure of RAF hospital, Wroughton.

  Mr. Sackville
  Regular discussions take place between officials of the Department of Health and the Ministry of Defence about plans for the future of military hospitals and their impact on the national health service, including RAF Wroughton. The timing and management of change at individual hospitals are discussed in joint machinery involving officials from my Department, NHS managers and Ministry of Defence officials.

  Bovine Somatotropin
  Mr. Morley
  To ask the Secretary of State for Health if she will make a statement on bovine somatotropin following recent research at Musgrave Park hospital on concentrations of insulin-like growth factor 1.

  Mr. Sackville
  All cows' milk contains IGF-1, an insulin-like growth factor. Administering artificially produced bovine somatatrophin to dairy cows results in marginally increased levels of IGF-1 in their milk.

  I understand that doctors at the Musgrove Park hospital, Taunton, have been conducting research into possible links between BST and cancer.

  Pregnancy
  Mr. Gareth Wardell
  To ask the Secretary of State for Health what was the number and rate of(a) conception, (b) full-term pregnancies and (c) terminations for each of the last 10 years for girls in the age group 12 to 15 years; and if she will indicate the levels of disaggregation for which figures are available currently.

  Mr. Sackville
  The information available for England as a whole is shown in the table. Corresponding information for regional health authorities is published in birth statistics series FM1—Office of Population, Censuses and Surveys—and that for district health authorities from 1986 onwards, with rates averaged over three-year periods, in the OPCS monitor, "Conceptions in England and Wales 1991: residents of regional and district health authority areas FM1 94/1", copies of which are in the Library.

  Conception at ages under 16 England

  Year

  Number

  1984

  9,096

  1985

  8,829

  1986

  8,684

  1987

  8,590

  1988

  8,246

  1989

  7,922

  1990

  8,111

  1991

  7,362

  19921

  7,475

  1 Provisional.

  Note:

  1. Rates in the table use the mid-year population estimates revised following the rebasing of mid-1991 estimates using the 1991 Census of Population.

  Rates per 1,000 women aged 13–15 England

  Conceptions leading to

  Year

  Total conceptions

  maternities

  abortions

  1984

  8.7

  3.8

  4.9

  1985

  8.6

  3.8

  4.9

  1986

  8.8

  4.0

  4.8

  1987

  9.3

  4.2

  5.1

  1988

  9.4

  4.3

  5.0

  1989

  9.4

  4.5

  4.9

  1990

  10.0

  4.9

  5.1

  1991

  9.3

  4.5

  4.8

  19921

  9.2

  2—

  2—

  1 Provisional.

  2 Data not yet available.

  Note:

  1. Rates in the table use the mid-year population estimates revised following the rebasing of mid-1991 estimates using the 1991 Census of Population.

  Royal Liverpool Hospital
  Mr. Alton
  To ask the Secretary of State for Health what is the length of time currently taken to treat a patient arriving at the Royal Liverpool hospital seeking treatment in the accident and emergency department between their arrival and the time of treatment.

  Mr. Sackville
  District health authorities are responsible for setting and monitoring performance 498
  standards for accident and emergency services locally. The hon. Member may wish to contact the chairman of Liverpool health authority, Mr. Donald Tod, for this information in respect of the Royal Liverpool hospital.

  Paramedics
  Mr. Redmond
  To ask the Secretary of State for Health who will fund the training of the paramedics required to meet her 1995 target.

  Mr. Sackville
  The funding arrangements for paramedic training are matters for individual ambulance services.

  NHS Audits
  Mr. Redmond
  To ask the Secretary of State for Health who appoints external auditors for(a) health authorities and (b) NHS trusts.

  Mr. Sackville
  The Audit Commission.

  Accident and Emergency Closures
  Mr. Chidgey
  To ask the Secretary of State for Health what assessment her Department has made of the impact of the closure of London accident and emergency facilities on emergency ambulance response times.

  Mr. Sackville
  We understand that, at the request of health authorities and others, the London ambulance service has looked at patient flows resulting from changing patterns of accident and emergency provision in London. The hon. Member may wish to contact Mr. Martin Gorham, chief executive of the LAS.

  Anaphylaxis
  Sir Cranley Onslow
  To ask the Secretary of State for Health what assessment she has made of the availability within the NHS of user-friendly adrenaline injection kits for the treatment of anaphylaxis.

  Mr. Sackville
  There are at least three presentations of self-injectable adrenaline preparations available, but only one of which is licensed for use under the Medicines Act 1968. Doctors can prescribe any product which they feel necessary for the treatment of their patients at national health service expense, providing it is not included in schedule 10 to the NHS (General Medical Services) Regulations 1992. However, doctors must take full responsibility for the patient's welfare when prescribing an unlicensed product. Arrangements are in place to enable these to be obtained.

  Sir Cranley Onslow
  To ask the Secretary of State for Health what assessment she has made of the adequacy of guidelines for the treatment of anaphylaxis in accident and emergency departments of NHS hospitals in England and Wales.

  Mr. Sackville
  We are not aware of any clinical guidelines on the treatment of anaphylaxis in accident and emergency departments. The development of such guidelines and their upkeep would be a matter for the medical profession. Information relating to Wales is a matter for my right hon. Friend the Secretary of State for Wales.
  499
  Sir Cranley Onslow
  To ask the Secretary of State for Health what assessment she has made of the adequacy of equipment and training for the treatment of anaphylaxis for ambulance services in England and Wales.

  Mr. Sackville
  All national health service paramedics in England and Wales are trained in the emergency treatment of anaphylaxis, and I am informed that the equipment needed for such treatment is standard on all front-line ambulances.

  Staff Loans
  Mr. Milburn
  To ask the Secretary of State for Health if she will provide a list of(a) trusts and (b) health authorities that have made loans to staff members in the latest year for which figures are available, indicating the sums involved.

  Mr. Malone
  This information is not available centrally.

  Smoking
  Mr. Alex Carlile
  To ask the Secretary of State for Health (1) what attempts were made, and what controls were in place to safeguard and judge the effectiveness of the 1994 no smoking campaign;

  (2) what proposals she has to improve the (a) targeting and (b) monitoring of future Government no smoking campaigns; and if she will make a statement.

  Mr. Sackville
  All health education campaigns on smoking are aimed at particular groups in line with "The Health of the Nation" targets on smoking and are evaluated in terms of their effectiveness in changing knowledge, attitudes and behaviour.

  Mr. Alex Carlile
  To ask the Secretary of State for Health how the sum spent last year on the no smoking campaign was disbursed.

  Mr. Sackville
  Resources for health education campaigns on smoking in 1993–94 and 1994–95 were allocated to programmes aimed at particular target groups as follows:

  1993–94 £000

  1994–95 £000

  Teenage smoking campaign

  1,199

  1,260

  Smoking in pregnancy

  446

  480

  Adult and parental smoking

  6,611

  7,552

  Mr. Alex Carlile
  To ask the Secretary of State for Health what is the current estimated cost to the national health service of treating smoking-related diseases.

  Mr. Sackville
  I refer the hon. Member to the reply I gave to the right hon. Member for Derby, South (Mrs. Beckett) on 13 January, column 257.

  Mental Illness
  Mr. Alex Carlile
  To ask the Secretary of State for Health what proportion of people registered as mentally ill in the community is assigned a key worker.
  500
  Mr. Bowis
  Mentally ill people in the community are not required to register with health or social services authorities or with any other agency. All patients subject to the care programme approach should have an identified key worker, but we do not require information on numbers of such patients to be submitted to the Department.

  Mr. Alex Carlile
  To ask the Secretary of State for Health what(a) guidelines or (b) rules her Department sets to ensure that people released from long-stay mental hospitals are given (i) social security advice, (ii) housing advice and (iii) financial advice.

  Mr. Bowis
  The "Mental Illness Key Area Handbook" advises health and local authorities that under the care programme approach, a systematic assessment of the health and social care needs of the patient should be undertaken prior to discharge. The assessment will include the person's housing and financial needs.

  Mr. Alex Carlile
  To ask the Secretary of State for Health how many long-stay mental hospitals in(a) London, (b) Birmingham, and (c) Manchester are open; and how many have set closure plans.

  Mr. Bowis
  Information on all long-stay mental illness hospitals is not routinely collected. Details on the remaining large mental illness hospitals—with over 100 beds—including closure plans if any, were published in the mental health task force report, "Survey of English Mental Illness Hospitals, March 1993", copies of which are available in the Library.

  Mr. Alex Carlile
  To ask the Secretary of State for Health how many people in(a) London, (b) Birmingham, and (c) Manchester are registered with health authorities as mentally ill in the community.

  Mr. Bowis
  Mentally ill people living in the community are not required to register with health authorities. National health service agencies will generally only hold details of those people in contact with specialist services and we do not require this information to be submitted to the Department.

  NHS Beds
  Mr. Alex Carlile
  To ask the Secretary of State for Health how many new acute psychiatric beds in(a) London, (b) Birmingham, and (c) Manchester are due to become available in 1995.

  Mr. Bowis
  This information is not available centrally.

  GP Fundholders
  Mr. Milburn
  To ask the Secretary of State for Health, pursuant to her answer of 6 February,Official Report, column 29, if she will provide a breakdown by region of the number of general practitioner fundholders who have overrun their budgets; and by what amount in each year since their inception.

  Mr. Malone
  Regional health authorities are responsible for the fundholding scheme in their areas. Information from regions is provided in the table. Final audited information for 1993–94 is not yet available.
  501

  1991–92

  1992–93

  Region

  Number of GP fundholders who overspent their budget

  Total overspend (£ million)

  Number of GP fundholders who overspent their budget

  Total overspend (£ million)

  Northern

  8

  0.4

  10

  0.5

  Yorkshire

  5

  0.3

  20

  2.4

  Trent

  6

  0.3

  19

  1.1

  East Anglia

  1

  0.0

  3

  0.1

  North West Thames

  1

  0.1

  8

  0.5

  North East Thames

  0

  0.0

  7

  0.4

  South East Thames

  0

  0.0

  12

  0.6

  South West Thames

  4

  0.4

  22

  1.7

  Wessex

  3

  0.2

  5

  0.3

  Oxford

  5

  0.2

  6

  0.3

  South Western

  7

  0.4

  9

  0.4

  West Midlands

  0

  0.1

  6

  0.3

  Mersey

  1

  0.0

  3

  0.0

  North Western

  5

  0.2

  17

  1.0

  Note: Figures have been rounded to the nearest £100,000.

  Early Retirement
  Mr. Milburn
  To ask the Secretary of State for Health which trusts and health authorities have given early retirement to chief executives or senior and general managers in each of the last three years, indicating the number and value of awards made.

  Mr. Malone
  The information is not available centrally.

  Charging Policy
  Mr. Hinchliffe
  To ask the Secretary of State for Health if she will make a statement on her policy with regard to local authorities charging for services provided under section 117 of the Mental Health Act 1983.

  Mr. Bowis
  We are advised that local authorities do not have legal powers to charge for services provided under section 117 of the Mental Health Act 1983.

  Mr. Hinchliffe
  To ask the Secretary of State for Health what account has been taken of local authorities' inability to charge for services provided under section 117 of the Mental Health Act 1983 in the special transitional allocation.

  Mr. Bowls
  None.

  Domiciliary Care
  Mr. Hinchliffe
  To ask the Secretary of State for Health if the assumption that 9 per cent. of expenditure on domiciliary care is recovered from charges excludes domiciliary and day care services provided under section 117 of the Mental Health Act 1983.

  Mr. Bowis
  Section 117 of the Mental Health Act 1983 has no bearing on the level of an individual authority's personal social services standard spending assessment. In the calculation of PSS SSAs for day and domiciliary services for people aged 65 and over and for services to people aged 18 to 64, no explicit account is taken of actual income from charges. The formulae for both elements implicitly assume that all local authorities recover costs at the same rate.

  Breast Cancer
  Mr. Chisholm
  To ask the Secretary of State for Health what percentage of operations for breast cancer in 1993–94 were performed in hospitals where(a) more than 150 such operations took place, (b) between 100 and 150 took place, (c) between 50 and 100 took place and (d) fewer than 50 took place.

  Mr. Sackville
  The information is not available in the form requested.

  Mr. Chisholm
  To ask the Secretary of State for Health how much money was spent on breast cancer research in each year since 1990–91 broken down by(a) Government contribution and (b) the contribution of charities.

  Mr. Sackville
  Government expenditure on breast cancer research since 1990–91 is shown in table.

  £ million

  1990–91

  3.22

  1991–92

  2.12

  1992–93

  3.80

  1993–94

  3.72

  Cancer charities' expenditure on breast cancer research is not available centrally.

  Advertising
  Mr. Malcolm Bruce
  To ask the Secretary of State for Health what was the total expenditure on all forms of advertising by her Department and its agencies for each year since 1979 in 1994 prices.

  Mr. Sackville
  Information for the years 1979–80 to 1984–85 is not available. Annual spend for the financial years 1985–86 to 1992–93 at 1993–94 prices is shown in the table:

  Year

  £ million

  1985–86

  4.732

  1986–87

  11.786

  1987–88

  9.119

  1988–89

  4.014

  1989–90

  8.956

  1990–91

  5.464

  503

  Year

  £ million

  1991–92

  8.656

  1992–93

  5.637

  1993–94

  6.076

  1994–95 (estimated)

  4.090

  Figures for 1985–86 to 1990–91 are for advertising publicity only.

  Figures for 1991–92 include the costs of Departmental and Agency recruitment advertising.

  Consultants
  Mr. Chisholm
  To ask the Secretary of State for Health how many(a) clinical oncology consultants and (b) medical oncology consultants there are currently in England and Wales; and how many of each are funded by charities.

  Mr. Malone
  The available information is shown in the table. Information on the funding of national health service consultant posts by charities is not available centrally.

  Hospital medical consultants in selected specialties by number England and Wales as at September 1993

  Specialty

  Number

  Clinical oncology

  237

  Medical oncology

  60

  Local Authority Contracts
  Mr. Hinchliffe
  To ask the Secretary of State for Health how many contracts have been awarded by local authority social services departments to the private sector in each of the last 10 years.

  Mr. Sackville
  This information is not available centrally.

EDUCATION

  Independent Schools (Surplus Butter)
  Mrs. Fyfe
  To ask the Secretary of State for Education how many independent schools with charitable status benefit from the sale on favourable terms of surplus EC butter; and what is her estimate of the total value in 1994 of such sales at(a) the actual price charged and (b) the average retail price.

  Mr. Robin Squire
  The Department does not collect this information.

  Education Assets Board
  Mrs. Helen Jackson
  To ask the Secretary of State for Education (1) what was the date of appointment of each of the members of the Education Assets Board; and by whom each was appointed;
  504
  (2) what is the remuneration of the chairman, chief executive and members of the Education Assets Board.

  Mr. Boswell
  The information requested is given in the table:

  Education Assets Board

  First appointed

  Reappointed

  Chairman

  Mr. R. Suddards CBE, DL

  January 1994

  Salary: £31,400

  Chief Executive

  Mr. S. Hoare (ex-officio board member)

  July 1990

  August 1992

  Salary: £49,100

  Board Members

  Mr. B Arthur, CBE

  July 1990

  August 1992

  February 1995

  Mr. K. Bridge

  July 1988

  July 1990

  August 1992

  Ms K. Buckley

  August 1992

  Mr. H. Couch TD

  July 1988

  July 1990

  August 1992

  February 1995

  Mr. M. Edwards CBE, QC

  July 1988

  January 1991

  August 1992

  Miss A. Lees

  July 1988

  July 1990

  August 1992

  Mr. P. Lewis

  August 1992

  Mrs. M. Ryding

  November 1994

  Mr. A. Solomons

  July 1988

  July 1990

  August 1992

  February 1995

  Members receive expenses and a fee of £155 for attending Board meetings.

  The Chairman and Board Members are appointed by the Secretary of State.

  The Chief Executive is appointed by the Board subject to the approval of the Secretary of State.

  Independent Schools
  Mrs. Fyfe
  To ask the Secretary of State for Education if she will list those independent schools registered with her Department which have charitable status.

  Mr. Robin Squire
  There are currently 1,312 independent schools in England registered with this Department which have informed us that they have charitable status. I have placed a list of these schools in the Library.

  School Performance Tables
  Mr. Blunkett
  To ask the Secretary of State for Education (1) if she will make it her policy to include measures in school performance indices comparing numbers of pupils not achieving any GCSE grades from one year to the next;

  (2) if she will list the criteria to be used in comparing school performance from one year to the next.

  Mr. Forth
  We shall be consulting soon on the arrangements for the 1995 school and college performance tables.

  Mature Students Allowance
  Mrs. Fyfe
  To ask the Secretary of State for Education what estimate she has made of the savings which would arise from the abolition of the mature students' allowance.

  Mr. Boswell
  We estimate that savings will amount to £5 million, £20 million and £30 million in the 1995–96, 1996–97 and 1997–98 financial years respectively.

  Grant-maintained Schools, Lancashire
  Dame Elaine Kellett-Bowman
  To ask the Secretary of State for Education if she will list the grant-maintained schools in Lancashire, giving in each case their location and their parliamentary constituency.

  Mr. Robin Squire
  The information requested is set out in the table:

  Grant-maintained Schools

  Parliamentary Constituency

  Archbishop Temple School (Ex William Temple), St. Vincent's Road, Fulwood, Preston

  Nigel Evans, Esq., MP, Ribble Valley

  Bacup and Rawtenstall Grammar School Glen Road, Waterfoot, Rossendale

  Ms Janet Anderson, MP, Rossendale and Darwen

  Baines School, Highcross Road, Poulton-le-Fylde

  Keith Mans, Esq., MP, Wyre

  Clitheroe Royal Grammar School, York Street, Clitheroe

  Nigel Evans, Esq., MP, Ribble Valley

  Lancaster Girls Grammar School, Regent Street, Lancaster

  Dame Elaine Kellett-Bowman, MP, Lancaster

  Lancaster Royal Grammar School, East Road, Lancaster

  Dame Elaine Kellett-Bowman, MP, Lancaster

  Leyland St. Mary's RC GM School, Royal Avenue, Leyland, Preston

  Robert Atkins, Esq., MP, South Ribble

  Newton Bluecoat C of E GM Primary School, School Lane, Newton Kirkham, Preston

  Michael Jack, Esq., MP, Fylde

  Salesbury CE Primary School, Lovely Hall Lane, Salesbury, Blackburn

  Nigel Evans, Esq., MP, Ribble Valley

  St. Peter's CE Grant-Maintained School, Eaves Lane, Chorley

  Den Dover, Esq., MP, Chorley

  St. Wilfrid's CE High School, Shakespeare Streat, Blackburn

  Jack Straw, Esq., MP, Blackburn

  Schools, Shropshire
  Mr. Biffen
  To ask the Secretary of State for Education what were the aggregate financial balances held by schools in Shropshire at the latest available date, and for the corresponding date in 1994 and 1993.

  Mr. Robin Squire
  The figures are £4.574 million at 31 March 1994, the latest date for which the information is available: £5.339 million at 31 March 1993. These figures relate to primary and secondary schools which were covered at those dates by the local education authority's scheme for the local management of schools 506
  Information relating to financial balances held by grant-maintained schools is held by the Funding Agency for Schools. I have asked the chairman of the funding agency to write to my right hon. Friend.

  College Funding
  Ms Harman
  To ask the Secretary of State for Education to what extent the funding formula for colleges takes into account the extra needs of inner-city students.

  Mr. Boswell
  The Further Education Funding Council's funding methodology currently allows colleges to claim full reimbursement from the council for the provision of free tuition to unemployed people, people on low incomes, and those taking programmes of English for speakers of other languages, or adult basic education. In 1995–96, the funding methodology will also recognise the additional needs of students on low incomes who have child care responsibilities.

  Bradford University (Bursaries)
  Mr. Madden
  To ask the Secretary of State for Education, pursuant to his answer of 1 February,Official Report, column 727, if he will place a copy of the survey together with replies, undertaken in 1994 in the Library.

  Mr. Boswell
  The survey undertaken in 1994 covered the academic year 1992–93. A copy of the letter to institutions seeking information about students on the courses supported through the Department's postgraduate scheme and tables summarising the responses have been placed in the Library.

  William Morris Academy
  Mr. Bryan Davies
  To ask the Secretary of State for Education if she has asked the Further Education Funding Council to consider bringing forward proposals to incorporate the William Morris Academy into the further education sector.

  Mr. Boswell
  Yes.

  Advertising
  Mr. Malcolm Bruce
  To ask the Secretary of State for Education what was the total expenditure on all forms of advertising by his Department and its agencies for each year since 1979 in 1994 prices.

  Mr. Forth
  The expenditure figures for advertising, including press, television and radio, by the Department for the financial years since 1979 are provided in the table:

  Year

  Advertising £000

  At 1993–94 prices £000

  1979–80

  91.6

  224.9

  1980–81

  8.9

  18.5

  1981–82

  86.9

  164.4

  1982–83

  6.0

  10.6

  1983–84

  9.6

  16.2

  1984–85

  18.5

  29.7

  1985–86

  14.8

  22.5

  1986–87

  532.0

  786.8

  1987–88

  280.0

  393.2

  1988–89

  515.0

  677.8

  1989–90

  249.8

  307.3

  1990–91

  2,604.0

  2,965.9

  1991–92

  3,037.9

  3,255.5

  507

  Year

  Advertising £000

  At 1993–94 prices £000

  1992–93

  1,086.4

  1,119.6

  1993–94

  1,442.2

  1,442.2

  1994–95

  1150.0

  147.1

  Note:

  1 Estimate.

  The Department's agencies are responsible for their own expenditure on advertising. Such information is not held centrally.

  Southwark College
  Ms Harman
  To ask the Secretary of Stale for Education if she will make a statement about the funding of Southwark college.

  Mr. Boswell
  Southwark college was guaranteed core funding by the Further Education Funding Council of £10.266 million for 1994–95. The college's bid for an additional £0.650 million was allocated in full, giving a total recurrent funding allocation for 1994–95 for £10.916 million.

ENVIRONMENT

  Aquifers, London
  Mr. Spearing
  To ask the Secretary of State for the Environment if he will state, or investigate, the extent to which water in the aquifers of the London geological syncline could be used in greater volumes, either in the public water supply or other purposes; what is the current cost of obtaining potable water from this source; and what capital and revenue costs would be incurred in using sufficient water for these uses so as to stabilise the height of the local water table.

  Mr. Atkins
  The National Rivers Authority has, at the request of the Department, improved the monitoring network of groundwater levels in the London area, and has worked closely with Thames Water Utilities Ltd. to investigate the potential of this resource to provide additional water for public supply. The TWUL is currently involved in several groundwater schemes in the London area including recharge and abstraction schemes in north London and south London and an exploratory scheme in central London.

  In 1989, the Construction Industry Research and Information Association published a report "The Engineering Implications of rising groundwater levels in the deep aquifer beneath London", part-funded by the Department. Since that time, the TWUL has investigated 20 sites in central London. Of these, seven provided yields of sufficient quantity and quality to be of potential use for public supply. However, the development of this resource for public water supply is relatively expensive. I am informed that the TWUL is not likely to require it in the short or medium term because of the success of the north London recharge scheme, improved leakage control and the construction of the London ring main.
  508
  Capital and operational costs for public water supplies are a matter for the water undertakers, within the price limits determined by the Director General of Water Supplies.

  Single Regeneration Budget
  Mr. Alton
  To ask the Secretary of State for the Environment what funds were awarded under objective 1 to Liverpool during the past 12 months: how many bids were entered for this money; how many were accepted; what is the total amount of money used from the allocation; what is the residue; and how the residue is to be used.

  Sir Paul Beresford
  The objective 1 programme covers the five boroughs of Merseyside, including Liverpool. The first round of applications seeking £243 million grant were submitted in August 1994. Many applications, for example for business support services or for training schemes, were not targeted at Liverpool alone and it is therefore not possible to say how much funding was bid for the borough. Approvals in principle for the first round of successful applications involving grant of £175 million were announced in November 1994. This includes £36 million of ESF for training projects, of which a significant amount will benefit Liverpool, and over £12 million of ERDF to projects based in Liverpool.

  Over £550 million of European funding remains for the rest of the programme up to 1999. It will be used in accordance with the single programme document. A second round of applications is currently under consideration.

  Imperial War Museum, Hartlepool
  Mr. Mandelson
  To ask the Secretary of State for the Environment when he expects to give Treasury authorisation for the commencement of building the new Imperial war museum in Hartlepool.

  Sir Paul Beresford
  A proposal to construct the Imperial war museum for the north in Hartlepool has been submitted by Teesside development corporation and is under consideration.

  Social Housing
  Mr. Raynsford
  To ask the Secretary of State for the Environment what figures have been prepared by his Department to estimate the need for new social housing provision in England on a framework for the investment programme set out in the 1995–96 budget.

  Mr. Curry
  I refer the hon. Member to the answer my hon. Friend the Under-Secretary gave to the hon. Member for Newham, North-East (Mr. Banks) on 1 February,Official Report, columns 685–86.

  Boreholes
  Mr. Redmond
  To ask the Secretary of State for the Environment what compensation will be available under the Environment Bill to those affected by damage caused by underground water abstractions from boreholes.
  509
  Mr. Atkins
  The Environment Bill currently contains no provisions on this subject, although relevant amendments have been proposed in another place. Compensation for damage caused by water abstractions from boreholes is governed mainly by the common law and the provisions of chapter II of part II of the Water Resources Act 1991.

  Sites of Special Scientific Interest
  Mr. Hinchliffe
  To ask the Secretary of State for the Environment (1) what assessment he has made of the impact of local authority highways department road building on sites of special scientific interest;

  (2) what studies he has undertaken to monitor the impact of road building on sites of importance to wildlife, other than sites of special scientific interest.

  Sir Paul Beresford
  Comprehensive information about the effect of road building or widening programmes might have on wildlife sites is not held centrally and could not be obtained except at disproportionate cost. All relevant considerations are taken into account in the planning process before final decisions are made.

  Mr. Hinchliffe
  To ask the Secretary of State for the Environment what steps are taken to monitor water tables in sites of special scientific interest and other areas of environmental sensitivity, where developments of roads could result in drainage changes.

  Sir Paul Beresford
  If necessary, conditions may be attached to a planning permission if there is likely to be a significant effect on drainage that would affect the integrity of the SSSI.

  Roads (Wildlife)
  Mr. Hinchliffe
  To ask the Secretary of State for the Environment what assessment has been made of the effect of road development on(a) otter and (b) badger populations; and what record of road mortality is kept for these species.

  Sir Paul Beresford
  An assessment of the overall impact on these species and other wildlife is undertaken at the planning stage of road development and mitigating measures, for example fencing and tunnels, installed where appropriate and practicable. There are no records kept of species killed on roads, but it is estimated that some 47,000 badgers die each year from road accidents. This rate of loss is not considered to affect the conservation status of the species.

  Mr. Hinchliffe
  To ask the Secretary of State for the Environment what studies have been undertaken to identify the impact of road noise on(a) wildlife breeding success and (b) breeding distribution.

  Sir Paul Beresford
  None. However, I am advised by English Nature that during 1995–96 work is likely to be commissioned to review indirect effects such as noise and lighting.

  Black Smoke Emissions
  Mr. Hinchliffe
  To ask the Secretary of State for the Environment what are the latest figures for black smoke emissions in the United Kingdom.

  Mr. Atkins
  Total national emissions of black smoke in 1992 were 457,000 tonnes.

  Nitrous Oxide Emissions
  Mr. Hinchcliffe
  To ask the Secretary of State for the Environment if he will list the 200 highest records for nitrous oxide emissions in the last year for which figures are available.

  Mr. Atkins
  The table below lists the UK 1993 NOx emissions from existing and new large combustion plants.

  Emissions of NOx (in tonnes) from existing and new large combustion plant in the United Kingdom for 1993

  Operator

  Plant

  NOx (in tonnes)

  Plant > 300 MWth

  National Power

  Aberthaw A and B

  26,512

  National Power

  Agecroft

  280

  National Power

  Blyth A and B

  12,700

  National Power

  Didcot

  28,303

  National Power

  Drax

  70,200

  National Power

  Eggborough

  23,546

  National Power

  Fawley

  1,630

  National Power

  Ironbridge

  19,990

  National Power

  Littlebrook

  4,971

  National Power

  Padiham

  1,728

  National Power

  Pembroke

  2,948

  National Power

  Rugeley A and B

  24,958

  National Power

  Skelton Grange

  1,980

  National Power

  Staythorpe

  5,515

  National Power

  Thorpe Marsh

  16,635

  National Power

  Tilbury

  18,385

  National Power

  Uskmouth

  1,050

  National Power

  West Burton

  29,916

  National Power

  West Thurrock

  2,980

  National Power

  Willington A and B

  5,714

  PowerGen

  Castle Donington

  128

  PowerGen

  Cottram

  40,859

  PowerGen

  Drakelow B

  79

  PowerGen

  Drakelow C

  11,849

  PowerGen

  Ferrybridge C

  44,895

  PowerGen

  Fiddlers Ferry

  13,853

  PowerGen

  Grain

  1,485

  PowerGen

  High Marnham

  6,817

  PowerGen

  Ince

  8,222

  PowerGen

  Kingsnorth

  13,542

  PowerGen

  Ratcliffe

  43,464

  PowerGen

  Richborough

  2,334

  SP

  Longannet

  23,690

  SP

  Cockenzie

  7,840

  SHE

  Peterhead

  18,616

  NIE

  Belfast West

  2,992

  NIE

  Ballylumford B

  6,487

  NIE

  Coolkeeragh

  371

  NIE

  Kilroot

  8,310

  BASF

  Seal Sands

  2,194

  BP Chemicals

  Baglan Bay

  4,737

  British Alcan

  Lynemouth

  11,555

  British Steel

  Llanwern

  350

  British Steel

  Port Talbot

  842

  British Steel

  Redcar

  461

  British Steel

  Scunthorpe

  373

  Brunner Mond

  Winnington

  1,880

  Ford Motor Co

  Dagenham

  291

  Grovenhurst Energy

  Sittingbourne

  2,408

  ICI

  Runcorn

  749

  ICI

  Wilton

  7,270

  Phillips

  Seal Sands

  220

  UML

  Bromborough

  650

  Total (53 plants)

  589,754

  Refineries

  BP Oil

  Grangemouth

  2,794

  BP Oil

  Llandarcy

  838

  Conoco

  South Killingholme

  2,085

  ELF

  Milford Haven

  971

  511

  Emissions of NOx (in tonnes) from existing and new large combustion plant in the United Kingdom for 1993

  Operator

  Plant

  NOx (in tonnes)

  ESSO

  Fawley

  5,051

  Gulf

  Milford Haven

  764

  Lindsey

  Killingholme

  2,773

  Mobil

  Coryton

  2,513

  PIP

  North Tees

  299

  Shell

  Shell Stanlow

  4,655

  Shell

  Shell Haven

  1,728

  Texaco

  Pembroke

  3,070

  Total (12 plants)

  27,541

  Total all UK existing combustion plant

  636,339

  New Combustion Plant

  Albright and Wilson

  Whitehaven

  91

  Slough Trading Estate

  Slough

  88

  Estimated emissions of nitrogen oxides (NOx) by source category for 1980–1992

  Thousand tonnes

  1980

  1981

  1982

  1983

  1984

  1985

  1986

  1987

  1988

  1989

  1990

  1991

  1992

  Power stations

  880

  839

  799

  787

  711

  775

  807

  826

  800

  769

  777

  718

  694

  Domestic

  68

  68

  67

  67

  64

  72

  75

  74

  72

  68

  68

  75

  73

  Commercial/public service

  62

  61

  61

  62

  63

  64

  65

  61

  60

  55

  56

  60

  58

  Refineries

  43

  38

  37

  36

  36

  34

  35

  33

  33

  35

  35

  37

  37

  Iron and steel

  44

  52

  47

  48

  48

  50

  45

  50

  54

  53

  51

  49

  47

  Other industrial combustion

  211

  191

  186

  177

  164

  169

  171

  165

  168

  158

  156

  158

  152

  Non-combustion processes

  11

  12

  12

  13

  13

  13

  13

  13

  9

  9

  9

  9

  9

  Extraction and distribution of fossil fuels

  44

  50

  54

  59

  63

  66

  68

  73

  76

  78

  82

  85

  88

  Road transport

  839

  846

  867

  907

  974

  1,015

  1,080

  1,205

  1,311

  1,418

  1,434

  450

  1,398

  Railways

  41

  39

  35

  37

  35

  37

  37

  35

  35

  32

  30

  31

  32

  Civil aircraft

  10

  9

  10

  10

  11

  11

  11

  12

  13

  14

  14

  14

  14

  Shipping

  121

  104

  119

  111

  123

  116

  108

  101

  102

  127

  131

  133

  130

  Waste treatment and disposal

  12

  12

  12

  12

  12

  12

  12

  12

  12

  12

  12

  12

  12

  Agriculture

  5

  5

  5

  5

  5

  5

  5

  4

  4

  4

  4

  4

  4

  Total

  2,392

  2,328

  2,312

  2,332

  2,321

  2,438

  2,533

  2,664

  2,749

  2,842

  2,860

  2,835

  2,750

  Source:

  Digest of Environmental Protection and Water Statistics No. 16 1994.

  Local Government Reorganisation
  Mr. Marlow
  To ask the Secretary of State for the Environment if he will list in descending order of population those former county boroughs for which a recommendation of unitary status has not yet been made.

  Mr. Robert B. Jones
  The following former county borough areas have not been recommended for unitary status by the Local Government Commission for England:

  Population

  Northampton

  187,244

  Warrington

  185,005

  Blackpool

  153,614

  Blackburn

  139,528

  Canterbury

  132,391

  Preston

  132,166

  Oxford

  131,967

  Norwich

  128,050

  Chester

  120,845

  Ipswich

  114,806

  Exeter

  105,087

  Gloucester

  104,805

  512

  Emissions of NOx (in tonnes) from existing and new large combustion plant in the United Kingdom for 1993

  Operator

  Plant

  NOx (in tonnes)

  Glaxo

  Stevenage

  2

  BP

  Grangemouth

  70

  Total new plant

  251

  Total all UK existing combustion plant

  636,339

  Total new plant

  251

  Total

  636,590

  Mr. Hinchliffe
  To ask the Secretary of State for the Environment if he will list nitrogen oxide emission sources by tonne within the United Kingdom, for each year since 1980.

  Mr. Atkins
  The list below gives estimated emissions of nitrogen oxides, by source, for 1980–1992.

  Population

  Carlisle

  102,878

  Great Yarmouth

  88,799

  Worcester

  87,638

  Eastbourne

  86,794

  Lincoln

  85,502

  Barrow in Furness

  73,299

  Burton on Trent1

  60,000

  Population figures above are mid-1993 resident populations.

  1 The former county borough of Burton on Trent is currently subsumed within the district of East Staffordshire which has a total population of 98,300.

  The Local Government Commission has recommended unitary status, within a larger unitary authority, for the areas of the former county boroughs of Brighton, Grimsby and Bath.

  New Forest Heritage Area
  Ms Ruddock
  To ask the Secretary of State of the Environment what are the current boundaries of the New forest heritage area in which national park planning
  513
  policies apply; and what proposals there are to change these boundaries.

  Mr. Atkins
  The New forest heritage area includes all the surrounding countryside which both has strong visual and historic links with the forest and provides off-forest grazing land needed to sustain commoning. The boundary as currently delineated has no statutory designation but was adopted in 1985 by the New Forest district council and is reflected in local development plans.

  The new planning regime will apply to the definition of the New forest heritage area as it emerges from the current process of preparing and adopting local plans.

  Cleveland (Structural Change) Order 1994
  Mr. Frank Cook
  To ask the Secretary of State for the Environment what guidance he has issued to other Government Departments, regarding the meaning of article 12 of the Cleveland (Structural Change) Order; and if he will publish that guidance.

  Mr. Robert B. Jones
  None.

  Water Companies
  Mrs. Helen Jackson
  To ask the Secretary of State for the Environment what is the value of the current five-year investment projections for each of the water companies; and what was the variation from the stated figure at the time the K factors were announced.

  Mr. Atkins
  Capital expenditure for individual water companies for the period 1995–2000 is shown in Ofwat's "Future Charges for Water and Sewerage Services" published in July 1994. The extent to which actual expenditure varies from these projections will be known only when returns of actual expenditure are available from individual water companies. This is monitored on an annual basis by the director general.

  Advertising
  Mr. Malcolm Bruce
  To ask the Secretary of State for the Environment what was the total expenditure on all forms of advertising by his Department and its agencies for each year since 1979, in 1994 prices.

  Sir Paul Beresford
  Advertising expenditure by my Department over the last five years was:

  1989–90: £24,635,221

  1990–91: nil

  1991–92: £ 733,481

  1992–93: £ 6,205,659

  1993–94: £ 4,477,643

  Expenditure by departmental agencies was nil with the exception of Ordnance Survey, which spent £24,378 in financial year 1990–91 and £213,736 in financial year 1991–92.

  Figures are expressed at 1994 prices using the retail price index and are exclusive of VAT.

  Information relating to the advertising spend alone for the financial years before 1989–90 cannot be obtained without disproportionate cost.

  Office of Water Services
  Mrs. Helen Jackson
  To ask the Secretary of State for the Environment (1) how many staff are currently employed at present by the Office of Water Services; and 514
  what were the figures (a) 12 and (b) 24 months previously;

  (2) on what terms Credit Lyonnais has been appointed as consultant adviser to the water industry regulator.

  Mr. Atkins
  These are matters for the Director General of Water Services.

  Housing Bond Guarantee Schemes
  Mr. Hardy
  To ask the Secretary of State for the Environment if he will approve and support the operation of housing bond guarantee schemes in 1995–96 and subsequently.

  Mr. Robert B. Jones
  If the hon. Member is referring to schemes under which local authorities provide rent deposits or equivalent indemnities to private sector landlords, the Government believe that they have a very useful role to play in helping people in housing need to secure accommodation. We are consulting the local authority associations about a general consent for local authorities to operate these schemes.

  Water (Leaks)
  Mrs. Helen Jackson
  To ask the Secretary of State for the Environment what was the figure for leakage as a percentage of total treated water supply for each of the water companies for each of the last three years for which figures are available.

  Mr. Atkins
  This information is to be found in Ofwat's "Report on the Cost of Water Delivered and Sewage Collected", for the years 1991–92, 1992–93 and 1993–94. Copies of the reports are available in the Library.

  National Forest Company
  Mr. Butler
  To ask the Secretary of State for the Environment if he will make an announcement about the composition of the board of the National Forest Company.

  Mr. Gummer
  My right hon. Friend the Minister of Agriculture, Fisheries and Food and I have invited the following people to serve on the board of the National Forest Company.Chairman
  Mr Rodney Swarbrick—(Lancashire farmer, former President of the Country Landowners Association, and currently a Countryside Commissioner)

  Directors

  Miss Bridget Bloom—(Journalist and Forestry Commissioner)

  Mr. Duncan Jeffray—(Nature conservation expert and current Chairman of the Royal Society for Nature Conservation)

  Mr. Derrick Penrose—(Fonner Chief Agent of the Chatsworth Estate)

  Mr. Geoff Steeley—(Local authority and planning expert, and current Director of Planning, Hertfordshire County Council)

  Mr. David Taylor—(Forestry consultant)

  Mr. John Thompson—(Responsible for access and recreation for the Peak District National Park)

  Mr. Rupert Wilkins—(Management consultant, local to the Forest area)

  Miss Susan Bell—(Chief Executive of National Forest Company)

  The National Forest Company will commence operations on 3 April this year.

  Energy Saving Trust
  Mr. Barry Field
  To ask the Secretary of State for the Environment what steps he proposes to take concerning the administrative expenses of the Energy Saving Trust.

  Mr. Robert B. Jones
  My right hon. Friend the Secretary of State proposes to lay before Parliament an
  515
  order designating the Energy Saving Trust under section 153 of the Environmental Protection Act 1990. This will provide a statutory basis, subject to parliamentary approval of an appropriate estimate, for the Government to contribute to the running costs of the trust.

  In the Government's view, the trust has a key role in future as an effective catalyst for change in a policy area which is important for progress on our economic, climate change and sustainable development objectives. The trust has had a difficult and uncertain year. It now needs to review its plans. It can do that only with a measure of certainty over funding. The trust must maintain its independence, but it is important that it is able to develop new and innovative ideas at a time of major change in the gas and electricity industries.

  I envisage contributing to the trust's administrative and salary costs if the trust can put forward satisfactory and cost-effective proposals to develop new initiatives to promote energy efficiency in the rapidly changing energy markets. Once the trust has drawn up proposals, my officials will discuss the plans with the trust and its other members. This will provide a basis for deciding on an appropriate contribution from Government, taking into account other contributions.

  United Nations Environment Programme
  Mr. Anthony Coombs
  To ask the Secretary of State for the Environment what measures he is taking to ensure the success of the next meetings of the Commission for Sustainable Development and the governing council of the United Nations environment programme.
  516
  Mr. Gummer
  On 10 and 11 February, the United Kingdom Government hosted a meeting to discuss the future role of these two organisations. It was attended by Environment Ministers from 13 countries, the European Environment Commissioner, the chief executive officer of the Global Environment Facility and the heads of the two organisations. The Indian Minister of Environment and Forests, Mr. Kamal Nath, and I jointly chaired the meeting.

  The meeting achieved a welcome degree of consensus about the respective roles of the two organisations which I believe will pave the way for productive meetings of both organisations over the next few months.

  Mr. Nath and I produced a note of the chairmen's conclusions at the end of the meeting. I have placed a copy of this note in the Library.

  Carbon Dioxide Emissions
  Mr. Dafis
  To ask the Secretary of State for the Environment who represented the United Kingdom Government at the recent United Nations conference on trade and development meeting in Prague to discuss carbon dioxide emissions.

  Mr. Atkins
  [holding answer Friday 10 February 1995]: The meeting took place on 12 to 14 January in Pruhonice near Prague and was attended by an official from my Department. The meeting was sponsored by the Czech Republic and its theme was "Economic Instruments for Sustainable Development". A new UNCTAD Paper entitled "Combining Global Warming: Possible Rules, Regulations and Administrative Arrangements for a Global Market in CO2, Emission Entitlements" was introduced by one of its joint authors on the final morning. This paper is now being studied by my Department.

FOREIGN AND COMMONWEALTH AFFAIRS

  Africa
  Mr. Worthington
  To ask the Secretary of State for Foreign and Commonwealth Affairs on what occasions preventive diplomacy has been successfully undertaken by the Government in Africa.

  Mr. Baldry
  The United Kingdom has carried out diplomatic activity on many occasions in response to possible crises in Africa. It is seldom possible to assess the effectiveness of any particular action but recent examples where we have played a constructive role include Lesotho and Mozambique. One objective of the United Kingdom initiative on African peacekeeping is to strengthen institutional support for preventive diplomacy by African nations.

  Somaliland
  Mr. Worthington
  To ask the Secretary of State for Foreign and Commonwealth Affairs what plans he or international organisations have to stimulate peace and development in Somaliland.

  Mr. Baldry
  Peace and development in the north-west and throughout the country is dependent on the Somalis reaching agreement on national reconciliation. We are encouraging other countries in the region to assist and the United Nations is willing to continue political efforts if the Somalis wish. However, responsibility for the process lies with the Somalis themselves.

  International agencies and NGOs continue to implement activities in the north-west where security permits, and we shall continue to support their work giving priority to those displaced by recent fighting.

  Nigeria
  Mr. Worthington
  To ask the Secretary of State for Foreign and Commonwealth Affairs what proposals he or, international organisations have to increase the pressure on the rulers of Nigeria to return the country to civilian and democratic rule.

  Mr. Baldry
  Members of the European Union have agreed that the measures against the Nigerian military jointly imposed in 1993 should remain in force, in the absence of progress towards a return to civilian rule. Our policy towards Nigeria is under constant review.

  Mr. Worthington
  To ask the Secretary of State for Foreign and Commonwealth Affairs what plans he or international organisations are currently considering for an embargo on oil sales from Nigeria, and what is his policy on such an initiative.

  Mr. Baldry
  We are not aware of plans for any such initiative.

  Indonesia
  Mr. Simon Coombs
  To ask the Secretary of State for Foreign and Commonwealth Affairs what measures he proposes to apply additional pressure on Indonesia to ratify the international covenant on civil and political rights.

  Mr. Goodlad
  We regularly encourage all countries to ratify the international covenant on civil and political rights and other United Nation human rights instruments.518
  My right hon. and learned Friend the Minister of State for Foreign and Commonwealth Affairs did so most recently at the UN Commission on Human Rights on 8 February.

  Nuclear Weapons
  Mr. Simpson
  To ask the Secretary of State for Foreign and Commonwealth Affairs how many representations his Department has received from foreign Governments over future changes in size in the United Kingdom's nuclear arsenal.

  Mr. David Davis
  The Foreign and Commonwealth Office has not received specific representations from foreign Governments on this issue. However, many countries express their opinions on nuclear deterrence in a number of international fora.

  Turkey
  Mr. Llwyd
  To ask the Secretary of State for Foreign and Commonwealth Affairs what representations Her Majesty's Government have made to Turkey during the last 12 months on the subject of the Kurds living within its boundaries.

  Mr. David Davis
  We have made representations at ministerial and official level to the Turkish Government many times during the last 12 months on the subject of their human rights performance overall and in particular the human rights abuses arising from the conflict in the south-east of the country between the Turkish military authorities and the Kurdish separatist movement: most recently when my right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs—together with his French, German and Italian colleagues—met the Foreign Minister Karayaclin in London on 2 February.

  Mr. Alton
  To ask the Secretary of State for Foreign and Commonwealth Affairs what measures Her Majesty's Government are taking to encourage the Government of Turkey to take steps(a) to safeguard the Christian community in south-east Turkey and (b) to halt its destruction of Christian villages.

  Mr. David Davis
  The Turkish Government are well aware that we take a close interest in the Christian communities in Turkey in the context of our wider concerns about human rights there. We take every opportunity to make known these concerns, which are shared by our western partners. Most recently my right honourable Friend the Secretary of State for Foreign and Commonwealth Affairs, and his French, German and Italian colleagues raised human rights with the Turkish Foreign Minister when they met him in London on 2 February.

  Mr. Alton
  To ask the Secretary of State for Foreign and Commonwealth Affairs what issues concerning Turkey's Christian minority he raised with the Turkish parliamentary delegation during its recent visit.

  Mr. David Davis
  My honourable Friend the Under-Secretary for Foreign and Commonwealth Affairs raised the issue of Turkey's overall human rights performance when he gave lunch to the Turkish parliamentary delegation on 1 February.

  Mr. Alton
  To ask the Secretary of State for Foreign and Commonwealth Affairs what measures Her Majesty's Government are taking to encourage the Government of Turkey to end its discrimination against Turkey's Armenian community; and if he will make a statement.
  519
  Mr. David Davis
  The Turkish Government are well aware that we take a close interest in the minority communities in Turkey in the context of our wider concerns about human rights there. We take every opportunity to make known these concerns, which are shared by our western partners.

  Sudan
  Mr. Worthington
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on whether the Sudanese Government will allow a visit by Amnesty International; and what representations he has made.

  Mr. Douglas Hogg
  The Sudanese Government have refused to agree to a visit by Amnesty International. This disappointing decision follows the recent publication of a report by Amnesty International detailing human rights abuses in Sudan. We regularly raise our concerns about human rights abuses with the Sudanese authorities bilaterally as well as through the EU and UN. We shall continue to urge them to accept visits by international humanitarian organisations such as Amnesty.

  Iran
  Mr. Cohen
  To ask the Secretary of State for Foreign and Commonwealth Affairs what representations he has received about Iran developing nuclear weapons and purchasing ballistic missiles; what information he has on this matter; and if he will make a statement.

  Mr. David Davis
  The Government remain deeply concerned at reports that Iran is interested in developing nuclear weapons and in acquiring ballistic missiles. We discuss such reports regularly with our partners in the missile technology control regime and nuclear suppliers group. We remain firmly committed to strengthening international efforts to combat the proliferation of both nuclear weapons and ballistic missiles.

  Mr. Cohen
  To ask the Secretary of State for Foreign and Commonwealth Affairs what is Her Majesty's Government's policy with regard to Iran's nuclear power programme.

  Mr. David Davis
  Iran is a state party to the nuclear non-proliferation treaty and a member of the International Atomic Energy Agency. All of Iran's nuclear facilities are under IAEA safeguards, and open to inspection. But we remain concerned at reports that Iran is seeking to develop nuclear weapons. Since March 1993, we have decided that, with two exceptions, licence applications for significant nuclear items destined for Iran should not be approved.

  It is also our policy not to approve items for Iran where there is knowledge or reason to suspect that it would go to a military end-user or be used for military purposes.

  Mr. Roy Ricks
  Mr. Cousins
  To ask the Secretary of State for Foreign and Commonwealth Affairs what employment, duties or services were carried out for his Department or its agencies by Mr. Roy Ricks and over which periods of time.
  520
  Mr. Goodlad
  To my knowledge there has been none.

  European Ombudsman
  Mr. John Marshall
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement about the procedures involved in the appointment of the European ombudsman.

  Mr. David Davis
  The post of ombudsman is established by article 138 (e) of the treaty which states that the European Parliament shall appoint the ombudsman. The Council decision of 7 February 1994 approved the regulations and general conditions governing the performance of the ombudsman's duties. The procedure involved in the appointment is set out in rule 159 of the European Parliament's "Rules of Procedure". A copy of both the decision and the "Rules of Procedure" are in the House Library. The hon. Member should be aware, however, that the Rules Committee of the European Parliament is currently considering whether or not to amend this rule; the main change would be to allow the European Parliament's Petitions Committee to submit the names of up to five candidates to the EP plenary. The present rules allow for only one.

  Rwanda
  Mr. Worthington
  To ask the Secretary of State for Foreign and Commonwealth Affairs, pursuant to his answer of 2 February,Official Report, column 86–87, what have been the obstacles to increasing the number for human rights monitors in Rwanda; and if these obstacles have now been removed.

  Mr. Douglas Hogg
  UN human rights monitors in Rwanda have been funded by voluntary contributions. Although the British contribution of £250,000 and four vehicles was made quickly in response to the appeal by the UN High Commissioner for Human Rights, the response of the international community as a whole has been disappointing. Some 80 UN monitors have now been deployed, but the High Commissioner continues to face funding difficulties.

  The UN Centre for Human Rights, which is responsible for mounting the programme, has been hindered by lack of previous experience of managing such an operation.

  The European Union is planning to deploy a team of human rights monitors shortly, to work with those from the UN.

  Prisoners of War, Japan
  Mr. Hinchliffe
  To ask the Secretary of State for Foreign and Commonwealth Affairs what progress he has achieved with the establishment of a fund for prisoners of war held captive by the Japanese in world war two; and if he will list the donations so far received from Japanese companies trading within the United Kingdom.

  Mr. Goodlad
  We have concluded that in present circumstances the proposal for a non-governmental fund to help former prisoners of war and civilian internees is unlikely to succeed. We are therefore exploring with the Japanese Government other possible ways of addressing this issue.

  Inhumane Weapons
  Mrs. Clwyd
  To ask the Secretary of State for Foreign and Commonwealth Affairs whether measures have been proposed by Her Majesty's Government to help verify and enforce an updated UN inhumane weapons convention; and what is his assessment of their effectiveness.

  Mr. Douglas Hogg
  The UN inhumane weapons convention is to be reviewed in September this year. We have played a full and active part in preparations for the review conference and shall continue to work hard to secure a strengthened and more effective convention at the conference itself.

  Advertising
  Mr. Malcolm Bruce
  To ask the Secretary of State for Foreign and Commonwealth Affairs what was the total expenditure on all forms of advertising by his Department and its agencies for each year since 1979, in 1994 prices.

  Mr. Goodlad
  Total expenditure on promotional material and recruitment advertising in the Foreign and Commonwealth Office (Diplomatic Wing and Overseas Development Administration) since 1979 at 1993–94 prices was:

  1979–80: 773,379

  1980–81: 544,123

  1981–82: 701,848

  1982–83: 645,044

  1983–84: 772,957

  1984–85: 617,116

  1985–86: 657,625

  1986–87: 834,308

  1987–88: 766,714

  1988–89: 1,288,287

  1989–90: 1,798,965

  1990–91: 2,082,746

  1991–92: 1,913,947

  1992–93: 2,095,207

  1993–94: 2,130,264

TRANSPORT

  Drivers (Eyesight)
  Mr. Chidgey
  To ask the Secretary of State for Transport if he will provide figures for each of the last five years of the number of drivers(a) who have committed an offence by not complying with the eyesight requirements of the Road Traffic Act 1988 to report their disability to the Driver and Vehicle Licensing Agency, (b) who have reported themselves to the DVLA and who have been found to have visual defects rendering them unfit to hold a licence to drive and (c) who have been reported by the police as having visual defects rendering them unfit to hold a licence to drive.

  Mr. Norris
  The information is not available.

  Interlogic Control Engineering
  Mr. Bayley
  To ask the Secretary of State for Transport (1) if he will place in the Library a paper setting out the financial and commercial reasons underlying the proposal by British Rail's subsidiary, Interlogic Control Engineering, to close its York office; and what reasons he has received from Interlogic for adopting this proposal 522
  rather than closing one of its other offices or reducing the size of the work force at several locations;

  (2) how much British Rail's subsidiary, Interlogic Control Engineering, estimates that it will cost (a) itself and (b) the Exchequer to make redundancy payments to the 169 staff at its York office.

  Mr. Watts
  The deployment of staff in Interlogic Control Engineering, the closure of the York office and associated redundancy payments are management matters for the British Railways Board. The cost of redundancy payments, which falls entirely to the British Railways Board, will depend upon individual circumstances. There are no direct costs to the Exchequer.

  Rail Funding
  Mr. Meacher
  To ask the Secretary of State for Transport how much money has been applied for and how much granted under section 8 of the Railways Act 1974, over the last 12 months.

  Mr. Watts
  Two grant applications were approved at a total value of £2,911,720. Five other applications with an estimated total value of £7 million are still under consideration. No decisions have been taken on these applications.

  Grant claims totalling £2,193,683 were paid in respect of four freight facilities grants awarded before February 1994.

  Section 8 of the Railways ct 1974 has been replaced by section 139 of the Railways Act 1993.

  Mr. Meacher
  To ask the Secretary of State for Transport how much has been applied for and how much granted under section 137 of the Railways Act 1993.

  Mr. Watts
  The Department has received seven formal applications for track access grant. Five are under consideration, one has been withdrawn, and one has been rejected. Grant is payable only up to the level needed to tip the balance in favour of rail, and the precise amount of grant to be paid for each of these schemes is currently being considered.

  Public Bodies
  Mr. Patten
  To ask the Secretary of State for Transport if he will list those public bodies for which he retains departmental responsibility; which of these bodies have been identified as suitable for placing in the private sector; and by when it is expected each of these bodies will enter the private sector.

  Dr. Mawhinney
  "Public Bodies 1994", copies of which are available in the Libraries of the House, lists bodies in existence at 1 April 1994 for which I am responsible. I also have responsibility for European Passenger Services Ltd. which was established as a Government-owned company on 9 May 1994.

  BR has been restructured and its main constituent parts are being transferred to the private sector. The first passenger service franchise contracts are due to be awarded by the end of 1995. The maintenance depots of British Rail Maintenance Ltd. should be in private sector ownership very shortly. The three rolling stock leasing companies are set for trade sales during 1995. Trainload Freight has been restructured in preparation for sale later this year and good progress is being made with the transfer to the private sector of the remainder of the domestic freight businesses, Rail Express systems and BR's support systems.
  523
  Railtrack Group plc, the Government-owned company responsible for operating track and infrastructure, is to be privatised by stock market flotation within the lifetime of this Parliament.

  EPS is due to be privatised during 1995–96 as part of the competition to construct and operate the channel tunnel rail link.

  A public consultation was held in spring 1994 on the possible privatisation of National Air Traffic Services, currently part of the Civil Aviation Authority.

  Link Road Offices
  Mr. Cohen
  To ask the Secretary of State for Transport what has been the cost to date, and what is the annual cost, of the Link road offices in(a) Wanstead and (b) Leyton.

  Mr. Norris
  This is an operational matter for the Highways Agency.

  I have asked the chief executive to write to the hon. Member.

  Letter from Lawrie Haynes to Mr. Harry Cohen dated 13 February 1995:
  Mr. Steven Norris has asked me to write in response to your recent Parliamentary Question about the cost of the Link Road Offices.
  Our records do not disaggregate the costs of the Wanstead and Leyton offices. However, since we did not take over the Leyton premises until early 1993, very little, if any, costs for this accrued before the 1993/94 financial year. All the figures include staff costs, but since staff are not allocated specifically to one office it is not possible to split their costs between the two.

  The total costs of both offices are:

  Financial year

  Cost £

  1992–93

  174,976

  1993–94

  260,673

  1994–95 to date

  172,153

  Total

  607,802

  Our estimate of future running costs is about £200,000 annually.

  Coventry Airport
  Mr. Morley
  To ask the Secretary of State for Transport if he plans to prosecute those involved with the export of calves from Coventry airport on board Air Algerie aircraft during November and December 1994 for operating without the permits required under the Air Navigation Order 1989.

  Mr. Norris
  The question of prosecution for breaches of article 88 of the Air Navigation Order 1989 will be decided when the current inquiry has been completed and the findings assessed.

  Emergency Stop Signals (Trains)
  Mr. Redmond
  To ask the Secretary of State for Transport what action he is taking to ensure that all British Rail trains can pick up an emergency stop signal from a control centre which does not have a blind spot; and if he will make a statement.

  Mr. Watts
  The issue of train communication and radio black spots is being considered as part of the investigations of the accidents at Cowden, Kent and Kirkby Stephen, Cumbria.

  Seat Belts
  Mr. Maclennan
  To ask the Secretary of State for Transport when he expects to conclude his consultation on proposed seat belt legislation; and if he will make a statement.

  Mr. Norris
  We intend to go out to formal consultation shortly. We shall then consider the responses carefully before final decisions are taken.

  Security
  Mr. Wilshire
  To ask the Secretary of State for Transport what factors led to his decision to delete 35 posts from his Department's security division; and what work will cease to be done as a result.

  Dr. Mawhinney
  The reduction in posts in the transport security division is part of my Department's general drive for increased efficiency. In Transec's case the efficiency gains will be achieved through a combination of delayering, more efficient working and the completion of projects.

  Over half the posts identified are support or managerial. The remainder are inspectorial or investigatory.

  This change will make no difference to the implementation of security measures which, along with the provision of equipment and staff, is the responsibility of operators.

  Advertising
  Mr. Malcolm Bruce
  To ask the Secretary of State for Transport what was the total expenditure on all forms of advertising by his Department and its agencies for each year since 1979 in 1994 prices.

  Mr. Norris
  The total expenditure on above the line advertising by the Department and its agencies for each year since 1984 in 1994 prices is:

  RPI (1987 base)

  Transport Spending (1994 prices)

  DVLA Spending (1994 prices)

  1984–85

  90.1

  5,118,798

  0

  1985–86

  95.4

  5,375,542

  0

  1986–87

  98.3

  112,947,094

  0

  1987–88

  102.4

  112,610,640

  0

  1988–89

  108.4

  3,504,481

  0

  1989–90

  116.6

  4,391,466

  0

  1990–91

  129.3

  3,130,790

  563,386

  1991–92

  134.6

  5,027,472

  380,392

  1992–93

  139.4

  5,990,156

  692,593

  1993–94

  141.9

  4,338,400

  725,790

  1994–95

  145.0

  n/a

  n/a

  n/a = Not yet available

  All figures provided by COI and exclude VAT. Figures prior to 1984 not readily available.

  Statutory and road scheme advertising figures before 1992 are not included because they wee not centrally collated at the time.

  1 Includes BA and BBA floatation advertising costs.

  Networker
  Mr. Morgan
  To ask the Secretary of State for Transport what assessment he has made of the impact on J. R. Manufacturing (Cardiff) Ltd. and other subcontractors of the decision by British Rail not to exercise its option to purchase 40 new Networker electric
  525
  multiple units; and what estimate he has made of the number of jobs that will be lost as a result of this decision.

  Mr. Watts
  British Rail has asked ABB and GEC Aslthom whether they wish to submit leasing proposals for further trains. Choice of subcontractors would be a commercial matter for the main supplier.

  Disabled People (Sea-Fishing)
  Mr. Alfred.Morris
  To ask the Secretary of State for Transport, pursuant to his answer of 25 January,Official Report, column 201, if he will now make it his policy to collate and publish statistics on the number of people disabled as a result of accidents at work in the sea-fishing industry.

  Mr. Norris
  It is not feasible for this Department to collect information on disabilities resulting from injuries sustained at work in the sea-fishing industry. However, major and serious injuries are required to be reported to the Department's marine accident investigation branch under the Merchant Shipping (Accident Reporting and Investigation) Regulations 1994. The information is collated by MAIB for inclusion in its annual report.

  Road Building
  Mr. Hinchliffe
  To ask the Secretary of State for Transport which sites of special scientific interest will be affected by future proposals for road building.

  Mr. Watts
  Information on the effect of trunk road proposals on sites of special scientific interest is held by the Highways Agency and I have asked the chief executive to write to the hon. Member. Information about the effect of local authority road proposals on such sites is not held centrally and could be obtained only at disproportionate cost.

  Letter from Lawrie Haynes to Mr. David Hinchliffe, dated 23 February 1995:
  The Minister for Railways and Roads, Mr. John Watts, has asked me to write to you in reply to your recent Parliamentary Question about those sites of special scientific interest (SSSI) that will be affected by future proposals for road building.
  I enclose a list of the Trunk Road and Motorway schemes in England, for which preferred routes have been announced, that are likely to involve permanent or temporary landtake from a SSSI and a list of schemes that may have an impact on a SSSI but do not involve landtake. Schemes marked with an asterisk have been under construction in 1994/95. The remaining schemes are at varying stages of design.
  You will, I hope, appreciate that the lists are therefore dynamic and will be subject to change as, and when, scheme designs are developed.

  I hope this is helpful.

  Schemes which may involve permanent or temporary landtake from SSSIs

  Road scheme

  SSSI

  *A30 Indian Queens Bypass

  Goss and Tregoss Moors

  A31 Poole Harbour Crossing

  Poole Harbour (Holes Bay)

  A31 Poole Link Road

  Slop Bog and Uddens Heath, Canford Heath

  A35 Chideock—Morcombelake Bypass

  Morcombelake, West Dorset Coast

  A43 Geddington Bypass

  River Ise and Meadows

  A46 Upper Swainswick—Pennsylvania

  Monkswood Valley

  *M4/M49 Second Severn

  Magor and Undy, Severn Estuary

  526

  Schemes which may involve permanent or temporary landtake from SSSIs

  Road scheme

  SSSI

  M5 Widening J18–10

  Severn Estuary

  A4S6 Kidderminster,

  Hurcott and Podmore Pools

  Blakedown and Hagley

  Birmingham Northern Relief Road

  Chasewater Heath

  A1(M) Redhouse—Ferrybridge

  Brockadale

  A650 Bingley Northern Relief Road

  Bingley South Bog

  *A13 Thames Avenue— Wennington

  Inner Thames Marshes

  A120 Stansted to Braintree (S.272)

  High Wood, Dunmow

  *M6 J30–32 Widening

  Red Scar and Tun Brook Woods

  *M6 J20–21A Widening

  Woolston Eyes

  A249 Iwade—Queenborough Improvement

  The Swale, Medway Estuary and Marshes

  *A249 M2—Iwade Improvement

  The Swale

  A259 Bexhill and Hastings Western Bypass

  Combe Haven, Pevensey Levels, Marline Valley Woods

  A259 Dymchurch—M20 J11 Improvement

  Lympne Escarpment (The Roughs)

  A259 Pevensey—Bexhill Improvement

  Pevensey Levels

  A259 Rye Bypass

  Walland Marsh, Camber Sands and Rye Saltings, Rye Harbour

  A17 Leadenham—Sleaford Imp

  High Dyke

  A10 Setchey and West Winch Bypass

  River Nar

  A27 Lewes—Polegate Improvement

  Southerham Grey Pit, Milton Gate Marsh

  A2/A282 Dartford Crossing

  Darenth Wood

  A34 Newbury Bypass

  Snelsmore Common

  M2 J1–4 Widening

  Shorne and Ashenbank Woods, Cobham Woods

  *M3 Bar End—Compton

  St. Catherine's Hill, Itchen Valley Water Meadows

  A5 Dunstable Eastern Bypass

  Blows Down

  Schemes with possible indirect impact on SSSIs but do not involve landtake

  Road schemes

  SSSI

  A45 Stonebridge GSJ

  River Blythe

  A31 Ashley Heath

  Avon Valley, Hum Common

  A5 Dunstable Eastern Bypass

  Houghton Regis Marl Lakes

  A1(M) Ferrybridge—Hook Moor

  Fairburn and Newton Ings

  A303 Wylye—Stockton Wood

  Stockton Wood and Down

  A303 Ilminister—Marsh

  Long Lye

  A21 Kipping's Cross—Lamberhurst

  Brookland Wood

  A57/A628 Mottram Tintwistle Bypass

  Dark Peak

  Birmingham Northern Relief Road

  River Blythe

  A40 Witney Bypass—Cassington

  Pixey and Yarnton Meads

  A419 Latton Bypass

  North Meadow, Cricklade, River Churn

  A10 Wadesmill High Cross—Colliers End Bypass

  Plashes Wood

  A1(M) Hook Moor—Bramham

  Hook Moor

  A64 York—Malton Bypass

  Mount Pleasant Query

  A65 Hellifield and Long Preston Bypass

  Long Preston Deeps, Pan Beck Fen

  M6 Widening J11–16

  Doxey and Tillington

  Western Orbital Route

  Hurcott Pools

  A556(M) M6-M56 Imp

  Rostherne Mere

  Forth Rail Bridge
  Mr. Dalyell
  To ask the Secretary of State for Transport, pursuant to his answer of 7 February,Official Report, column 53, what assessment he has made of the time scale of the threat to the structural integrity of the Forth rail bridge.

  Mr. Watts
  [holding answer 10 February 1995]: Railtrack continues to carry out detailed assessments of the Forth bridge. The structure is being inspected more thoroughly than ever before so as to ensure that attention can be concentrated on the areas which are in the most deserving condition. New shotblasting methods are currently being concentrated on the lattice tie-members of the bridge. Although relatively small components, these are of great importance to the bridge's structural integrity. Railtrack assessments confirm that the present maintenance and painting programme is fully adequate to protect the structural integrity of the bridge.

  Vehicle Excise Duty
  Mrs. Ray Michie
  To ask the Secretary of State for Transport if he will list the classes of vehicle currently exempt from vehicle excise duty for which vehicle excise duty will become payable from 1 July; and if he will give the amount of vehicle excise duty that will be payable in each class.

  Mr. Norris
  [pursuant to his reply, 27 January 1995, c. 383]: The information requested is as follows:

  Current exempt class

  Proposed class

  Proposed duty

  Special vehicles

  Road roller

  road rollers

  £135 (under 3.5 tonnes)

  £150 (over 3.5 tonnes)

  Road construction

  Street cleansing

  PLG or HGV

  £135—1£5,000

  Street lighting

  Vehicles used for short journeys between private land

  2as appropriate

  £15—1£5,000

  Special concessionary

  Electric

  electric

  Gritter

  gritter

  £35

  Snowplough

  snowplough

  1 No increase of more than £1,000 in first year of vehicle relicensing from 1 July 1995.

  2 Vehicles will license in appropriate new classes; the majority in special concessionary.

WALES

  Out-of-town Shopping Centres
  Mr. Sweeney
  To ask the Secretary of State for Wales what steps he is taking to limit the growth of out-of-town shopping centres.

  Mr. Gwilym Jones
  The need for attractive, vital and viable town centres, and their importance in the life of communities is emphasised in my right hon. Friend's published planning guidance, in the press release he issued last November and in his environmental agenda.

  Local Government Staff
  Mr. Harry Greenway
  To ask the Secretary of State for Wales how many local government staff are employed in Wales; what population they serve, and at what cost; what are the figures for(a) England an(b) Scotland; and if he will make a statement.

  Mr. Redwood
  Figures for local authority staffing are compiled by the Local Government Management Board. These show that in June 1994, there were 117,000 local government employees in Wales serving a population of almost 3 million and costing £2 billion. Comparable figures for England were 1,677,000 employees for a population of 48.5 million at a cost of £32.4 billion; and for Scotland, 255,000 employees for a population of over 5 million at a cost of £4.6 billion.

  Rare Beef Breeds
  Mr. Fabricant
  To ask the Secretary of Sate for Wales what measures he is taking to promote the export of rare Welsh beef breeds for human consumption and for breeding.

  Mr. Gwilym Jones
  The development agencies provide financial support for Welsh Food Promotions Ltd. which has recently launched an initiative to promote Welsh beef, including Welsh Black beef.

  Jobseekers Allowance Bill
  Mr. Flynn
  To ask the Secretary of State for Wales what assessment he has made on the future effects on Welsh jobs of the Jobseekers Allowance Bill.

  Mr. Gwilym Jones
  The jobseeker's allowance will help unemployed people to obtain jobs.

  Morriston Hospital, Swansea
  Mr. Donald Anderson
  To ask the Secretary of State for Wales when he expects to announce his decision on the future of the cardiac unit at Morriston hospital, Swansea.

  Mr. Richards
  I hope to make an announcement shortly.

  Training and Enterprise Councils
  Mr. Ieuan Wyn Jones
  To ask the Secretary of State for Wales that representations he has received on the resources allocated to training and enterprise councils in Wales for the current financial year.

  Mr. Richards
  My right hon. Friend and I have received no recent representations on this matter. I met TEC chairmen on 11 January to discuss, in broad terms, the 1995–96 training and enterprise public expenditure package. Allocations to TECs have not yet been made for 1995–96; the Department will begin negotiations with TECs shortly.

  Unemployment (Coal Mining Areas)
  Mr. Llew Smith
  To ask the Secretary of State for Wales what measures he is taking to lessen unemployment levels in former coal mining areas in south Wales.

  Mr. Richards
  We are using the full range of the Welsh Office's responsibilities, in conjunction with public bodies, development agencies and the private sector, to
  529
  help to provide both job opportunities and skills training for the people of the former coal mining areas in south Wales. Most importantly, the Government are creating the framework for a healthy economy in which businesses create jobs.

  Crewe-Holyhead Railway Line
  Dr. Marek
  To ask the Secretary of State for Wales what priority he has given to the Crewe to Holyhead railway line as a link between member states of the European Union.

  Mr. Richards
  The Crewe to Holyhead line is included in the European Commission's proposals for trans-European transport networks.

  Local Government Reorganisation
  Mr. Hanson
  To ask the Secretary of State for Wales if he will make it his policy to approve the necessary staff transfer order where there is a local agreement to the effect that all local government staff within a locally agreed area would transfer to a new authority following local government reorganisation.

  Mr. Gwilyn Jones
  That already is my policy.

  I wrote to the Staff Commission for Wales on 20 January as follows:
  "Once a group of authorities in a particular area has agreed which staff should be transferred to them, [the Secretary of State] would be prepared to give effect to the decision in the staff transfer order to be made under section 42 of the Local Government (Wales) Act 1994."

  Flooding
  Mr. Llwyd
  To ask the Secretary of State for Wales what evaluation his Department has undertaken of the role of the National Rivers Authority in relation to serious flooding in Wales; and if he will make a statement.

  Mr. Gwilym Jones
  The Welsh Office maintains close contact with the National Rivers Authority over its handling of flooding defence and I am pleased to report that there has been no serious flooding of developed areas in Wales so far this winter, despite the unusually wet weather.

  Mr. Llwyd
  To ask the Secretary of State for Wales if he will make it his policy to earmark or ring-fence a sum to each district and borough council in Wales to enable it to discharge its obligations effectively under its permissive drainage powers; and if he will make a statement.

  Mr. Gwilym Jones
  The Welsh Office funds local authorities through the annual local government revenue and capital settlements. It is for individual authorities to decide how to apportion those moneys between and within their various functions in accordance with their statutory obligations and their own priorities. However, the Welsh Office does make grant aid available under the Land Drainage Act 1991 specifically to assist district councils to undertake capital works under their permissive drainage powers.

  Advertising
  Mr. Malcolm Bruce
  To ask the Secretary of State for Wales what was the total expenditure on all forms of 530
  advertising by his Department and its agencies for each year since 1979 in 1994 prices.

  Mr. Redwood
  Advertising expenditure, expressed in 1994 prices, for my Department and its executive agency, Cadw, since 1979 is as follows:

  Year

  Welsh office £0001

  Cadw £0001

  1979–1980

  146

  —

  1980–1981

  128

  —

  1981–1982

  184

  —

  1982–1983

  170

  —

  1983–1984

  178

  —

  1984–1985

  103

  —

  1985–1986

  46

  —

  1986–1987

  109

  —

  1987–1988

  317

  —

  1988–1989

  227

  —

  1989–1990

  495

  —

  1990–1991

  317

  —

  1991–1992

  366

  58

  1992–1993

  434

  71

  1993–1994

  275

  126

  Note:

  1. Cadw was set up as an executive agency in April 1991.1 At 1993–1994 prices, using the retail prices index.

  Arts in Wales
  Mr. Hanson
  To ask the Secretary of State for Wales when he next plans to meet officials of the Arts Council in Wales to discuss funding for the arts in Wales.

  Mr. Richards
  I am meeting the chairman of the Arts Council of Wales on 27 March to discuss the council's plans for 1995–96.

AGRICULTURE, FISHERIES AND FOOD

  EU Spending
  Sir Teddy Taylor
  To ask the Minister of Agriculture, Fisheries and Food, if he will list(a) the spending on agriculture by the EU and (b) the national Government spending on agriculture by each member state (i) in the current year, (ii) in the previous year and (iii) five years ago.

  Mr. Jack
  Details of expenditure on agriculture by the EU, broken down by member state, are contained in annexe 2 of the annual financial reports on the European agricultural guidance and guarantee fund, guarantee section, copies of which have been deposited in the Library of the House. The latest report available relates to 1993. Provisional figures for 1994 are set out in the table.

  Details of United Kingdom expenditure on agriculture are contained in table 9.1 of the annual publication "Agriculture in the United Kingdom", copies of which are also deposited in the Library of the House. Comparable information for other member states is not readily available. Summary information on national aids to agriculture in other member states is available in the Commission's periodic surveys of state aids in the European Community. The latest of these covers 1986 to 1990 and is available in the Library of the House. This information is not, however, fully representative of

  531
  national Government expenditure on agriculture—for example, it excludes aid for research but includes aid financed by parafiscal charges.

  Expenditure on CAP support from the EC budget by member state

  1994 (provisional)

  MECU

  £ million

  Belgium

  1,170

  904

  Denmark

  1,277

  986

  Germany

  5,174

  3,997

  Greece

  2,626

  2,029

  Spain

  4,255

  3,287

  France

  8,019

  6,195

  Ireland

  1,457

  1,126

  Italy

  3,464

  2,676

  Luxembourg

  12

  9

  Netherlands

  1,916

  1,480

  Portugal

  652

  504

  United Kingdom

  2,797

  2,161

  Non-attributed direct payments

  103

  80

  Total

  32,924

  25,433

  Note

  1. The figures are rounded and do not add up to the totals shown.

  Source:

  Commission Working Document

  Exchange rate: 1 ecu = £0.77249

  Public Bodies
  Mr. Patten
  To ask the Minister of Agriculture, Fisheries and Food if he will list those public bodies for which he retains departmental responsibility; which of these bodies have been identified as suitable for placing in the private sector; and by when it is expected each of these bodies will enter the private sector.

  Mr. Jack
  The bodies are listed in "Public Bodies 1994" which has recently been placed in the Library of the House. None of these has been identified as currently suitable for placing in the private sector.

  Flooding
  Mr. Redmond
  To ask the Minister of Agriculture, Fisheries and Food what research his Department has carried out into the effect of the removal of hedges and trees on the propensity of land to flood; and if he will make a statement.

  Mr. Jack
  Research is being funded by MAFF into the hydrological effects of urban growth and the run-off response of river catchments, which are major factors influencing storm water run-off and therefore the propensity of land to flood. The removal of hedges and trees, taken on its own, is unlikely to have a significant effect on flood flows and this is therefore not seen as a priority area of research.

  Common Fisheries Policy
  Mr. David Porter
  To ask the Minister of Agriculture, Fisheries and Food (1) if he will include the option of negotiating to leave the common fisheries policy and developing a policy for fisheries management based on the premise that each member state can reclaim the sovereignty of its waters as part of his policy group review of the common fisheries policy;

  (2) what are the terms of reference of his policy group reviewing the common fisheries policy; what evidence it
  532
  will take from the industry; and if he will make a statement.

  Mr. Jack
  The arrangements for the group to review the common fisheries policy are currently under consideration and an announcement will be made in due course.

  Intervention Board for Agricultural Produce
  Mr. Kaufman
  To ask the Minister of Agriculture, Fisheries and Food why he has not yet provided the information about the Intervention Board for Agricultural Produce requested from him by the right hon. Member for Manchester, Gorton in his question about next step agencies on 20 January.

  Mr. Waldegrave
  The intervention board is an independent Government Department established under the European Communities Act 1972 responsible to all four Agriculture Ministers. Although it is an executive agency, it is not a next steps agency in my Department, and did not therefore come within the terms of the right. hon. Member's question. It has not, however, acquired its own buildings, its staff numbers have declined since it became an agency; it publishes no periodical journals; has no executive cars; its logo pre-dates agency status and was internally designed at no cost; it has no corporate clothing, although it provides protective clothing to specialist staff when their duties require it, and it has always had its own corporate stationery. This was redesigned in August 1993 at a cost of under £500.

  Lead Contamination
  Mr. Hinchliffe
  To ask the Minister of Agriculture, Fisheries and Food what studies he has undertaken to identify risks to human health resulting from lead contamination from petrol entering the human food chain; and if he will make a statement.

  Mrs. Browning
  MAFF routinely monitors the dietary intakes of lead by the United Kingdom population. The average intake is very low and in 1991 had further decreased to about half that found in 1988. The results of specific studies on the effect of lead fall-out from the atmosphere on the food chain, which would include lead from petrol, were reported in 1989 in "Food Surveillance Paper" No. 27 published by HMSO.

  Rules and Regulations
  Mr. Steen
  To ask the Minister of Agriculture, Fisheries and Food if he will list the rules and regulations in his Department which have been withdrawn in the last 12 months, or which his Department plans to withdraw in the next 12 months; and what impact this will have on his Department's manpower.

  Mr. Waldergrave
  [holding answer 6 February 1995]: The following rules and regulations were revoked by my Department over the last 12 months. Many, however, were replaced by new, but wherever possible less burdensome, legislation. The Department is continuing to identify rules and regulations for withdrawal. Those for withdrawal in the next 12 months will be announced as and when consultations are completed. The manpower implications will be taken into account in the Department's central manpower plans which will be published in the Department's annual report in March:

  533

  The Milk Marketing Scheme 1933, SR and 1933/789 as amended.

  Part 1 of the Agriculture Marketing Act 1958, in relation to milk.

  The Common Agricultural Policy (Wine) Regulations 1993, SI 1993/517 as amended.

  The Pig Carcase (Grading) Regulations 1988, SI 1988/180 as amended.

  The Hill Livestock (Compensatory Allowances) Regulations 1993, SI 1993/2631 as amended.

  The Poultry Meat (Hygiene) Regulations 1976, SI 1976/221 as amended.

  The Diary Produce Quotas Regulations 1993, SI 1993/923 as amended.

  The Agricultural Holdings (Units of Production) Order 1993, SI 1993/2037.

  The Sea Fishing (Enforcement of Community Quota, Measures) Order 1993, SI 1993/387.

  The Third Country Fishing (Enforcement) Order 1993, SI 1993/1197.

  The Sea Fishing (Enforcement of Community Control Measures) Order 1993, SI 1993/2016.

  The Sea Fishing (Enforcement of Community Conservation Measures) (Amendment) (No. 5) Order 1992, SI 1992/2936.

  The Pesticides (Maximum Residue Levels in Food) Regulations 1988, SI 1988/1378.

  The Movement and Sale of Pigs Order 1975, SI 1975/203 as amended.

  The Movement of Animals (Records) Order 1960, SI 1960/105 as amended, in relation to pigs and bovine animals.

  The Markets, Sales and Lairs Order 1925, SR and 0 1925/1349 as amended, in relation to pigs.

  Articles 8 (1)(a) and (e) and 18 The Swine Fever Order 1963, SI 1963/286.

  The Bovine Animals (Identification Marking and Breeding Records) Order 1990, SI 1990/1867 as amended.

  Article 14 (3) to (6) and (8) (b) of The Welfare of Animals at Markets Order 1990, SI 1990/2628.

  The Welfare of Animals during Transport Order 1992, SI 1992/3304.

  The Export of Animals (Protection) Order 1981 SI 1981/1051, in relation to the export of animals to another member state.

  The Poultry Pens, Fittings and Receptacles (Disinfection) Order 1952, SI 1952/437 as amended.

  The Poultry Premises and Vehicles (Disinfection) Order 1956, SI 1965/11.

  534

  The Fowl Pest (Infected Areas Restrictions) Order 1956, SI 1956/1611 as amended.

  The Live Poultry (Movement Records) Order 1958, SI 1958/1344.

  The Fowl Pest Orders (Amendment) Order 1983, SI 1983/941.

  The Infectious Diseases of Poultry Order 1986, SI 1986/1755.

  The Racing Pigeons (Vaccination) Order 1994, SI 1994/944.

  The Medicines (Leaflets for Veterinary Drugs) Regulations 1993, (SI 1983/1727.

  The Medicines (Veterinary Medicinal Products) (Applications for Product Licences) Regulations 1983, SI 1993/2398 as amended.

  The Medicines (Labelling) Regulations 1976, except for regulations 9 and 13, SI 1976/1726 as amended in respect of veterinary drugs placed on the market in accordance with the Marketing Authorisations for Veterinary Medicinal Products Regulations 1994.

  The Medicines (Veterinary Drugs) (Renewal Applications for Licences and Animal Test Certificates) Regulations 1993 SI 1993/1227.

  The Medicines (Restriction on the Administration of Veterinary Medicinal Products) Regulations 1983, SI 1983/1732.

  Article 4 of the Rabies (Importation of Dogs, Cats and Other Mammals) Order 1974, SI 1974/2211 as amended, in respect of commercially traded cats and dogs from other member states.

  The Medicines (Fees Relating to Medicinal Products for Animal Use) Regulations 1992, SI 1992/694.

  The Welfare of Livestock (Intensive Units) Regulations 1978, SI 1978/1800 as amended.

  The Welfare of Battery Hens Regulations 1987, SI 1987/2020.

  The Welfare of Calves Regulations 1987, SI 1987/2021.

  The Welfare of Livestock Regulations 1990, SI 1990/1445.

  The Welfare of Pigs Regulations 1991, SI 1991/1477.

  The Bovine Spongiform Encephalopathy Compensation Order 1990, SI 1990/222.

  The Seeds (National Lists of Varieties) (Fees) Regulations 1990, SI 1990/617 as amended.

  The Plant Breeders' Rights (Fees) (Amendment) Regulations 1993, SI 1993/430.

  The Marek's Disease (Restriction on Vaccination) Order 1987, SI 1987/905.

  Partial revocation of The Food Protection (Emergency Prohibitions) (Radioactivity in Sheep) (England) Order 1991, SI 1991/6.

SOCIAL SECURITY

  Income Support (Mortgages)
  Mr. Jim Cunningham
  To ask the Secretary of State for Social Security what discussions he has had with the Council of Mortgage Lenders regarding changes in income support for mortgage interest; what views he received from the council; what plans he has to review his decision; and what further plans he has to meet the Council of Mortgage Lenders for further discussions of his proposals.

  Mr. Roger Evans
  We have on-going discussions with the Council of Mortgage Lenders and will continue to do so throughout the consultation process. The council has expressed concern about the possible impact of the proposals. We are listening carefully to its concerns but believe that these proposals will result in the development of comprehensive quality insurance and will provide better protection for all home owners, not just those who currently get help from income support mortgage interest.

  Mr. Jim Cunningham
  To ask the Secretary of State for Social Security what representations he has received from charities for the homeless regarding his proposals for changes in income support for mortgage interest.

  Mr. Roger Evans
  We have received one representation from a charity for the homeless. We hope that all interested parties will take the opportunity to make representations to the Social Security Advisory Committee during its consultation on these proposals.

  Invalidity Benefit
  Mr. Llwyd
  To ask the Secretary of State for Social Security how many people are currently on invalidity benefit in(a) the United Kingdom, (b) Wales, (c) each Welsh county and (d) each Welsh constituency; in each case, what percentage of the population this represents; what were the figures in (i) 1979, (ii) 1983 and (iii) 1987; and if he will make a statement.

  Number of women receiving full (a) or partial Retirement Pension on their husbands contribution record payable in Great Britain

  Category B widows (b)

  Category B married women (a)

  Total

  Category B (L)

  Category A/B(L)(e)

  full rate

  reduced rate

  full rate

  reduced rate

  full rate

  reduced rate

  full rate

  reduced rate

  31.12.64(c)

  1,269,900

  62,420

  1,098,320

  25,480

  —

  —

  2,368,220

  87,900

  31.12.65(c)

  1,281,280

  64,180

  1,139,800

  27,360

  —

  —

  2,421,080

  91,540

  31.12.66(c)

  1,288,820

  62,820

  1,180,120

  28,500

  —

  —

  2,468,940

  91,320

  31.12.67(c)

  1,301,100

  60,560

  1,226,620

  31,660

  —

  —

  2,527,720

  92,220

  31.12.68(c)

  1,316,800

  59,840

  1,272,780

  33,660

  —

  —

  2,589,580

  93,500

  31.12.69(d)

  —

  —

  —

  —

  —

  —

  —

  —

  31.12.70(d)

  —

  —

  —

  —

  —

  —

  —

  —

  31.12.71(c)

  1,378,350

  55,370

  1,398,890

  53,900

  —

  —

  2,777,240

  109,270

  30.11.12(c)

  1,423,145

  58,402

  1,434,781

  59,172

  —

  —

  2,857,926

  117,574

  30.11.73

  1,475,288

  60,138

  1,471,773

  61,303

  —

  —

  2,947,061

  121,441

  29.11.74

  1,510,945

  62,962

  1,518,145

  63,959

  —

  —

  3,029,090

  126,921

  28.11.75

  1,582,473

  44,250

  1,556,967

  39,419

  —

  —

  3,139,440

  83,669

  26.11.76

  1,639,875

  42,820

  1,611,094

  39,973

  —

  —

  3,250,969

  82,793

  25.11.77

  1,716,099

  39,873

  1,652,205

  40,438

  —

  —

  3,368,304

  80,309

  30.11.78

  2,020,940

  76,140

  1,685,220

  39,830

  —

  —

  3,706,160

  115,970

  30.11.79

  2,045,650

  75,730

  1,707,440

  40,910

  7,920

  70

  3,761,010

  116,710

  28.11.80

  2,055,980

  71,290

  1,716,800

  40,270

  30,040

  230

  3,802,820

  111,790

  30.08.81

  2,073,950

  69,780

  1,715,520

  40,020

  45,080

  180

  3,834,550

  109,980

  31.05.82

  2,073,740

  66,660

  1,703,970

  38,550

  72,980

  330

  3,850,690

  105,540

  31.03.83

  2,068,690

  64,370

  1,671,020

  39,760

  102,560

  960

  3,842,270

  105,090

  31.03.84

  2,024,830

  59,330

  1,623,660

  40,360

  139,610

  820

  3,788,100

  100,510

  536
  Mr. Hague
  No information is available in respect of the Welsh counties and constituencies.

  Information for Great Britain, and Wales is in the table. My right hon. and learned Friend the Secretary of State for Northern Ireland is responsible for Social Security statistics in Northern Ireland.

  The number of Invalidity Benefit recipients in Great Britain and Wales at a particular time, and the percentage of the population they represent

  Number of recipients

  Percentage of population

  Great Britain:

  1979

  610,000

  1.7

  1983

  737,000

  2.0

  1987

  968,000

  2.6

  1993

  1,580,000

  4.2

  Wales:

  1979

  69,000

  3.8

  1983

  87,000

  4.8

  1987

  122,000

  6.6

  1993

  172,000

  9.2

  Notes:

  1. The number of recipients figure is at June for 1979, and April for 1983, 1987 and 1993.

  2. The Welsh 1979 figure may contain a small number of claimants not in receipt of benefit.

  3. The estimated population figures used are mid—year, and are in respect of men aged 16 to 69 and women aged 16 to 64.

  Sources:

  1. Invalidity benefit information is based on a one per cent. sample of claimants, rounded to the nearest thousand.

  2. Estimated mid-year population figures supplied by population estimates unit, OPCS.

  Retirement Pensions
  Mr. Frank Field
  To ask the Secretary of State for Social Security how many women received(a) a full and (b) a partial retirement pension on the contribution record of their husbands in each of the last 30 years.

  Mr. Arbuthnot
  The available information is in the table.
  537

  Number of women receiving full (a) or partial Retirement Pension on their husbands contribution record payable in Great Britain

  Category B widows (b)

  Category B married women (a)

  Total

  Category B (L)

  Category A/B(L)(e)

  full rate

  reduced rate

  full rate

  reduced rate

  full rate

  reduced rate

  full rate

  reduced rate

  31.03.85

  2,033,850

  70,970

  1,602,710

  40,130

  182,690

  1,010

  3,819,250

  112,110

  31.03.86

  2,013,410

  65,910

  1,554,690

  37,750

  264,360

  1,510

  3,832,460

  105,170

  30.09.87

  1,981,230

  53,830

  1,490,620

  37,790

  366,450

  1,910

  3,838,300

  93,530

  31.03.88

  1,962,880

  53,100

  1,463,630

  38,350

  394,110

  1,950

  3,820,620

  93,400

  31.03.89

  1,933,910

  51,420

  1,417,850

  38,480

  445,040

  2,210

  3,796,800

  92,090

  30.09.90

  1,876,810

  50,040

  1,375,150

  39,180

  522,530

  2,790

  3,774,490

  92,010

  31.03.91

  1,859,670

  48,990

  1,349,990

  39,680

  543,530

  2,800

  3,753,190

  91,470

  31.03.92

  1,823,070

  50,810

  1,320,390

  42,680

  586,870

  2,770

  3,730,330

  96,260

  31.03.93

  1,783,330

  51,640

  1,284,950

  45,790

  625,560

  2,930

  3,693,840

  100,360

  31.03.94

  1,736,610

  52,090

  1,243,940

  47,800

  661,200

  2,910

  3,641,750

  102,800

  Notes:

  (a) Full rate category BL and category A/B(L) pension is equal to approximately 60 per cent. of the full rate of category B pension.

  (b) Excluding pensions paid at a reduced rate on the basis of age at widowhood and pensions based on a combination of the woman's own contributions and those of her late husband.

  (c) Figures include a small number of pensions paid to persons overseas.

  (d) Figures not available.

  (e) Category A/B(L) retirement pension based on a combination of the woman's own contributions and those of her husband was introduced with effect from 6 April 1979.

  Mr. Frank Field
  To ask the Secretary of State for Social Security how many people claimed the retirement pension who have incomes from work in the last year for which figures are available.

  Mr. Arbuthnot
  It is estimated that, on average, 630,000 people in the United Kingdom receiving state retirement pension also have income from earnings.

  Source: 1992 family expenditure survey.

  Mr. Frank Field
  To ask the Secretary of State for Security (1) what assessment he has made of the causes for 9 per cent. of people over retirement age failing to qualify for a national insurance retirement pension; if he will break down the main failures in a claimant's contributory record, signifying the significant changes over time; and if he will divide these data according to whether the non-pensioner claimants are men or women;

  (2) how many pensioners drew a reduced retirement pension because of an inadequate insurance record for each of the last 30 years; if he will divide these data by gender; if he will give the totals as a percentage of all those drawing a retirement pension; and if he will list the main causes of the inadequate contributions records.

  Mr. Arbuthnot
  The information is not available in the form requested. The available information is in the table.

  As stated at footnote 5 to my answer of 7 February, Official Report, columns 202–204, the "People without RP" at column 6 of tables 1A and 1B includes people receiving invalidity benefit and widows' benefit in place of retirement pension. The information for 1993 is that there are 314,000 men aged 65 or over and 630,000 women aged 60 or over, who do not receive a retirement pension. Of these, around 229,000 men are in receipt of invalidity benefit or sickness benefit while around 101,000 women are receiving invalidity benefit, sickness benefit or widows benefit. In addition, married women aged over 60, with a husband aged less than 65, or who has not yet claimed retirement pension, would be entitled to a retirement pension only if they satisfied the contribution conditions in their own right.

  The main causes of inadequate contribution records are:

  non-liability due to:

  earnings, if any, being below the threshold for payment of contributions

  periods spent outside UK

  538

  full time education

  exercise by a married women or a widow of the right to pay contributions at a reduced rate giving no pension entitlement

  In the case of the self-employed, a small earnings exception from payment of contributions.

  Source:

  Retirement pension biannual inquiry

  Sickness benefit/invalidity benefit one per cent. sample.

  Population figures from OPCS.

  Number of claimants receiving less than 100 per cent. Standard rate contributory Retirement Pension in Great Britain in the last 30 years

  Men

  All Category A men

  Reduced rate

  Per cent.

  31.12.64(a)

  2,048,160

  63,420

  3.10

  31.12.65(a)

  2,120,780

  68,120

  3.21

  31.12.66(a)

  2,191,560

  71,900

  3.28

  31.12.67(a)

  2,291,460

  79,780

  3.48

  31.12.68(a)

  2,373,320

  84,780

  3.57

  31.12.69(e)

  —

  —

  —

  31.12.70(e)

  —

  —

  —

  31.12.71(a)

  2,591,360

  121,620

  4.69

  30.11.72(a)

  2,653,509

  126,277

  4.76

  30.11.73

  2,719,684

  136,217

  5.01

  29.11.74

  2,784,488

  147,528

  5.30

  28.11.75

  2,796,047

  98,129

  3.51

  26.11.76

  2,883,681

  102,198

  3.54

  25.11.77

  2,932,847

  103,394

  3.53

  30.11.78

  2,993,060

  103,660

  3.46

  30.11.79

  3,049,140

  105,850

  3.47

  28.11.80

  3,084,590

  105,800

  3.43

  30.06,81

  3,099,920

  105,530

  3.40

  31.05.82

  3,107,940

  103,650

  3.34

  31.03.83

  3,096,620

  107,670

  3.48

  31.03.84

  3,078,490

  107,480

  3.49

  31.03.85

  3,107,140

  118,520

  3.81

  31.03.86

  3,160,600

  122,310

  3.87

  30.09.87

  3,219,820

  123,300

  3.83

  31.03.88

  3,215,530

  124,590

  3.87

  31.03.89

  3,224,120

  128,450

  3.98

  30.09.90

  3,263,520

  136,220

  4.17

  31.03.91

  3,260,930

  139,080

  4.27

  31.03.92

  3,280,200

  148,730

  4.53

  31.03.93

  3,293,560

  161,030

  4.89

  31.03.94

  3,302,300

  172,310

  5.22

  539

  Number of claimants receiving less than 100 per cent. standard rate contributory Retirement Pension in Great Britain in the last 30 years

  Women

  All women

  All reduced Categories

  Per cent.

  All Category A women

  Category A reduced

  Per cent.

  All Category A/B(L) (b)(c)

  Category A/B(L) reduced

  Per cent.

  All Category B(a)

  Category B reduced

  Per cent.

  All Category B(L) (b)

  Category B(L) reduced

  Per cent.

  31.12.64(d)

  4,110,160

  263,040

  6.40

  1,654,040

  175,140

  10.59

  —

  —

  —

  1,332,320

  62,420

  4.69

  1,123,80

  25,480

  2.27

  31.12.65(d)

  4,236,340

  275,380

  6.50

  1,723,720

  183,840

  10.67

  —

  —

  —

  1,345,460

  64,180

  4.77

  1,167,160

  27,360

  2.34

  31.12.66(d)

  4,348,420

  286,280

  6.58

  1,788,160

  194,960

  10.90

  —

  —

  —

  1,351,640

  62,820

  4.65

  1,208,620

  28,500

  2.36

  31.12.67(d)

  4,477,720

  301,420

  6.73

  1,857,780

  209,200

  11.26

  —

  —

  —

  1,361,660

  60,560

  4.45

  1,258,280

  31,660

  2.52

  31.12.68(d)

  4,600,120

  313,220

  6.81

  1,917,040

  219,720

  11.46

  —

  —

  —

  1,376,640

  59,840

  4.35

  1,306,440

  33,660

  2.58

  31.12.69(e)

  —

  —

  —

  —

  —

  —

  —

  —

  —

  —

  —

  —

  —

  —

  —

  31.12.70(e)

  —

  —

  —

  —

  —

  —

  —

  —

  —

  —

  —

  —

  —

  —

  —

  31.12.71(d)

  4,907,490

  373,480

  7.61

  2,020,980

  264,210

  13.07

  —

  —

  —

  1,433,720

  55,370

  3.86

  1,452,790

  53,900

  3.71

  30.11.72(d)

  4,999,553

  384,259

  7.69

  2,024,053

  266,685

  13.18

  —

  —

  —

  1,481,547

  58,402

  3.99

  1,493,953

  59,172

  3.96

  30.11.73

  5,092,180

  391,267

  7.68

  2,023,678

  269,826

  13.33

  —.

  —

  —

  1,535,426

  60,138

  3.92

  1,533,076

  61,303

  4.00

  29.11.74

  5,177,185

  404,000

  7.80

  2,021,174

  277,079

  13.71

  —

  —

  —

  1,573,907

  62,962

  4.00

  1,582,104

  63,959

  4.04

  28.11.75

  5,181,664

  323,429

  6.24

  1,958,555

  239,580

  12.23

  —

  —

  —

  1,626,723

  44,250

  2.72

  1,596,386

  39,419

  2.47

  26.11.76

  5,263,672

  328,126

  6.23

  1,929,910

  245,333

  12.71

  —

  —

  —

  1,682,695

  42,820

  2.54

  1,651,067

  39,973

  2.42

  25.11.77

  5,327,166

  323,574

  6.07

  1,878,553

  243,265

  12.95

  —

  —

  —

  1,755,972

  39,873

  2.27

  1,692,641

  40,436

  2.39

  30.11.78

  5,399,160

  330,020

  6.11

  1,577,030

  214,050

  13.57

  —

  —

  —

  2,097,080

  76,140

  3.63

  1,725,050

  39,830

  2.31

  30.11.79

  5,474,400

  355,130

  6.49

  1,596,680

  238,490

  14.94

  7,990

  70

  0.88

  2,121,380

  75,730

  3.57

  1,748,350

  40,910

  2.34

  28.11.80

  5,590,800

  407,370

  7.29

  1,676,190

  295,810

  17.65

  30,270

  230

  0.76

  2,127,270

  71,290

  3.35

  1,757,070

  40,270

  2.29

  30.06.81

  5,674,060

  438,810

  7.73

  1,729,530

  329,010

  19.02

  45,260

  180

  0.40

  2,143,730

  69,780

  3.26

  1,755,540

  40,020

  2.28

  31.05.82

  5,761,550

  490,690

  8.52

  1,805,320

  385,480

  21.35

  73,310

  330

  0.45

  2,140,400

  66,660

  3.11

  1,742,520

  38,550

  2.21

  31.03.83

  5,830,760

  547,530

  9.39

  1,883,400

  443,400

  23.54

  103,520

  960

  0.93

  2,133,060

  64,370

  3.02

  1,710,780

  39,760

  2.32

  31.03.84

  5,913,380

  626,280

  10.59

  1,987,760

  526,590

  26.49

  140,430

  820

  0.58

  2,121,170

  59,330

  2.80

  1,664,020

  40,360

  2.43

  31.03.85

  5,966,010

  659,080

  11.05

  2,034,650

  547,980

  26.93

  183,700

  1,010

  0.55

  2,104,820

  70,970

  3.37

  1,642,840

  40,130

  2.44

  31.03.86

  6,036,480

  687,300

  11.39

  2,098,850

  583,640

  27.81

  265,870

  1,510

  0.57

  2,079,320

  65,910

  3.17

  1,592,440

  37,750

  2.37

  30.09.87

  6,074,680

  680,850

  11.21

  2,142,850

  589,230

  27.50

  368,36

  1,910

  0.52

  2,035,060

  53,830

  2.65

  1,528,410

  37,790

  2.47

  31.03.88

  6,066,410

  682.570

  11.25

  2,152,390

  591,120

  27.46

  396,060

  1,950

  0.49

  2,015,980

  53,100

  2.63

  1,501,980

  38,350

  2.55

  31.03.89

  6,062,620

  681,660

  11.24

  2,173,730

  591,780

  27.22

  447,250

  2,210

  0.49

  1,985,330

  51,420

  2.59

  1,456,310

  38,460

  2.64

  30.09.90

  6,107,570

  709,320

  11.61

  2,241,070

  620,100

  27.67

  525,320

  2,790

  0.53

  1,926,850

  50,040

  2.60

  1,414,330

  39,180

  2.77

  31.03.91

  6,096,910

  716,090

  11.75

  2,252,250

  627,420

  27.86

  546,330

  2,800

  0.51

  1,908,660

  48,990

  2.57

  1,389,670

  39,680

  2.86

  31.03.92

  6,122,330

  740,270

  12.09

  2,295,740

  646,780

  28.17

  589,640

  2,770

  0.47

  1,873,880

  50,810

  2.71

  l,363,070

  42,680

  3.13

  31.03.93

  6,130,820

  764,210

  12.47

  2,336,620

  666,780

  28.54

  628,490

  2,930

  0.47

  1,834,970

  51,640

  2.81

  1,330,740

  45,790

  3.44

  31.03.94

  6,114,590

  782,760

  12.80

  2,370,040

  682,870

  28.81

  664,110

  2,910

  0.44

  1,788,700

  52,090

  2.91

  1,291,740

  47,800

  3.70

  Notes:

  (a) Paid to widows on the basis of the late husbands' contributions—excludes pensions paid at a reduced rate on the basis of age at widowhood.

  (b) Full rate Category B(L) and A/B(L) paid to married women is equal to approximately 60 per cent. of the full Category B pension.

  (c) Category A/B(L) is based on a combination of the woman's own contributions and those of her husband was introduced with effect from 6 April 1979.

  (d) Figures include a small number of pensions paid to persons overseas.

  (e) Figures not available.

  Mr. Frank Field
  To ask the Secretary of State for Social Security what recent assessment he has made of the age profile of those pensioners eligible for, but not claiming, income support or housing benefit.

  Mr. Arbuthnot
  Reliable information on the age profile of pensioners eligible for, but not claiming, income support or housing benefit is not available.

  Mr. Frank Field
  To ask the Secretary of State for Social Security if he will give a breakdown of the 1993 data showing the age profile of retirement pensioners drawing(a) income support, (b) income support and housing benefit and (c) housing benefit only.

  Mr. Arbuthnot
  The available information is in the table.

  Retirement Pension cases with Income Support1

  Retirement Pension cases with Income Support and Housing Benefit2

  Housing Benefit and Retirement Pension3

  All cases

  1,386

  712

  952

  60–64

  62

  39

  46

  65–69

  154

  95

  189

  70–74

  216

  124

  294

  75–79

  283

  161

  218

  80 and over

  671

  293

  206

  Notes:

  1. Figures have been rounded to the nearest thousand.

  1 Includes all income support claimants in receipt of a state retirement pension, whether or not receiving housing benefit.
  540
  2 Represents only those recipients in column 1 also in receipt of housing benefit.

  3 Includes all housing benefit claimants in receipt of a state retirement pension but not in receipt of income support.

  Sources:

  Income support annual statistical inquiry—May 1993, 5 per cent. sample; housing benefit management information system, 1 per cent. sample.

  Reduced Earnings Allowance
  Mr. Etherington
  To ask the Secretary of State for Social Security how many reduced earnings allowance claims are outstanding for the benefits offices of Phoenix house, Dunn house, Houghton-le-Spring and South Shields.

  Mr. Hague
  Information is not available and could be obtained only at a disproportionate cost.

  Compensation Recovery Unit
  Mr. Worthington
  To ask the Secretary of State for Social Security for what reasons the £2,500 threshold limit for the compensation recovery unit has not been adjusted to take account of inflation; and what plans he has to increase the threshold.
  541
  Mr. Roger Evans
  Frequent adjustments to the limit could create a disproportionate administrative burden and raise costs. Consequently, we have no immediate plans to increase it.

  Statutory Sick Pay
  Mr. Frank Field
  To ask the Secretary of State for Social Security if he will list the number of successful

  Estimated proportion of GB labour force eligible for standard rate SSP compared with proportion eligible for higher rate SSP 1987–88 to 1993–94

  1987–88

  1988–89

  1989–90

  1990–91

  1991–92

  1992–93

  1993–94

  Average weekly earnings cut off lower rate: standard rate

  £76.50

  £79.50

  £84

  £125

  £185

  £190

  £195

  Proportion eligible for lower rate

  0.1

  0.1

  0.1

  0.2

  0.4

  0.4

  0.3

  Proportion eligible for higher rate

  0.9

  0.9

  0.9

  0.8

  0.6

  0.6

  0.7

  Notes:

  1. Information is not available for years prior to 1987.

  2. Proportions have been rounded.

  3. Proportions apply to GB employees as a whole eligible for SSP on earnings grounds only, not to SSP recipients.

  4. To apply the proportions to actual SSP recipients would require the assumption of a constant distribution of sickness across earnings bands.

  5. Most SSP recipients receive occupational sick pay in addition to SSP when they are sick. In many cases this brings the total payment received up to full pay.

  Source:

  Government Actuary's Department estimates.

  Mr. Frank Field
  To ask the Secretary of State for Social Security what plans he has to continue collecting data on the number of claims for statutory sick pay.

  Mr. Hague
  We have recently received a report of a joint DSS—employers' working group, which has considered changes and improvements to the administration of the statutory sick pay scheme, including the amount of mandatory records which employers are required to keep for SSP purposes. We are currently considering the group's report, but no changes will be made without consultation with both sides of industry.

  Mr. Frank Field
  To ask the Secretary of State for Social Security how many people annually gain national insurance credits; and what estimate he has made of the cost of these credits if taxpayers contributed the sums which such individuals would have paid into the national insurance scheme from their own employer's contributions if they were on(a) two thirds and (b) average earnings.

  Mr. Arbuthnot
  In 1992–93, the most recent year for which information is available, some 4.5 million people were awarded an average of 47 national insurance contribution credits. If these individuals were receiving earnings and paid employees' national insurance contributions at current rates, those on two thirds of average earnings would have paid £932.48 and those on average earnings would have paid £1,505.88 in contributions.

  Notes:

  (a) Calculations based on weekly male average earnings of £366—new earnings survey April 1994.

  (b) Calculations assume that contributions were paid at the not contracted out rate of 2 per cent. + 10 per cent.
  542
  claims for statutory sick pay for each year since the scheme's inception; and if he will classify the data according to the rate of benefit paid.

  Mr. Hague
  The information is not available in the form requested. For the available information, I refer the hon. Member to the reply I gave to him on 7 February,Official Report, columns 203–10. Further information is in the table.

  National Insurance
  Mr. Home Robertson
  To ask the Secretary of State for Social Security how many exemptions from class 2 national insurance contributions from self-employed people have been granted on grounds of low earnings in each of the last five years.

  Mr. Arbuthnot
  The administration of national insurance is a matter for Mr. George Bertram, the acting chief executive of the Contributions Agency. He will write to the hon. Member.

  Letter from George Bertram to Mr. John Home Robertson, dated 13 February 1995:
  As Acting Chief Executive of the Contributions Agency, I have responsibility for answering questions about operational matters relating to the National Insurance scheme. I have been asked to reply to your question asking how many exemptions from Class 2 National Insurance contributions from self-employed people have been granted on grounds of low earnings in each of the last five years.
  Small Earnings Exceptions have been granted as follows:

  1989–90: 93,300

  1990–91: 80,400

  1991–92: 82,900

  1992–93: 99,800

  1993–94: 73,100

  A sample statistical interrogation of the National Insurance Recording System was used to extrapolate these figures.

  Advertising
  Mr. Malcolm Bruce
  To ask the Secretary of State for Social Security what was the total expenditure on all forms of advertising by his Department and its agencies for each year since 1979 in 1994 prices.

  Mr. Hague
  The Department of Social Security did not exist independently prior to August 1988.
  543

  Advertising coast in 1994 prices on behalf of the Department and including its agencies for each of the following years ia as follows:

  Year

  £

  1989–90

  8,532,000

  1990–91

  5,298,000

  1991–92

  6,333,000

  1992–93

  4,748,000

  1993–94

  4,824,000

  Unemployment Benefit
  Mr. Frank Field
  To ask the Secretary of State for Social Security how many of the unemployed have failed to qualify for the unemployment benefit due to them exhausting their right to 12 months' benefit in each of the last three years for which figures are available.

  Mr. Roger Evans
  The information is not available.

  Mr. Frank Field
  To ask the Secretary of State for Social Security what assessment he has made of trends in the proportion of the unemployed who failed to qualify for national insurance unemployment benefit; if he will list the main reasons for the failure for claimants to have a full contributory record; what significant changes over time he has identified in the causes for failure to gain full contribution records; and if he will divide these data into information about men and women claimants.

  Mr. Roger Evans
  Statistics covering the reasons why men and women fail to qualify for unemployment benefit due to a lack of national insurance contributions are not kept. The main reasons for an insufficient contribution record in the relevant tax years include: non-payment of class 1 contributions due to long-term unemployment and/or sickness; self-employment; and periods spent outside the labour market.

  Family Credit
  Ms Harman
  To ask the Secretary of State for Social Security, pursuant to his answer of 27 January,Official Report, column 428, if he will list by benefit office areas and by region how much family credit, expressed in both cash terms and as a percentage of total expenditure on family credit, has been given to families with (a) one child, (b) two children, (c) three children, (d) four children and (e) five or more children, breaking the information down into occupational groupings.

  Mr. Roger Evans
  [holding answer 6 February 1995]: The precise information is not available. Information on a pro rata basis for each of the five years given in my answer of 27 January to the hon. Member for Peckham (Ms Harman), Official Report, column 428, has been placed in the Library. Information by benefit office and for larger families is not reliable at this level of disaggregation. The tables, therefore, show spending by region and combine spending on families with three or more children.

DEFENCE

  Defence Sales
  Mr. Cousins
  To ask the Secretary of State for Defence what contributions his Department made to the Export Credits Guarantee Department in respect of credit arrangements for defence sales in each year since 1981.
  544
  Mr. Freeman
  Since 1986–87, the Ministry of Defence has made contributions to the Export Credits Guarantee Department to provide interest rate support for the Jordan defence package. These contributions, which have been reported in the Defence appropriation accounts each year, are as follows.

  Year

  Expenditure £000

  1986–87

  894

  1987–88

  972

  1988–89

  1,118

  1989–90

  993

  1990–91

  1,058

  1991–92

  1,356

  1992–93

  1,054

  1993–94

  852

  International Military Services Ltd.
  Mr. Cousins
  To ask the Secretary of State for Defence what legal powers he used to set up the International Military Services Ltd. export finance house; when the finance house was set up; and what external legal advice from which source he received before it was being set up.

  Mr. Freeman
  International Military Services Ltd. set up its export finance house, with MOD agreement, in 1985. This business initiative was judged to fall within the financial guidelines laid down for the company by the Ministry. No external legal advice on the scheme was considered necessary.

  Mr. Cousins
  To ask the Secretary of State for Defence what were the total liabilities and assets of International Military Services Ltd. at the time it ceased trading activity; and what they are now.

  Mr. Freeman
  I refer the hon. Member to the company's annual reports and accounts filed at Companies House.

  Royal Marines
  Mr. Cousins
  To ask the Secretary of State for Defence what plans he has(a) to purchase and (b) to review the purchase of additional armoured vehicles for the Royal Marines; and at what date an order is likely to be placed.

  Mr. Freeman
  Options for procuring armoured vehicles for the Royal Marines in the United Kingdom landing force are currently under review.

  Low Flying
  Mr. Redmond
  To ask the Secretary of State for Defence, pursuant to his answer of 10 January,Official Report, column 105, who authorised the passes made over Her Majesty's prison, Stocken.

  Mr. Soames
  The passes made over the prison on 27 September 1994 were made at the request of Her Majesty's Prison Service, and were authorised by the Officer Commanding RAF Cottesmore.

  Falkland Islands
  Mr. Redmond
  To ask the Secretary of State for Defence what was the cost of maintaining British armed forces on the Falkland Islands in each of the last 10 years.
  545
  Mr. Soames
  I refer the hon. Member to the answer I gave to the hon. Member for Gordon (Mr. Bruce) on 6 February,Official Report, columns 37–39.

  Regimental Silver
  Mr. Milburn
  To ask the Secretary of State for Defence what has been the cost of purchasing and restoring regimental silver in each of the last five years.

  Mr. Soames
  Army regimental silver is maintained by the relevant regiment or corps using money from mess funds or other non-public funds. In the case of the Navy, it is referred to as "naval silver" and the cost of maintenance is borne by a registered charity through donations, and hire charges levied on ships and establishments for the loan of items. In common with the Army, Royal Air Force silver is purchased and restored using mess funds and other non-public funds. In the light of this, I can confirm that there is no cost to the public purse for the purchase or restoration of regimental silver, naval silver or silver belonging to the Royal Air Force.

  Eurofighter 2000
  Dr. David Clark
  To ask the Secretary of State for Defence, pursuant to his answer of 1 February,Official Report, column 744, if he will list the production costs of the Eurofighter 2000 for each of the last five years.

  Mr. Freeman
  No production costs have been incurred.

  Dr. David Clark
  To ask the Secretary of State for Defence, pursuant to his answer of 1 February,Official Report, column 744, whether his Department has agreed fixed price contracts for the Eurofighter 2000 project.

  Mr. Freeman
  The existing main development contracts for Eurofighter 2000 are not generally on a fixed price basis. As part of the reorientation of the project agreed by the Defence Ministers of the partner nations in December 1992, revised fixed price contracts are being negotiated with industry; these contracts are due to be placed shortly. It is the intention of the partner nations to agree with industry fixed or firm price contracts for the production investment and production phases of the project.

  Expenditure (Germany)
  Dr. David Clark
  To ask the Secretary of State for Defence what percentage of his Department's current defence expenditure arises from the United Kingdom's military presence and responsibilities in Germany.

  Mr. Soames
  The planned costs for 1994–95 of the two primary budgets in Germany, United Kingdom Support Command (Germany) and RAFSTC 2 Group Germany, are identified in table 1.3 of "UK Defence Statistics" 1994 edition as £1,233,800,000 and £262,100,000 respectively, representing 6.57 per cent. of the Defence budget.

  Vehicle Blinde Modulaire Programme
  Dr. David Clark
  To ask the Secretary of State for Defence (1) how much the British contribution to the Franco-German vehicule blinde modulaire programme is expected to be(a) as a percentage of the total projected programme cost and (b) in financial terms;

  (2) what is his Department's policy towards the Franco-German vehicule blinde modulaire programme; and if he will make a statement.
  546
  Mr. Freeman
  The Government are considering whether the Franco-German vehicule blinde modulaire/gepanzerte transport-kraftfahrzeuge programme offers the basis for trilateral collaboration in meeting our future requirement for armoured utility vehicles. No decisions have been made.

  European Communications Satellite
  Dr. David Clark
  To ask the Secretary of State for Defence what is his Department's policy towards the new generation European communications satellite; and how much the British contribution will be(a) as a percentage of the total projected programme cost and (b) in financial terms.

  Mr. Freeman
  Feasibility studies are currently under way to examine how the United Kingdom's military satellite communications requirement, after 2000, could be met. Various collaborative options are being examined as part of these studies. No decision on the way forward is expected to be made before 1996.

  Phoenix Unmanned Aerial Vehicle
  Dr. David Clark
  To ask the Secretary of State for Defence what is his Department's policy concerning the Phoenix UAV; and if he will make a statement.

  Mr. Freeman
  The Phoenix project is currently under review.

  French-British Co-operation
  Dr. David Clark
  To ask the Secretary of State for Defence how many procurement programmes are currently being developed through co-operation between his Department and the French Government; and if he will make a statement.

  Mr. Freeman
  I refer the hon. Member to the "Statement of Defence Estimates (SDE) 1994", table 8, which lists collaborative projects involving the United Kingdom.

  Increases in the cost of developing and producing modern high technology equipment, coupled with budgetary constraints make armaments co-operation with other nations a vital component in meeting our future defence needs. We shall therefore pursue co-operation where this makes military and economic sense and we would expect France to be an important partner.

  Farnborough Airfield
  Dr. David Clark
  To ask the Secretary of State for Defence, pursuant to his answer of 11 January,Official Report, column 160, what financial commitment his Department will make for Farnborough airfield after it becomes surplus to requirements; and if he will make a statement.

  Mr. Freeman
  My Department will make available sufficient funds to meet its commitments at Farnborough airfield between now and the end of the century.

  WE177 Bomb
  Dr. David Clark
  To ask the Secretary of State for Defence what is his Department's policy concerning the WE177 bomb; and in what year they will be withdrawn from service.
  547
  Mr. Soames
  We envisage that the WE177 will continue to contribute to our sub-strategic nuclear capability for a number of years.

  Dockyard Consultants
  Mr. Fatchett
  To ask the Secretary of State for Defence if he will list(a) those external consultants who have been hired to assist on the privatisation of the dockyards at Rosyth and Devonport, (b) the specific functions that they were asked to perform and (c) the latest total cost of the consultants.

  Mr. Freeman
  For the names and functions of the consultants advising on the proposed privatisation of Devonport dockyard and Rosyth dockyard, I refer the hon. Member to the answer I gave to the hon. Member for Plymouth, Devonport (Mr. Jamieson) on 5 December 548
  1994, Official Report, column 110. As to the costs involved, for the period between 18 October 1993 and 31 October 1994 I refer the hon. Member to the second answer I gave to the hon. Member for Devonport on 29 November 1994, Official Report, column 621; payments made or outstanding for the period from 1 November 1994 to 31 January 1995 totalled £700,000.

  Advertising
  Mr. Malcolm Bruce
  To ask the Secretary of State for Defence what was the total expenditure on all forms of advertising by his Department and its agencies for each year since 1979, in 1994 prices.

  Mr. Freeman
  The information requested is not held centrally and could not be provided without disproportionate cost.

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

World Sustainable Development: G7 Talks
Lord Judd Lord Judd asked Her Majesty's Government:
What steps they are taking together with other members of the G7 group of nations to review the international machinery available to sustain global and social development.
The Minister a State, Foreign and Commonwealth Office (Baroness Chalker of Wallasey): My Lords, at the Naples summit G7 leaders agreed to consider at their June 1995 meeting in Halifax what institutional changes might be necessary to meet the goal of sustainable development with prosperity and well-being for the world's people. Her Majesty's Government will play a full role in that discussion.
Lord Judd: My Lords, I thank the Minister for that reply. However, does she agree that there is an urgent need to review the global accountability of the international financial institutions and their relationship to the UN system as a whole? Is there not a danger, for example in Rwanda, that past financial and trade policies may have aggravated a grave situation? Can the Minister assure us that the G7 will have in mind in its deliberations both the Secretary-General's agenda for development and the outcome of the world summit on social issues which will take place in Copenhagen next month?
Baroness Chalker of Wallasey: My Lords, the noble Lord is correct in saying that the G7 leaders should address those issues. I cannot agree with him that the international financial institutions' relations with Rwanda and Burundi actually aggravated a situation which had been going on in those two countries for a long while. However, I agree with him that more account must be taken of the Secretary-General's agenda. We now have the constitutional review in this 51st year of Bretton Woods and the 50th anniversary this year of the UN. That makes the G7 review of institutional questions very important indeed. We should be deciding where we go in the future as well as learning from the lessons of the past.
Lord Judd: My Lords, I again thank the Minister for that reply. Does she agree that it is unfortunate, when so many world leaders will be attending the social summit in Copenhagen, that the Prime Minister is not going and is leaving attendance to a departmental Minister? Does she agree that that situation is difficult
432
to reconcile with our ambition to remain central to world affairs and continued permanent membership of the Security Council?
Baroness Chalker of Wallasey: My Lords, it has not even been decided who will go to the social summit in Copenhagen in March, so the noble Lord is a jump ahead of me. We want the summit to improve the focus of the international debate on issues related to development. Of course Her Majesty's Government, and my department in particular, have been actively involved in the preparations for Copenhagen.
Lord Shepherd: My Lords, will the noble Baroness give an assurance that she herself will be going to the conference?
Baroness Chalker of Wallasey: My Lords, whether or not I can go will depend on your Lordships' business.
Baroness Williams of Crosby: My Lords, given the conference on the role of women in the world later this year and the Minister's own interest in the subject, will Her Majesty's Government consider making a submission about the role of women in economic development? The Minister may agree that the subject has been consistently somewhat neglected by international financial institutions despite the fact that, with regard to both subsistence fanning and local trading in Africa and elsewhere, women are in many cases more important (dare I say it?) than men in terms of economic development.
Baroness Chalker of Wallasey: My Lords, the noble Baroness is absolutely right on the last point. Given that the summit in Peking takes place in September, I hope to be able to attend without inconveniencing your Lordships. The role of women in economic development is brought home to one time and time again out in the field. Only a week ago, in Malawi, I saw how the National Association of Businesswomen of Malawi has started up small-scale projects by which women are becoming the earners in the family. That is spreading throughout the country. The whole matter of how much women contribute to subsistence farming should arise in Peking, and I shall do my best to ensure that it does.
Lord Bruce of Donington: My Lords, when considering social development within its wider world context, will the noble Baroness bear in mind that, in the light of the recent Rowntree Report, a certain amount of social development is required here at home?
Baroness Chalker of Wallasey: My Lords, that may be the reason why my old constituency area has asked me to speak on development in Merseyside in a couple of weeks' time.
Lord Chalfont: My Lords, when the G7 nations consider the machinery .of international co-operation, can the noble Baroness say whether they will take into account the possible role of Internet and what is now fashionably called the information superhighway?
Baroness Chalker of Wallasey: My Lords, I believe that the main challenges must be reducing poverty through sustainable development, promoting sustainable

433
non-inflationary growth, enhancing global trade, protecting the environment, managing international conflicts and tensions and fighting international crime and drug trafficking. Since to do that the use of information technology is essential, I am sure that even if the subject is not a heading on the list it will be considered.
Lord Cledwyn of Penrhos: My Lords, will the Minister agree that the United Nations has been severely criticised for the failure of its continuing policies in seeking to resolve the awful problems in Bosnia? In agreeing with that, will the Minister say whether it is a matter which G7 will consider?
Baroness Chalker of Wallasey: My Lords, that lies slightly outside the review of institutions which I believe was the purpose of the original Question. It is true that the United Nations has been criticised but often, I believe, most unfairly. When one assesses some of the efforts of the United Nations, not only to resolve the great difficulties of Bosnia but also to ensure that food, shelter and medicines reach the places for which they are intended, it has done well. One has to keep the problem in proportion. As was said on the radio this morning, the difficulty is that whereas the United Nations started with under 80 countries, we are now talking of about 180 countries. The United Nations membership does not find it nearly as easy to reach sensible resolutions on many of the issues of today.
Lord Monkswell: My Lords, are the Government aware that prior to the outbreak of social instability in Rwanda and Burundi, the per capita incomes of those countries decreased significantly in the two years prior to the instability? Are the Government further aware that the same pattern of reduction of incomes and social instability were exhibited in this country in the early 1980s and more recently due to recession? What steps are the Government taking to learn from that both at home and in the international arena?
Baroness Chalker of Wallasey: My Lords, I find the comparison which the noble Lord makes somewhat strange. I remember the difficulties of 1976 in this country. It would probably be stretching your Lordships' patience too much to go into all that.

St. Bartholomew's Hospital: Future
2.46 p.m.
Lord Molloy Lord Molloy asked Her Majesty's Government:
Whether they are aware of the concerns of the professional staff at St. Bartholomew's Hospital about the hospital's future; and what plans they have for the hospital.
The Parliamentary Under-Secretary of State, Department of Health (Baroness Cumberlege): My Lords, Ministers have received a number of representations from professional staff at St. Bartholomew's Hospital. My honourable friend the Minister for Health has visited the hospital and met staff there recently.
434
The Royal Hospitals Trust—of which St. Bartholomew's is a part—has drawn up plans for the future organisation of services across its sites. East London and the City Health Authority is currently conducting public consultation on those proposals.
Lord Molloy: My Lords, I am grateful to the Minister for that comprehensive reply. Is she aware of Professor Jarman's report which states that the number of people now waiting for treatment in hospitals is increasing, and that, in particular, the accident rates are increasing? On its first visit, the King's Fund Commission recommended that St. Bartholomew's should be closed. It was then called back to make a second more thorough investigation and it said that its first decision was wrong and that St. Bartholomew's should in no way be removed.
Baroness Cumberlege: My Lords, with regard to Professor Jarman's proposals, although the number of people waiting in London has increased, the time it takes to treat them is decreasing and progress has been considerable.
As regards the King's Fund Commission, I am interested that it should have reviewed its findings, but some members of the original commission still feel that the original findings were correct.
Baroness Gardner of Parkes: My Lords, will my noble friend inform me of the position regarding the Homerton Hospital? Is it a fact that the population has largely moved away from the St. Bartholomew's area towards Homerton? I understand that the two hospitals have always worked together. Is the Homerton Hospital now taking a great load of the work which would previously have been done at Bart's?
Baroness Cumberlege: Yes, my Lords, the Homerton is certainly taking some of the accident and emergency cases. However, the Royal London Hospital, which is twinned with St. Bartholomew's, will take most of the specialist services in the future.
Baroness Jay of Paddington: My Lords, what is the Minister's response to the report published last week by the inner London health authority chief executives, called Hospital services for Londoners? The report states that people in inner London are using NHS beds at a 17 per cent. higher rate than was previously expected. Does the Minister agree with the report's conclusions that:
"London's … hospitals are operating under very considerable pressure"?
Baroness Cumberlege: My Lords, in the report the chief executives of inner London reinforced the direction the Government are taking. They said that we should invest in primary care; that we should strengthen specialist services by concentrating expertise and patient numbers in fewer, larger centres; that we should bolster medical research in education by bringing undergraduate and postgraduate teaching together; that we should find better ways of providing care and treatment for elderly people in their own homes and neighbourhoods; and that we should provide the general

435
hospital services which we need for routine medical and surgical treatment as close as possible to where people live.
Lord Strabolgi: My Lords, what is the noble Baroness doing about the shortage of emergency beds which is now reaching a dangerous level?
Baroness Cumberlege: My Lords, we are expanding considerably the number of emergency beds at the Royal London Hospital. In fact, we are investing £3 million in that in the current year; at the Homerton an extra £2 million; and at UCL £800,000.
Baroness Jay of Paddington: My Lords, I thank the Minister for her original reply to my question. But can she please respond to the point that I made about chief executives saying that it seemed that Londoners were using NHS beds at a 17 per cent. higher rate than had been expected? Does that not suggest that bed closures have been premature?
Baroness Cumberlege: No, my Lords. The chief executives were quite firm in saying that with the proposals that I have just outlined to the noble Baroness, there would be less need for inappropriate use of hospital beds in London.
Lord Molloy: My Lords, does the Minister agree that St. Bart's is famous throughout this country and the Commonwealth, not because of the building but because of the remarkable staff who work there? It appears that they will now lose their jobs and that is a great shame. Would the Minister be prepared to consider meeting a small delegation from the remarkable staff of a remarkable hospital to listen to their case?
Baroness Cumberlege: My Lords, I appreciate the very strong emotional feelings as regards this hospital, and I am grateful for the noble Lord's comments about buildings. With regard to the expertise of the people who work there, the London Implementation Group has already set up an agency to help staff find new posts. But I am very confident that with the skills and expertise of the people who are involved, the vast majority will continue to work in the National Health Service, and many of them in London.
Lord Dean of Beswick: My Lords, can the Minister give an assurance that, whatever the final outcome of the changes in this area, they will result in a better service for the people who live there?
Baroness Cumberlege: Yes, my Lords.
Lord Annan: My Lords, is the Minister aware that in 1968 the noble Lord, Lord Todd, reported that there should be an amalgamation of the medical schools of St. Bartholomew's and the London? Is she further aware that in 1980 a similar report by the noble Lord, Lord Flowers, recommended exactly the same thing? Since then there have been a multitude of reports, some initiated by members of the medical profession and some by the Minister's department; all of them pointed inescapably to the fact that St. Bartholomew's must recognise that some change in its status is bound to take place. Is it not a fact that when the forcible
436
amalgamation took place of regiments in the. Army, after the initial dismay the amalgamations were conducted with great expertise and with a good effect on morale?
Baroness Cumberlege: My Lords, the noble Lord, Lord Annan, is correct in every word that he says. Countless reports have said that there should be changes in London. With the changing needs of populations; with different aspirations; with clinical practice changing; with developments in science, technology and medical education; and with rising costs, we simply cannot freeze all the London services into a time warp. That would be totally wrong. We have to produce a better service for London. These changes will ensure that that happens.

Pergau Dam
2.53 p.m.
Lord Dubs Lord Dubs asked Her Majesty's Government:
How they propose to reimburse the overseas aid budget for the sums that have been used to finance the Pergau Dam.
Baroness Chalker of Wallasey: My Lords, as my right honourable friend the Foreign Secretary announced in another place on 13th December, the aid programme will be enhanced this year and next by amounts reflecting the expenditure on Pergau and on three other ATP projects. He made clear that we do not propose to increase public expenditure still further in respect of payments made on Pergau before the current financial year.
Lord Dubs: My Lords, does the Minister agree that those payments made in respect of Pergau before the current financial year come to some £24 million; and that many people find it unacceptable that the Government should seek to evade their legal and moral responsibilities in this way? Please will the Government reconsider their decision?
Baroness Chalker of Wallasey: My Lords, I can indeed confirm that the figure spent on Pergau is £24 million. But we cannot rewrite the past. The financial books for past years are closed. As the Foreign Secretary said in his statement, the funds spent on these projects were voted by Parliament. The Government do not believe that the taxpayer should be asked to find offsetting funds for the aid programme in the present year or in future years for which enhanced provision has recently been announced by the Chancellor because of the court's decision.
In answer to Mr. Rowlands in another place on 13th December last, the Foreign Secretary made it quite clear that he had dealt with the larger sums involved in this year's and next year's budget in an equitable way. But the clock cannot be turned back.
Lord Judd: My Lords, does the Minister agree that, while it is not possible to rewrite the past, the facts are that money which was voted for humanitarian purposes was used for other purposes; and therefore it is only proper that that money should be reimbursed to the aid

437
programme? Can she give a specific undertaking that in future years there will be no question of cutting aid budgets in order to accommodate payments for Pergau and other projects, which will now have to be made from elsewhere?
Baroness Chalker of Wallasey: My Lords, first of all, unusually, the noble Lord is wrong today. No humanitarian money was spent on ATP when it was agreed. It was a project with a developmental output, because that area of Malaysia needed electricity badly. No humanitarian money was used for the project. I cannot foresee all the things that will happen in future years, but, as the noble Lord knows, it is planned that the aid programme will increase by £56 million in 1996–97 and £115 million in 1997–98. We have a very sound programme. When we allocate money for ATP, as we do on an annual basis, we will now do so in the full knowledge of the decision that was made by the court on this case. Certainly we are not legally obliged to compensate the aid programme for the previous payments.
Lord Avebury: My Lords, does the Minister agree that it is a pity that the noble Baroness, Lady Thatcher, could not be surcharged for the £24 million that was unlawfully spent, as she would have been had she been a member of a local authority?
Baroness, Chalker of Wallasey: My Lords, the noble Lord's comment is very wide of the issue. It is not only that. In government—which the noble Lord has never known and never will—one has to take a whole range of issues into account. The court held that, had there been a developmental promotion purpose in Section 1 of the 1980 Overseas Development and Co-operation Act, it would have been entirely proper for the Foreign Secretary to have taken account of the impact of withdrawing the 1989 offer of support for Pergau on our political and commercial relations with Malaysia. That was the consideration that my noble friend took into account in reaching her decision.
Lord Richard: My Lords, I wonder whether the Minister can help me a little. As I understand it, the £24 million is part of the money that the courts decided should not have been used on Pergau. In addition to the £24 million, there are the sums that will be reimbursed; namely, the sums that the Minster says are payable this year and next year. That money will come back to the aid budget despite the fact that it has to go to Pergau as well. What is the logic for making the distinction between the £24 million and the rest of the money, if indeed it is all covered by the court judgment and the court said that the money should not have been used for Pergau? What is the logic of drawing the line there?
Baroness Chalker of Wallasey: My Lords, the logic of drawing the line is that you cannot change the past. Current year and future year payments are down to ECGD, and the aid programme is being reimbursed. Indeed, some of the reimbursement this year will provide further emergency aid for, for instance, the crisis in Chechnya. The point is that, once the financial
438
books are closed, the past cannot be changed. You can change the present and you can change the future. We are doing that.
It may be wise just to remind the noble Lord that the judgment said that the unravelling was not a matter for the court; it is for Parliament to decide for the future how finance should be provided. We announced those steps on 13th December.
I want to make it quite clear that the aid programme will not be cut this year or next. I mentioned its having next year an additional £65 million available for other uses. That seems to me to be a wholly reasonable response to the court's decision.
Lord Dubs: My Lords, a commercial company that has been accused of misspending money could not say that its books were closed. Why cannot the same principle apply to the Government?
Baroness Chalker of Wallasey: My Lords, because, commerce is commerce and government is government.

The Gambia: Advice to Tourists
3 p.m.
The Earl of Kinnoull: My Lords, in asking the Question standing in my name on the Order Paper, I should like to declare a very small interest.
The Question was as follows:
Whether Her Majesty's Government are likely to change their advice to tour operators and United Kingdom citizens not to seek holidays in The Gambia.
Baroness Chalker of Wallasey: My Lords, our advice to British tourists and tour operators is kept under constant review. Updated advice, issued on 9th February, continues to recommend that tourists consider postponing non-essential travel. The situation in the country remains uncertain and security could still deteriorate quickly.
The Earl of Kinnoull: My Lords, I thank my noble friend for that reply. Bearing in mind the need to return to democracy, can she say what is the Government's attitude to a recently announced timetable by the military council to return to democratic rule? Can she also say whether bodies such as the European Union and the Commonwealth countries are in accord with the Government's policy?
Baroness Chalker of Wallasey: My Lords, I thank my noble friend. The two years announced by the regime in The Gambia is still too long. Effectively it means that the Gambians will suffer at least another 17 months of military rule and there is no guarantee that the military would leave even then. It is completely unnecessary in a country which had a functioning constitution and democratic elections as recently as spring 1992. Frankly, the longer the military junta stays, the greater the harm to the economy and the longer it will take to build it up again. I can assure my noble friend that we are working very closely with our European Union partners and our Commonwealth

439
partners at every stage of the developments in The Gambia. My officials are working in Brussels this very day, as we speak, in the Africa Working Group, to see how we can all persuade The Gambia to return to democratic rule.
Lord Judd: My Lords, will the Minister accept that on this side of the House we shall support her to the full in anything that she finds necessary to see the restoration of democracy in The Gambia? Does she agree that it is not simply that democracy and human rights have been trampled upon by the military regime but that as a result, in the economic chaos which has followed, perhaps 150,000 more people are destitute than was the case before the coup? Does she recognise that in the light of that we want to see pressure increased, not diminished, at this juncture?
Baroness Chalker of Wallasey: My Lords, I am most grateful to the noble Lord for his question. It is the state of the people of The Gambia which worries us. They have every right to expect a speedy return to democratic government in their country.
Lord Merrivale: My Lords, will Her Majesty's Government seek to encourage UK citizens in the meantime to take their holidays in Senegal, which is south and north of The Gambia?
Baroness Chalker of Wallasey: My Lords, I know the great interest my noble friend takes in matters Senegalese. He knows that there are some delightful places to visit. Unfortunately, some people are not so able as he is in speaking fluent French and therefore prefer to go to English-speaking territories. Anyway, we want to see the Gambian economy build up again for the sake of the Gambian people. It was an unnecessary, illegal coup. There was a democratic government who were pushed out. The sooner the country returns to civilian democratic rule the better.
The Earl of Kinnoull: My Lords, will my noble friend confirm that the current aid programme to The Gambia still remains in place?
Baroness Chalker of Wallasey: My Lords, I can assure my noble friend that humanitarian aid and health and education aid is still going to The Gambia. We are trying to help the people in those priority sectors. With the present regime in power, we shall not give aid in the police sector because it could well be misused. That is why we are limiting ourselves to humanitarian aid. But we hope before long to resume other forms of aid to help them get back on their feet once more.

Olympic Symbol etc. (Protection) Bill
3.5 p.m.
Brought from the Commons; read a first time, and to be printed.

Building Societies (Joint Account Holders) Bill
Brought from the Commons; read a first time, and to be printed.

South Africa Bill [H.L.]
Lord Inglewood: My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Therefore, unless any noble Lord objects, I beg to move that the order of commitment be discharged.
Moved, That the order of commitment be discharged.—(Lord Inglewood.)
On Question, Motion agreed to.

Pensions Bill [H.L.]
3.6 p.m.
The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish): 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 Mackay of Ardbrecknish.)
On Question, Motion agreed to.
House in Committee accordingly.
[The CHAIRMAN OF COMM111EES in the Chair.]
Clause 14 [Requirement for member-nominated trustees]:
[Amendment No. 105 had been withdrawn from the Marshalled List.]
The Earl of Buckinghamshire The Earl of Buckinghamshire moved Amendment No. 105A:
Page 6, line 25, leave out ("deferred members of the scheme") insert ("such class or classes of deferred members of the scheme as the trustees may determine").
The noble Earl said: In moving this amendment, I shall speak also to my Amendment No. 111B. Amendment No. 105A is a probing amendment. It would increase the discretion of trustees by allowing them to choose an appropriate class of deferred members when they consult regarding changing scheme rules to implement their requirement for member-nominated trustees.
The reasons for the amendment can be quickly summarised in three parts: trustees have to consult members about rule changes to the scheme, they have to consult current pensioners and active members; but they have a discretion as to whether they consult deferred members. The current drafting of the Bill suggests that, if the trustees decide to consult with deferred members, they have no option but to consult with all deferred pensioners.
That could be difficult in practical terms. Deferred pensioners' addresses, for instance, may not be available and in many schemes the amount of deferred pension can be quite small in terms of money. With this amendment I suggest that it would be unnecessary to consult all the deferred pensioners as a class. I beg to move.
Baroness Hollis of Heigham: We haw; no objection to the amendment on our side of the Committee. It

441
seems to us to give additional flexibility to the trustees, as described by the noble Earl. Therefore, we support the amendment.
Lord Mackay of Ardbrecknish: My noble friend has a valid point with his amendment and in his remarks when bringing it to our attention. As he said, not all deferred members may be known to the trustees; for example, trustees may not hold an up-to-date address list for all deferred members. If trustees are faced with the difficulty and expense of tracing deferred members, they may be reluctant to use their discretion to include them in the statutory consultation process. We do not want this clause to work to the detriment of deferred members.
However, I am sorry to say to my noble friend that I am not content with the drafting of the amendment. As it stands, trustees could determine that they wish to consult only particular deferred members; for example, they could decide to consult only those members who they felt might respond in a particular way and to exclude those who might have opposing views. I am sure that that is not the effect that we want to achieve.
Therefore we accept the principle of the amendment and should like to make it easier for trustees to include deferred pensioners. However, we do not want to make it possible for schemes to discriminate against certain classes of deferred members, especially in the circumstances I outlined. If my noble friend therefore will withdraw his amendment, I shall undertake to consider it further and see what we can do to answer the point.
The Earl of Buckinghamshire: I thank my noble friend for his reply. I stand chastised. However, I know that he will come back with a better amendment than mine. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 106 not moved.]
[Amendment No. 107 had been withdrawn from the Marshalled List.]
The Chairman of Committees (Lord Boston of Faversham): In calling Amendment No. 107A, I must inform the Committee that if the amendment is accepted, I cannot call Amendments Nos. 107B or 108.
Baroness Dean of Thornton-le-Fylde Baroness Dean of Thornton-le-Fylde moved Amendment No. 107A:
Page 6, line 42, leave out from beginning to first ("of") in line 44 and insert ("a majority").
The noble Baroness said: The effect of Amendment No. 107A would mean that the majority of trustees on an occupational fund trust board would be member-nominated instead of, as currently provided in the Bill, only one-third. I have heard the arguments that one-third should be satisfactory because the employer has an enormous cost to meet on the balance should there be a shortfall. But most employees pay around 5 per cent. of their gross income into their pension fund, which is an enormous investment. It may not be the largest investment of their lives, but it may be more of
442
an investment than the cost of their home through a mortgage. There is therefore a lot riding on this matter for each individual employee.
People say that it is not fair because the employer, in a shortfall, will be required to pay the balance. But what about the employers who over the past few years have consistently taken pension contribution holidays while employees have had to continue to pay at the normal level of pension fund contribution? It is swings and roundabouts based on an actuarial assessment.
My argument is that the contributions to a pension fund scheme are deferred wages. I know that some people do not accept that, but a number of court rulings confirm that interpretation. Indeed, Barber v. Royal Exchange is a case where the court found that pension contributions were deferred wages for the employees.
Amendment No. 107A brings equity into a scheme. It means that the individuals whose lives may be substantially affected will be given a greater say than is currently provided for. Come what may, at the moment they have only a minority say in whether there is a pension surplus or a deficit; and the Bill continues to provide for only a minority say. I hope the amendment gains the Committee's support. It is necessary bearing in mind that only 35 per cent. of all occupational schemes have nominated member trustees on their boards. I beg to move.
3.15 p.m.
Baroness Hollis of Heigham: In speaking to Amendment No. 107A I should like to speak also to Amendment No. 108 standing in my name, the name of the noble Baroness, Lady Seear, and that of my noble friend Lady Castle. The amendment is grouped with Amendment No. 107A but is a more modest amendment. It calls for at least 50 per cent. of the trustees to be scheme members.
Most European countries do not have operational pension structures and schemes similar to those in the UK. However, where they do—Ireland, Australia, Switzerland and Spain—50 per cent. member trustees are the norm. More to the point, it is also the norm in some of the biggest and best of British companies at the present time. For example, Rothmans, Jaguar and Leyland Daf have 50 per cent. member trustees. Thomas Cook and, if we include the pensioner member, Shell, Allied Lyons and Boots all have 50 per cent. member trustees. Since 1926, ICI has had six employer trustees, six employee trustees and one independent. Unilever has 12 employer and 12 employee trustees and one pensioner trustee. Albright & Wilson, Courtaulds, Lucas and Sainsbury are all companies that already draw 50 per cent. of their trustees from their scheme membership. That is a roll-call of the best names in British industry, as I am sure your Lordships will agree. It is therefore already established practice in our best schemes.
The amendment would bring all schemes, unless members chose otherwise, up to the best practice of already established and well-run schemes. There is nothing provocative about it; nothing syndicalist; nothing revolutionary. It is an amendment which reflects

443
and embodies best practice. By itself it is not enough to prevent fraud or theft, but all the evidence suggests—and employers confirm—that where there are 50 per cent. member trustees, there is less fraud, there is more scrutiny, there is better information flow, there is more confidence in the pension promise and there is more employee commitment to the company.
In a previous Committee debate the noble Lord, Lord Marsh, made a powerful speech which won the support of many Members when he argued that the best protection against pension fraud cannot come from the regulator; it must come from the trustees acting where necessary as whistle blowers. I am sure that he is right. Amendment No. 108A would help to ensure that.
If it is already best practice among the roll-call of our best companies, what are the possible objections to the amendment? The first is that scheme members may elect unsuitable people; secondly, that it may tip the balance of power unfairly away from the employer in a situation where such issues could be delicate.
Let me deal first with the objection, that unsuitable people may be elected. I asked around in some of the other company schemes and there is no evidence for that at all. Too often when one hears the word "unsuitable" becomes a euphemism for the trustee asking the awkward questions, as in the Maxwell companies where such trustees found their services speedily dispensed with by Maxwell. That is one of the reasons why my noble friend Lady Turner will be moving an amendment later to give the trustees protection.
If trustees elected by the membership are corrupt, they will be discharged; if they are inexperienced, they will be trained; if they are unsuitable, they will not be elected. Do we believe that employees will not choose the most sober, cautious and careful of people to safeguard their pensions? They will be looking for Methodist chapel stewards if they can find them.
The second argument that may enter the considerations of the Committee is that such an amendment may be unfair to employers; it may reflect a sectional interest. I have two answers: first, as with all trustees, the fiduciary duty of scheme member trustees is to the scheme for which they are stewards, not to the constituency from which they come. That applies as much to the financial director nominated by the employer as it does to the scheme member elected by his colleagues. After all, benefits and so forth will remain a matter of employer/employee negotiations, not a matter for trustees who are stewards for the scheme as a whole.
Secondly, such fears perhaps under estimate the power that will remain with the employer after the Bill becomes an Act. Most of his existing powers will remain firmly in place. It will not disturb the balance. Were the Committee minded to accept the amendment to make 50 per cent. of the trustees come from the scheme membership it would still be the case that employers would have a voluntary choice on whether to set up occupational pensions; it would still be the case that employers could wind up schemes; it would still be the case that the employers would define the rules of eligibility, including new members; it would still be the case that the employer could veto any benefit improvements to the scheme; it would still be the case
444
that the employer could take a contributions holiday without even a quid pro quo in the form of improved benefits for the scheme members; it would still be the case, crucially, that any change in the scheme rules, such as altering benefits or improving accrual rates, must have his consent. The employer will still have half the trustees. Whatever percentage of trustees is drawn from scheme members, all the long stop powers that the employer will have under the Bill will remain intact. It will not affect the delicate balance between them.
Finally, Members of the Committee may have a third fear that somehow the amendment will generate additional costs for the employer. Whatever the percentage of member trustees the costs for the employer cannot be increased beyond the current benefits as promised. Whether there are fewer than one-third member trustees, 50 per cent. or 75 per cent., none of that will affect the employers' commitment to financing benefits in any way. It is true that under the Bill the employer may face additional costs to meet what is called the minimum solvency standard; and so he should if the scheme without it is not financially sound. But that will happen by virtue of the Act itself. It will have nothing to do with the percentage of trustees. In other words, the issue of potential financial liability for the employer under the Act and the issue of trustees drawn from the membership are completely unconnected. Whatever the percentage of trustees, the employers will have to meet those financial responsibilities. Whatever is the percentage of trustees that will not add to the employers' financial responsibilities.
Why then are we pressing the amendment? I have tried to suggest that the good employer has nothing to lose because good employers already do it. Who will lose? It will be those employers who sail close to the wind in their practices, whether in terms of self-investment, favourable loans or seeking delays in passing over contributions to trustees. They will be affected. However, given that the Bill is brought forward to protect the pension promise from just such practices—practices that lead to insolvency or are fraudulent—is this not exactly what we want to happen?
I hope that the Committee will support the amendment. It would produce 50 per cent. trustee members drawn from the scheme members. It is the current good practice in the best firms of this country. It will have no financial implications for the employer as such, but it will strengthen the capacity of trustees to take on the role that the Bill intends them to do: to monitor and to act as good stewards for the pension promise.
Baroness Seear: I wish strongly to support the amendment particularly because it suggests at least 50 per cent. A number of schemes are already above 50 per cent. and they have proved very satisfactory. We are very much of the view—it is a widely-held view—that pensions are deferred pay. As the noble Baroness, Lady Hollis, said, the employer has the ultimate weapon, if he needs to use it, of withdrawing the scheme. That is a powerful weapon where employee members are determined to keep the scheme going. They are extremely unlikely—it would be extremely foolish—to

445
act in such a way that would lead to the employer winding up the scheme. I cannot see that the employer has anything to fear. I should like to see the figure higher than 50 per cent. The amendment would enable that to happen in those places where it was agreed that it should.
Baroness Castle of Blackburn: I wish to support Lady Hollis's amendment which, of course, subsumes mine. I tabled something on the same lines at the suggestion to me of one of Maxwell's long-suffering pensioners. That is straight from the mouth of someone who has gone through all the suffering, anxiety and miseries of the past few years following Maxwell's gigantic fraud.
The pensioner pointed out to me that there are grave risks that are taken by member trustees who are trying to deal with a fraudulent employer. There are such things as intimidation. There are also such things as bribes by saying, "You were wanting promotion, weren't you? Well you had better shut up". He has seen it in action among fraudulent employers. There is safety in numbers. The very minimum ought to be 50=50 representation. I am glad that Lady Seear has pointed out that it is at least 50 per cent.
I want to stress the point that Lady Hollis made which seems to be the very centre of our argument. The good employer does not need this legal obligation placed on him. But we are trying to protect members of a pension scheme from the fraudulent employer. In that way we have got to give the member trustees a sense of strength that they have real equal status and that they speak as people of equivalent importance to the employer at the very least. I do hope that the Committee will see the sense and logic of that and listen to my Maxwell pensioner friend who has urged that this kind of amendment should be made.
Viscount Caldecote: Is the noble Baroness, Lady Dean, correct in saying that in the case of a pensions holiday it is legal for the employer to take a pensions holiday while insisting on the employees continuing to pay? That has never been the case in my experience, but I should like to know whether that was just good practice or whether it is a statutory requirement.
Lord Dean of Harptree: I am strongly in favour of member trustees of pension schemes and, as has already been pointed out in the debate, best practice suggests very strongly that that development should be encouraged. However, I should like to express some doubts about the amendments.
We live, unfortunately, in an age where very few new occupational final salary pension schemes are being set up. That is a serious development. It may be something to do with the recession that we have gone through but it is a harsh reality. We must be very careful before we place additional obligations on employers which might discourage the setting up of new schemes, particularly final salary schemes. We have to take into account that the Bill already lays a statutory obligation for one-third of the trustees to be members. That is a new obligation
446
which employers will have to meet. Some of them meet it already, but not all do. The disincentive effect is a factor which we have to take into account.
We also have to bear in mind that in most occupational pension schemes the employer contributes about twice as much as the employee. That financial fact has to be taken into account when one considers the balance on trustee boards. For those reasons I hope that my noble friend the Minister will resist the amendments.
3.30 p.m.
Lord Ezra: I have not been a trustee of a pension fund, but I have been on the employers' side as chairman of the companies concerned in both the public and private sectors. In the schemes with which I have been involved in that way there has been at least an equal part of member trustees. That has worked perfectly. The clinching argument in this debate is that put forward by the noble Baroness, Lady Hollis, when she reminded us that the fiduciary duty of trustees, whether they come from the employers' or the members' side, is to the scheme. Once appointed they should forget any "party view" if I can so describe it, and simply do what is in the best interests of the scheme. Therefore, it may be asked: why argue about it? As soon as they are appointed the best people from whatever side have to do their duty.
One then comes up against the question of perception. We are dealing with legislation which originated from the Maxwell affair. People want to be satisfied that the steps which are being taken will effectively safeguard the interests of the beneficiaries. Therefore, from the point of view of general public perception and of those in schemes, I very strongly support the proposition that although all trustees will, we hope, henceforth have only one duty towards the scheme they serve, nonetheless the Government will agree, if they are to fulfil the main objective of this legislation, that this amendment should be supported.
Lord Allen of Abbeydale: This is not a party political matter and, as has been explained, there are not any great financial implications. I believe that it is legitimate for a Cross-Bencher to express very briefly a view on the merits of what is proposed.
I recognise that my own detailed knowledge of pensions is becoming out of date, but the arguments for or against this particular proposal are fairly clear cut. The proposal by the noble Baroness, Lady Dean of Thornton-le-Fylde, goes a little too far. The swings and roundabouts arguments ends up with perhaps 50 per cent. and not more. A strong case has been made out for Amendment No. 108. It seems to be the fact that a number of very successful companies operate that arrangement with perfect success. I am glad to add my word briefly in support of that amendment.
Lord Mackay of Ardbrecknish: This is clearly one of the important parts of the defences that we are erecting on pensions in the light of the Maxwell affair which brought Professor Goode's Committee into being and led to this Bill.

447
Perhaps I may go back a little and point out that the requirements in the Bill itself are that members should have a right to nominate at least one-third of their scheme's trustees. We believe that that statutory minimum will ensure that trust boards include at least some people whose perspective differs from that of the scheme sponsor who, typically, does appoint the majority, if not all, of the trustees. We fully accept the Pension Law Review Committee's view that there is an important role for member-nominated trustees in providing scheme security. I set out in my Second Reading speech the general advantages we see for schemes in having member-nominated trustees.
But I believe that this provision is quite different from requiring a majority of member-nominated trustees on a trust board or requiring that a proportion of member-nominated trustees shall be equal to that of the trustees appointed by the sponsoring employer. The scheme and its associated fund is established by an employer to achieve a business objective. My noble friend Lord Dean of Harptree mentioned the very worrying fact that employers are not creating new schemes in a way that we would like to see. We do riot want to make schemes look unattractive to employers and discourage them from starting schemes or decide that they should back off from the schemes they already have. The employer retains a considerable business and financial interest in the performance of the fund and in the effectiveness of the scheme. We have to remember his interest in all this and how he could bring the scheme to a close if he felt it was perhaps in the interest of his business. We do not want that, or to add factors which may make schemes less attractive.
The fund belongs neither to the members nor to the sponsoring employer. It is held in a trust by the trustees to be distributed on the basis set out in the trust deed and the rules. That leads straight back to the argument that the balance between member and employer-nominated trustees on the board should reflect the balance of interest in the fund.
In a defined benefit scheme where the employer is bound to meet the pension promise and to make good any deficit, the fund is almost incidental as far as the members are concerned. Of course, it offers a degree of security against employers becoming insolvent and provides a vehicle for delivering their pensions. But the pension they receive is not dependent on the existence or performance of the fund. By contrast, the existence and performance of the fund is crucial to the sponsoring employer. It offers a tax-efficient way of providing an important part of the remuneration package. It smoothes out the cash flow problems which a pay-as-you-go system might incur. Its performance and any consequent need to increase pension contributions could have a dramatic effect on company cash flow. The employer is the one giving the guarantee. He is the one who has to top up or make good the fund in the event of any deficiency. Therefore, the employer has a major interest in the successful operation of the fund. We believe that it is appropriate that that should be recognised in the
448
composition of the trust board. That is why the Goode Committee opted for a one-third/two-thirds split in favour of the employer as the minimum provision.
The running of the trust fund is of such significance to many employers that without the security of this level of influence, as I mentioned when answering the point made by my noble friend Lord Dean, they could well decide to move away from defined benefit pension provision which may well not be in the interests of scheme members. For those reasons, we have supported the PLRC approach.
In June of last year we ran a consultation exercise on our proposals for member-nominated trustees. Views were very widespread and there was no consensus at all on an ideal constitution. Some respondents said that the balance should tilt towards the employer; some said towards the members and others went for a 50–50 split. Sometimes the casting vote went to either the employer or the member.
Many of the replies spoke of member representatives or employer representatives. It is important to recognise that trustees are not representatives; they are individuals who are appointed under trust law to act independently and collectively, putting aside their own personal preferences in the best interests of all the beneficiaries.
It is with that in mind and the recommendation of the Pension Law Review Committee for defined benefit schemes that we have opted for the one-third minimum. Our objective is not to give scheme members a representative as such on the trustee board, but to ensure that the board as a whole has a sufficiently broad perspective on the issues for which it is responsible. Any pension legislation should provide an even-handed approach between promoting the interests of scheme members and preserving the legitimate interests of the employers. I trust that the two are not mutually exclusive.
I recognise, of course, that many excellent schemes already have an equal number of employer-appointed and member-nominated trustees. The noble Baroness, Lady Hollis, read out a list of a number of firms in this country which already go either at least as far as she wants to go or further. She also read out, as is usual in these matters, a list of countries who reputedly do better than we do in the view of the noble Baroness. It is fair to say that we have so much bigger resources in pension funds that I do not believe that we should be looking for examples—dare I describe them without being unkind?—to the minnows in this particular business. In Ireland, members have to approach their employer and ask for member-nominated trustees. I understand that in Spain only the larger, government-approved schemes have 50 per cent. such members.
For those schemes which are not currently familiar with member-nominated trustees, our requirement of one-third as the minimum gives them a chance to test the water, with the possibility of building on the statutory minimum—as other schemes have already done—once they become accustomed to the change. In some cases, employers are happy to take a minority interest on the trust board. However, I believe that we

449
have to be realistic and acknowledge that employers voluntarily set up and maintain pension schemes and that they may be dissuaded from doing so if they are coerced into what may be unfamiliar territory to many of them.
I am not sure whether we should be speaking also to Amendment No. 107B, which brings us into the territory of small schemes, but, for the sake of completeness, I should like to refer to small schemes because they are part and parcel of the clause. The Pension Law Review Committee said:
"We recognise that in the case of schemes with a very small number of members—say, those with fifty active and pensioner members or fewer—a legal obligation to have additional trustees not appointed by the employer could cause difficulties".
The difficulties that were envisaged related to cost and to the possible shortage of members willing to be nominated by their fellow members.
We have gone one further than the Pension Law Review Committee and made member-nominated trustees a requirement for all schemes which cannot be evaded unless members approve alternative proposals. However, we took account of the note of caution that was sounded by the committee and reduced the basic number of member-nominated trustees from at least two to at least one for schemes with fewer than 100 members. Schemes are free to invite members to select more than one trustee if the circumstances of that scheme permit. I see no justification for increasing the basic number of member-nominated trustees for small schemes.
My noble friend Lord Caldecote asked me about contributions holidays. I hope that I understood his question correctly. Employers can currently take a contributions holiday. The employer is standing behind the scheme. He is taking the risk. We shall come later to some of the circumstances surrounding dealing with surpluses, so perhaps we should leave this debate until then.
The clause provides that there should be a statutory minimum of one-third member-nominated trustees for all schemes. As I have said, I believe that that strikes a fair balance between the interests of all the parties to the trust deed. I fear that, by compelling employers irrevocably to relinquish the strength of their association within the trust board, the amendment could prejudice the long-term prospects of the pension schemes. Therefore, I am afraid that I cannot accept the amendment. I invite noble Lords to agree with me in this discussion and, if it comes to a vote, to vote against the amendment.
Baroness Seear: Before the Minister sits down, I think I understood him to say something that confirms that he accepts that pensions are deferred pay. Am I right in my recollection? It would be useful to have that confirmed.
Lord Mackay of Ardbrecknish: One has to look at what one says in such cases, but my recollection is that we reached one of the issues that we now have to face by way of the European Court which considered that pensions were deferred pay. I do not
450
think that I would greatly argue with that. I am not sure what point the noble Baroness is seeking to make, but this is part and parcel—
Baroness Seear: If the Minister reads Hansard tomorrow, I think that he will find that that is what he said.
Lord Mackay of Ardbrecknish: A pension is part and parcel of the remunerative package that someone gets from a firm. The point that I was trying to make—the noble Baroness should take this a bit more on board because she seemed cavalierly to dismiss the employer's position—is that the employer is the person who decides to create a scheme. He stands behind the scheme and has a considerable interest in ensuring that it is properly run. If it is not properly run, he is the person—unless he decides to take drastic measures—who has to put cash into the scheme to make it up.
3.45 p.m.
Lord Desai: Perhaps I may ask the Minister another question before he sits down. I detect a logical flaw in his argument. On the one hand, the Minister has said that trust members do not represent any interest except their fiduciary duty to the trust; but, on the other hand, he seems to be speaking in terms of "employers' interests" and "employees' interests" and saying that unless an employer has at least a majority of members on the trust board, he will not set up a scheme. Are the trustees partisan, playing for one side or the other, or are they all neutral? If it is the case that employers cannot set up schemes unless they have a majority, that changes the logic of the trust. Could the Minister please clarify that point?
Lord Mackay of Ardbrecknish: I have tried to explain where we are on this point. Of course, the trustees have a duty to the whole scheme. They are not there as representatives. That is perfectly clear. However, that does not get away from the fact that if something goes awry with the scheme, it is the employer who stands behind the guarantee. That has to be in the interests of all the members of the scheme. I should not think that anything would divide us on that aspect.
The point that I am making is an important one about how people become trustees. We have clearly gone a long way from the current position by establishing a minimum of one-third. I believe that going further would upset a balance which takes many issues into account. That question of balance includes whether one wants to encourage employers to set up occupational pension schemes and to continue with them. Those are questions of considerable importance which we have to take into account. At the risk of sounding like Members on at least one of the Benches opposite, I think that we must appreciate that there is a balance in all these things.
Viscount Caldecote: I wonder whether my noble friend could clarify his answer to my question about a pensions holiday. Was he saying that it is possible—that it is legal—for an employer to say, "I'm going

451
to cease paying contributions because of the over-funding", but to insist that the employees continue to pay their contributions? That seems to have a bearing on the merits of the amendment.
Lord Mackay of Ardbrecknish: We shall come to the problem of a contributions holiday later, but my understanding—I hope that my noble friend will forgive me if I say "my understanding" because this is all pretty complicated—is that under the Bill an employer will be able to take a contributions holiday if that is the way in which it has been agreed to deal with any surplus. I hope that that answers my noble friend's point.
Viscount Caldecote: Can the employees be forced to continue their contributions while the employer is not contributing?
Baroness Hollis of Heigham: Yes.
Lord Mackay of Ardbrecknish: I think that was implicit in what I said. Yes, of course he can. The employees will continue with their contributions at whatever rate has been agreed. The employer may take a contributions holiday in the circumstances that we shall come to if the fund is in surplus. I do not want to go into the debate about why that should be the case, but I want to make the point now that the employer is in that position because, if the opposite happens, it is the employer who has to pick up the tab for the deficit.
The Earl of Buckinghamshire: Perhaps I may answer my noble friend by saying that the question of legality will be covered in the trust deed and rules. The scheme will be run in accordance with the trust deed and rules.
Perhaps I may quickly clarify the position on the issue of deferred pay of which much was made at Second Reading and which has been raised today by the noble Baroness, Lady Dean. The case that we are referring to is the Barber case of May 1990 which reached the European Court, which held that for equal treatment purposes, pension rights were to be treated as pay. That judgment did not hold that the assets guaranteeing the pension rights were pay, except possibly in money-purchase schemes. The ownership of the assets was examined at length by Professor Goode who did not reach a definite conclusion about where the ownership of the assets lay but, on balance, in a balance of cost and defined benefits plan, he came down on the side of the employer.
That is the view of the judiciary also, as we can see in Imperial No. 1, the Hillsdown case, which is based on the view that a pension fund in a final salary scheme acts as a guarantee of the employer's promise to pay a pension on retirement. There is no such need for a guarantee of the employer's promise to pay a pension on retirement in public sector schemes because the Government stand behind them. The reason Civil Service schemes are not funded is that there is that guarantee behind them.
452
I wanted to clarify the position of whether a pension is deferred pay. The assets have nothing to do with the issue. The pension rights have. The Committee may not wish that to be so, but it is the actual position.
Baroness Hollis of Heigham: That explanation from the noble Earl is helpful, because it is our understanding of the situation. Some extraordinarily distinguished voices have taken part in the debate. They range from my noble friend Lacy Castle who, as Minister, introduced some of the most significant pensions legislation, to the noble Lord, Lord Ezra, a company chairman, and the noble Lord, Lord Allen, who founded the Occupational Pensions Board. They have all given the same message: they support the amendment.
The noble Lord, Lord Dean of Harptree, raised some entirely appropriate points. First, he accepted that 50 per cent. of trustees drawn from scheme members is already good practice in most of this country's major companies. There is no dispute between us. This is not some leap into the dark, some will of the wisp, but is standard practice in this country's best blue chip companies. The point made by the noble Lord—this was supported by the Minister in his reply—is that he fears that such a requirement may deter employers in the future who are considering setting up occupational pensions schemes.
At the moment, as I understand it, about 92 per cent. of scheme members are in final salary schemes. The noble Lord is right: employers are looking increasingly to money and money purchase schemes within the company. But, of course, in a money purchase scheme, Goode recommended that there should be two-thirds member trustees, because the financial weight carried by the scheme members vis à vis employers was that much greater. Given the argument put forward by the noble Lord—if he accepts, as I am sure he does, that companies are moving increasingly to money purchase schemes—then there is a even greater need for the amendment than he might otherwise suggest.
I think the Committee will agree that experience seems to suggest that most companies go into hybrid schemes. People in their late 30s and 40s, when they are making a lifetime commitment to the company, often move on to final salary. Amendment No. 108 meets both those needs. Otherwise, particularly with money purchase schemes—the noble Lord, Lord Dean, is probably right that employers are going that way—those people who are making substantial, significant contributions will be left relatively exposed because there the employer has no such responsibility to pick up the deficit. All that is promised is a defined contribution, not a final benefit. Following the noble Lord's argument, it is even more important that the amendment be accepted.
The Minister emphasised the point about the employer's interest, and called on us to go for an even-handed approach. That is what the amendment does. It is an even-handed approach which is reflected in Boots, ICI, Unilever, Sainsbury, Shell, Courtaulds,

453
and Allied Lyons. They think that it is in their companies' interest to have an even-handed—to use the Minister's words—approach to scheme members.
I have asked around whether any company with a 50:50 approach has found any disadvantages. I have not been told of one company. Through the organisations representing employers, not one company has said, "This is a disadvantage". On the contrary, major companies such as Sainsbury have said to the Social Security Select Committee in the other place what an asset it has been to the company to have such an arrangement. It hopes that smaller company schemes will follow suit.
Lord Mackay of Ardbrecknish: I thank the noble Baroness for allowing me to intervene. In the list of companies she has read out, I wonder whether she is distinguishing properly between member trustees and member-nominated trustees. That is my first point. The second point I should like to make, having listened to the last few sentences, is that one may perhaps be led to believe that we are going to say that there must be one-third only. In fact, it is a minimum of one-third. So all the companies to which she has pointed and which, I agree, are doing something sensible and splendid for them, can continue to do that. She should not be sounding as if somehow this provision will in any way endanger what the schemes are already doing.
Baroness Hollis of Heigham: I thank the Minister for that intervention, because if it means that he concedes that the amendment is desirable—because that is what the Bill will permit—I welcome him to our side of the Committee. As for the distinction between employee-elected and employee-nominated trustees, no, I am not making that distinction because a number of the major schemes—there may be Members of the Committee who know more about the detail of those companies than I do—draw their people from electoral colleges because their membership base is so large. That would confuse the either/or that the Minister has suggested. I believe that that is the case with ICI, Unilever and Shell.
I should like to repeat the basic point: this is an even-handed amendment which will have two advantages. First, it will not result in the employer acquiring any additional financial responsibilities so far as concerns benefits. As the noble Viscount, Lord Caldecote, asked, once a Bill becomes an Act the employer may still take contribution holidays while the employees continue to make their contributions. That remains unchanged, as does the employer's power to wind up a scheme or to refuse to make any changes that he does not think to be in the company's financial interests. The employer's powers of veto as a long-stop are unaffected by the amendment.
What the amendment will do is to bring up to the best the practices of the weaker schemes. It will provide an even-handed approach which will ensure
454
that all trustees, wearing their fiduciary duty hats, will seek to deliver the pension promise that we all want. I hope that the Committee will support the amendment.
Baroness Dean of Thornton-le-Fylde: I speak in support of the amendment. I wish to clarify a couple of points that have quite rightly been raised. The first relates to the pensions holiday. There is no law that provides that the employer who takes a contributions holiday has to allow the employee a reduction in contributions or a pensions holiday. There is nothing to stop the trust rules from saying that. There is nothing to stop the trustees agreeing to do that, but in my experience it happens in a minority of cases only.
I have been a trustee of two pension schemes. Both those schemes reduced contributions from the employees when they were in surplus. However, one must bear in mind that over the past half decade a substantial number of schemes have been working in surplus and so a substantial number of employees have been taking pension holidays.
My noble friend Lady Castle talked about her friend who was affected by the Maxwell pension fund. A number of Maxwell pension funds were in surplus. Maxwell did not pay a penny piece in employer's contributions into the very funds he was defrauding of their assets. So the balance is unfair.
The Minister said that there should be a one-third/two-thirds split because that would enable employers to stand behind their schemes. He said that it was in their interests that the schemes should be well run. What about the employees? It is in their interest that a scheme is well run. They are the people who have to pick up the pieces at the end of their working lives if the scheme is short, not the employer. Few employers are in the same scheme as their employees, as we have seen recently with some of the alleged public sector scandals.
As regards the Civil Service, when I was negotiating on behalf of people in HMSO, for instance, I was always made aware during the annual pay negotiations that I should take into account the fact that the payment to the members that I represented included an equivalent 9 per cent. contribution towards their pension. It is totally incorrect to say that a pension is not deferred pay. However, I am a realist. I am also a pragmatist. I have heard the tremendous well of support that the 50:50 rule for trustees has gathered. On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 107B not moved.]
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 108:
Page 6, line 44, leave out ("one-third") and insert ("one-half").
The noble Baroness said: I wish to test the opinion of the Committee. I beg to move.
4 p.m.
On Question, Whether the said amendment (No. 108) shall be agreed to?
Their Lordships divided: Contents, 116; Not-Contents, 129.

Division No. 1

CONTENTS

Acton, L.

Jenkins of Putney, L.

Addington, L.

Judd, L.

Airedale, L.

Kennet, L.

Allen of Abbeydale, L.

Kinloss, Ly.

Archer of Sandwell, L.

Lauderdale, E.

Avebury, L.

Lawrence, L.

Barnett, L.

Lester of Heme Hill, L.

Beaumont of Whitley, L.

Listowel, E.

Blackstone, B.

Lockwood, B.

Bottomley, L.

Longford, E.

Bruce of Donington, L.

Lovell-Davis, L.

Callaghan of Cardiff, L.

Mallalieu, B.

Carmichael of Kelvingrove, L.

Mason of Barnsley, L.

Carter, L.

Mayhew, L.

Castle of Blackburn, B.

McCarthy, L.

Cledwyn of Penrhos, L.

McIntosh of Haringey, L.

Clinton-Davis, L.

Milne, L.

Darcy (de Knayth), B.

Milner of Leeds, L.

David, B.

Molloy, L.

Dean of Beswick, L.

Monkswell, L.

Dean of Thornton-le-Fylde, B.

Morris of Castle Morris, L.

Desai, L.

Morris of Kenwood, L.

Diamond, L.

Nicol, B.

Donaldson of Kingsbridge, L.

Ogmore, L.

Dormand of Easington, L.

Peston, L.

Dubs, L

Plant of Highfield, L

Eatwell, L.

Portsmouth, Bp.

Elis-Thomas, L.

Prys-Davies, L.

Ezra, L. [Teller.]

Rea, L.

Falkender, B.

Richard, L.

Falkland, V.

Richardson, L.

Farrington of Ribbleton, B.

Ritchie of Dundee, L.

Fisher of Rednal, B.

Rochester, L.

Fitt, L.

Rodgers of Quarry Bank, L.

Foot, L.

Sainsbury, L.

Freyberg, L.

Seear, B.

Gallacher, L.

Sefton of Garston, L.

Gladwyn, L.

Serota, B.

Glenamara, L.

Gould of Pottemewton, B.

Shaughnessy, L.

Graham of Edmonton, L. [Teller]

Shepherd, L.

Simon, V.

Stallard, L.

Stedman, B.

Greene of Harrow Weald, L.

Stoddart of Swindon, L.

Grey, E.

Strabolgi, L.

Halsbury, E.

Taylor of Blackburn, L.

Hamwee, B.

Thomas of Walliswood, B.

Harris of Greenwich, L.

Thomson of Monifieth, L.

Haskel, L.

Thurlow, L.

Healey, L.

Tordoff, L.

Hilton of Eggardon, B.

Turner of Camden, B.

Hollick, L.

Varley, L.

Hollis of Heigham, B.

Wallace of Coslany, L.

Holme of Cheltenham, L.

Wedderbum of Charlton, L.

Howie of Troon, L.

White, B.

Hughes, L.

Wigoder, L.

Jacques, L.

Williams of Crosby, B.

Jay of Paddington, B.

Williams of Elvel, L.

Jenkins of Hillhead, L.

Winchilsea and Nottingham, E

NOT-CONTENTS

Aberdare, L.

Blatch, B.

Ailsa, M.

Blyth, L.

Aldington, L.

Boardman, L.

Ampthill, L.

Borthwick, L.

Archer of Weston-Super-Mare, L.

Boyd-Carpenter, L.

Astor, V.

Brabazon of Tara, L.

Balfour, E.

Braine of Wheatley, L.

Belhaven and Stenton, L.

Bridgeman, V.

Birdwood, L.

Brigstocke, B.

Blaker, L.

Brougham and Vaux, L

456

Bruntisfield, L.

Kinnoull, E.

Buckinghamshire, E.

Lindsay, E.

Butterworth, L.

Lindsey and Abingdon, E.

Buxton of Alsa, L.

Long, V.

Cadman, L.

Lucas, L.

Caithness, E.

Lyell, L.

Campbell of Alloway, L.

Mackay of Ardbrecknish, L.

Campbell of Croy, L.

Mackay of Clashfern, L. [Lord Chancellor.]

Carnegy of Lour, B.

Carnock,L.

Macleod of Borve, B.

Chalker of Wallasey, B.

Mancroft, L.

Charteris of Amisfield, L.

Manton, L.

Chelmsford, V.

Merrivale, L.

Clanwilliam, E

Mersey, V.

Constantine of Stanmore, L.

Miller of Hendon, B.

Courtown, E.

Montgomery of Alamein, V.

Cranbome, V. [Lord Privy Seal.]

Mowbray and Stourton, L.

Crathome, L.

Moyne, L.

Cross, V.

Munster, E.

Cullen of Ashboume, L.

Murton of lindisfame, L.

Cumberlege, B.

Nelson, E.

Davidson, V.

Newall, L.

De Freyne, L.

Norrie, L.

Dean of Harptree, L.

Northesk, E.

Dixon-Smith, L.

O'Cathain, B.

Elibank,L.

Orr-Ewing, L.

Ellenborough, L.

Oxfuird, V.

Elliott of Morpeth, L.

Pender, L.

Elton, L.

Peyton of Yeovil, L.

Faithfull, B.

Rankeillour, L.

Ferrers, E.

Rawlings, B.

Finsberg, L.

Rennell, L.

Flather, B.

Renwick, L.

Gainford, L.

Rodger of Earlsferry, L.

Gardner of Parkes, B.

Romney, E.

Geddes, L.

Saltoun of Abernethy, Ly.

Goschen, V.

Sanderson of Bowden, L.

Gridley, L.

Seccombe, B.

Hacking, L.

Shannon, E.

Hailsham of Saint Marylebone, L.

Shaw of Northstead, L.

Harding of Petherton, L.

Skelmersdale, L.

Harmar-Nicholls, L.

Slim, V.

Hayhoe, L.

Soulsby of Swaffham Prior, L.

Hayter, L.

Strathclyde, L. [Teller.]

Henley, L.

Sudeley, L.

Hives, L.

Swansea, L.

HolmPatrick, L.

Terrington, L.

Hood, V.

Teviot, L.

Hooper, B.

Teynham, L.

Hothfield, L.

Thomas of Gwydir, L.

Howe, E.

Tugendhat, L.

Hylton-Foster, B.

Ullswater, V.

Inglewood, L. [Teller.]

Vivian, L.

Johnston of Rockport, L.

Wynford, L.

Kimball, L.

Young, B.

Resolved in the negative, and amendment disagreed to accordingly.
4.10 p.m.
Lord Lucas Lord Lucas moved Amendment No. 109:
Page 6, line 45, leave out from ("not") to end of line 2 on page 7 and insert ("provide for a greater number of member-nominated trustees than that required to satisfy that minimum unless the employer has given his approval to the greater number".).
The noble Lord said: This is a technical amendment to clarify the intention behind the clause. Schemes must permit their members to select at least one-third of the trustees, with a minimum of two, or one if the scheme has fewer than 100 members unless they opt out of the member-nominated trustee requirements.
However, we recognise that there are many excellent schemes which currently exceed that minimum and we wish them to continue if the sponsoring employer is content. The current wording of Clause 14(7) (b) may suggest that employers have the right to approve or reject particular individuals as trustees, which is certainly not our intention. The amendment makes clear that the employer's agreement is required only for the member-nominated trustees if that number is above the statutory minimum. I beg to move.
Lord McIntosh of Haringey: We have no objection to the amendment which seems to improve the wording. I ask the noble Lord not to describe the amendments as "technical" all the time. He did so on the first day of our Committee stage and on a number of occasions that simply was not the case. Real changes of policy were involved even though the amendments had been described as "technical". The amendment is not objectionable but it is not a technical or drafting amendment.
On Question, amendment agreed to.
Baroness Seear Baroness Seear moved Amendment No. 109A:
Page 7, line 2, at end insert:
("( ) The arrangements must provide for at least one trustee to be nominated by pensioner members of the scheme, once pensions are paid from it.").
The noble Baroness said: This amendment seeks to include on the trustee board a number of existing pensioners. I anticipate that the noble Lord will say that such a pensioner represents a special interest. We ask that a pensioner should be there because he has a special point of view, knowledge and appreciation of how the scheme works. Therefore, he can contribute to the collective knowledge of the unified group of trustees which will make the decision regarding the pension scheme.
It is true also that the interests of the member trustee who is still working in the organisation are not necessarily exactly the same as those of the pensioner who is benefiting currently from the scheme. At times, when there is any doubt as to whether the scheme is being properly run, it would be easier for a pensioner member to "blow the whistle"—the phrase we agreed to use to describe the situation when the regulator needs to be alerted to the fact that things are going wrong. He could not be victimised or lose his job because he does not have a job to lose, which would not be the case for a member trustee. Therefore, the argument for having a pensioner as a member of the trustee board is very strong. I beg to move.
Lord Desai: I support the amendment. I have been approached by the BT and Post Office Pensioners Association which is strongly in favour of the amendment. I agree with what the noble Baroness said. As a group, pensioners have an interest in how schemes are run. Although we take the point that trustees are trustees and are not representing sectional interests, I believe that it is fair and just that one pensioner should be on the board, especially when a scheme is mature and pensions are being paid through it.
458
This proposal has commanded a great deal of support in the briefings I have received. Some Members of the Committee may have seen a letter in The Times on 4th February by Mr. Don Langford who is chairman of the English China Clays Executive Retirement Benefits Scheme Pensioners' Association. He believes that the proposal is in the interests of pensioners. Therefore, I support the amendment.
Baroness Hollis of Heigham: I support the amendment for three reasons. There are three rather than two parties to the pension promise—the employer, the employees and pensioners, both active and deferred. It is right and fair that the trustees should reflect the experience of the three parties, even though they are acting in an overall fiduciary way. There are 5,000 schemes with 1.83 million members which have a pensioner trustee and that is regarded as a valuable addition. It is necessary to ensure that the trustees reflect the balance and breadth of interest we wish to see.
Secondly, to emphasise a point already made, the experience and interests of pensioners may differ from those of employees. It is important that the trustee board should hear that voice. For example, issues as regards the eligibility of new members which may dilute schemes; changes in benefits for contributions; or changes in accrual rates which may add to future liabilities, are all matters of considerable significance to pensioners. Their interests may be at odds with those of active members. That is especially important when the scheme has in it more retired than active members.
The third reason for supporting the amendment is that a pensioner—in particular a pensioner who is elected or selected by his fellows—has time to give, very often has a real expertise, and has the retirement status to make him independent of improper pressure from any quarter. In a very real sense, a pensioner is less likely to be sectional and more likely to carry a fiduciary responsibility and stewardship than the other parties to the pension promise. For those reasons, we strongly support the amendment.
Lord Ezra: It seems to me that the argument is unassailable that we need to have on the boards of trustees members who represent all interests. Of course they will serve the scheme jointly, but in performing that service they would bring to it the expertise which has come to them from being concerned mainly with management, being working members of the scheme, or being pensioners. I should have thought that the Government could agree that such an amendment would strengthen the legislation.
Lord Mackay of Ardbrecknish: As has been pointed out clearly by those who have spoken, the amendment would oblige schemes to give pensioner members the right to select trustees. Therefore, it would give pensioner members a status and privilege greater than that given to other 'members and would limit the freedom of schemes to develop the selection arrangements best suited to their circumstances. Indeed, some schemes operate along the lines suggested by the noble Baroness and a number go even further and have specifically selected or elected pensioner members. Nothing in the Bill prevents that continuing. As I shall

459
say on a number of occasions, after the Bill is enacted it will be very much a matter for the active and pensioner members as to how the member-nominated trustee section of the Bill should be dealt with when the scheme is put before them by the employer for their approval.
As I said, a wide variety of schemes operates at present. It would be wrong to impose a rigid and uniform selection process which may be quite unsuitable for some of them. Schemes should be free to develop their own arrangements for the selection of trustees, but such an arrangement must command the approval of active and pensioner members. That may be extended to deferred members if the trustees so wish.
Those arrangements will determine who is eligible to nominate trustees. Members' interests, including pensioner members' interests, will thus be protected by the regular statutory consultation procedure. The Bill gives equal opportunities and rights to both active and pensioner members. I hope that the Committee will agree that it is for scheme members to decide the best way to nominate their trustees.
The amendment would in fact introduce a mandatory pensioner trustee by the back door, although I know that some Members of the Committee would be quite open and would want to introduce such people by the front door. I fully accept that various organisations representing pensioner interests have lobbied us on the point. We have listened most carefully to their arguments; indeed, as I indicated, I share their view on the diligence and competence of the vast majority of pensioner trustees. I do not argue at all with the noble Baroness about that aspect of her speech, although she said it in a way that rather assumed that I opposed it. That is not the case.
I know that many schemes have pensioner trustees. We have received evidence from many sources of the considerable contribution that they can make to running schemes. That evidence may well encourage scheme members to nominate a pensioner member as a trustee voluntarily. We want to see the best possible trustees running schemes. We have no objection to pensioner trustees, or any other type of trustee, if that is what the members want.
The noble Baroness, Lady Hollis, gave three reasons why she thought pensioner trustees were a good idea and should be made mandatory. There is no dispute between us about them being a good idea if that is what scheme members want. However, the dispute between us concerns whether that should be made a mandatory requirement and written on the face of the legislation.
The noble Baroness mentioned the fact that pensioners would somehow be free from improper pressures, although, interestingly enough, she instanced as one of her reasons the particular interest that pensioners would have against what may be the interests of active pensioners. That is not really an argument that I should like to see developed—namely, the role of one trustee against another—as regards members' interests.
One of the noble Baroness's main arguments was about the pressures exerted on employee trustees by an employer. We have heard a good deal about that during our deliberations from the noble Baroness, Lady Dean,
460
who has the experience of the Maxwell pension business to fall back upon. Indeed, no one could argue with the horrors of that particular case.
However, similar claims could be made against pensioner trustees—for example, that they were only interested in enhancing pensions and that they see themselves as representative of pensioners. I do not believe that we should give weight to any of those suppositions. I wish to avoid anything that could lead members to regard the trustees whom they select as representative of a particular group or faction among the members of the scheme, whether they be active members, deferred members or pensioner members. If pensioner members were singled out to have the right to nominate their own trustee, there could be a danger that that trustee might not enjoy the confidence of active members. It would of course be quite a different situation if a pensioner member is selected to be a trustee under impartial rules agreed by both active and pensioner members.
As I have said, trustees are not representative of any particular party to the trust deed. They are required to act in the best interests of all parties. Their conduct will very much depend on their qualities as individuals rather than their category within the scheme. However, in the event of improper interference by an employer in areas covered by trustees' powers, there are several safeguards. Trustees will be free to approach the occupational pensions regulatory authority if they feel that the employer is obstructing them in the performance of their duty. There is the duty on scheme professionals to report any irregularities to the authority and the employer will not be able to dispose of a member trustee simply by terminating his employment. Trustees will enjoy the same protection under employment law as other employees.
Pensioner members should have the same rights as active members in approving any selection rules proposed by the trustees of their schemes. However, accepting the proposed amendment would fetter members' choice by imposing preconceived selection arrangements. It would restrict the freedom of schemes to develop their own selection rules which would be developed to meet their own particular requirements. If the matter becomes the subject of a Division, I would urge Members of the Committee to reject the amendment.
Baroness Seear: I must say that I find the Minister's response most astonishing. To have a pension trust scheme without a pensioner on it is surely "Hamlet" without the prince writ large. What is it for, except pensioners? Why on earth—
Lord Mackay of Ardbrecknish: I am sorry to interrupt the noble Baroness but I cannot allow her to get away with that remark. That is not what I said. The noble Baroness wants to make the position a mandatory one in respect of pensioners. Nothing in my speech could possibly have been interpreted as meaning that I

461
do not approve of pensioners being trustees. What I do not approve of is the fact that, under the amendment, they would have a mandatory place on trust schemes.
Baroness Seear: I understand that, but the Minister has left the matter in such a way that the producer of the play is still free to leave out Hamlet. That is my contention. It should be a mandatory requirement for a pensioner to be on the trust scheme. That is the difference between us. The Minister said that if a pensioner gets there, then that is fine and he would have no objection. However, we are saying that this is a scheme for pensions and, to say the least, it seems odd that there should not be a pensioner on the trustee board.
I hope that we do not have to say at every stage of the Bill that we accept that pensioners do not represent interests. Indeed, we have accepted that fact at least three times during our debates this afternoon. I hope that we shall not have to do so again. However, we are saying that pensioners have an approach, the knowledge and the experience of how the scheme is working that is not available to those who are still working or to someone who is an employer. Their experience is different and such experience is well worth having.
I do not accept the Minister's contention that protection against victimisation is sufficient for the people who are already there. A wink is as good as a nod to a blind man. You do not have to tell the member of the trust scheme that he is out if he does not go along with what the employer wants. It is very easy for an employee member to sense what the feeling is and to hold back from the kinds of suggestions and criticisms that he would otherwise make for fear of what the consequences might be. The pensioner is in no such position. He has a freedom to speak that the working member does not have. I believe that all the points at issue have been put most clearly. I must test the opinion of the Committee.
4.27 p.m.
On Question, Whether the said amendment (No. 109A) shall be agreed to?
Their Lordships divided: Contents, 115; Not-Contents, 131.

Division No.2

CONTENTS

Acton, L.

Cocks of Hartcliffe, L.

Addington, L.

Craigavon, V.

Airedale, L.

Darcy (de Knayth), B.

Allen of Abbeydale, L.

David, B.

Archer of Sandwell, L.

Dean of Beswick, L.

Avebury, L

Dean of Thomton-le-Fylde, B.

Barnett,L.

Desai, L.

Beaumont of Whitley, L.

Diamond, L.

Blackstone, B.

Donaldson of Kingsbridge, L.

Bottomley, L.

Dormand of Easington, L.

Bridges, L.

Dubs, L.

Bruce of Donington, L.

Eatwell, L.

Callaghan of Cardiff, L.

Erroll, E.

Carmichael of Kelvingrove, L.

Ezra, L. [Teller]

Carter, L.

Falkender, B.

Castle of Blackburn, B.

Falkland, V.

Cledwyn of Penrhos, L.

Farrington of Ribbleton, B.

Clinton-Davis, L.

Fisher of Rednal, B.

462

Fitt, L.

McIntosh of Haringey, L.

Foot,L.

Merlyn-Rees, L.

Freyberg, L.

Milner of Leeds, L.

Gallacher, L.

Molloy, L.

Gladwyn, L.

Monkswell, L.

Glenamara, L.

Morris of Castle Morris, L.

Gould of Potternewton, B.

Morris of Kenwood, L.

Graham of Edmonton, L.

Nelson, E.

Greene of Harrow Weald, L.

Nicol, B.

Grey, E.

Ogmore, L.

Halsbury, E.

Peston, L.

Hamwee, B.

Plant of Highfield, L.

Harris of Greenwich, L.

Prys-Davies, L.

Haskel, L.

Redesdale, L.

Healey, L.

Richard, L.

Hilton of Eggardon, B.

Ritchie of Dundee, L.

Hollick, L.

Rochester, L.

Hollis of Heigham, B.

Rodgers of Quarry Bank, L.

Holme of Cheltenham, L.

Sainsbury, L.

Hooson, L.

Seear, B. [Teller.]

Houghton of Sowerby, L.

Sefton of Garston, L.

Howie of Troon, L.

Serota, B.

Hughes, L.

Shaughnessy, L.

Jacques, L.

Shepherd, L.

Jay of Paddington, B.

Stallard, L.

Jeger, B.

Stedman, B.

Jenkins of Hillhead, L.

Stoddart of Swindon, L.

Strabolgi, L.

Jenkins of Putney, L.

Taylor of Blackburn, L.

Judd, L.

Thomas of Walliswood, B.

Lawrence, L.

Thomson of Monifieth, L.

Lester of Heme Hill, L.

Tordoff, L.

Listowel, E.

Turner of Camden, B.

Lockwood, B.

Varley, L.

Longford, E

Wallace of Coslany, L.

Lovell-Davis, L.

Wedderburn of Charlton, L.

Mallalieu, B.

White, B.

Mason of Bamsley, L.

Williams of Crosby, B.

Mayhew, L.

Williams of Elvel, L.

McCarthy, L.

Winchilsea and Nottingham, E

NOT-CONTENTS

Aberdare, L.

Clanwilliam, E.

Ailsa, M.

Courtown, E

Aldington, L.

Cranbome, V. [Lord Privy Seal.]

Ampthill, L.

Cullen of Ashboume, L.

Archer of Weston-Super-Mare, L.

Cumberlege, B.

Ashbourne, L.

Davidson, V.

Astor, V.

Dean of Harptree, L.

Balfour, E.

Dixon-Smith, L.

Barber, L.

Elibank, L.

Birdwood, L.

Elliott of Morpeth, L.

Blaker, L.

Elton, L.

Blatch, B.

Faithfull, B.

Blyth, L.

Ferrers, E.

Boardman, L.

Finsberg, L.

Borthwick, L.

Flather, B.

Boyd-Carpenter, L.

Gardner of Parkes, B.

Brabazon of Tara, L.

Geddes, L.

Braine of Wheatley, L.

Goschen, V.

Bridgeman, V.

Gowrie, E.

Brigstocke, B.

Gridley, L.

Brougham and Vaux, L.

Haddington, E.

Bruntisfield, L.

Hailsham of Saint Marylebone, L

Burnham, L.

Harding of Petherton, L.

Butterworth, L.

Harmar-Nicholls, L.

Buxton of Alsa, L.

Hayhoe, L.

Cadman, L.

Henley, L.

Caithness, E.

Hives, L.

Caldecote, V.

HolmPatrick, L.

Campbell of Alloway, L.

Hood, V.

Campbell of Croy, L.

Hothfield, L.

Camegy of Lour, B.

Howe, E.

Camock, L.

Inglewood, L. [Teller]

Chalker of Wallasey, B.

Jellicoe, E.

Charteris of Amisfield, L.

Johnston of Rockport, L.

Chelmsford, V.

Killearn, L.

463

Kimball, L.

O'Cathain, B.

Kinnoull, E.

Orr-Ewing, L.

Lauderdale, E.

Oxfuird, V.

Lindsay, E.

Pender, L.

Lindsey and Abingdon, E.

Peyton of Yeovil, L.

Long, V.

Quinton, L.

Lucas, L.

Rankeillour, L.

Lyell, L.

Rawlings, B.

Mackay of Ardbrecknish, L.

Renwick, L.

Mackay of Clashfern, L. [Lord Chancellor.]

Romney, E.

Saltoun of Abernethy, Ly

Macleod of Borve, B.

Sanderson of Bowden, L.

Manchester, D.

Seccombe, B.

Mancroft, L.

Shannon, E.

Manton, L.

Shaw of Northstead, L.

Marsh, L.

Skelmersdale, L.

McColl of Dulwich, L.

Slim, V.

Merrivale, L.

St Davids, V.

Mersey, V.

Strathclyde, L. [Teller.]

Miller of Hendon, B.

Sudeley, L.

Milne, L.

Swansea, L.

Milverton, L.

Teviot, L.

Mountevans, L.

Teynham, L.

Mowbray and Stourton, L.

Thomas of Gwydir, L.

Moyne, L.

Tugendhat, L.

Munster, E.

Ullswater, V.

Murton of Lindisfarne, L.

Vivian, L.

Newall, L.

Weatherill, L.

Noel-Buxton, L.

Wise, L.

Norrie, L.

Wynford, L.

Northesk, E.

Young, B.

Resolved in the negative, and amendment disagreed to accordingly.
4.35 p.m.
[Amendment No. 110 not moved.]
Clause 14, as amended, agreed to.
Baroness Turner of Camden Baroness Turner of Camden moved Amendment No. 111:
After Clause 14, insert the following new clause:
Protection against victimization
(" . In relation to a member-nominated trustee appointed under section 14 above, the Employment Protection (Consolidation) Act 1978 and the Trade Union and Labour Relations (Consolidation) Act 1992 (referred to in this section as "the 1992 Act") shall each have effect as if—

(a) the purposes specified in section 146(1) of the 1992 Act (action short of dismissal on grounds related to trade union membership or activities) included preventing or deterring him from carrying out any relevant functions as a trustee, or penalising him for doing so; and

(b) the reasons specified in section 157(1) of the 1992 Act (dismissal on grounds related to trade union membership or activities) included the reason that he had carried out, or proposed to carry out, his functions as a trustee.").

The noble Baroness said: We now come to what I believe is one of the most important issues in the whole of this Bill. As we know, the Bill is devised ostensibly to provide more security for members of occupational schemes. In order to do this, it has been acknowledged by the Government that the role of trustees is absolutely crucial. They are likely to be the first people to know if things are going wrong. Therefore, they are in the best position—better even than that of professional advisers—to prevent such calamities as the Maxwell affair from happening again.
There is an acknowledgment in the Bill that there should be member trustees; in other words, people who are currently in employment and who have been nominated or elected to serve the beneficiaries and to protect the fund. We have had our discussions this evening about the number of such member trustees. Our view remains that at least a majority should come from the members themselves and we also want pensioners to be represented. Unfortunately, so far, the Chamber has decided against those two suggestions. But consider the position of an employee trustee when faced with a Maxwell-type employer. In the Maxwell scheme there were employee trustees but there were few people who ever challenged Maxwell about anything, let alone an employee. It therefore becomes necessary, I would suggest, to build into the Bill some protection against unfair dismissal or action short of dismissal for people who come forward to act as pension scheme trustees. The internal whistle blower has to be protected.
At present, as the Bill stands the member trustee will obviously, when he takes up his or her post as a trustee, come into the employer's sights, perhaps for the first time. As we know, the Bill contains quite severe penalties for the trustee who falls down on the job. But the trustee has no protection against his employer, should that employer decide that the questions he is asking are causing problems, or that he or she is seen to be making a nuisance of himself or herself by stirring things up a bit.
The amendment before the Committee seeks to give member trustees some kind of protection. Some Members of the Committee may remember that several years ago, together with my noble friends Lord Wedderburn and Lord McCarthy, we were able to persuade the Government and the Chamber that it was necessary to give some protection against victimisation to individuals working on oil rigs in the North Sea who blew the whistle on unsafe practices. At that time they had no such protection and as many were on short-term contracts they tended to keep quiet when it might have been better had they spoken out. The Chamber supported our Private Member's Bill and it later became incorporated into general health and safety legislation.
What we are seeking to do here is something very similar and in its way almost as important. The North Sea issue, of course, affected lives and safety: this could affect the living standards in retirement of many people, and therefore indirectly their prospects of a longer life. The amendment lays down that anyone who becomes a trustee has the same protection against unfair dismissal—and that protection dates from the commencement of employment—as someone undertaking trade union activity. It also provides that should he or she be dismissed in such a way that it stems from his work as a trustee—and the onus of proof rests on the employer rather than the employee—the employee is then entitled to compensation at the top rate, which I believe could now be of the order of £32,000. I know that there is absolutely no way in which individuals can have complete protection. However, I believe that such a provision in the Bill will surely cause

465
employers who could think of getting rid of or making things difficult for awkward trustees to pause, think again, and then perhaps not do it.
4.45 p.m.
Lord Marsh: As the noble Baroness said, the legislation poses some onerous liabilities upon trustees. Indeed, one of the reasons why I have been somewhat less than enthusiastic for the growing attempts to represent ever more employees among the trustees is precisely because of the sheer size of those liabilities.
Perhaps I may refer briefly to the investment power. The Bill refers to,
"Liability for breach of an obligation under any rule of law to take care or exercise skill in the performance of any investment functions".
That is a pretty heavy and onerous liability.
As one becomes more and more concerned about the situation, one turns to the amendment. My immediate reaction to the amendment was that the situation would be so outrageous that it could be dealt with under the heading of wrongful dismissal or constructive dismissal.
Lord Hailsham of Saint Marylebone: Or unfair dismissal.
Lord Marsh: As the noble and learned Lord says, or unfair dismissal. That is not my belief, on reflection. I shall say why in a moment.
In the case of directors, the Cadbury Report concentrated strongly on ensuring that directors were forced to a realisation of the liabilities which they face. The provision has worked well. It is now common for directors of companies, including people now known as shadow directors, to refuse to continue a discussion with a company in difficulties until there is legal advice available in the room. A few years ago that position would have been regarded as ludicrous.
The Cadbury Report was also anxious to ensure that some directors should not be totally reliant upon the company for their employment and living. In this case, we have trustees with liabilities every bit as serious as those for directors of public companies, many of whom will owe their entire standard of living to the employer concerned. Therefore, I believe that the provision is extremely important. We shall come to the liabilities on trustees in general later. In those circumstances, it is difficult to conceive of any situation in which the trustees could be more at risk.
Reference has been made to very large companies, the numbers of employee trustees, and even pensioners. Those large companies have literally hundreds of people as executives in every conceivable discipline. Medium-sized housebuilding companies do not. Many of those people will find themselves for the first time in a situation where they have to challenge people sitting on the other side of the room who have education, sometimes in quite technical areas. If those people seriously intend to do their job, they will sometimes make mistakes and it is possible that a bad employer
466
will seek either to threaten or actually ensure that those persons lose their jobs as a result. Therefore, why does the existing law not protect them?
The law does not do so because we all know what will happen in the real world in an unfair dismissal case. First, the employer hires counsel. Secondly, the employer spins the matter out for as long as he can in the run-up to attending court; and unless that employee is defended by a trade union or has some legal liability insurance, which is unlikely, he will have to give up because he cannot afford to go on—he will lose his job—or have second thoughts and not raise the issue anyhow.
Therefore, I believe that the amendment is important. The provision is crucial if people are not to be faced with running the risk of losing their employment when seeking to discharge their duties, or caving in and sitting quiet. If that occurs, as I believe it will in some circumstances without such a provision, it strikes at a major protection of pensioners in the Bill. I therefore support the amendment.
Lord Boyd-Carpenter: On the face of it, the amendment seems reasonable. There may well be an answer and I await the Minister's reply with interest. However, I say to the Minister that on the face of it, as matters now stand, it certainly looks a reasonable proposition. If the Minister decides to reject it, the onus is on him to demonstrate what is the matter with the provision.
Baroness Seear: The amendment stands in my name, too. However, with such powerful support from the noble Lords, Lord Marsh, and Lord Boyd-Carpenter, there is little for me to add. That support has come from quarters from which one might not expect it. I made this point on the previous amendment, but I did not notice either of those noble Lords in the Lobby supporting that amendment. However, that is water under the bridge.
This is plainly one area in which the Government can show that they have second thoughts. I beg the Minister to take on board this most important amendment if he wishes the whole scheme to be taken seriously, with member participation a real and effective part of the scheme.
Lord Finsberg: I speak as trustee of a large pension fund. I have not experienced this problem but I agree very much with my noble friend Lord Boyd-Carpenter and the noble Lord, Lord Marsh, that there is a real danger. It is an even more subtle danger. Somewhere down the line someone may quietly say, not necessarily with the authority of the directors, "Watch out for your promotion". One can never take such a subtle statement to court. The Minister is bound to say—I have said it myself when I was a Minister—that the amendment is technically deficient. However, if he says that, I hope that he will undertake to come back at the next stage with a provision which covers this important issue.
Lord McCarthy: With such degree of support throughout the Chamber, one hesitates to enter into the debate in case one queers the pitch. However, I seek to anticipate the Minister's answer because no one else seems able to do so.

467
We seek to put a trustee in the position of an employee who is dismissed on the ground of trade union activity, or because he is not a trade unionist, or on grounds of race or sex. In effect, we seek to make the dismissal of a trustee an unfair reason. Whenever one seeks to put an "unfair reason" into the unfair dismissal legislation, it is always said, "You do not need to put in another unfair reason because there is a residual. You can dismiss someone for some other substantial reason". It may well be said—I hope that it will because if not I am giving the Minister an argument—then why do we not have that protection already? Any tribunal considering a case of someone dismissed for action as a trustee could hear that that is the reason why it happened. If the tribunal agreed, it would say, "It is not sex, it is not race, it is not indiscipline. It is none of those things but we can find some other substantial reason. There is a residual". But that will not do, for many of the reasons already given, not least by the noble Lord, Lord Marsh.
In the first place, it will not do because it does not cover the two-year rule. Anyone who acts as a trustee in the newly established system and who has not been an employee for two years is not covered by the present unfair dismissal legislation. That is why we have special provisions for sex, race and trade union activities, to cover them completely. Secondly, once one can show that it is an unfair dismissal for a particular reason, such as sex or race, the onus of proof moves to the employer. The employer has to prove that he has not carried out the dismissal for those reasons.
Most important, I should have thought that the Government would wish to declare to all those who might be trustees that they have some protection. It is not much protection to tell someone, "Be a trustee of this kind of scheme and you will be protected because I happen to know that, although there is nothing in the statute and nothing in the law, if you were actually dismissed and went along to an as yet unnamed, unspecified tribunal, it would be bound to say that there was some other substantial reason". It is not much protection, not much encouragement. That is why, if the Government believe in trustees, they should give them this minimal protection.
Lord Mackay of Ardbrecknish: The noble Lord, Lord McCarthy started by trying to work out what the Minister might say in reply. I noticed that the one outcome he did not envisage was the Minister saying: "I surrender". The noble Lord is probably quite right not to have done that. However, given the number of speeches on the amendment, I feel just a tinge beleaguered as I stand at the Despatch Box. I say that especially because although on two occasions we all agreed that scheme members should be able to have member-nominated trustees and we all agreed that if a pensioner was selected and elected by the active and pensioner members it was a good thing we then had an argument leading to a Division on both the numbers and the specific place of the pensioner member.
So it is with some trepidation that I start by saying that I very much support the purpose of the amendment but do not believe that such provisions are necessary. We are satisfied that the existing provisions in the
468
employment protection legislation, together with further measures provided in the Pensions Bill, will afford adequate protection for member-nominated trustees against unfair treatment by the employer. It is on that basis that I urge the Committee not to accept the amendment.
The provisions of the employment protection legislation making it unlawful to dismiss or to take action short of dismissal on trade union grounds constitute a strictly limited enhancement of the rights generally available to employees under the employment protection legislation. They were established in recognition of the fact that there are certain types of behaviour by employers which are so unacceptable that special protections were merited.
I should certainly not wish to understate how serious a matter it would be for an employer to victimise an employee because of his or her functions as a pension scheme trustee. But I do not believe that this would generally fall into the same category as infringements of a fundamental right, such as discrimination on grounds of sex or race.
In any event, I believe that provision; already in the Bill make the amendment unnecessary. Paragraph 2 of Schedule 3 amends the Employment Protection (Consolidation) Act 1978 and makes it automatically unfair for an employer to dismiss an employee trustee, regardless of the employee's length of service, on the grounds that he or she has sought to exercise the new statutory right to reasonable time off for training or performance of duties. Except in relation to such fundamental rights as I mentioned earlier, we are convinced that the general employment protection legislation affords a sufficient safeguard for employees against unreasonable treatment by their employers. Pension scheme trustees who are dismissed for carrying out their functions can, of course, complain of unfair dismissal, provided they have completed the normal two-year qualifying period of continuous service, as the noble Lord, Lord McCarthy, pointed out. I believe that in the case of employee trustees it will invariably be the situation that they have served for at least two years before they could possibly be elected or selected as trustees.
In the same way, employee trustees who have action short of dismissal taken against them in those circumstances may be entitled to resign and make a complaint of constructive unfair dismissal, again subject to having completed the normal two years' service, or may be able to claim damages for breach of contract.
Industrial tribunals in such cases would consider all the circumstances in reaching their decision. Dismissal solely on the grounds that an employee had carried out, or proposed to carry out, functions as an employee trustee would almost certainly be found to be unfair.
The Pensions Bill itself contains a number of additional protections for member-nominated trustees. Clause 14(3) (c) prevents member-nominated trustees from being removed from the trustee board except by unanimous agreement of all the other trustees. Clause 14(10) provides that a member-nominated trustee who ceases to be a member of the pension scheme will cease to be a trustee. However, if he merely ceases to be

469
employed by the sponsoring company but leaves his pension rights in the scheme—that is, he continues to be a deferred member—he will be able to remain as a trustee. So, at its bluntest, the simple act of sacking someone does not necessarily remove him from the board of the trust fund if he remains in the pension scheme as a deferred pensioner. The noble Baroness, Lady Hollis, is making interruptions from a sedentary position. I am considering a number of examples of what Members of the Committee say might happen. I am now examining the case of an employee who has been dismissed because of what he is doing. I suggest that that would not remove him from the trust fund. Under the provisions of Clause 14—
Lord McCarthy: Is the noble Lord therefore saying that the employee should not worry, because although he has got the sack he is still in the pension fund?
Lord Mackay of Ardbrecknish: No, I am not saying that at all. There are two aspects to the argument with which I hope the Committee agrees. One is the aspect of the protection of the employee himself which I have already covered. I suggest that between the Bill and the various employment protection measures, that provision already exists. But there is the other aspect of the protection of the fund. Probably the point I have just made is more with regard to the protection of the fund and the interests of all the scheme members in the fund against someone trying to get rid of a member-nominated trustee who is being difficult.
Under the provisions of Clause 14, if a member-nominated trustee resigns or is removed from the board he must be replaced by another member-nominated trustee. Again, that is for the protection of the fund, the scheme and other scheme members. Additionally, a member-nominated trustee, or, for that matter, any individual who considers the pension scheme is not being run in accordance with the law can bring the matter to the attention of the regulatory authority. The authority will in turn be able to investigate any complaint. When we examined the amendment by the noble Baroness, we took—
Lord Marsh: I apologise for interrupting the Minister, but this is quite a complicated point. He said that the employee concerned would be able to appeal to the regulatory authority. Presumably that would enable the authority to consider whether there had been a breach of the rules of the scheme. However, I should have thought it did not provide direct protection to the employee.
Lord Mackay of Ardbrecknish: I was not trying to argue that point. As I mentioned before, there are two aspects to it. Members of the Committee have understandably been more concerned about the individual employee. I tried to address that aspect. I am now addressing the more general point of the employer removing an employee because of what he wishes to do with the fund and the protections that exist, including the one on which the noble Lord intervened. It is that the
470
person involved could blow the whistle to the regulatory authority if the argument was about something which the regulatory authority ought to investigate.
We looked at this amendment not with regard to Section 157 of the 1992 Act, to which the text of the amendment relates, but with regard to Section 152 of the Act, as we believe that that is probably where the noble Baroness, Lady Dean, is looking for the kind of support for an employee that she seeks. This is a difficult issue. I hope that I have managed to explain why we think that this particular amendment is unnecessary. It is not that the protection is not desirable; it is that this way of doing it is unnecessary, because the protection is already there between employment legislation and some of the new provisions in the Bill for the employee. As I outlined, in regard to the fund, the provisions in the Bill would give the fund protection if the employee who was being removed was on to what might be called a good point; namely, one in which the regulatory authority would be more than interested if it were not resolved.
Looking at all the issues that I have mentioned, we believe that existing employment legislation provides sufficient safeguards for employee trustees without the need for further provision in the amendments. As I think I made perfectly clear, I do not want to see employees placed at a disadvantage in this regard. I have listened with some interest to what has been said. Nobody has yet made any comment about my contribution, but on the assumption that I have not totally convinced some Members of the Committee—I see the noble Lord, Lord Monkswell, already rising to his feet—I will of course consider what has been said. As in the previous two examples, I believe that we are at one in what we want to achieve. Noble Lords believe that some amendment to the Bill is required. I believe that we do not need anything other than what is already in the Bill and in employment protection legislation. I look forward to seeing how the argument develops.
5 p.m.
Lord Hailsham of Saint Marylebone: I say first to my noble friend on the Front Bench that I start this controversy by participating in it with an absolutely open mind; that is to say, I am not necessarily wedded to the particular route that has been selected by those who propose this particular amendment via the two consolidation Acts which have been referred to. I do not think that that is the way to begin looking at the problem. On the other hand, I entirely agree with my noble friend on the Front Bench that probably the route (if there is one) that one should follow is by way of the comparatively modern jurisprudence of unfairness principle. Perhaps my noble friend will forgive me for talking in terms of English law, which is the only system that I have ever studied. I refer to unfair dismissal, rather than wrongful dismissal through the courts or discrimination.
What one really wants to guard against is that a person who is a member, as a trustee, of a pension scheme, because he gets the reputation of being what I might call an awkward customer, a loose cannon or something like that, does not have some protection

471
against the conditions in which he continues to be employed, or indeed in relation to his chances of promotion. That is the point of the case. The only question is how one addresses it. I would have thought that my noble friend could have gone rather further in the direction of those who support this amendment than he has already done.
The unfair dismissal route—again I am talking in English terms—involves appearance before a tribunal. The tribunal is not an ordinary court of law. It is one of those tribunals that have developed into English (and therefore British) jurisprudence since the war. It acts informally and it is not bound strictly by the rules of evidence or the conventions of the legal system as such. I wonder whether something could be put into the employment protection legislation that would put the burden of proof on the employer who wanted to disadvantage a person who happened to be a trustee of the scheme in the conditions of his employment to show that it was nothing to do with the way in which he had behaved as a trustee.
I feel that those who propose this amendment, irrespective of technicalities (I do not want to indulge in too much technicality) have a point. If a person acting as a trustee has a reputation as an awkward customer—which he is bound to be from time to time, because, as has been said repeatedly during the course of this afternoon's debate, a trustee owes his duty to the fund rather than to either side o f the employment contract—there should be something in the tribunal jurisprudence which puts the burden of proof on the employer to justify action against that person who is both a trustee and an employee. I wonder whether my noble friend could perhaps try a little harder than he has done in his very capable and probably persuasive reply if one relies solely on the technicalities.
Lord Mackay of Ardbrecknish: I did not think that I was depending on the technicality. I try not to do that. I simply wanted to point out, so that when noble Lords read my speech in Hansard they would realise how we had decided, in looking at the amendment, which way it had really meant us to go rather than what was on the Marshalled List.
My noble and learned friend strays into territory which is a little beyond me as a simple non-lawyer—as opposed to simple lawyers! I see the point that he makes. Certainly, I would like to consider the reversal (if I understand him) of what would in ordinary courts be considered the quality of proof, the need for the employer to prove that his action in dismissing (or whatever it is) the employee had nothing to do with the employee's action as a trustee. I would have to take some fairly firm advice on whether that was a route that was necessary to strengthen the purposes about which we all agree and which are behind the amendment. That is the best I can do in answer to my noble and learned friend.
Baroness Turner of Camden: I am very grateful to all the Members of the Committee who have participated in this debate and who have supported what we are trying to do in this amendment. Unfortunately, I
472
really do not think that the Minister's response goes far enough. It does not address the concerns that have been expressed on all sides of the Committee.
As the noble and learned Lord, Lord Hailsham, rightly said, we are concerned about what happens to the awkward person who is in employment and keeps asking questions and who gets the reputation of being a bit of a stirrer. He is not protected by anything that I can see in this Bill. Certainly the sections of the Bill to which the Minister drew our attention relate to refusal to provide training, for example, which is not the issue at all. The Minister also made reference to existing legislation under which people may apply to the industrial tribunal if they believe that they are being unfairly dismissed. But of course, there is a two-year qualifying period involved; and it could very well apply to trustees—perhaps a trustee in a new scheme that has recently been established in a comparatively new company; if there had been a change as a result of a takeover; or as a result of a merger of companies, or something of that kind. The protection that we seek to provide to such employees would, by making reference to the Employment Protection (Consolidation) Act 1978 and the consolidation Act of 1992, have the desirable effect of putting the onus of proof upon the employer.
As I said at the beginning, in drafting this amendment we looked at the kind of amendment that we had drafted for our Private Member's Bill, when we sought to protect employees working on oil rigs who blew the whistle on unsafe practices. Noble Lords accepted that Private Member's Bill, and it eventually got into legislation. It seemed to us that it was equally important to try to protect the trustee whistle-blower in this situation. I was waiting to hear whether the Minister would say that they do not like the wording but that they will come back with something else.
Lord Mackay of Ardbrecknish: Would the noble Baroness like to tell me whether we are right in thinking that "Section 157" ought to have been "Section 152"? To be honest, that would be quite important if the noble Baroness were to force the matter to a Division. It means that I can take refuge in the ultimate bolthole of the amendment being defective. As I said, it would help us. We would certainly consider all that has been said.
Baroness Turner of Camden: Is the Minister saying that he is willing to consider what we have to say in the context of Section 152 rather than Section 157?
Lord Mackay of Ardbrecknish: I wanted to be clear that we were right in thinking that it was Section 152. As we do not disagree on what we want to do, I am reluctant to allow the Committee to proceed on the basis that I am totally opposed to looking at what has been said. I would certainly wish to take away all the points raised, including the one made by my noble and learned friend and other noble Lords, to see whether my advice is correct and that examples such as those that have been brought to us are adequately and safely dealt with. If the

473
Committee is dissatisfied with what I eventually decide, there is Report stage at which to come back and have another go at me.
Baroness Turner of Camden: While the Minister was speaking, I took counsel from my noble friends. We are not anxious to push amendments to a vote or a Division, if it looks as though we might be able to reach agreement between ourselves on some way of giving protection to the people who will act as trustees and might be regarded as rather awkward and in need of special protection. When the Minister responded to me earlier, he said that special protection had been needed in other cases when certain types of behaviour by employers was unacceptable. I ask him to accept that the amendment acknowledges that there could be very unacceptable behaviour by employers. I believe that all sides of the Committee are agreed on that.
If the Minister is willing to say that he will look at what has been said in this debate and come back at Report perhaps with something to which we can all agree—we seem to have a measure of agreement between us—I certainly shall not press the amendment to a Division this afternoon.
Lord Mackay of Ardbrecknish: I am not sure that I can go much further than I already have gone. I should like to look carefully at what has been said. I should like to see whether the points that I made about protection are correct or whether the concerns of other Members of the Committee are justified. Obviously, if I am looking at that, I cannot promise one way or another to come forward inevitably with an amendment. I can certainly give the noble Baroness an assurance that we will take very seriously indeed everything that has been said today. If, in my view, a serious loophole has been opened up, we shall give serious consideration to how we can close it.
Baroness Turner of Camden: I thank the Minister for that statement. We shall look very carefully at the way in which this matter develops. Again, I thank all those who have participated in the debate. In view of what has been said this afternoon, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 15 [Exceptions]:
5.15 p.m.
The Deputy Chairman of Committees (Lord Murton of Lindisfarne): If the Committee agrees to Amendment No. 111A, I shall not be able to call Amendment No. 111B tabled by the noble Earl, Lord Buckinghamshire, because of pre-emption.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 111A:
Page 7, line 15, leave out from beginning to ("and") in line 21, and insert:
("( ) a ballot of active and pensioner members has been carried out by the employer under the statutory consultation procedure,
( ) in that ballot a majority of members eligible and voting supported that alternative,
474
( ) any complaint made to the Authority under the statutory consultation procedure has been considered and rejected, or action taken to rectify the position,").
The noble Baroness said: In moving this amendment I shall speak also to Amendments Nos. 116B and 158B.
This is a modest amendment but we believe that it is rather important. Two-thirds of all schemes, covering a third of members, have no elected or nominated member trustees and at the moment many of the rest will not contain one-third such trustees. In other words, after the passage of this Bill, most schemes will need to change, unless the employer and scheme members wish to keep the present trustee arrangements undisturbed; for example, where the scheme employs an independent professional trustee. That is their right, provided that members have been fully informed and fully consulted and that members' rights have been properly exercised. But will that be the case? I hope to persuade the Committee that this amendment will make that choice very clear.
Under the Bill at present, if the employer wishes to keep the existing arrangements of fewer than one-third trustees coming from scheme members, he must notify employees; and only if 10 per cent. of the staff require it he must then proceed to a ballot to ascertain their views. In other words, scheme members have to take the initiative to seek a ballot. We believe that it should be the other way round.
We believe that employers should be required to provide a ballot as part of the statutory consultation process itself. It should not be left to the energy of members to ask for a ballot. It should be the duty of the employer to provide one. Otherwise, how can the employer genuinely know members' views?
Perhaps I may use an analogy which I am sure will be familiar to the Committee. On a matter of such importance, we want, so to speak, the affirmative rather than the negative procedure when employees are perhaps being asked whether they wish to opt out of their legal rights under this Bill. We want to ensure that there must be a positive vote to relinquish rights rather than having scheme members merely trigger a vote because 10 per cent. of them have demanded it. I believe that that is only fair.
This is a very modest change but it ensures that people know what they are doing because they have balloted on the issue when they are asked or invited to forgo what would otherwise be their legal rights. That seems only fair. I beg to move.
Lord Finsberg: I hope that my noble friend will advise the Committee to reject the amendment. It seems to treat as incompetent, uneducated, second-class citizens those in pension funds and pensioners. It suggests that if they have a problem, they will not be competent enough to form part of the 10 per cent. who can ask for a ballot. Moreover, the amendment will involve in unnecessary cost every scheme of every employer, or mixture. I do not believe that that is an advantage to the pension fund.
Those who are in pension funds will, after all, not be coming to something that is totally new. If, in the past, they have been less than satisfied, they will be active in

475
asking for a ballot and for the 10 per cent. to be forthcoming. If it concerns anything else, I still believe that individuals in a pension scheme or pensioners will have enough wit to say, "There is something that I should like to put right. I should like my chance of having a ballot." They would ask for it.
I hope that my noble friend will not be tempted into accepting the amendment. It is in fact a far more unnecessary—dangerous is not quite the word to use—amendment than those we have already discussed.
Baroness Seear: My name is also on the amendment. It is not about a vital principle, as perhaps those amendments that we have discussed previously have been. However, such things can go by default and we want to make sure that they do not do so. The noble Lord, Lord Finsberg, said that members will not be coming to something new. But the scheme could be a brand new one. People might not be very familiar with it.
This is not an issue of the highest level of importance. However, we want to make sure, particularly in the small schemes, where the organisation may not be very strong, that the employer cannot set up the kind of arrangement that he wants simply because the matter goes by default. That is all I want to say. I support the amendment.
Lord Monkswell: I hesitate to rise in this debate except to say this. We have just debated protection for employees who are members of boards of trustees, and there was general agreement that they should be protected from the pressure that may be placed upon them by an employer. We are now envisaging a similar situation in that the proposal by the Government suggests that there should be a form of trigger mechanism. The implication of such a mechanism is effectively to say to the employer, "We think there is something wrong with the scheme and therefore want a change". Exactly the same pressures arise. It may be a wider group of employees, but an employer may threaten that if an employee starts the trigger mechanism he will wind up the scheme.
That may prove to be a bar on employees becoming involved in schemes, seeking representation among the trustees and, through the trigger mechanism, ensuring that their pension scheme is operating satisfactorily. The provision therefore needs to be considered as part of the structure of safeguards that should be built into the Bill for the benefit of future schemes.
Lord Marsh: My anxiety at the moment is that I cannot work out what the Minister's objection, if objection he has, can possibly be based on.
Perhaps I may take issue with the noble Lord, Lord Finsberg, on two points that he raised. First, cost is obviously a factor; but it will be extremely small for this kind of activity. A large company will have an administrative machine well capable of dealing with the situation, and small schemes will not encounter high costs.
On the noble Lord's second point that members of schemes may be third-rate citizens without the skills required, he may well be right—not that the members
476
are second-rate citizens but that in many cases they will be people who are not articulate; who are not used to campaigning, setting up a ballot and going against the employer.
A third point made by the noble Lord, Lord Monkswell, is that this is another example where people have to stand up and be counted against their employer. The fewer cases of that, the better. However, I look forward to hearing the Minister say that he had intended to provide something on the lines of the amendment but that this is the first opportunity he has had to put it in.
Lord Mackay of Ardbrecknish: Amendments Nos. 111A, 116B and 158A concern incorporating minimum standards on the face of the Bill and whether that would be prudent. I can assure the Committee that in our proposed statutory consultation procedure members will be left in no doubt about their rights and options. It may be helpful, even though I may need to address the Committee for a few minutes more than I try to at each intervention, for me to set out the statutory consultation procedure that we believe should operate and what our current thinking is on the prescribed rules. I hope that after I have done that the noble Baroness will accept that it is unnecessary to pursue the amendments.
I shall also argue that there could be disadvantages in placing too much detail about the consultation procedure and the prescribed rules on the face of the Bill. The features set out in the amendment may not be appropriate in all circumstances for all time, and incorporating them in the Bill could give rise to unnecessary difficulty in some cases and a loss of flexibility.
To return to the detail of the statutory consultation procedure and prescribed rules, the Committee may find it helpful if I set out in some detail what we propose to incorporate in these important regulations which trigger the whole mechanism for member-nominated trustees. For the statutory consultation procedure we propose to provide that it should incorporate detailed notification requirements. Members must be told clearly what their rights are under Clauses 14 or 15 as appropriate and what is proposed by way of an alternative. They will need to be told about their rights to object to what is proposed, and by when, and be given clear information about how to go about registering that objection.
Our current thinking is that the notification should be in writing and incorporate a tear-off slip for members to use if they wish to register an objection—we dealt with that in passing on Committee day one—but it may be appropriate to allow less formal methods in limited circumstances. The safeguard for the members is that, if there is any suggestion that the employer or trustees have failed to carry out the requirements of Clauses 14 or 15—for example, by ignoring objections—the regulatory authority could be asked to investigate; and the onus would be on the employer or trustees to show that they had acted properly. Given that, I would argue that the appeal role for the regulatory authority envisaged in Amendments Nos. 116B and 158B is unnecessary.

477
As to who should be consulted, that is already set out on the face of the Bill. In all cases, all active and pensioner members will need to be consulted and the trustees may determine at their discretion that deferred members should be consulted. That is an important feature of the proposals and it is clearly right that that should be on the face of the Bill. As we have already discussed this afternoon, it gives significant influence over the composition of the trust board to pensioner members of the scheme. What the statutory consultation procedure will not do is to provide for separate consultation arrangements for different classes of member. We believe that the issues should be considered by eligible members collectively and that all should have an equal voice.
That would not of course prevent employers or trustees from proposing, or members from agreeing to, actual arrangements for selecting the trust board which gave different weight to different groups or involved different electoral colleges. We are keen that schemes should be able to maintain or introduce whatever arrangements best suit their particular circumstances, so long as members eligible to be consulted are content. If an appropriate percentage of scheme members register an objection to what is proposed, there would need to be a positive test of opinion. We believe that that is a better way to proceed than holding a ballot in every case, as the three amendments would require.
We come to that view because we want to minimise the cost and procedural hurdles for schemes which want to maintain or introduce arrangements for constituting their trust board which are indeed likely to be acceptable to the scheme members and which may well be within the spirit of the requirement to appoint at least one-third member-nominated trustees. We are mindful of the conclusion of the Pension Law Review Committee that the constitutions of many trust boards, while not based on member election, are likely to be quite acceptable to the members and we are anxious—like the PLRC—not to disturb existing perfectly satisfactory arrangements. If, however, the proposed arrangements were opposed by a percentage of those consulted—we believe it would be right to specify a level of around 10 per cent.—there would need, as I have said, to be a positive test of opinion by way of a ballot.
To complete the picture, we intend that the statutory consultation procedure should indeed be activated within a minimum period after the commencement of the Act. Our current intention is that trustees selected in accordance with approved arrangements under either Clauses 14 or 15 should be in place within six months of the commencement of the Act. There will be substantial notice of this requirement, so it should not prove too onerous; but we intend to consult about its practicality. We believe it would be unhelpful to have an unamendable timetable laid down in primary legislation.
We intend to provide under the statutory consultation procedure that eligible members should be consulted afresh at least every six years. We also believe it would be appropriate to require trustees to consider whether further consultation is appropriate following specific developments such as a merger or bulk transfer; and to
478
give them the right to request or conduct a further consultation exercise at any time. Acting in a fiduciary capacity, they would be bound to give consideration to any views on this point expressed by scheme members.
A further consideration is that we feel it is necessary to consult widely about the procedures I have just outlined to ensure that they take account of all the possible variations of circumstances which may be relevant. There may also be a case for limited exceptions or modifications to apply in specific circumstances, and we believe it is right to retain the flexibility to do this by providing for the procedure to be specified in regulations.
The arguments affecting the proposed "prescribed rules" are a little different. The Committee will recall that these rules will be the statutory arrangements for the selection of member-nominated trustees which will apply if it proves impossible to agree "appropriate rules"; that is, rules accepted or approved by eligible scheme members under the statutory consultation procedure.
Thus the prescribed rules can be seen as being something of a default procedure. It would be wrong to view them as some kind of statutory minimum: they are arrangements which might need to be implemented quickly, perhaps following a disagreement. As such they must be relatively straightforward and uncontroversial and deliver the basic policy intention of securing at least some members of the trust board who have a different perspective from that of the employer. Our present intention therefore is that under the prescribed rules active members only should be invited to make nominations and then given the opportunity to vote on those nominations. As I say, this does not represent our view of the ideal arrangement; but it does seem to be one which could be implemented quickly and without fuss. Any attempt to complicate this arrangement could frustrate or delay the achievement of the basic policy objective.
I am sorry that I have spoken at some length but I think it is important at least to put on record for your Lordships to read in Hansard what our intentions are with regard to the regulations. For all these reasons, I hope that Amendments Nos. 116B and 158B will not be pursued. I hope that my explanation helps.
On the specific question of Amendment No. 111A, although I am unable to agree with the noble Baroness, Lady Hollis, I think that she may have identified an important lacuna in that, if an employer had failed to conduct a statutory consultation procedure, the Bill as drafted does not currently provide for the arrangement for constituting that trust board to be invalid. We shall certainly have to consider that point further. That having been said, and with an undertaking to consider the specific point where an employer fails to conduct a statutory procedure, I hope that the noble Baroness will feel able to withdraw her amendment.
5.30 p.m.
Baroness Hollis of Heigham: The Minister addressed himself to subsection (3) without dealing with the substance of subsections (1) and (2). Three basic

479
issues have been raised. The Minister has not set aside my concerns on those issues although he may go on to do so later this evening.
The first is the basic general principle that statutory consultation should means what it says. It should include the testing of opinion by ballot and not merely by default. Perhaps I may refer to other areas of which we have had experience. I have in mind housing action trusts or opt-out schemes. In those situations, when local governors, tenants' associations or residents' associations wish to move down that path, there has to be a ballot. There is not a ballot triggered by 10 per cent. who are agreed. The presumption does not go with the governors or with the local housing authority. It must be tested by ballot. The Government have accepted that in almost every sphere of policy. Where people are deciding to opt out of something their opinion must first be tested by a vote. That is reasonable and I believe that we should hold to it.
The Minister's second argument, which was repeated by the noble Lord, Lord Finsberg, is one of cost. The Minister spent a helpful amount of time detailing the consultation procedure to follow. I think I heard him rightly when he said that all the papers will go out, there will be full documentation explaining the issues and there will be a tear-off slip to register an objection. Why not use that tear-off slip as a ballot paper? If 10 per cent. of the members use the tear-off slip to say they want a ballot, far from the employer saving costs the employer will face double costs because he will have sent out all the papers in the first place asking whether members want a ballot and when 10 per cent. say they do he will have to send out a second set of papers for the ballot. If the noble Lord, Lord Finsberg, is concerned about the cost, it is surely sensible to use that slip of paper which apparently is part of the statutory procedure to make it a ballot. What could be simpler? It will save the cost, the time and the energy of going over the whole issue a second time because 10 per cent. of members have indicated that they want a ballot. Why have two pieces of paper when one will do and when at the same time we could uphold the democratic principle? I am baffled.
The Minister explained clearly that there will be a tear-off piece of paper. Why should there be a tear-off piece of paper asking whether members want a ballot when that could be used for the ballot? Employers will have to come out with another piece of paper. That cannot be sensible. It is daft. It is Alice in Wonderland stuff.
A third point was made by my noble friend Lord Monkswell and the noble Lord, Lord Marsh. They are absolutely right. By asking employees to trigger a ballot one is setting up, whether one wishes it or not, a confrontation. Whether one likes it or not the impression will get out that somehow employees are extracting from a grudging employer the democratic right to vote. That is not a sane and healthy way to approach the construction of a trustee board which should represent the fiduciary interests of the entire company and all the parties to it. We are inviting people to see whether they wish to opt out of their legal rights. We believe that that should be done by the affirmative rather than by the negative procedure. We think it is more democratic and that it will save costs. It
480
will happen only every six years or so. Above all, it will appear to prevent any notion of sectionalism or of confrontation which otherwise will be set up when the employees have to extract from an employer what I am sure most of us believe is an inherent right. I feel that I should test the opinion of the Committee.
5.35 p.m.
On Question, Whether the said amendment (No. 111A) shall be agreed to?
Their Lordships divided: Contents, 114; Not-Contents, 131.

Division No. 3

CONTENTS

Acton, L.

Jacques, L.

Addington, L.

Jay of Paddington, B.

Airedale, L.

Jeger, B.

Archer of Sandwell, L.

Jenkins of Hillhead, L.

Barnett, L.

Jenkins of Putney, L.

Beaumont of Whitley, L.

Judd, L.

Blackstone, B.

Lester of Herne Hill, L.

Bottomley, L.

Listowel, E.

Bridges, L.

Lockwood, B.

Brooks of Tremorfa, L.

Lovell-Davis, L.

Bruce of Donington, L.

Mallalieu, B.

Callaghan of Cardiff, L.

Marsh, L.

Carmichael of Kelvingrove, L.

Masham of Ilton, B.

Carter, L.

Mason of Barnsley, L.

Castle of Blackburn, B.

Mayhew, L.

Cledwyn of Penrhos, L.

McIntosh of Haringey, L.

Clinton-Davis, L.

McNair, L.

Cocks of Hartcliffe, L.

Merlyn-Rees, L.

Darcy (de Knayth), B.

Milne, L.

David, B.

Milner of Leeds, L.

Dean of Beswick, L.

Mishcon, L.

Dean of Thornton-le-Fylde, B.

Monkswell, L.

Desai, L.

Morris of Castle Morris, L.

Diamond, L.

Mulley, L.

Donaldson of Kingsbridge, L.

Nicol, B.

Dormand of Easington, L.

Ogmore, L.

Dubs, L.

Peston, L.

Eatwell, L.

Prys-Davies, L.

Ezra, L.

Rea, L.

Falkender, B.

Redesdale, L.

Falkland, V.

Richard, L.

Farrington of Ribbleton, B.

Ritchie of Dundee, L

Fisher of Rednal, B.

Robertson of Oakridge, L.

Freyberg, L.

Rochester, L.

Gallacher, L.

Rodgers of Quarry Bank, L.

Geraint, L.

Seear, B.

Gladwin of Clee, L. [Teller.]

Sefton of Garston, L.

Gladwyn, L.

Serota, B.

Glenamara, L.

Shannon, E.

Gould of Potternewton, B. [Teller.]

Shepherd, L.

Graham of Edmonton, L.

Stallard, L.

Greene of Harrow Weald, L.

Stedman, B.

Grey, E.

Stoddart of Swindon, L.

Halsbury, E.

Strabolgi, L.

Hamwee, B.

Taylor of Blackburn, L.

Harris of Greenwich, L.

Thomas of Walliswood, B.

Haskel, L.

Thomson of Monifieth, L.

Healey, L.

Tope, L.

Hilton of Eggardon, B.

Tordoff, L.

Hollick, L.

Turner of Camden, B.

Hollis of Heigham, B.

Varley, L.

Holme of Cheltenham, L.

Wallace of Coslany, L.

Hooson, L.

Whaddon, L.

Houghton of Sowerby, L.

White, B.

Howie of Troon, L.

Williams of Elvel, L.

Hughes, L.

Williams of Mostyn, L.

Irvine of Lairg, L.

Winchilsea and Nottingham, E.

481

NOT-CONTENTS

Aberdare, L.

Hylton-Foster, B.

Ailsa, M.

Inglewood, L. [Teller.]

Aldington, L.

Kinnoull, E.

Astor, V.

Lauderdale, E.

Balfour, E.

Leigh, L.

Belhaven and Stenton, L.

Lindsay, E.

Blaker, L.

Lindsey and Abingdon, E.

Blatch, B.

Long, V.

Blyth, L.

Lucas of Chilworth, L.

Boardman, L.

Lucas, L.

Borthwick, L.

Lyell, L.

Boyd-Carpenter, L.

Mackay of Ardbrecknish, L.

Brabazon of Tara, L.

Mackay of Clashfern, L. [Lord Chancellor.]

Braine of Wheatley, L.

Bridgeman, V.

Macleod of Borve, B.

Brigstocke, B.

Mancroft, L.

Brougham and Vaux, L.

Manton, L.

Buckinghamshire, E.

McColl of Dulwich, L.

Burnham, L.

Merrivale, L.

Butterworth, L.

Mersey, V.

Buxton of Alsa, L.

Miller of Hendon, B.

Cadman, L.

Milverton, L.

Caithness, E.

Mottistone, L.

Caldecote,V.

Mountevans, L.

Campbell of Alloway, L.

Mowbray and Stourton, L.

Campbell of Croy, L.

Moyne, L.

Carnegy of Lour, B.

Murton of Lindisfarne, L.

Carnock, L.

Newall, L.

Chalker of Wallasey, B.

Norrie, L.

Charteris of Amisfield, L.

Northesk, E.

Chelmsford, V.

Orkney, E.

Clanwilliam, E.

Orr-Ewing, L.

Clark of Kempston, L.

Oxfuird, V.

Colwyn, L.

Pender, L.

Courtown, E.

Perry of Southwark, B.

Craigavon, V.

Peyton of Yeovil, L.

Cranborne, V. [Lord Privy Seal.]

Prior, L.

Crathorne, L.

Quinton, L.

Cross, V.

Rankeillour, L.

Cumberlege, B.

Rawlings, B.

Davidson, V.

Rees, L.

Dean of Harptree, L.

Renwick, L.

Dixon-Smith, L.

Rodger of Earlsferry, L.

Elibank, L.

Romney, E.

Ellenborough, L.

Saltoun of Abernethy, Ly.

Elles, B.

Sanderson of Bowden, L.

Elliott of Morpeth, L.

Seccombe, B.

Elton, L.

Shaw of Northstead, L.

Faithfull, B.

Skelmersdale, L.

Ferrers, E.

Skidelsky, L.

Finsberg, L.

St. Davids, V.

Flather, B.

Stewartby, L.

Gardner of Parkes, B.

Strathclyde, L. [Teller.]

Goschen, V.

Strathcona and Mount Royal, L.

Haddington, E.

Sudeley, L.

Harding of Petherton, L.

Swansea, L.

Harmar-Nicholls, L.

Swinfen, L.

Harmsworth, L.

Swinton, E.

Harrowby, E

Thomas of Gwydir, L.

Hayhoe, L.

Tugendhat, L.

Henley, L.

Ullswaler, V.

Hives, L.

Vivian, L.

Holderness, L.

Whitelaw, V.

HolmPatrick, L.

Wise, L.

Hothfield, L.

Wynford, L.

Howe, E.

Young, B.

Resolved in the negative, and amendment disagreed to accordingly.
5.45 p.m.
[Amendment No. 111B not moved.]
Baroness Turner of Camden Baroness Turner of Camden s moved Amendment No. 112:
Page 7, line 22, at end insert ("provided that in no case may the employer appoint all the trustees").
The noble Baroness said: This very simple amendment provides that in no case may the employer appoint all the trustees. Prior to the Goode Report, one of the criticisms frequently made of occupational pension schemes, particularly small pension schemes, was that the employer was too dominant and in many instances where there were no employee trustees the employer appointed all the trustees or acted as the trustee himself.
The whole tenor of the Goode Report and much of the Bill before the Committee, is against that concept. If the Bill is about anything at all it is about empowering the beneficiaries and their dependants. There is now absolutely no reason at all why the employer should ever appoint all the trustees. This part of the Bill specifies that where existing arrangements are acceptable there is no need to change them—at least, that is what it appears to be saying. But that is not acceptable if the employer appoints all the trustees and we must say so on the face of the Bill. I invite the Minister to accept this amendment. I beg to move.
Lord Mackay of Ardbrecknish: The noble Baroness has raised an important issue and I acknowledge that the Government did indicate their support for the relevant PLRC recommendation No. 36 in our White Paper in June 1994. However, I believe the underlying point is fully addressed by the statutory consultation procedure. Under this proposed procedure, scheme members will be able to use their statutory right to object to their existing scheme arrangements or to any other suggested constitution of the trust board proposed by an employer. These are the matters which we have just discussed. In this way they can, if they choose, defeat arrangements which give an employer the sole right to appoint trustees.
However, members may be perfectly content with their scheme arrangements, notwithstanding that the employer appoints all the trustees. They may not want a change to something new or to select member-nominated trustees. In these circumstances my instinct is to respect the wishes of members. They, after all, are in the best position to decide the most suitable arrangements for their scheme. The noble Baroness agreed with that when she said—if I got her words right—that we wanted to empower scheme members. That is indeed what our proposed system would do.
The amendment proposed by the noble Baroness would prevent some schemes from keeping their existing arrangements if those arrangements give the employer the sole power to appoint trustees. Many employees enjoy excellent relationships with their employer, and as long as they are happy with an arrangement, it would be wrong for the Government to intervene. I am not convinced that this amendment would ultimately be in the best interests of pension schemes and scheme members and, therefore, I am unable to accept it.
Baroness Turner of Camden: I am somewhat disappointed by the Minister's response. If the onus is put on the schemes to ensure that trustees are appointed and not simply by the employer, one is taking an important

483
step forward in empowering the members of the scheme. You are saying to them, "It is up to you now; you have to appoint someone". There are many small schemes in existence where individual employees simply would not know about statutory consultation arrangements and statutory rights. Therefore, if something is written on the face of the Bill which makes it obligatory on the employer to set about finding a member trustee, that will eventually be very much in the interest of scheme members. However, it is not my intention to press this amendment to a vote. It is not one of the most crucial before the Committee tonight.
Nevertheless, I feel that it is important to try to underline the fact that that is not an acceptable practice or one that we should in any way seek to encourage. The employer should not be allowed to appoint all the trustees. Everything possible should be done to ensure that the members of the scheme take their responsibilities seriously and set about appointing trustees who will properly represent the beneficiaries' and members' interests. Having said that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Dean of Thornton-le-Fylde Baroness Dean of Thornton-le-Fylde moved Amendment No. 112A:
Page 7, line 33, leave out from ("appointments") to end of line 34.
The noble Baroness said: This a probing amendment because we are not absolutely clear about the wording of the provisions. We have just had a debate in which it has been said that many pension schemes do not have member trustees and that there will be many changes when the Bill comes into force in 1997. For the first time scheme members will be electing trustees, but during the consultation process they will be given the opportunity for the situation to remain as it is.
Clause 15 deals with exceptions and begins by stating:
"Section 14 does not apply".
Therefore, none of the provisions relating to trustees applies. I highlight that fact because Clause 14(8) states clearly:
"The arrangements must not provide for the functions of member-nominated trustees to differ from those of any other trustee".
The amendment relates to subsection (3) of Clause 15, which, after giving some details, states:
"and the terms of their appointments and any special rules for decisions to be made by particular trustees".
I suggest that if there is already bad practice in the trustee arrangements, the provisions allow that bad practice to continue. The subsection allows,
"special rules for … particular trustees".
We find those provisions very worrying. Do they mean that a member-nominated trustee on a trust board may be disenfranchised from having full involvement because the clause specifically states that Section 14 does not apply? Do the provisions mean that employer-nominated trustees will have special additional rights over other trustees? We need answers to those questions and I hope that the Minister will be able to cover those points when he replies. Indeed, if he accepts the amendment as it stands, his reply will he quite short. He would make my day if he did that, but we shall have to wait and see.
I advise the Minister that we have serious concerns about this. When the Bill becomes an Act, its provisions must be absolutely clear. Both from my personal experience and as a result of having read the relevant papers, I can advise the Minister that the matter is not clear at the moment and that the Bill provides a gateway allowing bad practice to continue despite the fact that there will be a statutory consultation process. I beg to move.
Lord Mackay of Ardbrecknish: This amendment could seriously undermine the security of members in schemes which currently have an independent trustee on the trust board; and it would detract from the right of those members to choose to maintain such arrangements.
Many schemes have set up arrangements involving trustees independent of the sponsoring employer for the specific purpose of, say, avoiding a takeover bid. The aim of such bids can be to take advantage of the healthy state of the pension funds. Some of the schemes have made representations to us, arguing that member-nominated trustees would not be the best solution to their problems and have urged us to enable them to opt-out. Without commenting on the merits of the case, I know that many people would say that this type of arrangement offers comparable security to member-nominated trustees. But I can say that they expressed a very reasonable aspiration to he able to determine, with members' approval, the arrangements best suited to the circumstances of their schemes.
In these schemes different powers may be given to a professional corporate trustee who is independent of the employer and may sit alongside other trustees. This trustee may be able, for example, to appoint other trustees or wind up the scheme in certain circumstances and he may have been placed on the trust board specifically to protect scheme members.
The requirements of subsection (3) ensure that employers must be explicit about the exact nature of their arrangements and give details which members have a right to know about. It places a requirement on them to inform members during the statutory consultation procedure if, among other things, the powers of certain trustees differ from the others. It is for scheme members to decide whether or not they should approve such arrangements.
The amendment restricts members' rights to choose the arrangements best suited to their needs. It could jeopardise the many excellent arrangements which involve professional corporate trustees, many of which, I am informed, were set up to avoid hostile takeover of the sponsoring employer.
With that explanation of why the provisions are in the Bill, I hope that I have reminded the noble Baroness that, whatever the arrangement that is made, it has to go through the statutory consultation procedure and members have to agree to it, via the procedures that we talked about earlier. That provides protection against anything that might be—dare I say the words?—devious

485
or underhand. As it stands, the clause provides for independent trustees and the important role that they can play in a fund.
Lord Monkswell: I understand the Minister's description of the important role of independent trustees and their ability to take decisions which are independent of either the employer or the employee. However, I find the suggestion that they should have special rules and special powers rather difficult. On the one hand, we are asked to believe that all trustees are equal and have responsibility for the fiduciary interests of the fund, but, on the other hand, we are asked to believe that it is all right for some trustees to have special powers.
I wonder whether a different way of dealing with it might resolve the problem. We could have special independent trustees without giving them any special powers in terms of their work as trustees. We could give them the same powers and responsibilities as other trustees but, by virtue of their independence—and, if I dare say so, of their financial independence—they would be enabled to take action that would be debarred other trustees. In effect, we would be ensuring that every trustee has the same powers and responsibilities, but there would be an independent trustee with a special ability to act because of his or her independence. I suspect that the Minister will not be able to respond to my comments this afternoon and I know that this is a probing amendment, but I wonder whether he could bear them in mind for consideration at a later stage. I am trying to suggest a way in which we might go forward and resolve the problem.
Lord Mackay of Ardbrecknish: Perhaps it would be helpful if I were to reply to that point. I always bear the noble Lord's comments in mind. If I understood his comments correctly, I would argue something like this: the point about having independent trustees (where they exist) is that they may need to take decisions, but may not be able to get the support of the majority of the trustees for the actions that they want to take, so they may need special powers. So the noble Lord's suggestion would remove the very protection that the independent trustees give because they would no longer be able to act independently and independent of the other trustees who may want to go down a different road which the independent trustee considers is not in the best interests of the scheme. If they all had the same power they would be able to vote down the independent trustee on those matters which the employer and the scheme members had agreed to be powers reserved for him. I hope that that answers the noble Lord, but I shall look tomorrow at his question in the Official Report and my answer to see whether I have answered his point.
6 p.m.
Baroness Dean of Thornton-le-Fylde: I thank the Minister for his detailed response, because he kindly highlighted the fact that the clause protects the position of independent trustees. I have represented many people who have been covered by pension schemes that have had independent trustees called in to protect the members of the fund. I am aware of the value of many of those independent trustees. There is provision elsewhere in the
486
Bill (Clause 20, I believe) relating to independent trustees. It was not my intention to eliminate any powers that independent trustees may have conferred upon them by the receiver or the court. There is a well-known case of which I am aware.
But if that is the case, why does not the Bill say so? Why does it not say so with regard to independent trustees? That term is used in several places in the Bill and is clearly understood. The reference to special rules for particular trustees is so open-ended that I do not believe that it will protect schemes sufficiently. However, I do not intend to press this matter to a Division at this stage. I shall read what the Minister has said. I ask him to reconsider the wording and to come back with an amendment which will provide coverage for independent trustees. I can assure the Minister that if he does not, we will cover this matter on Report. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 112B to 113A not moved.]
Clause 15 agreed to.
Clause 16 [Member-nominated trustees: supplementary]:
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 113B:
Page 8, line 2, at end insert:
("( ) Where either—

(a) the statutory consultation procedure has not commenced within the prescribed time after the coming into force of this Act, or

(b) the statutory consultation procedure having resulted in approval of the prescribed rules as the method of obtaining member-nominated trustees, the procedure for appointing such trustees has not commenced within 6 months of the conclusion of the statutory consultation procedure, the Authority shall issue a notice to the existing scheme trustees warning them that the relevant procedure must be commenced forthwith.

( ) If, after the expiry of 28 days of the issue of such a notice, no procedure under the prescribed rules has yet commenced, the Authority shall appoint an independent trustee under section 4(4) of this Act to ensure that the relevant procedure is carried out.").
The noble Baroness said: I shall be brief. The point of the amendment is that in the event of a default, civil penalties under Clause 9 are not enough. We ask that the regulator should be able to impose statutory arrangements instead by providing that an independent trustee do the job. I beg to move.
Lord Mackay of Ardbrecknish: The noble Baroness has identified an important issue. I accept that the statutory consultation procedure which must be undertaken when schemes develop their own rules for selecting member-nominated trustees, or if an employer proposes alternative arrangements under Clause 15, should be commenced promptly and brought to a conclusion within a reasonable period after the commencement of the Act.
Our intention is to prescribe appropriate timescales in regulations under Clause 16(3). Our current intention is that member-nominated trustees, selected in accordance with Clause 14, should be in place within six months of the Act coming into force. Similar arrangements are proposed under Clause 15. We currently intend to require that employers complete the statutory consultation

487
procedure and have the arrangements in place within six months. However, that is not something on which we have a closed mind. We intend to consult schemes and individuals who have experience of the day-to-day running of schemes and gauge their opinion on the best timetable for implementing those requirements.
The second part of the amendment is superfluous. It proposes that the authority should issue warning notices to schemes and in the final event be able to appoint an independent trustee to carry out relevant procedures. The authority already has the power to sanction trustees and employers for failing to comply with statutory requirements. The Bill also already contains a power for the authority to remove existing trustees and appoint an independent trustee (under Clause 6) to ensure that statutory duties are carried out. However, I do not believe that it would be sensible, as this amendment would do, to fetter the authority's discretionary powers to examine the merits of each case and decide on the appropriate action.
I hope that with that explanation the noble Baroness will be able to withdraw the amendment.
Baroness Hollis of Heigham: I thank the Minister for that reply. We shall obviously study it in Hansard to see whether we are confident that the interlocking of the clauses will serve the function that he suggests. It is our belief that he has given the regulator power to penalise but not power to impose a solution. If that is incorrect, we shall obviously need to come back on it. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Lucas Lord Lucas moved Amendment No. 114:
Page 8, line 3, after ("15(2)") insert ("or any corresponding provisions in force in Northern Ireland").
The noble Lord said: For the convenience of the Committee I shall speak also to Amendment No. 115. Technically speaking, these are drafting amendments which correct an error in the Bill by moving the phrase,
"or any corresponding provision in force in Northern Ireland",
from the end of Clause 16(2) and inserting it in the first line of that subsection. Its purpose is to clarify that the Northern Ireland provisions referred to are those which correspond to the selection of member-nominated trustees and not to Section 591B of the Taxes Act 1988. I beg to move.
Baroness Hollis of Heigham: The Minister has convinced us by his eloquence that this is a technical amendment. We are therefore happy to accept it.
Lord Monkswell: On a technical point, I wonder whether I may point out to the Government that the reference to the Taxes Act 1988 is not recognised by the Printed Paper Office. After some investigation, it was found that the provision related to the Income and Corporation Taxes Act 1988. It may be worth having that in Hansard for future reference.
Lord Lucas: If a further technical amendment is necessary, we shall bring that forward.
On Question, amendment agreed to.
Lord Lucas Lord Lucas moved Amendment No. 115:
Page 8, line 5, leave out ("or any corresponding provisions in force in Northern Ireland").
On Question, amendment agreed to.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 115A:
Page 8, line 17, at end insert:
("( ) Regulations made under subsection (3) above shall not specify a time period of more than six months for making of arrangements under sections 14(1) or 15(2), or one year for the selection of trustees in pursuance of such arrangements, both periods to run from the date of this Act coming into force.").
The noble Baroness said: I shall be brief, because the substantive points should be made on Amendment No. 116. Currently, the clause is open-ended, allowing the Secretary of State to take as long as he likes to bring it into force. We are apprehensive, because the Government have a record in previous pension legislation of putting proposals in legislation but not then bringing them forward; for example, there was a registrar of pensions scheme with important powers in the 1985 Act; and there were statutory increases for pensioners in the Social Security Act 1990. The amendment is intended to prevent the Government from dragging their feet en this matter. I beg to move.
Lord Mackay of Ardbrecknish: I am having a little difficulty with Amendment No. 115A. Perhaps the noble Baroness will explain it to me in a little more detail.
Baroness Hollis of Heigham: It is grouped with Amendment No. 113A, which was not moved by my noble friend Lady Turner.
Lord Mackay of Ardbrecknish: I realise that it was grouped with several amendments in respect of which I had a long speaking note. My trouble is that I must try to dissect that speaking note in order to find the appropriate part. I do not wish to bore the Committee by dealing with all the amendments in the group.
Amendment No. 115A asks me to insert:
"Regulations made under subsection (3) above shall not specify a time period of more than six months for making of arrangements under sections 14(1) or 15(2), or one year for the selection of trustees in pursuance of such arrangements, both periods to run from the date of this Act coming into force".
I covered the matter when dealing with the regulations that we would introduce in respect of time limits. It is better that the matter is left to regulations rather than being put on the face of the Bill. I explained some of the time limits and I believe that we should be able to change them after consultation. Furthermore, as time passes they may require to be changed because circumstances may arise which suggest that that would be good sense. I believe that that is the best way to proceed. To do otherwise would incorporate into the Bill the two time limits of six months and 12 months, which are best left to regulations.
I understand the laudable desire to put the them onto the face of the Bill. However, before putting the requirements into place we must consult all the pension scheme people and individuals with experience of the day-to-day running of the schemes. We expect the arrangements to be in place six months after the enactment of the Bill; that is, by

489
autumn 1997. We shall take account of the responses that we receive to consultations before making that final decision.
I am sorry about my hesitation in trying to find my way through four amendments, three of which have disappeared. I hope that with that explanation the noble Baroness will be satisfied.
Baroness Hollis of Heigham: We did not mean to throw the Minister. We are conscious of the time and the number of amendments that the Committee has yet to explore. I am sorry if the Minister was caused inconvenience in disentangling his briefing.
The Minister conceded the substance of the point and said that the Government expect to bring the arrangements into force within six months of the passing of the Act. We believe that the matter should be on the face of the Bill because where on several occasions it has been open-ended the Government have not delivered. We have had soothing words in Committee and a failure to act in practice.
I realise that we have had Pepper v. Hart and that we understand the provisions in terms of what the Minister said. Although the Minister has given an indication of the way in which the thinking will go, we remain uncomfortable that such an important issue can be discarded simply because the Minister has not given himself a time limit by which he must introduce the provision. I do not wish to raise the big issue of regulations now, but we shall return to the matter on Report. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 115B not moved.]
6.15 p.m.
Lord Peyton of Yeovil Lord Peyton of Yeovil moved Amendment No. 116:
Page 8, line 18, leave out subsection (5).
The noble Lord said: I can deal with this matter briefly. I have had occasion to raise it during the course of a number of Bills. There are in the Bill about 100 lines of words or almost three pages of "material" which relate to this matter. I use the politest description that I can think of. Then in subsection (5) we are told:
"The Secretary of State may by regulations modify sections 14, 15 and this section in their application to prescribed cases".
If the impression is not to be given that the Secretary of State has a low opinion of Parliament and believes that its procedures can be taken for granted and its decisions altered with a stroke of the pen, further explanation is required. I entirely exempt my noble friend from any breath of criticism. He is merely the messenger, which is sometimes a difficult role to fulfil.
We are dealing with what has been recognised during our protracted debates on the issue as member-nominated trustees. It is a matter of great importance. Once agreement has been reached in Parliament it is unwise to allow Ministers too much discretion to tamper with it just as they wish.
There was a time during my career when I had tremendous respect for all Secretaries of State. During the succeeding years Secretaries of State of all parties have
490
taught me to be a little more discriminating. Therefore, I say to my noble friend that I look forward with eagerness to being satisfied that his right honourable friend understands what he is doing and is not merely looking for a licence to alter Acts of Parliament merely for reasons which appear to him, but to no one else, to be good and with only a minimum of consultation.
It is not my intention to divide the Committee on this issue today. I look forward to hearing some honeyed words from my noble friend. I shall then digest them and I am sure that I shall be wholly convinced because I have such regard for him. I beg to move.
Lord Simon of Glaisdale: It is always valuable when the noble Lord, Lord Peyton of Yeovil, shifts his baleful glare from the building of the Department of the Environment, which he has shaken so severely to its foundations that it is to be dismantled and, we hope, left an open space. He has rightly shifted his gaze on the various attempts by the Executive to allocate to themselves power to alter Acts of Parliament. The provision now in question is such a one.
I am afraid that we come with great suspicion to any measure put forward by this department. It was responsible for the Child Support Act and we cannot help but reflect that that Bill, apart from its schedules, had more than 100 Henry VIII clauses, of which only 15 were subject to the affirmative resolution. We shall deal with amendments to that Act later this Session. I am sure that the noble Baroness is raring to have a go at it. I have offered her a small prize if she can show sufficient restraint and not say, "We told you". So far, she has managed to be in the running for that prize.
The main provisions of the Child Support Act were only part of the unconstitutional measures that were rammed through your Lordships' House. Above all, there was the claim that officials should be put above the law and should have special rights in contradiction to what Dicey defined as the rule of law; namely, that officials are subject to the ordinary law of the land. However, in that Act we found that special powers were given to officials to enter private property and to interrogate employers and fellow employees and even that power was given for the Inland Revenue to breach its duty of confidentiality. Therefore, the noble Lord in charge of the Bill cannot be in doubt that we view with considerable suspicion any measure coming from his department.
As against that, we remember that the noble Lord himself was an original member of the scrutiny committee. We remember also that we owe that committee not only to the noble Earl, Lord Jellicoe, and his committee but also to the Committee of Selection which instituted such a very strong body as it subsequently proved to be and continued to be even after the noble Lord's departure from it.
As I say, this is in the nature of a Henry VIII clause. There were more than 100 regulation-making powers in the Child Support Act. As the scrutiny committee pointed out, there are more than 200 such powers in this Bill. Therefore, we are bound to regard what is claimed with considerable reserve.

491
On this occasion, as in the past, the scrutiny committee has shown great discrimination. It has drawn specific attention to only four provisions in the Bill, of which two may overlap. It has signalled clearly that your Lordships are likely to insist on amendments in relation to those four provisions.
An addition which may not be covered entirely by the scrutiny committee's report is the very important point made the other day by the noble Baronesses, Lady Hollis and Lady Seear; namely, authority being taken to create criminal acts by subordinate legislation. The provision to which the noble Lord, Lord Peyton, directed the attention of the Committee is not one which the scrutiny committee clearly signalled against but it gives us an opportunity to say that we rely on the Minister in charge of the Bill—he is entirely in charge of the Bill in this Chamber—not to yield to departmental pressures to derogate from the recommendations of the scrutiny committee.
The noble Lord, Lord Peyton, does not intend—I think rightly—to divide the Committee on the amendment. But I support it strongly because it directs our attention to the powers being sought in the Bill.
Baroness Hollis of Heigham: I am delighted to follow two such distinguished speakers as the noble Lord, Lord Peyton, and the noble and learned Lord, Lord Simon of Glaisdale. On the one hand, we had the elaborate touch of the noble Lord, Lord—I nearly said Lord Satan—Peyton and the noble and learned Lord, Lord Simon, who is indeed a heavyweight on such issues.
The noble Baroness, Lady Seear, and I tried to put down a marker on the last Committee day in relation to the nature, number and significance of the regulations in the Bill. As the noble and learned Lord, Lord Simon, said, there are something like 200 of them, several of which obviously caused the scrutiny committee very real anxiety. I hope that Members of the Committee will share that anxiety when we reach the relevant clauses.
The matter which we raised last week was relatively modest. It was merely a marker or peg on which to raise the general issue. This amendment deals with a more substantial matter, as has been made clear. It means that all the arrangements that we have been discussing for the past three and a half hours of parliamentary time in relation to member-nominated trustees, basic rights to statutory consultation and so on, may be dispensed with by the Secretary of State in particular cases as he sees fit.
What have we been doing? Why have we bothered to do that if all that has been said, including the warmth of response which we received from the Minister on the amendment concerned with unfair dismissal, can be dismissed if the Government so wish?
I invite the Committee to look at the relevant provision. The Secretary of State may make arrangements as he sees fit; and that is wrong. He should not have that power. It is an unreasonable extension of executive power. It is far too sweeping and it enables him to negate wide swathes of the Bill. I am sure that the Minister would not dream of doing that but he cannot bind his successors. He cannot bind them in relation to their good intentions, good humour or their commitment to the principles of the Bill. As a result, we are extremely uneasy about it.
492
This clause contains a double jeopardy. The Secretary of State has the power by regulation to alter any or all of the trustee-member arrangements. He has then given himself additional powers, by regulation, io regulate the first set of regulations. The result is that there are regulations acting upon regulations and we get so far away from the text of the Bill that no one—professionals, trustees, the regulator, scheme members, employers, companies and ourselves—will know what the Secretary of State can, may, must, should, ought and will do or not, as the case may be. It will be like trying to traverse quicksands in the dark, an activity which is usually held to be somewhat unwise. We support the amendment.
Lord Boyd-Carpenter: With reluctance, I find myself very largely agreeing with the noble Baroness. These are extraordinarily wide powers. I believe that the Committee is entitled to an explanation, first, as to why the Government seek to give such very wide powers to the Secretary of State; and, secondly, how he intends to use them.
6.30 p.m.
Lord Mackay of Ardbrecknish: I should like to take counsel from some noble Lords opposite who are not present in the Chamber today but who were probably Secretaries of State when my noble friend Lord Peyton was in opposition in the other place—if indeed he was always so deferential to Secretaries of State in the past as he suggested in his speech. I was happy to see that he excluded Ministers of State, though that may be just a temporary blip—
Lord Peyton of Yeovil: I do not want my noble friend to misunderstand me. I did my best to assure him that my deference to Ministers of State remains unwounded by the conduct of Secretaries of State.
Lord Mackay of Ardbrecknish: I am grateful for my noble friend's assurance. I hope that I can keep it for the next five minutes or so as I answer his point.
The noble and learned Lord, Lord Simon of Glaisdale, reminded the Committee—as, indeed, I suppose he will on a number of occasions—that I was a founder member of the scrutiny committee. I appreciate the general point about the need to explain to Parliament as fully as we possibly can exactly why we should be seeking to give future Secretaries of State powers to modify, in the words of the subsection,
"sections 14, 15 and this section in their application to prescribed cases".
I hope that I can explain exactly what we have in mind in relation to that power.
We consider that we require the power primarily to have the potential to make adjustments to the member-nominated trustee requirements or opt-out provisions to enable them to be used by certain categories of schemes. Those schemes could otherwise have difficulty in operating them. The requirements might cause considerable practical difficulties or involve excessive costs for certain types of schemes.
Representations were made on behalf of some insured schemes, schemes which provide only death benefits and from centralised or industry-wide schemes.

493
Industry-wide schemes are those which have more than one unassociated sponsoring employer. In some cases schemes may have hundreds of unassociated employers. I am sure the Committee can appreciate that those schemes could experience considerable difficulty in implementing the member-nominated trustee requirements or following through opt-out arrangements as set out in Clause 15.
The intention is to modify the requirements if it becomes apparent that some schemes would have considerable practical difficulties in implementing them or the procedure would involve excessive expense. My department will consult with pensions professionals and the types of schemes which have made representations. That will enable us to ascertain the circumstances, if any, in which the member-nominated trustee requirements should be modified to accommodate the difficulties faced by those schemes. However, if we choose to modify the requirements, we intend to preserve members' rights to select at least one-third of their scheme's trustees. We also intend to use the power to include corporate trustees under the member-nominated trustee provisions. Many sponsoring employers set up subsidiary companies to act as a trustee for their pension schemes. While the company is a trustee, the individuals who run the scheme are not. They are trust company directors.
The Pension Law Review Committee recommended:
"In cases of subsidiary companies acting as corporate trustees, legislation should provide that the constitution of the board of directors reflects our recommendations for a board of trustees".
We, too, consider that members of those schemes should have the right to nominate at least one-third of their schemes' company directors.
I turn now to what is perhaps the most difficult point for my noble friend Lord Peyton, the noble and learned Lord, Lord Simon of Glaisdale, and indeed the noble Baroness, Lady Hollis, to accept. It must be said that provisions in the Bill, especially Clauses 14 and 15, are extremely complex. Indeed, we are dealing with a very complex area, as all of us who have had to get on top of it are well aware. To be realistic, there will be circumstances where some unforeseen difficulties will arise which require some kind of amendment. Everyone knows the problem of primary legislation.
In conclusion, my last point is in answer to the general question about secondary legislation. If we had to devise legislation and come to this Chamber with a Bill containing all the regulations, it would, first, be an extremely large Bill. Secondly, because of the detail thereby contained in the legislation, there would be a danger, even with the best will in the world, of our not managing to get absolutely everything right and then having to fix it in concrete for a considerable amount of time to come. That is a general point about regulations. However, with that explanation of what the subsection under discussion seeks to empower my right honourable friend the Secretary of State to do, I hope that my noble friend will be satisfied that there are no ulterior motives or reasons behind taking such a power.
Baroness Seear: Surely the Minister must explain to the Committee why there has to be such a sweeping
494
provision giving powers to alter everything in the clauses. We recognise the fact that there may be certain circumstances in which alterations will have to be made. However, I cannot believe that it is beyond the wit of the Minister and of the mandarins in his department to devise a clause which could appear on the face of the Bill covering the kind of exceptions that he has in mind—and not, therefore, to give the Secretary of State such extraordinary powers to alter by regulation as he sees fit the whole of Clauses 14 and 15. Can the Minister take the matter back and reconsider whether there is some way in which he can put the kind of exceptional powers that he wishes the Secretary of State to exercise on the face of the Bill?
Lord Mackay of Ardbrecknish: I should point out to the noble Baroness that we are discussing "prescribed cases". I thought that I gave the Committee an indication of the kind of pension funds and trustees that we believe we shall need to exempt from some parts—not all—of the two clauses. I should have thought that some of the points that I outlined in my speech show just how complicated the matter is and how deeply difficult it would be to reach the nice, simple solution preferred by the noble Baroness.
Lord Monkswell: I believe that we are entitled to raise the point that such a provision may be acceptable if it is felt that at some time in the future a problem will arise which will need to be tackled in a different way. However, from what the Minister said, it seems that the Government know that there are problems and that they will have to tackle them in different ways; but they are not prepared to include such provision in the Bill. They propose to insert the mechanism to re-write the three clauses without advising Parliament how such clauses will be re-written, even in broad outline. I am most concerned about the Government's philosophy of recognising a problem and the difficulty of tackling it, while not being prepared to provide for it on the face of the Bill.
Lord Peyton of Yeovil: I should like, first, to express my gratitude to the noble and learned Lord, Lord Simon of Glaisdale, and to my noble friend Lord Boyd-Carpenter for supporting my amendment. Perhaps I may take up one point which I should not have dared to refer to without the authority of the noble and learned Lord. I have in mind the building in Marsham Street which we all hope will come down. If, by chance, my noble friend the Minister has a spare moment, perhaps he will pass on just a word of my interest as to when that ghastly building will be pulled down. Alternatively, are they going to leave it to fall down, because I believe it is making some progress in that respect? I am obliged to the noble and learned Lord for referring to the matter.
I had also intended to overwhelm the noble Baroness, Lady Hollis, with my thanks. However, I then found myself stunned by her ingratitude—after all, I raised a point that she seemed to think was quite useful—as she made a muddle of my name. I hope that that was a

495
genuine slip of the tongue and did not reflect her true opinion. I must ask the noble Baroness to understand how sensitive I am.
Baroness Hollis of Heigham: I was once told that what one needed to know about people was whether they liked their compliments forehand or backhand. I can assure the noble Lord that the aligning together of the two names was indeed a backhanded compliment.
Lord Peyton of Yeovil: From whichever side of the court the noble Baroness's compliments come, I shall look at them with a good deal of suspicion in the future. I assure my noble friend that I was not accusing him of any ulterior motives. I am complaining about something that he has not really removed. The noble Baroness, Lady Seear, has just referred to the point. Why is it necessary to use the blanket phrase, "We can do anything we like to anything in Clauses 14, 15 and 16"? I must admit that I have not read every word with all that care. However, Clause 14(3) and (7) are examples of this matter. I cannot believe that my noble friend's right honourable friend the Secretary of State will be troubled in his sleep overnight with the thought that he may need powers to amend those provisions. They seem to me to be a cardinal part of the Bill. To take this broad brush approach to questions of this kind is a bad habit for Ministers to get into.
There may well be points of detail as regards which there is no purpose in having to bring back an amending Bill to Parliament. That is accepted. However, it is the broad brush approach that I find difficult. This Chamber has been discussing this matter of member-nominated trustees for some hours now. Obviously the Committee has views on this matter. I think it is bad for the Government to say, "It does not matter what we agree today. If it is convenient to us—without worrying to inform you—we will change this by regulation". I do not think that is good enough. I hope that my noble friend will at least say that he will take a closer look at the clauses concerned and retain this power where it is really necessary and dispense with it for those parts of the clauses where it is not called for.
Lord Mackay of Ardbrecknish: I will—as I always do—consider what has been said in the debate. However, I wish to make it clear that any exceptions will be for specific kinds of schemes. I do not think the power is here simply to decide that we will not bother with member-nominated trustees for all the schemes. This is a matter of specific schemes. I have tried to outline the kinds of special schemes which exist among the 150,000 schemes that have hugely different patterns. It is for that reason that we feel we need this power. My noble friend has already said that he will not press this amendment. However, I can assure him that we will consider what has been said and see whether there is some way in which we can perhaps allay some of his worries if possible, but which at the same time will allow us to be able to deal with those special schemes which may require some special attention.
Lord Boyd-Carpenter: Will my noble friend, when considering this matter, bear in mind that some of us feel very strongly about powers as wide as this to
496
proceed by regulation and to deal with a statute in this way? Unless he can come forward at the next stage with some limitation on this power, he may find that many of us who are on the whole loyal supporters of the Government will not support him.
Lord Mackay of Ardbrecknish: I think I was beginning to get the flavour of that even before my noble friend's intervention.
Lord Peyton of Yeovil: I am grateful to my noble friend. I realise that he is not in the easiest of situations. I very much welcome what he said and on that basis I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
6.45 p.m.
The Earl of Buckinghamshire The Earl of Buckinghamshire moved Amendment No. 116A:
Page 8, line 19, at end insert:
("( ) The Secretary of State may, on application to him by the trustees of a trust scheme, by order modify sections 14, 15 and this section in their application to that scheme.").
The noble Earl said: Clause 16 allows the Secretary of State to make modifications to Clauses 14 and 15 regarding member-nominated trustees, but only in general classes. This amendment would allow trustees who felt they had a particular case to apply to the Secretary of State to have their scheme considered separate from a general class of schemes. This is a probing amendment. Scheme rules vary so greatly that there may be particular circumstances that may be missed by general class rules. Would the Minister allow the trustees of those schemes to make an application for exemption? I beg to move.
Lord Mackay of Ardbrecknish: I think my noble friend is inviting me to go a little further than I went in the previous debate. I hope we do not re-run that and bring everyone to their feet again. We do not believe that the arrangement he proposes is necessary. Clauses 14 and 15 will be sufficiently flexible to allow the majority of schemes to comply with them. Where it is clear—this was the point of the previous debate—that certain types of scheme would have considerable difficulty implementing the requirements, the Secretary of State has a power, in the subsection we have just discussed, to modify these clauses with regard to these types of schemes.
If we decide to use this power to modify., it will be to cater for types of schemes, not individual schemes. As I have already explained in my view the main category who may wish to take advantage of this power, will be industry-wide schemes (schemes with several, often hundreds of non-associated employers). To allow individual schemes to apply to the Secretary of State for modification would be costly as well as difficult to control and administer. I do not think that would be desirable and I also think that I would run into exactly the kind of roadblock that was set for me on the previous amendment. I hope with that explanation my noble friend will feel able to withdraw his amendment.
The Earl of Buckinghamshire: I am grateful to my noble friend the Minister for his reply. I was aware that

497
we could be going backwards in coming forward as one might say. But on the basis of his reply, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 116B not moved.]
Clause 16, as amended, agreed to.
Lord Haskel Lord Haskel moved Amendment No. 116C:
After Clause 16, insert the following new clause:
("Power to alter benefits
.—(1) This section applies where, at any time, a member is appointed to be a trustee of a trust scheme, pursuant to section 14, section 15 or otherwise.
(2) In any case where this section applies, the trustees of the scheme shall have power to make or to approve, as the case may be, benefit improvements affecting all of the members of the scheme or some class of members, or to make or to approve, as the case may be, a reduction in benefits affecting all members of the scheme or some class of members notwithstanding that one or more trustees is a member of the scheme or of the class of members affected by the improvement or reduction.").
The noble Lord said: This is a lawyer's amendment and draws attention to the .fact that in a recent case, Manning v. Drexel Burnham Lambert, the judge raised an important point. It is one of the principles of trusteeship that trustees must not allow their duty to the beneficiaries of the scheme and their self-interest to conflict or be seen to conflict. In the Manning case this principle appeared to be insuperable because all the trustees were members of the scheme and the benefit improvements which were proposed when the scheme was wound up, and to which the trustees had to consent, would have improved their own prospective pension rights. They could not therefore exercise their discretion to use the surplus in the pension scheme to improve such benefits, and the only course of action available to them was to apply to the court.
The court held that it could approve the proposed distribution but upheld the general rule that trustees cannot benefit from the exercise of their discretion even when they only receive the same level of benefit as any other scheme member. The court went on to say that this principle appeared to be in conflict with the recommendations of the Goode Report, and confirmed in the White Paper. The judge called for a reform in the law to avoid the need to apply to the court in such cases. The court's urging for this reform does not seem to have been picked up in the Bill and this amendment is intended to deal with it. I beg to move.
Lord Mackay of Ardbrecknish: I hope that I shall be able to reassure the noble Lord that his amendment is unnecessary.
The Government have, of course, carefully considered the issues in the light of Mr. Justice Lindsay's comments. If there were any grounds for thinking that recent judgments—in the Drexel or in the earlier Makin case—cast serious doubt on the validity of decisions reached by trust boards containing individuals who also happen to be members of the scheme, we would ourselves have introduced an amendment on similar lines.
498
However, we believe that the present legal situation, as reflected in developing case law, is satisfactory. In particular, it poses no threat to the arrangements for member-nominated trustees. This conclusion is perhaps not surprising given the very large numbers of schemes which have operated, and continue to operate, with trustees who happen to be beneficiaries or potential beneficiaries of the scheme. There is a general acceptance that decisions in which such individuals participate need not be called into question simply because they, among others of a class, could benefit.
Of course, there must be some limits on this. To be acceptable such decisions must be taken in good faith. Trustees must live up to their fiduciary responsibility to act in the interests of all the beneficiaries. But I am assured that trust law is adequate to take account of this and to deal with the situations in which a decision may have been improperly influenced.
One further argument against this amendment is that it could unduly constrain the sensible operation of existing trust law.
The Drexel and Makin cases had particular, unique features which made it difficult to avoid the need for a reference to the court. Most of the schemes would probably have avoided any such need. Many schemes have so-called "protective clauses" in their trust deed which prevent any suggestion that the mere fact of a trustee being a potential or actual beneficiary should invalidate decisions in which he or she had participated.
It is also relevant that the Drexel and Makin cases arose before the commencement of the provisions in the Social Security Act 1992 which require the appointment of an independent trustee on the insolvency of the sponsoring employer. As any difficulties are most likely to arise—as they did in the Drexel and Makin cases—in the event of a need to determine the distribution of surplus on scheme wind-up, we can expect the appointment of independent trustees in such cases to minimise the risk of difficulty in future.
In so far as it may be necessary, the passage of this Bill, with its provisions for member-nominated trustees, will send a very strong message to the judiciary that Parliament is quite content for pension fund trust boards to include beneficiaries and potential beneficiaries of the scheme.
I hope that with that explanation the noble Lord will see that his concerns are not justified. I hope that I have reassured him.
Lord Haskel: I thank the Minister for those assurances. It is a complicated legal matter. Rather than waste the time of the Committee, we shall read Hansard for the detail of what the Minister said and refer to our legal advisers. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 17 [Circumstances in which following provisions apply]:
Lord Haskel Lord Haskel moved Amendment No. 116D:
Page 8, line 24, at end insert ("or a scheme created by board resolution").
The noble Lord said: The amendment deals with schemes without trust deeds. Powers to appoint an independent trustee—they come from Section 57D of the Social Security Pensions Act 1975, and provisions introduced by the Social Security Act 1990—apply only to schemes where there is a fully fledged trust deed. That has been much criticised by insolvency practitioners in particular, and lawyers in general, because they cannot appoint an independent trustee where the scheme has been set up by a board resolution but has no trust deed. The amendment is intended to rectify that. Perhaps the Minister will confirm that the Bill indeed covers schemes which are set up by board resolution.
The real remedy is that there should be a model set of basic rules, as there is under the Companies Act, and people can then elaborate as they wish. I beg to move.
Lord Mackay of Ardbrecknish: This amendment would extend the definition of schemes to which the independent trustee provisions apply by including schemes created by resolution of the board of directors. However, as the definition of trust schemes in Clause 112 already includes schemes created by board resolution I hope that I can again persuade the noble Lord that his amendment is unnecessary.
Clauses 17 to 21 broadly replace Sections 119 to 121 of the Pension Schemes Act 1993. In the original wording of Section 119, the independent trustee provisions applied to schemes "constitued by trust deed". It was considered that this did not take account of those schemes which had been created by resolution of the board of directors and the wording was amended in the present Bill expressly to reflect that fact.
This amendment has been effectively incorporated in the present wording of Clause 17. I hope that with my assurance and explanation the noble Lord will be content that his amendment is therefore unnecessary.
Lord Haskel: I seek to find the reference. Clause 112 (Page 63, line 34) refers only to "trust" and not "trust deed". Does that mean that board resolutions are covered?
Lord Mackay of Ardbrecknish: Perhaps I may assist the noble Lord. As he rightly said when introducing the amendment, it is a complex legal point. I have explained to him that it is possible to set up trusts by resolution. Although, like myself, he is having some difficulty in getting around two pages of fairly closely argued text, perhaps it might be helpful if he were to take the amendment away, read what I hope are wise remarks, and consult those people who understand these matters. If he requires to do so, he can come back at Report stage and take me to task again.
Lord Haskel: Rather than waste the time of the Committee, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 17 agreed to.
Clause 18 [Requirement for independent trustee]:
Baroness Turner Baroness Turner moved Amendment No. 116E:
Page 9, line 9, leave out ("practitioner or official receiver") and insert ("Authority").
The noble Baroness said: This is a simple amendment to Clause 18. As the clause stands, it refers to the requirement for an independent trustee. It states:
"While section 17 applies in relation to a scheme, the practitioner or official receiver must satisfy himself that at all times at least one of the trustees of the scheme is an independent person",
and so on. The intention of the amendment is to remove the words "practitioner or official receiver" and replace them with "authority". The other amendments in that grouping are consequential upon that amendment. Indeed, it is grouped with other amendments which have a similar effect: to introduce the authority into the scene instead of the practitioner or official receiver.
The reasons for that are that it is felt that the authority must have the status to undertake a whole series of important functions. We think that one of them relates to independent trustees. We do not see that the practitioner or the official receiver may be the appropriate person in those circumstances. It seems to us that the authority is the right body to carry out those duties, to satisfy itself that at all times at least one of the trustees of the scheme is an independent person and, if not so satisfied, to secure the appointment of an independent person as a trustee of the scheme. I beg to move.
7 p.m.
Lord Mackay of Ardbrecknish: Although this is a complex group, it is nothing like as complex as the legal points we have just been discussing and I turn to it with some relief.
The group of amendments deals with the appointment of an independent trustee on the employer's insolvency. One suggestion is to place the obligation to appoint with the regulatory authority. An alternative is to leave it with the insolvency practitioner but to give the authority the power to apply to the court for an order requiring the insolvency practitioner to discharge his duties. There is a further suggestion that the authority should have the power to determine the reasonableness of an independent trustee's fees.
These amendments seek to place the obligation for appointing independent trustees on the regulatory authority instead of on the insolvency practitioner. This would represent a significant move away from the independent trustee provisions which have received widespread support since they were first introduced in 1990.
The authority is there to ensure that those involved with the running of schemes comply with the regulatory provisions. Once in place the independent trustee will be subject to the same statutory obligations as any other scheme trustee. If there were suspicions that an independent trustee was not complying with the regulatory provisions, the authority would be able to investigate and impose penalties to secure compliance.
There is no evidence of major breaches by independent trustees appointed by insolvency practitioners. The provisions are generally working well for the benefit of schemes and their members, and we see no reason to change something that is operating satisfactorily.

501
The task of appointing an independent trustee on the insolvency of an employer is not a regulatory function. I would not wish to accept amendments to give the authority new responsibilities which are not in keeping with its regulatory role. These can only detract from its effectiveness and create unnecessary costs, which would be passed on to employers through the levy. I hope that the noble Baroness will withdraw her amendments after she has considered what I have said.
Insolvency practitioners appoint the independent trustee because, on the insolvency of the employer, these professionals are already dealing with the employer's financial liabilities, including the pension scheme. They will have knowledge of the particular circumstances and their effect on the pension scheme. They are best placed to ensure that the trustee appointed is truly independent and has a suitable background to deal with any particular problems with the scheme. The authority, on the other hand, would not be able to act as quickly nor as effectively as practitioners and would have to intervene in every case even where there was no problem with the scheme.
Amendment No. 118C would give the authority the power to apply to the appropriate court for an order requiring an insolvency practitioner or official receiver to discharge his duty. We consider that it is an unnecessary amendment as Clause 18 already empowers scheme members to take any necessary enforcement action through the courts.
The Department of Trade and Industry already regulates insolvency practitioners and official receivers. As a way of ensuring that an independent trustee is appointed as quickly as possible, we are in discussion with the insolvency service about drawing up guidance notes for insolvency practitioners. These will include a recommended time limit for the appointment of an independent trustee.
Amendment No. 118D provides that an independent trustee appointed under Clause 18(1) (b) is entitled to be paid out of the pension scheme's resources only if his fees for acting in such a capacity are certified by the authority as being reasonable. That would involve the authority in checking the fees of any independent trustee. We consider that unnecessarily bureaucratic; it would require the authority to spend time carrying out routine checks. We do not wish the authority to be bogged down with routine checks, taking it away from its major task of regulating and of giving its attention to those schemes with problems.
With those explanations of what we envisage the situation to be and with my explanation of the current practice which seems to be working reasonably, I hope that the noble Baroness will withdraw her amendment.
Baroness Turner of Camden: I thank the Minister for that detailed response, some aspects of which I welcome. What prompted the amendments was the feeling that in insolvency situations the members are even more vulnerable. Therefore it seemed necessary that the regulator should have a role in relation to the appointment of independent trustees. I note what the Minister said; in particular I am glad to hear that the
502
intention is to have discussions with the insolvency service to try to draw up notes of guidance in relation to insolvency practitioners. That is a welcome development. We look forward to hearing more about it.
I do not intend to press the matter to a vote tonight. However, there are probably instances of disappointments and anxieties about the way in which official receivers have sometimes dealt with pensions schemes. That is another reason why we thought it a good idea to replace "practitioner or official receiver" with the regulator. However, having heard what the Minister said, we shall look closely at his remarks in Hansard tomorrow. If we think it necessary, we may come back with a variant of the amendments on Report. Meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 116F and 116G not moved.]
Lord Lucas: I beg to move that the House do now resume. In moving the Motion I suggest that the Committee stage begin again not before 7.50 p.m.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Law Reform (Succession) Bill [H.L.]
7.7 p.m.
The Lord Chancellor (Lord Mackay of Clashfern): My Lords, I beg to move that this Bill be now read a second time.
I am, as ever, pleased to be able to bring before your Lordships a Bill to give effect to recommendations of the Law Commission. The Bill effects reforms of the technical rules governing the distribution of estates of persons who die intestate, claims for financial provision by members of the deceased's family circle and the effect of divorce or annulment of marriage on testamentary gifts or appointments in favour of the former spouse.
Full Notes on Clauses are available for any Members of this House who may wish to examine the technical provisions in greater detail, and fuller explanation of the current law and the proposed changes may be found in the two Law Commission reports from which the Bill derives, on Distribution on Intestacy (Law Com. No. 187) and The Effect of Divorce on Wills (Law Com. No. 217). With your Lordships' leave, however, I propose to explain the Bill's provisions in fairly broad terms. Although the Bill implements most of the recommendations in the two Law Commission reports I have mentioned, it does not implement all of them, as I shall explain in a moment.
Clauses 1 and 2 of the Bill give effect to the minor recommendations made by the Law Commission in the intestacy report, which were all considered to be uncontroversial. The starting point is Sections 46 and 47 of the Administration of Estates Act 1925 which provide an order of priority for sharing in the estate of a person who dies either wholly or partially intestate. This is a safety net calculated to reflect both the way in which those who make wills tend to dispose of their property

503
and the policy that the surviving spouse should generally be enabled to remain in occupation of the matrimonial home. Consequently, a surviving spouse heads the order of priority and will receive the deceased's personal chattels plus a fixed net sum (the "statutory legacy") out of the estate and will share the residue (if any) with other relatives. The amount of the statutory legacy depends upon whether the deceased left issue. If there is no issue then the statutory legacy will be greater than it otherwise would be.
The commission's primary recommendation was that the surviving spouse should not share at all with relatives on intestacy but should automatically receive the whole estate, whatever its size. This proposal was conceded by the commission itself to be contentious, and I am obliged to the noble Lord, Lord Mishcon, who raised the issue in this House in June 1992, when it became clear that there was anxiety about it on all sides of the House as well as on the part of such bodies as Justice and the Law Reform Committee of the Bar. Despite the attractions of simplicity and clarity, I am not persuaded that it would be appropriate to exclude other members of the family completely in all cases, particularly where the deceased left children from a previous marriage. However, the need for the amount of the statutory legacy to be kept under review is recognised, and indeed it was raised in December 1993 to its present rate of £125,000 at the lower level and £200,000 at the higher level.
The other recommendations of the Law Commission give rise to no such concerns. Clause 1 of the Bill will introduce a rule that a surviving spouse should inherit on intestacy only if he or she survives the deceased by a period of 14 days. As the commission pointed out, it has long been considered good practice for a provision to similar effect to be inserted in wills in order to prevent arbitrary results where the family of just one spouse inherits the property of both should the two die within a short time of one another, as, for example, after a road accident.
Clause 1 also abolishes the "hotchpot" rule, by which certain payments made by a person who dies intestate, and certain interests acquired under the will of a person who dies partially intestate, must be brought into account by the recipient against the share in the estate to which he would otherwise be entitled. The rule has proved difficult to operate in practice, causing particular difficulties for lay administrators and resulting in consequences which would probably not have been in accordance with the deceased's intentions.
Clause 2 amends the Inheritance (Provision for Family and Dependants) Act 1975 which enables members of a deceased's family circle to apply for financial provision from the estate if the will or intestacy rules leave them without reasonable provision. At present, someone who lived with the deceased as husband or wife must demonstrate that he or she was actually dependent on the deceased. This can leave a long-term cohabitant who contributed fully to the household without provision and unable even to use this safety net. The commission considered this to be unfair and proposed the change implemented by Clause 2 whereby a cohabitant (using the well-settled definition
504
in the Fatal Accidents Act 1976) may make an application without having to show actual dependence. The definition of "reasonable financial provision" remains the same as for other applicants apart from spouses, but the factors to be taken into account in assessing what is reasonable include, mutatis mutandis, those relevant for spouses. This recognises the contribution which each cohabitant may make to the common household, while preserving the distinction between the respective claims of married and unmarried partners.
Clauses 3 and 4 of the Bill give effect to the commission's recommendations in the report The Effect of Divorce on Wills. The basic principle of the present law is that, unless there is a contrary intention apparent from the will, a former spouse should not benefit from a will made before the marriage was dissolved or annulled but that the will should not be affected in any other way.
No change is proposed to this basic principle, but the commission criticised the current means of achieving it by the "lapse" rule (contained in Section 18A of the Wills Act 1837). This provides that a gift to a former spouse lapses; it does not take effect and reverts to the testator. This rule can fail to give effect to the presumed intention of the testator and can bring about unintended results, such as where the will provides for a gift over should the spouse fail to survive the testator. An example is the case of Re Sinclair in 1985, where the Imperial Cancer Research Fund was deprived of the gift over because the conditions of the gift were not fulfilled, the former wife still being alive, and the estate fell into intestacy.
Clause 3 counters this difficulty by providing instead for any gift to a former spouse to be revoked and for the property which would otherwise have passed to the former spouse to pass as if the former spouse had died on the date when the marriage was dissolved or annulled. In this way only the former spouse, and not any other beneficiary, will be deprived of any benefit which he or she might otherwise have acquired. Unintended results such as that in Re Sinclair will be avoided. As at present, the rule will be displaced by a contrary intention of the testator.
The new rule will also apply to all appointments in the will. Consequently, again subject to any expressed contrary intention, any appointment of a former spouse as an executor or as a trustee, or as a donee of a power of appointment, will take effect as if the former spouse had pre-deceased the testator.
Clause 4 of the Bill deals with the appointment of a former spouse as guardian of the testator's children. The current law, under which divorce has no effect on testamentary guardianship, is unsatisfactory, since in those cases where the child is the child of the testator but not of the former spouse, and the former spouse does not have parental responsibility, it is very doubtful that the testator would want the appointment of his former spouse as guardian to remain effective after their divorce. This is less likely to be the testator's view where the child concerned is the child of the testator and the former spouse; but in such cases the former spouse will already have parental responsibility for the child,

505
which is not affected by divorce, and therefore the revocation of any such appointment will not have any practical effect. Therefore, in order to achieve the practical effect which is most likely to reflect the testator's wishes, and in the interests of clarity and simplicity, Section 6 of the Children Act 1989 will be amended to provide that, subject to any expressed contrary intention, any appointment of a former spouse as guardian should be revoked.
Clauses 5 and 6 cover repeals, the Bill's title and its extent, which is limited to England and Wales.
Each of these reforms is to come into effect in respect of estates of, or wills or appointments made by, persons dying on or after a fixed date. The date chosen is 1st January 1996, both to ensure a memorable date and to allow sufficient time to ensure that proper publicity may be given to the changes before they have effect in any individual case.
This Bill represents a useful and uncontroversial measure of law reform. We are all grateful to the Law Commission for the careful work which it put into the preparation of the reports on which the Bill is based. My normal assumption is that one would wish to give effect to Law Commission proposals. As regards the main one with which I have dealt in connection with the intestacy proposals, I have explained why, so far, I have not thought it wise to give effect to it. I accordingly ask the House to give the Bill a Second Reading.
Moved, That the Bill be now read a second time.—(The Lord Chancellor.)
7.17 p.m.
Lord Irvine of Lairg: My Lords, we on these Benches strongly support the expeditious placement on the statute book of Law Commission recommendations concerning lawyers' law where those recommendations are not politically controversial. We have felt able to agree this Session that a number of measures which are not politically controversial and which concern technical law are suitable for enactment by way of the procedures of a special Public Bill Committee.
This Bill would in principle have been suitable to be committed to such a committee. But its brevity and clarity are such that it can perhaps be considered most expeditiously on the Floor of the House in the usual way. That leaves for special Public Bill Committees more substantial measures of law reform, which are especially likely to benefit from the procedures of these committees, in particular the facility to take evidence from and to question experts in the field of law at issue and representatives of special interest groups.
I also think it appropriate to put on record the appreciation on the part of these Benches of the fine work of the Law Commission and to express the support of these Benches for fast-track procedures to give effect to many of its reports. That is not to say that its recommendations should be uncritically accepted, nor that the commission would wish them to be; although I tend to agree that we start with a strong presumption in their favour.
506
That they should not be uncritically accepted is well illustrated by the fact that the Government have not—and we think rightly not—accepted the commission's primary recommendation that the surviving spouse should automatically, on an intestacy, receive the whole of the estate, regardless of its size, to the exclusion of the interest of other relatives. The noble and learned Lord has been good enough to remark on the important role of my noble friend Lord Mishcon in calling attention to the concern that is felt in many quarters about that particular recommendation.
The noble and learned Lord summarised the provisions of the Bill and explained them clearly. I do not feel that this debate would be enhanced by my seeking to offer an additional summary and explanation of the provisions of the Bill. Therefore, I confine myself to putting on record the fact that we support the Second Reading of the Bill and its expeditious progress thereafter through your Lordships' House.
7.20 p.m.
Lord Meston: My Lords, I, too, would like to thank the noble and learned Lord for his explanation of the Bill. As is clear, the Bill gives effect to only part of the recommendations of the Law Commission on intestacy. Clause 1, dealing with survivorship and with "hotchpot" makes useful changes, for the reasons advanced by the Law Commission. However, the significance of that part of the Bill lies not in what it contains but in what it does not contain. The Law Commission described the defects in the present intestacy rules and recommended a major reform, whereby on intestacy the surviving spouse could receive the whole estate.
The Law Commission described the case for reform as overwhelming. However, the Government and others, including, I believe, the noble Lord, Lord Mishcon, were not overwhelmed. I well understand why. Most recently Professor Cretney, in The Law Quarterly Review, only last month suggested that, although the Law Commission may have overstated the case for reform, its principal recommendation had much to commend it. He suggested further reflection. I hope that will take place.
The Law Commission emphasised the need for rules which are "certain, clear and simple". Intestacy rules are inevitably a second-best means of distribution of estates. There is no substitute for a considered, up-to-date will. Intestacy rules are the price that some families have to pay if their nearest and dearest do not get round to making a will. There are still a remarkable number of people who do not make wills, for all sorts of reasons, including superstition.
Neither the present rules nor the Law Commission's straightforward alternative can reflect the justice of every situation. They cannot distinguish between happy and unhappy marriages; between long and short marriages; between marriages where the survivor made particular contributions or sacrifices and those where the survivor's moral claims are less strong; or between cases where the survivor is wealthy or has been well provided for or badly treated during the lifetime of the deceased. The existing rules cannot take account of the geographic variation in property values. Likewise, where there are

507
children as well as a surviving spouse, under the existing rules there may be cases in which a mother has to make a claim for more provision from the estate and her children become respondents to her application to the court. Under the Law Commission's proposal, I readily understand that it could be the other way round.
A particular problem of the existing system is that it requires periodic uplifts in the statutory legacy. I have recently acted for a widow, whose husband died suddenly and unexpectedly just before the statutory legacy went up from £75,000 to £125,000. Had her husband died only weeks later, she might well not have considered recourse to the family provision legislation. Whatever else may occur, I urge on the Government the view of Professor Cretney in his recent article. He said:
"it is not satisfactory to proceed by using delegated legislation at irregular and unpredictable intervals to vary the amount of a surviving spouse's entitlement without any clear statement of the principle upon which the variation is made".
It may well be that, after further consideration, it is decided that the existing rules are as fair and reasonably predictable as any arbitrary system can be expected to be.
Certainly, one objective must be to try to minimise the need for recourse to the discretionary family provision legislation. Litigation under the 1975 Act is costly to estates, which are seldom able to sustain the luxury of legal expenses. It is litigation which is often divisive and distressing to the competing relatives, each of whom may have his own idea of what the deceased would or would not have wanted had he got round to making a will. The 1975 Act has a number of distinct limitations and it is also an area of discretionary law in which practitioners do not find it particularly easy to advise with certainty on the outcome, if the case has to go to a court.
Therefore, I support the view that, before the safety net of the intestacy rules is altered, the underlying further safety net of the family provision legislation should also be checked for holes, strength and positioning. That review is almost certainly too wide ranging to involve this Bill in the special committee procedure of this House.
This Bill deals with one reform of the 1975 Act, which is a useful new provision for cohabitees. It will apply to situations in which there may be inadequate testate provision as well as where there is an intestacy. The existing law requires proof of dependency. Mere financial or other sacrifice for the sake of the deceased does not qualify for a claim under the 1975 Act. That is probably the result of insufficient thought being given to that problem during the parliamentary passage of the 1975 Act. Clause 2 of the Bill goes some way towards changing that. I assume that it will not extend to cohabitants of the same sex, but I should welcome clarification.
Clauses 3 and 4 of the Bill are welcome. They strive to achieve what most testators would wish. Clause 3 minimises inconvenience to innocent third parties, both individuals and charities. I am not so sure about the Law Commission's suggestion of a booklet to accompany the decree absolute of divorce in place of the existing simple notice. Certainly that notice, as now printed on a
508
decree absolute, warning of the effects of a divorce on wills, may well have to be modified when the Bill becomes law. Good solicitors will always draw the consequences of the decree to the attention of their clients. However, perhaps it is not too much to hope that, with the possibility of a do-it-yourself divorce being followed by a do-it-yourself will, there could be something left over for the lawyers.
7.27 p.m.
Lord Mishcon: My Lords, times change and social conditions change, but sometimes the law does not. I believe that we all pay tribute to the Law Commission and to the great Lord Chancellor, Lord Gardiner, who set it up, for the fact that we now have a body of people looking at our law from time to time and bringing before Parliament, as indeed we are experiencing now, suggested changes to bring things up to date. I shall not repeat what noble Lords have said so well. Certainly I shall not summarise the provisions of the Act, which the noble and learned Lord the Lord Chancellor did with his usual lucidity. I intend merely to comment upon some of the provisions of the Bill.
One first notes that survivorship for 14 days is established by the Bill as being a necessary condition for inheritance (if I may put it that way) on intestacy. As a practising lawyer drawing up wills, it is my practice, following upon the practice of my learned colleagues and predecessors, to provide for a survivorship clause in a will. We do that for a minimum period of one month and usually for a maximum period of three months. So I pause for a moment to consider whether it is not wise to carry that practice into effect when dealing with intestacy. It is most unlikely that letters of administration will be granted within 14 days or even 28 days. Therefore, in order to protect the position, one would have thought it sensible not to make the period 14 days but the minimum of 28 days. I merely throw that suggestion most respectfully to the noble and learned Lord for his consideration.
I turn next to what the noble and learned Lord described as an alternation of the "hotchpot" rule, indeed, its abolition in the case of intestacy. I have one query. The law at the moment is this. On a partial intestacy, where a will bequeaths an interest to a surviving spouse, that surviving spouse must bring that into account when looking at the statutory grant which is made to the surviving spouse on an intestacy. The Bill abolishes that provision and I wonder why. It seems to me a little illogical.
If we look at the report of the Law Commission on Family Law: Distribution on Intestacy, upon which the Bill is based, and turn to page 14, paragraph 55 states:
"Two special hotchpot provisions apply on partial intestacy. The first provides that a surviving spouse who acquires any beneficial interests under the will takes the statutory legacy less the value at the date of the deceased's death of those beneficial interests. As we have recommended that the surviving spouse should receive the entire estate this rule becomes redundant".
It is a decision of the Government and one I fervently support that the surviving spouse should not receive the entire estate and that provision therefore is not in the Bill. Since that rule is no longer redundant in the sense

509
that the surviving spouse must bring in "hotchpot", why does the Bill abolish the hotchpot rule in the case of the surviving spouse?
I turn to the all-too-gracious remarks of the noble and learned Lord and my noble friend in regard to my intervention earlier in the history of this House in relation to the recommendation of the Law Commission that the surviving spouse should inherit everything. I confess that I should not have done more than say thank you for those remarks were it not for the comments of the noble Lord, Lord Meston.
The noble Lord correctly referred to an article in The Law Quarterly Review by Professor Cretney. I was grateful to receive that article from him, as no doubt was the noble Lord, Lord Meston. But on reading it I did not follow the same thought pattern in relation to that article as did the noble Lord, Lord Meston. Perhaps I can mention two passages from the article so that we do not in any way misunderstand what the professor was saying. First, in regard to the question of a surviving spouse inheriting all, at his conclusion on page 98 the professor said,
"The Law Commission's principal recommendation that a surviving spouse should inherit the whole of an intestate's estate has much to recommend it in terms of achieving a simple code of succession law which would give effect to the intestate's presumed wishes in the majority of cases. However, social and economic changes have the consequence that such a code would lead to injustice in some cases".
Earlier, at page 87 of his article, the professor said—and this is extremely important—
"In 1925, there were only 2,657 divorces in England and Wales; in 1952 there were 31,966; today there are some 160,000 divorces each year. For present purposes, these figures are significant not so much because of the vastly increased probability that an intestate will leave more than one former spouse—the divorce court has extensive powers to reallocate property at the time of the divorce—but because of the likelihood that the deceased's widow may never have had any parental relationship with the children of his first marriage, and may not feel under any obligation to pass on to them any of the property she inherits from their father".
In days gone by I deemed that to be a reason for my venturing to differ from the recommendation of the Law Commission. Professor Cretney underlines that point as one of the things to be taken into account.
There is one other point I wish to mention before I endeavour to make your Lordships smile, if only a little. The noble and learned Lord said, quite correctly, that it was a good idea, one promulgated by the commission, that one should adopt the wording of the Fatal Accidents Act in dealing with the inheritance provisions Act which would now apply under the Bill to cohabitees. If one looks at the draft bill, at page 20 of the Law Commission's report, one sees that it faithfully copies the wording of the Fatal Accidents Act:
"Where on or after 1st January 1991 a person dies domiciled in England and Wales and is survived by a person who was living with the deceased in the same household".
That is the wording of the draft Bill and is the actual wording of the Fatal Accidents Act. If one turns to the Bill, one finds that for some reason, in Clause 2(3), after the words "the person was living", the words "with the deceased" are left out. I do not know why. As I said, the draft Bill was faithfully followed and includes those
510
words. The Fatal Accidents Act has those words and I can see the reason for them. Somebody may live in the same household who has decided to live separately from the cohabitee and in those circumstances will not fulfil the requirements—one may think justly so—for benefiting under the Bill. That person would not have been living with the deceased. As I said, the Fatal Accidents Act contains those words and the draft Bill contains those words. I ask as a meaningful question why the words are omitted from this Bill.
As I said, I wanted only to bring a smile to your Lordships' faces by saying that presumably the Law Commission has decided to find a reason why a former spouse has become a former spouse. If your Lordships will look at the top of page four of the report you will find that on two occasions in paragraph 2.7 the reason that has been given is that the former spouse has "pre-decreased" the testator, presumably meaning that her extravagance has led to her becoming a former spouse. The word "pre-decreased" is used with the testator twice in that paragraph. If that remark proves nothing else, it proves that I took the trouble to read the Law Commission's report.
7.40 p.m.
The Lord Chancellor: My Lords, I am extremely grateful to all noble Lords who have spoken. I would have assumed, before we had our debate on a previous occasion, that the noble Lord, Lord Mishcon, had read the Law Commission's report. However, if there was any lingering doubt in my mind about that, he has demonstrated tonight beyond all possible doubt that he has read it carefully.
There is a good deal in Professor Cretney's article which merits careful consideration. I am grateful to Professor Cretney, who was a colleague of mine on law commissions in the past, for also sending me a copy of his article. He had kindly provided the typescript to my officials earlier. He is advocating that further consideration be given to the question of what should replace the Law Commission's proposal. He thinks that it was understandable to some extent as to the question of to what degree we should not have adopted it. But his plea is for further consideration of that question. Your Lordships may think that it is a question which could merit further consideration. That is the main matter of general importance that has been raised.
The noble Lord, Lord Mishcon, asked about the Law Commission's repeal of the "hotchpot" rule relating to the statutory legacy. The view was taken on the decision not to proceed with the Law Commission's main recommendation that, since it was recommending the abolition of the "hotchpot" rule, that particular aspect of the "hotchpot" rule should be repealed as part of the abolition of the "hotchpot" rule. On the question of cohabitants who will not require to demonstrate dependency, the view that was taken on the drafting of this Bill—the clause is slightly different in appearance—is that the words to which the noble Lord, Lord Mishcon, referred are now superfluous because they appear not only in the first part of the definition in the Fatal Accidents Act but also in the last part. If your Lordships look at the definition as counsel has framed

511
it for this Bill, you will see that he has used the words of the 1975 Act without unnecessary repetition whereas if he had put in the whole of the provision it would have appeared that "with the deceased" would have come in twice and therefore be superfluous.
That is the kind of matter which needs to be looked at with the clause fully in front of one. In view of the noble Lord's question, I shall certainly ask parliamentary counsel to reconsider the matter. However, my understanding of why this phrase has been couched in the way that it has is that it was thought that from the way in which it is expressed in this Bill to repeat the phrase "living with the deceased" would have been superfluous. The clause requires that for all the period in question the person should live with the deceased as husband and wife.
With regard to the question of the noble Lord, Lord Meston, "living as husband and wife" appears to us, as the law stands, to apply to partners of opposite sexes and not to partners of the same sex.
I am grateful to the House for the support that has been given to the Bill. I agree with the view that the Bill would have been suitable for a Special Standing Committee, but in the light of the consideration that has been given and the fact that some time ago before the Bill was brought forward we had a debate in the House about the really substantial departure from the Law Commission's recommendations, I have reached the view—I hope your Lordships agree with it—that in the circumstances of this case the ordinary procedure in the House is appropriate. Therefore, I am not asking for any special procedure here. I commend the Bill to the House.
On Question, Bill read a second time, and committed to a Committee of the Whole House.
Viscount Long: My Lords, I beg to move that the House do now adjourn during pleasure until 7.50 p.m.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 7.45 to 7.50 p.m.]

Pensions Bill [H.L.]
House again in Committee on Clause 18.
Lord Lucas Lord Lucas moved Amendment No. 117:
Page 9, line 13, leave out ("within the prescribed period").
The noble Lord said: In moving this amendment I shall speak also to Amendment No. 118. The Bill as it stands requires us to prescribe in regulations a time limit within which the appointment of an independent trustee must be made. In these two amendments we propose to relegate our power of prescription to a back-up role. We wish to substitute a requirement to appoint an independent trustee as soon as reasonably practicable. We intend that guidelines should be drawn up by the insolvency service and that we should resort to regulation only if these guidelines do not work. I beg to move.
On Question, amendment agreed to.
Lord Lucas Lord Lucas moved Amendment No. 118:
Page 9, line 15, at end insert:
512
("( ) The duty under subsection (1) (b) must be performed as soon as reasonably practicable and, if a period is prescribed for the purposes of that subsection, within that period.").
On Question, amendment agreed to.
Lord Haskel Lord Haskel moved Amendment No. 118A:
Page 9, line 24, at end insert:
("( ) he is not an employee or partner of any company which, for the purposes of the Companies Act 1985, is an associated company in relation to a company that practises as an insolvency practitioner, and").
The noble Lord said: Without casting any aspersions on the insolvency profession, this amendment is a safeguard against those very few accountants and insolvency practitioners who ignore the rules. Sadly, there are people who have lost their licences through making what are called "reciprocal arrangements". That misconduct not only creates problems with their current work but also casts doubt on their previous work. This amendment states quite unequivocally that there should be no reciprocal arrangements between trustees. I beg to move.
Lord Mackay of Ardbrecknish: I do not believe that this amendment is necessary. One of the requisite qualifications for an insolvency practitioner under the Insolvency Act 1986 is that a person must be an individual. It follows that the amendment cannot have the effect intended, since no company can practise as an insolvency practitioner. Any problems with an independent trustee being connected with, or an associate of, an insolvency practitioner is covered in Clause 18(2) (b) (ii), which is itself re-enacting a similar provision in the Pension Schemes Act 1993. With that explanation I hope the noble Lord will withdraw the amendment.
Lord Haskel: I thank the Minister for that response. I was under the impression that although they act as individuals the practitioners have to be licensed. However, in view of what the noble Lord said we shall study his response. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Turner of Camden Baroness Turner of Camden moved Amendment No. 118B:
Page 9, line 25, at end insert ("and—
( ) his name is included in the Register of Independent Trustees to be maintained by the Authority;").
The noble Baroness said: This is a very simple amendment and it follows on from what we were saying earlier as regards the section dealing with the requirement for an independent trustee. This amendment simply adds to the list of requirements that the name of the independent trustee should be included in the register of independent trustees to be maintained by the authority. I believe that the reason for that is fairly clear. Quite obviously, if there were a register it would be available for inspection. It would be an assurance to members of the scheme that an individual who is an independent trustee is an approved person because he or she is on the register of independent trustees. It is some extra assurance for scheme members that an

513
independent trustee when appointed is a person acceptable to the authority and a member of the register to be maintained by the authority. I beg to move.
Lord Mackay of Ardbrecknish: The amendment adds to the definition of an "independent trustee" provided in clause 18(2). It provides that an independent trustee must be included on a register of independent trustees which is to be maintained by the authority. This would mean that only a trustee included on the register could be appointed to a scheme under Clause 18(1).
The purpose of Clause 18 is to ensure that a person is independent in relation to the particular scheme for which he acts. Such a person might never take on the duties of trustee again. But there is no reason why he should not, provided he is independent of any new scheme for which he acts. Consequently, requiring the authority to maintain a register of independent trustees seems to me to serve no useful purpose.
If the intention behind this amendment is to introduce a form of regulation for professional independent trustees, I have to say that I do not believe that OPRA is the appropriate mechanism. OPRA will be an enforcement agency for occupational pension schemes, and independent trustees do not act exclusively for pension schemes.
More importantly, OPRA has the necessary powers to deal with any trustee of an occupational pension scheme who is found to be in breach of an obligation. It has the power to fine them and the power to remove them. These powers and how they can be used by the authority are set out in Clauses 9 and 3 of the Bill respectively. OPRA can also disqualify a trustee under Clause 24. An independent trustee disqualified under this clause would be prevented from acting as a trustee of an occupational pension scheme ever again.
I hope that what I have said will persuade the noble Baroness that there are already pretty reasonable safeguards in the Bill in this regard and that we do not need to add to it the complication of a register of independent trustees.
Baroness Turner of Camden: I thank the Minister for that explanation which we shall look at with interest in Hansard tomorrow. I note that he believes that reasonable safeguards already exist in the Bill. It was because we were worried whether or not they did that we wanted to establish a register of suitable people who would be independent trustees. However, having heard what the Minister said, I do not intend to press this provision, which is somewhat of a probing amendment. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 18, as amended, agreed to.
Clause 19 [Members' powers to apply to court to enforce duty]:
[Amendment No. 118C not moved.]
Clause 19 agreed to.
Clause 20 [Appointment and powers of independent trustees: further provisions]:
[Amendment No. 118D not moved.]
8 p.m.
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 118E:
Page 11, line 20, after ("actuary") insert ("or otherwise as a paid professional adviser").
The noble Baroness said: In moving Amendment No. 118E, I should like to speak also to Amendments Nos. 118F to 118K which stand in my name. Amendment No. 118E is the first of a series of amendments about the role of professional advisers. Wherever possible, we want to avoid conflicts of interest. Such a conflict may arise because the professional adviser is advising both the trustees and the employer, an issue to which we shall return later. In addition, we do not believe that it is right that the same scheme professionals giving disinterested, paid, professional advice to the trustees should also be trustees. The Government have accepted that argument for auditors and actuaries, but not in the case of other paid professionals. We believe that that principle should be extended to other paid professionals. Nobody can doubt that lawyers abide by the highest standards of professional ethics, but, as a general principle, it seems wise to avoid potential conflicts of interest wherever they might occur. I beg to move.
Lord Mackay of Ardbrecknish: The amendments seek to broaden the authority's power by placing a general duty to enforce trust law, to prevent all professional advisers to the scheme from acting as trustees and to prevent exceptions to the general rule that a trustee and any person who is connected with or an associate of such a trustee should be ineligible to act as an auditor or actuary of the scheme.
Turning to Amendment No. 118K, the authority is there to ensure that those involved with the running of schemes comply with the regulatory provisions. We believe that we have underpinned the key trustee responsibilities with the obligations placed on them by Part I of the Bill. Trustees who are found to be in serious or persistent breach of these provisions may be removed by the authority and disqualified. That means that removal and disqualification relate to breaches of clear duties, rather than leaving it open to wide interpretation and potential dispute as to whether someone has rendered themselves unfit to continue to act as a trustee.
I have been asked to introduce more robust rights of review and appeal against such decisions. If we were to go down that route, the authority would need to have clear grounds on which to base its decision; otherwise the process of review or appeal would become extremely protracted and the subject of prolonged and contentious argument. I am afraid that I cannot accept amendments which place a general duty on the authority to enforce trust law. Amendment No. 118K would do just that. I believe that the enforcement of trust law is best left to the courts.
We agree with the Pension Law Review Committee that the existence of the professional relationship that the actuary and auditor have with a scheme would be incompatible with trusteeship because of the potential conflicts of interest involved. Clause 22 extends that

515
provision so that a person who is connected with or an associate of the scheme actuary or auditor is also ineligible to act as a trustee of the scheme. However, under subsection (2) we are proposing that in prescribed circumstances it should not apply to actuaries who are connected with or an associate of the scheme trustee.
We consider that there is a fundamental difference in the role of actuaries and auditors that justifies a slightly different approach. The actuary's basic role is to give advice to the trustees on funding matters. His job is to take a broad, full view of the scheme and to provide the trustees with advice on funding matters, valuations, including statements, contribution levels and calculation of transfer values. His role is one of advice-giver whereas the auditor is more of a policeman to the scheme. The actuary is not involved in matters of scheme security in quite the same way as the auditor and we do not therefore see the same need to extend the bar to the firm by which he is employed. To do so would prohibit the sort of "package" arrangements which many schemes, particularly small and medium-sized schemes, purchase from firms of actuaries, pension consultants and insurance companies. We see no justification for upsetting that. Actuaries are bound by professional codes of conduct and discipline and we have no reason to believe that "package" arrangements are anything but effective and secure. To outlaw such arrangements is likely to incur extra costs for the schemes that use them and this is of course something we wish to avoid.
Turning to Amendments Nos. 118E, 118G, 118H and 118J, as the Committee will recall, in Clause 22 we are endorsing the Pension Law Review Committee recommendations that the actuary and the auditor should not act as scheme trustees because of unacceptable conflicts of interest. We believe it is right that those professionals should be under an obligation to whistle-blow. We have placed the whistle-blowing duty on the key individuals that the schemes will be required to appoint; namely, the actuary and the auditor. They will have access to all the key scheme documentation. We want to encourage others to report to the authority if they believe that a scheme is not being run properly. However, we believe that it is neither appropriate nor necessary to place them under a duty to do so.
If the other scheme professionals are not under a duty to whistle-blow, they will not have a conflict of interest. If we debarred those individuals from acting, trust boards would effectively be purged of any professional employed by the scheme. We do not believe that that is in the interests of ensuring that schemes are properly run. With that long explanation of the details, I hope that the noble Baroness will withdraw the amendment.
Baroness Hollis of Heigham: I am not particularly persuaded by a number of those arguments, but obviously we shall want to consider them. Therefore, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 20 agreed to.
Clause 21 agreed to.
Clause 22 [Trustee not to be auditor or actuary of the scheme]:
[Amendment No. 118F not moved.]
Clause 22 agreed to.
Clause 23 [Section 22: consequences]:
[Amendments Nos. 118G to 118K not moved.]
Clause 23 agreed to.
Clause 24 agreed to.
Clause 25 [Persons disqualified: consequences]:
Lord Haskel Lord Haskel moved Amendment No. 118L:
Page 13, line 39, after ("scheme") insert ("or a trustee, a member of a scheme or an independent recognised trade union").
The noble Lord said: This amendment deals with the register of disqualified trustees. It is important to have a register, but why is it available only to people connected with the administration of the scheme? Surely it should be a matter of public record. However, the amendment does not go as far as that, but suggests that the register should be available to other trustees, members of schemes or to their trade unions or advisers. It is another small attempt to make the work of the regulator more open and accountable. I beg to move.
Lord Mackay of Ardbrecknish: The amendment provides that the authority must, if requested to do so by a trustee, a member of a scheme or an independent recognised trade union, disclose whether the name of the person specified in the request is included on the authority's register of persons disqualified under Clause 24(3).
I am pleased to be able to say that we are at one on this. We intend that anyone who has concerns about a particular person who is either already acting as a trustee of an occupational pension scheme, or is under consideration for appointment as such, can contact the authority to check whether the authority's register shows the person in question to be disqualified in respect of a particular scheme.
We had hoped that subsection (7) would allow any person who has an interest in a scheme to ask the authority such a question and require the authority to provide an answer. That would cover trustees, scheme members and independent trade union officials. The subsection has been drafted to ensure that the authority is required to state only whether a person named by an inquirer is disqualified in respect of a particular scheme named by the inquirer. This is because some people may be disqualified in respect of a particular class or group of schemes only, and because there is a need to protect those listed in the register from having the information held on them being used for purposes that have nothing to do with whether or not they should act as the trustee of a particular scheme. That is why the register will not be available for public inspection.
I think that we have dealt with the issue in the subsection but, given that the noble Lord and I are at one on this and he has raised a doubt, I shall take the issue away so that I can determine whether, and to what

517
extent, an amendment is necessary or possible. I hope that, with that assurance, the noble Lord will feel able to withdraw his amendment.
Lord Haskel: I thank the Minister for that long explanation and in view of the fact that, as he said, we are at one on this, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 25 agreed to.
Clause 26 [Trustees not to be indemnified for fines or civil penalties]:
Lord Lucas Lord Lucas moved Amendment No. 118M:
Page 14, line 9, at end insert:
("(4) Where a trustee of a trust scheme—

(a) is reimbursed, out of the assets of the scheme or in consequence of provision for his reimbursement made out of those assets, in respect of any of the matters referred to in subsection (1) (a) or (b), and

(b) knows (or has reasonable grounds to believe) that he has been reimbursed as mentioned in paragraph (a),

then, unless he has taken all such steps as are reasonable to secure that he is not so reimbursed, he is guilty of an offence.
(5) A person guilty of an offence under subsection (4) is liable—

(a) on summary conviction, to a fine not exceeding the statutory maximum, and

(b) on conviction on indictment, to imprisonment, or a fine, or both.").

The noble Lord said: The amendment introduces a new criminal offence. Clause 26 places an overriding obligation on trustees not to use the assets of the scheme to reimburse any fine imposed on them by the courts, or civil penalties imposed on them by the Occupational Pensions Regulatory Authority.
Subsection (3) already provides that any trustee who does not take appropriate action to prevent such a reimbursement being made is liable to removal by the authority and/or to a civil penalty. However, we consider that that does not go far enough. We want to ensure that any trustee who breaches the provisions in Clause 26 for his own benefit can be prosecuted. And that is what subsection (4) of this amendment does. It provides that a trustee who is reimbursed out of the scheme assets, or out of provisions (for example, an insurance policy) paid for out of them, in respect of any matters referred to in subsection (1) (a) or (b) is guilty of an offence if, first, he knows (or has reasonable cause to believe) that he has been so reimbursed; and, secondly, he does not take all reasonable steps to secure that he is not so reimbursed.
The new subsection (5) of the amendment sets out the penalty that can be imposed upon a person convicted of an offence under subsection (4). On summary conviction, a person would be liable to a fine not exceeding £5,000. On conviction on indictment, a person would be liable to an unlimited fine, or a term of imprisonment not exceeding two years, or both. We believe the penalty set out here reflects the serious nature of the breach.
Sanctions will not provide an effective deterrent to wrongdoing if the trustees are able to reimburse themselves from scheme assets for any financial penalties imposed upon them. People who breach the provisions in Clause 26 for their own benefit shall also be punished appropriately. I beg to move.
On Question, amendment agreed to.
Clause 26, as amended, agreed to.
Clause 27 [Decisions by majority]:
Baroness Dean of Thornton-le-Fylde Baroness Dean of Thornton-le-Fylde moved Amendment No. 118N:
Page 14, line 11, at beginning insert ("Except where otherwise provided in the trust deed, or in the Memorandum and Articles in the case of a trust company,").
The noble Baroness said: I shall speak also to Amendments Nos. 118P, 118Q, 118R, 120B and 120C. The amendments tidy up the area relating to the functions of trustees and decisions being taken by a majority. Amendment No. 118N clearly covers trustees' responsibilities, in that trustees, or the memorandum and articles in the case of a trust company, cannot be overridden by a decision of the trustees of a scheme to do just that and move to a majority decision.
Amendment No. 118P removes the words "and only the trustees", because clearly there must be occasions when the authority has the right to step in. The words, "from time to time" are covered by Amendment No.118Q.We do not believe that those words are necessary. If the Minister feels that they are, we should like him to tell us why. Why include the words "from time to time", because that is very open ended? It is not specific. That feeds through to the reasoning behind Amendment No.118R. I have nicknamed subsection (2) (b) "ad hocery" because it may have effect for a specific occasion or for a class of occasion, and if neither of those do it can have effect generally. That is wrong. If the Minister opposes the deletion of paragraph (b) will he tell us why it has to be in? It leaves again an open-ended situation and decisions made by a majority of trustees.
Amendment No. 120B introduces again "with the consent of the Authority". Amendment No. 120C is important because it covers that a determination under the clause:
"shall override anything to the contrary in any rule of law, enactment, instrument or agreement".
The words in the amendment make it clear that decisions of the trustees cannot override anything in law, enactment, instrument or agreement. I beg to move.
8.15 p.m.
Lord Mackay of Ardbrecknish: As the noble Baroness explained, the amendments seek to overturn the main thrust of Clause 27, which is that the trustees of a scheme can decide whether or not the determinations of the board should be by majority. Under current trust law, decisions of the trustees must be unanimous, unless otherwise provided in the trust rules.
Like the Pension Law Review Committee, we believe that the rule of unanimity is no longer suitable in the present day and that, in fact, most schemes already provide in their rules for majority decisions. We therefore propose to legislate so that trustees have the

519
right to determine the appropriate voting rule for their scheme, despite what scheme rules may say. The trustees can determine for themselves whether voting should be unanimous or by majority, and, if by majority, they can also decide that certain specified decisions should be unanimous. I believe that answers one of the points raised by Amendment No. 118R.
Taken together, the amendments would mean that, if scheme rules already provide for unanimous decisions, schemes would be able to change that position only with the consent of the authority.
The noble Baroness asked me about the phrase "from time to time". Not being a lawyer, I have some difficulty with this, but I suspect that the phrase is used so that it is not a once-and-for-all decision. That is my answer to that amendment.
The whole basis of Clause 27, and indeed many of the other provisions in Part I, is that schemes' trustees are the ones responsible for running schemes. They are there to run their own schemes. It is not necessary to involve the authority in matters such as this. If the trustees believe they should be dealing with decisions on a majority basis, it should be for them to decide that for themselves. Of course all that is subject to the minimum requirements which outline what a majority means.
Baroness Seear: Does what the Minister said mean that where there is only one-third of employee members, the employer members can override on every occasion if a majority decision is required? That makes a nonsense of employee membership based on a third.
Lord Mackay of Ardbrecknish: I do not believe that it does. Clause 27(3) (a) provides that the trustees may determine that a decision be taken provided that a majority of the trustees i s present. The fact that a majority of the trustees is present acts as a protection against a minority of trustees being totally overridden.
Baroness Hollis of Heigham: No.
Lord Mackay of Ardbrecknish: It depends upon how one defines a majority and minority. We believe that there should be provision for majority decision-making in certain circumstances. We are giving the trust board the right to decide if it wants to take that route. It may decide not to take that route or that it wants to take it only in certain circumstances. The rules governing what forms a majority are tightly drawn. They mean that a few members of the board would not be able to take decisions when other members were not there who may or may not wish to vote against them. There are considerable protections in the current situation. I doubt whether we need to enlarge them in the way in which the amendments do.
Baroness Dean of Thornton-le-Fylde: I do not understand the Minister's rationale or arithmetic in respect of majorities. Earlier today the Minister stood by the provision of two-thirds of the trustees in occupational pension schemes being employer-nominated. Therefore, there is an inbuilt majority. Unless at a later stage the Minister is persuaded to give way that provision will remain in the
520
Bill. There is reference elsewhere in the Bill to majority decisions. Where amendments have been put forward and the principle has been accepted we shall at a later stage table amendments requiring at least one member-nominated trustee to be present at the trustee meetings.
I rest my case on the recommendation in paragraph 4.5.58 of the Goode Report. It concedes the principle of decision by majority and states:
"There is one further matter to which we wish to draw attention, namely the legal rule that under English law decisions of trustees must be unanimous unless otherwise provided by the trust instrument".
That is what the Minister quoted to us. The report continues:
"We believe that such a rule is not suitable for pension fund administration; indeed, scheme rules regularly provide for decisions to he taken by a majority of trustees".
It concludes:
"We recommend that this should be the law except where the trust deed otherwise provides".
That is specifically what Amendment No. 118N would provide. I had thought that the Minister would respond warmly to the final sentence of that paragraph, which states:
"This would bring English law into line with Scots law".
I ask the Minister to reconsider the matter. We shall look at it again because it is an important principle to concede. Nevertheless, on this occasion—
The Earl of Clanwilliam: Is it not required to specify a quorum of trustees if the whole board is not present at a meeting?
Lord Mackay of Ardbrecknish: Yes, there would be a requirement for a quorum before any decision could be taken by majority voting.
Baroness Dean of Thornton-le-Fylde: Indeed, any meeting normally requires a quorum. If the trust deed provided other than a majority—and some trust deeds could do so—the majority rule would not apply, which is being suggested in the amendment. Nevertheless, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 118P to 118R not moved.]
Lord Lucas Lord Lucas moved Amendment No. 119:
Page 14, line 25, leave out ("reasonable").
The noble Lord said: I shall speak also to Amendments Nos. 120 and 121. The purpose of the amendments is to strengthen the requirement that trustees be given notice of all meetings. They will enable regulations to specify precisely where, in what way and within what timescale, notice must be provided to all the trustees. This will enforce the policy intention that all trustees, including member-nominated trustees, should be able to play their full part in the deliberations of trustee boards. OPRA will have powers of enforcement in case of a breach. I beg to move.
Lord Renton: The word "reasonable" is attractive but it gives rise to a great deal of argument in the courts.

521
It would be far better to leave out the word "reasonable" and have definitive arrangements for the giving of notice. I gladly support the amendment.
On Question, amendment agreed to.
Lord Lucas Lord Lucas moved Amendment No. 120:
Page 14, line 27, at end insert:
("( ) Notice under subsection (3) (b) must be given in a prescribed manner and not later then the beginning of a prescribed period.").
On Question, amendment agreed to.
Baroness Dean of Thornton-le-Fylde Baroness Dean of Thornton-le-Fylde moved Amendment No. 120A:
Page 14, line 27, at end insert:
("( ) A determination under subsection (3) (a) of this section shall not be valid unless it specifies that at least one member-nominated trustee appointed under sections 14 or 15 shall be present when any decision is so taken, whether at a meeting of the main trust board or of any committee of trustees.").
The noble Baroness said: I shall speak also to Amendments Nos. 143 and 144. As the Bill is worded there is no reference to the recommendation made by the Goode Committee, nor to the reference in the White Paper accepting that recommendation. The amendment will insert a new subsection requiring at least one member-nominated trustee to be present when decisions are taken. Paragraph 49 of the Goode Committee recommends:
"Schemes should set a quorum for meetings of trustees which should include at least one member-appointed trustee".
The White Paper stated that the Government accept that recommendation, but there is no reference to it in the Bill. We suggest that the Bill is deficient on that basis, even though subsection (3)(b) provides reasonable notice of meetings. I have had experience of such provisions and know that one can run a coach and horses through them. One can always ensure that some trustees do not receive notice or that meetings are held at times and in venues that are not necessarily appropriate.
The new subsection would ensure that a member-nominated trustee was present at meetings of the board and we hope that the Minister will accept that.
Amendment No. 143 provides for "may" being changed to "shall" because it is important to ensure a mandatory requirement. Amendment No. 144 provides that the,
"Regulations shall require that a minimum number of trustees shall be present",
and shall,
"include at least one member-nominated trustee".
I beg to move.
Lord Mackay of Ardbrecknish: Amendments Nos. 120A and 144 refer primarily to the requirement that a member-nominated trustee should always be present at any meeting of the main board or of any committee of trustees when any decision relating to the scheme is taken. In some respects they are linked with the previous debate.
We certainly support the principle that member-nominated trustees should be able to participate fully in the decisions of the trustee board. However, we do not believe that this amendment is an appropriate
522
way to achieve that objective. It would effectively give member-nominated trustees a veto, and that is clearly not the intention.
To provide particular trustees with the means to dictate to trustee boards in this way would place disproportionate power in the hands of member-nominated trustees. A less than co-operative trustee, for whatever reason, could have a potentially disruptive effect on the scheme. It is a question of balance—and perhaps I may be forgiven for using that phrase for the second time today. We want to ensure member-nominated trustees are able fully to participate in the decision-making process but not at the expense of the efficient running of the trustee board. To achieve this we are taking steps to ensure that individual trustees have every opportunity to attend trustee meetings so that the full range of views can be heard.
On Second Reading the noble Baroness gave more detailed examples of the ways in which someone might make it impossible for a trustee to attend a meeting. He might say, "I will have the meeting at 11 o'clock tonight in Guadeloupe. By the way, my private plane is the only one that is going and I am sorry that there isn't a seat on it". That may be an exaggerated case but perhaps the noble Baroness has experience of something akin to it. The noble Baroness would be well advised not to accept a lift on a boat in those circumstances.
In Clause 27 we are taking power to require that notice of all meetings, including meetings of any sub-committees, must be given to all trustees in a prescribed manner and at a prescribed time. In that way we believe that the policy intention of providing all trustees with the opportunity to attend all trustee board meetings will he achieved. We fully intend that to be the outcome.
Amendment No. 143 would remove the flexibility provided in subsection (2) to make exemptions in certain cases from the requirements to keep books and records. It is normal practice in the majority of schemes for trustees to keep proper books and records, including records of all their meetings. Subsections (2) to (4) provide powers to make regulations and it is intended that these will set minimum standards of compliance.
We fully intend to bring forward regulations which will require those books and records to be kept by schemes, but there are some schemes for which that requirement would not be necessary. We are still considering what those possible exemptions might be, but there are unlikely to be very many. Those we have in mind at present are schemes with fewer than two members and so-called "unapproved schemes"; that is, schemes which are not approved for tax purposes.
In view of that explanation of what I expect to be in regulations, I hope that the worst fears of the noble Baroness have been removed in relation to catching the plane to Guadeloupe.
8.30 p.m.
Lord Renton: It may be that I did not hear my noble friend correctly and, if I did not, I apologise to him. However, there may be another reason for rejecting the amendment. Clause 14 envisages that there will not

523
always be a member-nominated trustee. There may be a vacancy. Arrangements are made to deal with that. Clause 14(5) states:
"If a vacancy for a member-nominated trustee is not filled because insufficient nominations are received";
and then it states what must be done. That is another reason why the amendment moved by the noble Baroness, Lady Dean of Thornton-le-Fylde, presents a difficulty.
Baroness Dean of Thornton-le-Fylde: I understand the point made by the noble Lord, Lord Renton, in relation to Clause 14(5), but I do not accept that it covers this situation. If I were a member-nominated trustee listening to our debates or reading the report of them in Hansard, I should have reached the point at which I wondered whether the Government are committed to ensuring that members of occupational pension funds have the rights and responsibilities which extend to the equity within those funds.
We have put forward reasonable amendments providing for 50 per cent. of trustees on boards, amendments relating to member-nominated trustees being present, and then this amendment. This amendment does not provide for members who do not turn up and are being difficult. It merely provides that a member:
"shall be present when any decision is so taken".
I cannot believe that the Minister is implying that a member may be difficult and not turn up so that business cannot be conducted.
The reality will be that member-nominated trustees will perform an extremely worthwhile and responsible job. The amendment is very reasonable, especially in view of the fact that already inbuilt into the occupational scheme is a provision for two-thirds employer-nominated membership, unless the scheme decides that there will be one-third of member-nominated trustees.
I hear what the Minister says. Clearly I shall not press the matter to a Division. But I must express my personal disappointment, because it seems to me that the Minister is indicating that member-nominated trustees are not as responsible and caring as employer-nominated trustees. I am sure that the Minister did not mean to imply that but I should like him to confirm that he did not. I must reject that view. However, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 120B and 120C not moved.]
Lord Lucas Lord Lucas moved Amendment No. 121:
Page 14, line 30, at end insert:
("( ) If subsection (3) (b) is not complied with, sections 3 and 9 apply to any trustee who has failed to take all such steps as are reasonable to secure compliance.").
On Question, amendment agreed to.
Clause 27, as amended, agreed to.
Clause 28 [Amendments: need for member-nominated trustees]:
On Question, Whether Clause 28 shall stand part of the Bill?
Lord Lucas: I wish to oppose the Question that Clause 28 stand part. This clause was intended to provide that, unless a scheme has secured approval to opt out of the member-nominated trustee proposal, scheme rules cannot be amended if there are no member-nominated trustees on the trustee board. The intention of the clause was to prevent schemes from amending their rules in the absence of a member-nominated trustee: for instance, in any interim period between the expiry of one member-nominated trustee's term of office and the appointment of another.
We believe that, as worded, this clause would give member-nominated trustees an effective veto over amendments and would act against Clause 14(5), which deals with the situation in which no nominations for member-nominated trustees are made. On a detailed scrutiny of the Bill as it now stands, we believe that other provisions in the Bill adequately cover the situation. I hope that the Question will be decided in the negative.
Baroness Hollis of Heigham: I am extremely unhappy that the Government are proposing to withdraw this clause from the Bill. We think that it is a rather useful protective device where bad employers may exploit a situation.
As it now stands, the sanctions against employers and existing boards of trustees who refuse to implement the requirements for member-nominated trustees under Clauses 14 and 15 are not very strong and could, in any case, mean considerable delay while the requirements are being implemented.
If the clause had remained in place, it would have created a blocking mechanism so that for so long as there is no member-nominated trustee, no scheme amendments may be made. That encourages an employer to get a move on. I cannot believe, as my noble friend Lady Dean said, that the Minister is serious when he seems to imply that member trustees uniquely will seek to veto, block and make impossible the workings of a pension scheme for which they have a fiduciary responsibility; for example, by refusing to let names go forward or by not attending meetings. That is a rather cynical attitude towards member trustees, who in other circumstances the Minister expects to be a major part of the whistle-blowing fabric of the whole scheme which is to deliver the pension promise. That is unfortunate and I hope that, on reflection, the Minister will not pursue what is almost bad-mouthing the integrity and motivation of would-be member trustees on schemes. That is what his response to my noble friend and his action in seeking to withdraw this clause seem to suggest. That is extremely unfortunate.
This clause is a useful, protective device to ensure that employers cannot delay unreasonably for their own ends. I hope that the Minister will decide not to withdraw the clause but will seek further guidance on it.
Lord Renton: I saw a further problem with regard to the clause when I first read it and before I knew that my noble friend was going to move that it should be left out.

525
Under the Trustee Act and under the general law for centuries, the courts have had power to amend trusts if application is made to them by trustees, or, indeed, by beneficiaries, in case they should need amendment. The clause says that,
"no power to amend the scheme can be exercised by any person".
If my noble friend had not been moving the Motion to leave out the clause, I was going to ask whether it was intended to exclude the jurisdiction of the High Court. If that were so, it would be a great mistake. Fortunately, however, the problem will not arise if we leave out the clause.
Lord Lucas: My noble friend and I both find the clause as it stands unsatisfactory. I propose to continue to oppose its retention in the Bill. However, I shall read carefully the remarks made by the noble Baroness, Lady Hollis. At root I am sure that we are aiming in the same direction. If there is something that the noble Baroness said which we can take account of elsewhere in the Bill, we shall certainly look into the matter.
Clause 28, negatived.
Clause 29 [Investment powers: duty of care]:
Lord Ezra Lord Ezra moved Amendment No. 121A:
Page 14, line 35, leave out ('investment functions") and insert ("functions relating to investments (within the meaning of the Financial Services Act 1986)").
The noble Lord said: In moving the amendment, I shall speak also to Amendments Nos. 123A and 124A. Clause 29 deals with the liability for breach of an obligation relating to,
"the performance of any investment functions".
Amendment No. 121A is a probing amendment which seeks to define more closely what is meant by "investment". In fact, that is done under the Financial Services Act 1986. That is why the amendment has been proposed. It seems that that would be a better way to define investment so as to have consistency in the duty of care and authorisation as laid down in the FSA. Otherwise, investment managers and practitioners could have two different bases upon which to work. Other types of investment that do not come within the FSA could of course be continued with—for example, real property—and would remain covered by trust law and the scheme rules as before. I have now covered the proposals under Amendments Nos. 121A and 123A which relate to Clauses 29 and 30.
Amendment No. 124A is the last amendment in the group. Again, it is a simple proposal. It seeks to bring within the scope of the provision which permits delegation regulated overseas-based investment managers. The reason behind it is that many pension funds have investments overseas; indeed, some of them have done quite well in that respect. They should not be deprived of that facility, nor of making use of properly regulated and authorised agents overseas. That is the purpose of the amendment. I beg to move.
8.45 p.m.
Lord Mackay of Ardbrecknish: I appreciate the noble Lord's wish with Amendment No. 121A to limit
526
the risk that trustees may be influenced to move out of investments not covered by the Financial Services Act. However, I do not accept that trustees will become more reluctant to make non-Financial Services Act investments as a result of the Bill's provisions.
It is for trustees to decide the most appropriate investments for them to make in the light of their schemes' circumstances after taking and considering relevant professional advice. Where it is perfectly proper for them to make investments which are outside the scope of the Financial Services Act they will, I believe, continue to do so. They have nothing to fear from the contents of the Act provided they take such steps as are necessary to comply with the general duty of care expected from trustees under trust law when making investments.
In the light of the changes in trustees' investment power that are being introduced to the Bill, I believe that it would be wrong to set in place arrangements which would allow scheme rules to exempt trustees from their duty to take care and exercise skill. The requirements of Clause 29 are clear. We have provided for trustees to be exempted from liability under Clause 30 where they appoint an authorised fund manager, as recommended by the PLRC.
The purpose of Amendment No. 123A will be met by Amendment No. 124 which the Government have proposed and with which we shall deal later. Amendment No. 124 will make it clear that investment decisions delegated to a fund manager authorised under the Financial Services Act 1986 are in respect of decisions only about investments set out in that Act. Therefore, the noble Lord, Lord Ezra, is indeed on to a good point but one which I hope he will agree is dealt with under Amendment No. 124.
With regard to Amendment No. 124A, Government Amendments Nos. 123 and 124 which we shall be discussing shortly are intended to clarify those persons to whom trustees may delegate investment decisions and to whom they may do so without incurring liability for the acts of that fund manager under the provisions in subsection (3). It specifies that a fund manager to whom Section 191(2) (a) to (c) of the Financial Services Act applies is an authorised person for the purposes of the subsection. That may include overseas fund managers appointed in certain circumstances.
We have not, however, gone further. We believe that it could be unwise to extend trustees' ability to delegate decisions to unauthorised fund managers, either in this country, the European Community or abroad, without their retaining their vicarious liability for such actions. We do so, first, because of the regulatory structure provided under the Financial Services Act whereby the PLRC recommended the removal of trustees' liability where they appoint an FSA authorised fund manager.
Secondly, it is for trustees to decide what investments are appropriate in the light of their scheme's particular circumstances. Where it is appropriate for them to invest in overseas markets, they must decide what proportion of the fund should be so invested and in which markets and consider who are the most appropriate people to manage those investments. I do not believe that it is for

527
the Secretary of State to deem which overseas regulatory systems are acceptable to UK pension schemes; that must be a matter for the trustees to decide.
Thirdly, as I intimated—and so that the noble Lord will not become confused—the amended definition of an authorised fund manager does provide for overseas fund managers to be appointed. As this occurs under Clause 30(2), trustees will not be held vicariously liable for their acts provided that they take certain steps.
Lastly, I do not believe that trustees would be less likely to make overseas investments which are not covered by the Financial Services Act as a direct result of the clause. Any trustee who takes proper advice on overseas investments, appoints apparently competent persons to manage those investments and takes all reasonable steps to meet his obligations to take care under trust law will have nothing to fear from the provisions in Clause 30.
Having given that fairly long response to what I know is an important matter—indeed, that is why I went into some detail—I hope that the noble Lord, Lord Ezra, will feel able to withdraw the amendment.
Lord Ezra: I thank the Minister for going into such detail. However, I must admit that at one stage I was becoming a little confused as to whether the noble Lord was talking about "unauthorised" or "an authorised" investment manager. I shall consult Hansard tomorrow to ascertain which one he was referring to at various stages. I am glad that the Government regard it as an important issue.
As regards the first two amendments, I am rather sorry that the Government do not accept the fact that there could be some benefit in having greater compatibility with the definition of "investment functions" in the Financial Services Act. However, having said that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 29 agreed to.
Clause 30 [Power of investment and delegation]:
Lord Haskel Lord Haskel moved Amendment No. 122:
Page 15, line 10, at end insert (", provided that this power is exercised, in relation to all matters affecting the fund, to the same degree of care and diligence as an ordinary prudent person would exercise in dealing with the property of another for whom the person felt morally bound to provide and by using such additional knowledge and skill as the trustees possess or ought to possess by reason of their profession, business or calling").
The noble Lord said: We have now reached the part of the Bill which deals with investment. It is notable that the Bill does not set out a standard by which the conduct of trustees can be assessed by the regulator so far as concerns investment. The Bill suggests that trustees should deal with assets as if they were their own. But if you are dealing with your own property you can be reckless or negligent as the whim takes you. Your only responsibility is to yourself. If you are dealing with other people's property, I believe the standard of care should be higher because there is a greater duty of care.
This amendment sets out to impose this higher duty of care as the standard demanded from trustees. One can frivolously bet with one's own money on a horse or on a commodity price, but a trustee should be careful about doing this with other people's money. This amendment clearly sets this out and I understand that it has the support of the Law Society. The wording of this amendment allows a certain amount of discretion according to the trustees' professional skills and ability or calling. This wording is now more commonly used in Australia, in the United States and in Ontario. The wording is more suited to modern investment needs and practices and gets away from the old excessively rigid ones. I beg to move.
The Earl of Buckinghamshire: I should like to support the noble Lord, Lord Haskel, in this amendment. I think that trustees have always had to act as prudent men in this area but I believe there is a need to make what is implicit explicit. I think this amendment is helpful in achieving that objective. Like the noble Lord, Lord Haskel, I, too, am aware that wording like this appears elsewhere in the world. It has been taken, for example, from the United States and the ERISA legislation. I certainly commend it to my noble friend the Minister.
Lord Renton: I agree with the purpose of the amendment and it is perfectly clear that trustees should have such duty. However, the difficulty is that they have already got such duty. This is the kind of duty which time and again has been laid down by the courts in the exercise by trustees of their duties, including their duties with regard to investment. Therefore although the amendment certainly has some merit—looked at as it reads—I very much doubt whether we need to add to the law because it is already part of the law.
Lord Mackay of Ardbrecknish: The standard of care required from trustees when they exercise their investment powers is a complex area involving highly developed equitable principles of law. We were initially attracted to the idea of introducing into the Bill such a standard. But after careful consideration, we have concluded that it would not be appropriate for three important reasons.
First, as my noble friend Lord Renton just mentioned, there is a well developed standard of care required from trustees in making investments under existing trust case law. This will continue to apply and develop. It is not, therefore, necessary for the Bill to introduce a statutory standard of care as set out in the amendment. Secondly, whilst I think we all recognise the PLRC's excellent attempt to encapsulate the principles of case law in this area, the legal advice I have obtained is that such consolidation would result in the statutory standard being applicable to all cases. This carries the danger that the law would become fossilised.
Lastly, the existing standard of care will be reinforced by the provisions in Clause 31, which require trustees to prepare and maintain a written statement of the principles which will govern their decisions about investments. In completing this statement, trustees will

529
need to think clearly and consider all of the circumstances affecting the scheme before deciding the most appropriate investment strategy.
I am suggesting to the Committee that this amendment is unnecessary because its purpose is already achieved. Indeed in some ways it could be counter-productive as regards fossilising existing trust case law. I hope, in the light of my explanation, the noble Lord will feel able to withdraw the amendment.
Lord Haskel: Certainly investing the fund's money is probably the most important task of trustees. As the Minister said, the rules governing it are complex. My feeling is, why not make it explicit if the rules are complex? However, if it ossifies—I believe the Minister said that—the regulations, I think we ought to look into that. With that in mind, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Lucas Lord Lucas moved Amendment No. 123:
Page 15, line 12, leave out from ("manager") to ("any") in line 14 and insert ("to whom subsection (2A) applies").
The noble Lord said: In moving Amendment No. 123 I wish to speak at the same time to Amendments Nos. 124 and 125. These three amendments clarify to whom trustees may delegate investment decisions. As drafted the clause could be seen to be preventing trustees from delegating fund management to EC institutions which are eligible to carry on investment business in the United Kingdom. This was never the intention and could place the United Kingdom in breach of EC obligations. I beg to move.
Lord Dean of Harptree: I welcome these amendments. I am advised that they deal with overseas managers but that they do not in fact safeguard the position as regards property investment. I realise this is a complicated issue and my noble friend the Minister may not be able to give a definitive answer at this stage. However, it seems to me that there is a case for protection under this clause to be afforded to trustees who delegate property investment to properly qualified managers. I would be grateful if my noble friend the Minister would consider that point, possibly not this evening as I realise it is a complex matter. However, it seems to me that it is a point which is not covered at the present moment in the clause or the amendments and that it requires consideration.
Lord Renton: Before my noble friend sits down, can he say whether he uses the word "property" in this context to mean landed property and only that—land and buildings in fact?
Lord Dean of Harptree: I mean all sorts of property.
Lord Lucas: My noble friend is quite right that these amendments do not in any way cover property, either as narrowly or as broadly defined. If my noble friend reads Hansard tomorrow and the answer that my noble friend Lord Mackay gave to the noble Lord, Lord Ezra, on his Amendment No. 121A, and those grouped with it, he will find set out there—I hope—he answer which he requires.
On Question, amendment agreed to.
[Amendment No. 123A not moved.]
Lord Ezra Lord Ezra moved Amendment No. 123B:
Page 15, line 16, after ("investments") insert:
("(aa) may delegate such discretion to a person who is not a person to whom subsection (2B) applies, where the purpose of the delegation is solely to enable that person to delegate that discretion to a fund manager who is a person to whom subsection (2B) applies,").
The noble Lord said: I would like to move Amendment No. 123B with which Amendments Nos. 124B and 125A have been grouped. These amendments provide for sub-delegation of investment functions in the limited circumstances where the immediate delegate is not covered by the Financial Services Act but the sub-delegate is. Some pension schemes collaborate in setting up a common investment fund; for example, where an employer has several schemes, or for different companies in a group. Having a common investment fund increases operational flexibility and reduces investment management costs.
Legally, the scheme trustees delegate their investment functions to those of the common investment fund who are not usually authorised persons for the purposes of the Financial Services Act because they do not need to be for the activities that they undertake. As it stands, the Bill does not appear to contemplate sub-delegation in these circumstances. The amendments are intended to make sure that the trustees of schemes that have joined together in a common investment fund are not prevented from still doing so. I beg to move.
Lord Mackay of Ardbrecknish: I am bound to say that despite the arguments put forward by the noble Lord, I cannot agree that trustees should be permitted to delegate discretion over investment decisions to someone who is not appropriately authorised to manage those investments himself, so that that person may then subsequently pass that discretion on to someone who is properly authorised.
Decisions relating to scheme investments are a key responsibility of trustees. Where those investments require the appointment of an authorised fund manager, it is for the trustees to chose who is, in their opinion, the most appropriate person to manage those investments, to appoint that person and to ensure that he is performing his work competently. Those tasks are central to the trustees' role to act in the interests of the schemes beneficiaries. They should be undertaken by the trustees themselves and not delegated to another party to undertake on their behalf. For those reasons I am unable to commend Amendments Nos. 123B and 124B to the Committee.
I note the concern that, without a clear power to sub-delegate as proposed by Amendment No. 125A, trustees and fund managers could be hampered in conducting their day-to-day business, which would be in no-one's interest. However, the interests of security of the scheme must be paramount. I should therefore like to examine this issue in more detail. I shall in particular need to be sure that trustees maintain both control over, and security of, investments. I hope that with the promise that we shall look at the particulars

531
which are drawn to our attention in Amendment No. 125A the noble Lord will feel able to withdraw the amendment.
Lord Ezra: I am obliged to the noble Lord for promising to have another look at Amendment No. 125A. I am sorry that he has spoken quite so categorically about Amendments Nos. 123B and 124B. I believe that at present a number of perfectly proper investments would fall foul of the provision for none other than a technical reason. I therefore wish to consider the matter further. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
9 p.m.
Lord Lucas Lord Lucas moved Amendment No. 124:
Page 15, line 19, at end insert:
("(2A) This subsection applies to a fund manager who, in relation to the decisions in question, falls, or is treated as falling, within any of paragraphs (a) to (c) of section 191(2) of the Financial Services Act 1986 (occupational pension schemes: exemptions where decisions taken by authorised and other persons).").
The noble Lord said:. I have spoken to this amendment. I beg to move.
On Question, amendment agreed to.
[Amendments Nos. 124A and 124B not moved.]
Baroness Dean of Thornton-le-Fylde Baroness Dean of Thornton-le-Fylde moved Amendment No. 124C:
Page 15, line 30, after ("number") insert ("(of whom at least one shall be a member-nominated trustee)").
The noble Baroness said: As my noble friend Lord Haskel said a few moments ago, the investment of pension funds is probably the most crucial role that trustees have to carry out. It is therefore regrettable that Clause 30(4) does not provide that member-nominated trustees will have a role in decisions regarding investments. Clause 30(4) (a) provides that the trustees of a trust scheme may,
"authorise two or more of their number to exercise on their behalf any discretion to make any decisions about investments".
My experience has been that when problems of any magnitude regarding pension funds have arisen they involve money. That is not surprising. However, the problems relate to the manner of investment and the misuse of pension funds. The clause as drafted makes no provision for member-nominated trustees to have a role in that function.
The general thrust of the Bill provides that only one-third of trustees will be member-nominated trustees unless otherwise decided by the trustees. However, decisions can be taken by the majority. If one adds those two provisions to Clause 30 as drafted one could exclude totally member-nominated trustees from the very heart of investing the funds to ensure the viability of the scheme.
The Bill when enacted will not make rogues disappear; they will still be with us. But we hope that the new Act will make it nigh impossible for rogues to take the advantage that they have chosen to take over the years. We need to learn from the experience we have
532
gained thus far on pension funds. One experience has involved the exclusion of member-nominated trustees from any crucial decisions that are taken.
It is for those reasons regarding the power of investment and delegation that we put forward the amendment. I beg to move.
Lord Renton: I agree with the noble Baroness that it is important that if possible, a member-nominated trustee should be required to act in the circumstances envisaged in subsection (4). But, again, we are up against the problem that Clause 14 envisages that there may be a vacancy among the member-nominated trustees. Indeed, there may not be a member-nominated trustee when one is urgently needed. I believe that we should envisage such a contingency. Therefore, although I have a great deal of sympathy for the case put forward by the noble Baroness, her amendment would have to be somewhat differently worded in order to cover the circumstance of there not being for the moment, a member-nominated trustee.
Lord Mackay of Ardbrecknish: Like my noble friend Lord Renton, I am as anxious as the noble Baroness to ensure that member-nominated trustees play a full part in the work of the trust board.
However, I believe that the amendment is unnecessary and would unduly constrain the ability of a trust board to make sensible provision for handling investment matters. The subsection as a whole makes clear that responsibility for investment decisions should rest with the whole trust board and cannot be delegated.
In practice, many trust boards will be content to authorise an investment sub-committee to operate on behalf of the board. This enables the fund's investments to be kept under regular review, possibly by those trustees with a particular expertise in that area, and for decisions to be taken relatively quickly without needing to convene the whole board.
It could be an inappropriate and unnecessary constraint on the trust board if it were required to appoint a member-nominated trustee to the sub-committee.
I should remind the Committee that any such sub-committee will be operating within the investment principles laid down by the board as a whole under Clause 31. This, as well as the fact that the trust board as a whole cannot delegate its responsibility for investment decisions, means that there is no risk of any investment sub-committee running wild.
There is a further technical objection to the amendment. I wish to explain to the Committee that I do not take refuge in technical objections, but it is sensible to point it out. Not all schemes will have member-nominated trustees. Therefore, the amendment would not fit into the Bill. I do not particularly rest on that last point. I merely make it in passing. The main points which I hope the noble Baroness will take on board and accept are that the investment principles are

533
laid down by the board as a whole and the board cannot delegate its responsibility for taking the investment decisions.
Baroness Dean of Thornton-le-Fylde: I thank the Minister for that response. It ebbed and flowed a little. For a moment I thought I was receiving support; then I was not; and then I thought perhaps there was a chance. I am not absolutely clear where the Minister stands. I shall read his remarks with a great deal of interest in Hansard tomorrow.
Before concluding, I should like to pick up a point made twice by the noble Lord, Lord Renton. I do not believe that we can operate the law by saying that something is desirable. I take the point he made in regard to Clause 14 and the vacancy, but, from my experience as a trustee, boards do not meet day in, day out, week in, week out. When vacancies occur on trust boards, they are usually filled pretty quickly without disturbing the work of the board. Within any trust board there is an investment portfolio which provides that such a percentage can go towards equities, international investments, property and so on. However, the clause provides that the trustees of. a trust scheme may,
"subject to any restriction imposed by the scheme",
do certain things. I take the point that the Minister makes about the trust board being responsible, but my understanding is that the trust board can decide by majority decision to delegate by proxy its authority. While not letting go of overall responsibility at the end of the day, it can delegate the role of investment to the small sub-committee. Therein lies the danger.
Once we start to loosen the strings attached to control on investment, breaches can and do take place. If the wording which we put forward does not meet the point and causes technical problems—and I understand that in law technical problems can become insurmountable in certain cases—we would reconsider the point in parallel with what the Minister said. For the time being, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Lucas Lord Lucas moved Amendment No. 125:
Page 15, line 32, leave out from ("manager") to ("any") in line 33 and insert ("to whom subsection (2A) does not apply").
On Question, amendment agreed to.
[Amendment No. 125A not moved.]
Clause 30, as amended, agreed to.
Clause 31 [Investment principles]:
9.15 p.m.
Lord Haskel Lord Haskel moved Amendment No. 126:
Page 16, line 10, at end insert:
("( ) the exercise of voting rights and other powers granted by virtue of the management of investments on behalf of the beneficiaries;").
The noble Lord said: In moving this amendment I also wish to speak to Amendments Nos. 131 and 141. The purpose of the amendments is to oblige pension fund managers and trustees to vote their shares at company meetings, to announce beforehand how they intend to vote and to keep a record of how they voted.
This is a topical matter because it deals with the excessive payment packages and share options paid to directors of recently privatised industries. That is because over one-third of all the shares on the London Stock Exchange are held by pension funds. Support for the amendment is based on the recommendations of the Cadbury Committee, on experience in the USA and on research which shows that companies with more shareholder involvement perform better.
First, Cadbury: the recommendations are clearly stated in the report and paragraph 6.11.2 says:
"Institutional investors should make positive use of their voting rights".
That is covered by my Amendment No. 126. Paragraph 6.12 says:
"We recommend that institutional investors should disclose their policies on the use of voting rights".
That is covered by my Amendments Nos. 131 and 141.
The recommendations by Cadbury have been readily accepted by most businesses because they promote the community of interest between shareholders, directors and all employees and improve the company's performance; and this community of interest will be needed on matters other than pay. Shareholders, employees and pensioners will not determine details of corporate strategy, but they will make their voice heard on matters of principle as laid down by the Cadbury code, probably on such matters as environmental issues, ethical issues and policies towards employment.
Turning to experience in the United States, this is based on the fact that voting has been a duty for pension funds since 1988. That has been a potent force. In harnessing the good sense of individual people interested in the success of their companies, they have found a variety of ways of dealing with pay and other matters and helping their companies to perform better. For instance, in some companies shareholders have insisted that the directors use a proportion of their pay to become significant shareholders themselves. The Committee will not be surprised to learn that research at the Harvard Business School comparing 70 companies concluded that companies where the directors had been obliged to hold stock by their fellow pension fund stockholders did indeed perform better.
Other shareholders have insisted on wage compression. That means that they have set the difference between the highest and the lowest paid employees. If senior executives earn more, they have to carry the rest of the team with them. Research into this has not been carried out, but my instinct tells me that there will be an improved company performance.
Let us compare that position with the awful mess that the Government have got into over the pay and share options of senior executives in the recently privatised utilities, with the Government vainly calling for shareholders to vote while the public get more and more angry. I am sure that the Minister and his friends would have much preferred to have a duty to vote in the privatisation prospectus than put up with all of that. The omission will be highlighted even more: activity by American pension fund managers in the UK is about to increase dramatically.
Since 1994 American pension fund managers have had their duty to vote extended to shares that are held outside the United States in order to reflect the globalisation of capital markets. This became apparent a few weeks ago with the removal of Maurice Saatchi, chairman of the advertising agency. It was fund managers in Chicago who threatened to vote him off the board; they were acting under United States law. Is it riot sensible to bring British law into line with American law, so that we, too, reflect the globalisation of capital markets?
Since raising this matter at Second Reading, I have received a lot of correspondence. Some of the more progressive pension fund managers, such as Mr. Alastair Ross-Gooby, have been strongly supportive. The Pensions and Investment Research Corporation has suggested that for some time and in recent years has provided a service to its members advising them on which way to vote at company meetings. The National Association of Pension Funds and others raised two problems: the question of cost and offending other clients by voting against them. Those objections were remarkably easy to deal with. We dealt with cost by agreeing that abstaining was a voting option. That could very well he the decision in a large number of cases and would have to be recorded as such. Pension fund managers giving offence to their customers is easily dealt with by anonymous voting. Many companies in the United States, in order to encourage voting at their meetings, have instituted a system of anonymous voting so that fund managers can vote without offending their other clients.
I have also been asked why voting should be a duty. My response is that these amendments do not tell people how they should vote; they provide a framework to encourage them to vote. Government and business obviously want people to vote. Surely it is then a duty to provide that framework and not just stand back. Without it, all that we have is vested interests shouting at each other, as they are doing over directors' pay in the privatised utilities. Provide the structures and you will get a result.
Then there is the position of trustees and pension fund managers under trust law. The position is not clear and it is not my intention to try to clear up the whole area of trust law. But it is possible, and timely, to clear up this one area.
There is no doubt then about the benefits of voting. Why should it be in this Bill? My main reason is that improving the performance of British industry is too important to let this opportunity pass us by. It will be many years before there is another pensions Bill. We must take the opportunity that presents itself. We are dealing here with the single largest group of shareholders in UK companies.
This provision will not bring a major improvement in the performance of British industry. Life is not as simple as that. Our performance will be improved by a whole series of small increments, and this is but one of them. I beg to move.
Lord Mackay of Ardbrecknish: This amendment has been well trailed by the noble Lord, Lord Haskel.
536
We are in no doubt that institutional investors, as owners of shares, have a responsibility to the companies in which they invest. As part of that responsibility, it is extremely important that shareholders should subject the performance of their companies to critical scrutiny. If shareholders see that their companies are not competitive, they must point out to management the improvements that they want to see. If those improvements are not forthcoming, they must demand changes in the management and impose them if they must. It is not an exaggeration to say, as the noble Lord did, that that function is crucial to our economic prosperity.
The Government strongly believe that institutions should develop constructive, long-term relationships with the companies in which they invest. Regularly voting their shares can be an important part of that relationship. It demonstrates to management that the owners are interested in the company and committed to its future. It is also consistent with the trustees' duties to act in the interests of the beneficiaries.
But there is a significant difference between encouraging best practice, which the Government do encourage, and imposing specific or detailed obligations on pension funds, which risk being regulatory and burdensome. As an example of best practice I commend to the Committee the lead taken by the National Association of Pension Funds. It recommends that trustees should decide on their voting policy and that voting policy should be made public. Thereafter the trustees should exercise that vote prudently in the interest of the scheme beneficiaries.
The Committee will no doubt be aware also of the pressure that Postel, which manages the Post Office and British Telecom pension funds, has brought to bear in encouraging better corporate governance and, for example, seeking to reduce the length of rolling contracts. Those are positive and welcome examples of a trend which I hope will continue.
However, the legislative approach suggested by the noble Lord seems to me to be fraught with difficulties and inconsistencies. On the face of it, the phrase "duty to exercise voting rights" means the creation of a binding statutory requirement on trustees or fund managers to vote or exercise their proxies on any resolution on which they are entitled to vote by virtue of their investments.
I have some difficulties with that particular requirement. Mandatory voting is not even something that we impose on the electorate at large when it comes to elections. I also argue, as I would in a discussion about mandatory voting in elections, that there is a right to abstain. That is a very reasonable and important freedom which the electorate ought to have and which should be paralleled in any duty of trustees to vote.
I would also question the logic of a duty being imposed only on pension funds, which is the primary object of the Bill. It would argue for a similar duty to be placed on individuals who hold shares, other collective investment vehicles and insurance companies. It will not surprise the Committee to know that we are not attracted to going down the road of intrusive legislation of that kind.

537
On the practical side, it is perhaps unfortunately the case that forcing people to vote provides no guarantee that they will exercise that vote in a prudent manner. I could talk for a long time about that and give instances of it having happened. But I shall leave that aside. If we go further down that road, the amendment imposes a legislative duty to vote in the interests of the beneficiaries. Taken to its logical conclusion, mere evidence of voting by the trustee on a resolution would not necessarily discharge the duty. To discharge the duty properly, a vote would have had to be made in the best interests of the beneficiaries.
How does one enforce such a duty and how many resolutions would the trustees of an average pension fund have to vote on? I suspect that the number would be high. I do not know how any administrative system could cope with the paperwork and the delving required to check on the trustees' voting records. I understand that the United States Government randomly inspect pension funds to check their practices in relation to corporate governance. To most UK eyes, that would appear to be unnecessarily intrusive and contrary to the Government's general deregulation approach.
In conclusion, the Government believe that the right way ahead in this important area is to encourage higher standards of corporate governance and encourage institutional investors to play their part in that. I do not believe that anything divides the noble Lord, Lord Haskel, and myself in that regard.
We accept that the role of institutional investors and the relationship with the companies in which they invest is an important aspect of corporate governance. But I urge the Committee to be wary of using the Pensions Bill to try to address that wider debate. Any provision introduced into this Bill would, by its very nature, be a partial response. It would risk cutting across initiatives designed specifically to address issues such as those put forward by the Cadbury Committee and its successor body, mentioned by the noble Lord, and the work of the Greenbury Committee on directors' remuneration. The Government will consider any recommendations by those bodies on the need for further action. But this is not the right vehicle to ride that particular horse.
I have clearly explained the Government's position, which I am sure will be read tomorrow, not only by Members of the Committee but also by the outside interests to which some of the remarks are directed. With those assurances and underlining the position of the Government, I hope the noble Lord, Lord Haskel, will feel able to withdraw the amendment.
Lord Haskel: I thank the Minister for that considered response, which I found extremely disappointing. I feel that this whole matter is too important to be left to individual discretion. If we leave it to the individual discretion of busy people it is the kind of thing that they will simply not get round to. By making it a duty to vote it interprets the duties of the trustees of pensions funds as put forward by the Cadbury Report.
The Minister said that the matter was well trailed; that is because there is a lot of interest in it. Only today the DTI published further proposals about best practice in
538
British industry. A duty to vote is among the best practices being promulgated by the Department of Trade and Industry. It is all designed to encourage long-term relationships between shareholders and companies. It has been shown time and again that share values increase when shareholders take an interest, partly because the market feels that if shareholders take an interest, then bad management will be jumped on far more quickly.
I do not believe that the provision is regulatory and burdensome. A few companies are coming round to putting it into effect and many pension funds are working along these lines. We have a duty, therefore, to provide a framework in which it can be encouraged. However, at 9.30 in the evening I am not prepared to have a lengthy debate on it. I shall return to it at Third Reading and beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Ezra Lord Ezra moved Amendment No. 127:
Page 16, line 11, at end insert:
("( ) In preparing or revising such a statement, the trustees of the trust scheme shall have regard to the timescale over which the liabilities of the trust scheme will fall to be discharged, and accordingly (unless such timescale is of a short duration) such statement shall provide that—

(a) investments are to be evaluated for their expected return over a period commensurate with such timescale; and

(b) investments are not be be made, or realized, by reference primarily or exclusively to considerations of a short-term nature.").

The noble Lord said: In moving Amendment No. 127 I shall speak also to Amendment No. 133. The points I raise follow on logically from the points made by the noble Lord, Lord Haskel. Clause 31 requires trustees to prepare, maintain and periodically review a written statement of their investment policy. The amendment seeks to add to Clause 31 an obligation on the trustees, when preparing or revising that statement, to take a long-term rather than a short-term view.
I am convinced, in view of what the Minister said in response to the noble Lord, Lord Haskel, that I shall be told that this goes outside the limits of the proposals in the legislation and, if dealt with at all, should be dealt with in some other way. But before the Minister takes that stance, perhaps he will reflect upon one or two aspects of the problem.
I am sure that the Minister will agree, and that other Members of the Committee will agree, that short-termism is a defect in the whole British approach to investment. The Bill gives us a chance to do something about it and we should not let it go by without drawing attention to it. It seems to me to he particularly appropriate to do so in the case of pension schemes, whose liabilities are by definition long term in that the trustees have to look ahead to the pension needs of people who are currently employees and may be many years away from retirement. They, of course, will be replaced with young, new entrants who themselves will be looking long term for their pensions.
The nature of the proposed amendment conforms with the general pattern of this part of the Bill in that it simply requires the trustees to have regard to a long-term timescale, except in the case of schemes

539
whose liabilities are short-term; for example, where for whatever reason they are being wound up. The general problem of short-termism contains many paradoxical features. No doubt in many cases the chief executives of companies like to take a long-term view but they feel constrained because of the perceived demands of Institutional investors for short-term high returns both for capital and income. The ultimate beneficiaries of pension schemes no doubt also take a long-term view.
However, in the middle there is the investment community whose fund managers compete with each other on the basis of quarterly performance league tables. One cannot blame them because they live in a competitive situation. What is needed to put this right is for pension scheme trustees to direct fund managers as to strategic investment criteria, including moving them firmly towards a culture of long-termism. Unless there is a move in some part of the chain I fail to see how we can get away from this problem.
Amendment No. 133 is also about long-termism but ties in almost precisely with the point made by the noble Lord, Lord Haskel, on voting rights. The proposition made in Amendment No. 133 is that voting should not only be undertaken but should be undertaken with a view to long-term objectives.
I move the amendment in order to take advantage of this legislation to help us move away from the short-term culture. I beg to move.
9.30 p.m.
Lord Haskel: I rise to support the noble Lord, Lord Ezra, and to ask the Minister one question. Will he consult with his colleagues in the Department of Trade and Industry, because we are inundated with requests from the Department of Trade and Industry to take a long-term view? As the noble Lord pointed out, this is an opportunity to have this obligation to take a longer term view on shareholders. I should have thought that the Minster's friends in the Department of Trade and Industry would be delighted if he took this opportunity.
Lord Mackay of Ardbrecknish: This has been an important debate. Its subject matter formed a small part of the debate we had at Second Reading, when the noble Lord, Lord Ezra, raised some of the points which he has just made. While I would not deny that it is important for investors to take a long-term view of the position of the companies in which they invest, one has to look at the role of the trustees in a trust fund when it comes to their decisions, which are related, of course, to the interests of the scheme for which they are trustees.
For example, there is a wide range of factors which pension fund trustees must take into account in setting their scheme's investment strategy. Those factors will be influenced by the level of resources available, by the size of the scheme, by the period within which liabilities have to be met, by the relative rates of return on different types of investment and by the relative volatility of different investment vehicles; in short, all the factors already mentioned in Clause 31. Some more mature schemes may be best advised to hold a large percentage of their assets in gilts. I know that the noble Lord, Lord Ezra, appreciates that point. Indeed, it is
540
catered for in his amendment. As pension schemes continue to mature, this factor may well have a noticeable impact on the balance of overall pension fund investment, irrespective of the minimum solvency requirement.
These are all highly complex and technical matters, on which trust boards will be obliged to seek professional advice. Their conclusions will depend on their particular view of the wide range of factors mentioned in this debate and on the particular circumstances of their scheme. Our view is that trustees who draw up their investment principles taking account of the points already listed in the clause, will be bound to take account of the considerations mentioned in this amendment.
Amendment No. 133 requires trustees holding securities in public companies to use any voting or other rights held, for the
"best interests of the trust scheme as a long-term investor".
It then defines "best interests" using criteria which have regard to the
"promotion of the sustainable growth in value of the company concerned".
Trust law clearly provides that trustees must act in the interests of the beneficiaries of the trust. It is clearly in the interests of everybody to encourage any action which will promote growth in UK companies. However, the introduction of any duty which requires trustees always to consider the interests of any other party before those of scheme members would be inappropriate because it would be incompatible with trust law. Such a requirement could lead to severe conflicts of interest between trustees' duties to scheme beneficiaries on the one hand, and their obligations to other parties on the other.
Of course we want to maintain the current high level of investment by pension funds in UK equities. It is a potent source of finance for British industry. I take the point that pension fund investments in gilts rather than equities could, in certain circumstances, be bad news for scheme members in that it may limit the ability of the scheme to provide discretionary increases. Equally, we must not impose the kind of substantial costs on sponsoring employers which would arise if there was an unnecessarily large shift of pension funds from equities into gilts.
The Committee will be aware that my right honourable friend the Secretary of State had this point very much in mind in determining the appropriate valuation basis for the proposed minimum solvency requirement which we shall be discussing at a later stage. Probably the debate deserves a longer airing. I hope that my brevity has not taken away from the fact that I consider this to be a very important issue. For the reasons which I have briefly outlined, I hope that the noble Lord, Lord Ezra, will feel able to withdraw his amendment.
Lord Ezra: I am most grateful to the noble Lord for the care with which he has dealt with this subject. I am not surprised at the conclusion that he has reached, but I regret it. I feel as the noble Lord, Lord Haskel, does, that the Government have spoken time and time again

541
about the need for us to take a long-term view of investment. The vast mass of investment in this country is handled through the institutions of which the pension funds form a very large part.
Therefore, this would have been an opportunity to translate exhortation into obligation without in any way in my opinion—or indeed that of the noble Lord—harming the interests of beneficiaries. It must be in their interests to take a long-term view of investment and to persuade the companies that they invest in to take a similarly long-term view. No doubt this is a matter to which we shall try to return, but in the circumstances I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Lucas Lord Lucas moved Amendment No. 128:
Page 16, line 14, after ("the") insert ("written").
The noble Lord said: In moving this amendment I shall speak also to Amendment No. 129. The purpose of these amendments is to ensure that when preparing or revising their statement of investment principles, trustees obtain advice in writing from a person who is properly qualified to give appropriate advice to pension schemes. The effect of Amendment No. 128 is to require trustees to obtain advice in writing. Amendment No. 129 develops further the qualifications required from a person from whom trustees must take advice. I beg to move.
The Earl of Buckinghamshire: My Amendment No. 129A is joined with these amendments. Members of the Committee will be aware that at Second Reading I expressed some concern about the overall impact of Clause 31. I wish to return to that matter at Report stage. At this point I wish to say in general that I believe the words in this clause "consult the employer" seem to change the current status quo where the trustees have to take into account the interests of all parties including the employer, as a contingent beneficiary. The amendment does not deal with that issue, which is why I wish to return to the matter on Report. However, the provisions make clear that the trustees have to consult and that failure to do so will carry penalties under Clauses 3 and 9. I am sure that, in most circumstances, the trustees will consult the employer but there may be circumstances where the relationship has broken down to such an extent that consultation does not take place.
The amendment refers to the penalties, but I am somewhat diffident about loading more penalties onto the trustees. Again, that is a point that, I made on Second Reading. However, as there are limited powers to get rid of trustees, I believe that the provisions complete the circle of the trustee requirements set out in the Bill.
Lord Lucas: To answer my noble friend, we too feel diffident about involving OPRA in these matters, but I can advise him that we shall be giving further consideration to the matter. Therefore, I hope that my noble friend will not seek to move his amendment.
On Question, amendment agreed to.
Lord Lucas Lord Lucas moved Amendment No. 129:
Page 16, line 16, after ("matters") insert ("and to have the appropriate knowledge and experience of the management of the investments of such schemes").
On Question, amendment agreed to.
[Amendments Nos. 129A and 129B not moved.]
Lord Haskel Lord Haskel moved Amendment No. 129C:
Page 16, line 26, at end insert:
("( ) The trustees of a trust scheme must include in the annual report of the scheme a statement by the trustees that they have carefully considered the investments and are satisfied that they conform to the statutory criteria.").
The noble Lord said: In moving Amendment No. 129C, I should like to speak also to Amendments Nos. 138, 140A, 141A, 142A and 142B. Amendment No. 129C is yet another Goode recommendation which the Government accepted but have not included in the Bill. It is designed to ensure that the trustees do not approve the annual report on investments and other matters on the nod but that they pay attention to what has gone on. That is similar to the responsibilities that are laid on directors in relation to the annual accounts of a company. We are talking about the same objective. It is a matter of good practice which needs to be encouraged and specified in the Bill. I beg to move.
Lord Mackay of Ardbrecknish: The first five of these amendments concern the requirements on trustees to obtain and make available certain information. The amendments would require the Government to make regulations which would require trustees of all schemes to produce scheme documents which are readily comprehensible to members within a given maximum time limit. They would also require trustees automatically to send an annual benefit statement to all members.
Amendment No. 142B inserts a new clause which would require scheme advisers who provide information to the employer in relation to the scheme to disclose such information to scheme members and independent trade unions.
Amendment No. 129C mirrors a recommendation made by the Pension Law Review Committee which has been accepted by the Government. However, we consider it more appropriate to give force to that recommendation in secondary legislation. We intend that new regulations concerning the provision of information to members shall be made under the powers at Section 113 of the Pension Schemes Act 1993 and Clause 35. These shall include detailed requirements for the content of scheme annual reports.
Amendment No. 138 would provide a mandatory power rather than a permissive power to make regulations concerning the provision of information to members. The effect would be to require the trustees or managers of all occupational pension schemes to obtain certain documents and make them available to members. Such a requirement would not be appropriate. Certain types of occupational schemes will need to be treated differently and the power to make regulations must provide for this. We have in mind, for example, certain

543
exemptions for public service schemes. Those schemes are in the main unfunded and it would clearly be inappropriate to require them to produce accounting documents in the same way as for funded schemes.
The effect of Amendment No. 140A would be to require audited accounts, auditors' statements and actuarial valuations, which are by their nature very technical documents, to be produced in a readily understandable format with important information highlighted. We support the principle behind this amendment, which is to provide members with information which is meaningful and written in plain English. We consider that that is particularly important for documents such as the annual report and scheme booklet which are intended primarily for scheme members. It is perhaps of lesser importance for the documents of the sort covered by the amendment which concern technical issues and are intended to be read by relative experts.
As the Committee will be only too aware, whether something is readily understandable or whether information is important is a matter of opinion. It is not at all something for which we can legislate. Therefore, while we wish to encourage the use of plain English, we do not believe that the Pensions Bill is the place to do so.
Amendment No. 141A would require trustees to provide annual statements of accrued rights to members and others. We support the principle that members of all occupational schemes should have the right to receive an annual benefit statement if they want one. Members of money purchase schemes will continue to receive annual benefit statements automatically and we shall continue to encourage salary related schemes to do the same. However, we appreciate the practical difficulties that requiring all schemes to issue statements automatically would place on some schemes and have no wish to increase their administration costs unnecessarily.
The amendment would also require trustees to obtain and disclose specific items of information within set time limits. We consider that secondary legislation should specify the time limits for the provision of information and should set out all of the information which is required to be disclosed in the scheme annual report or booklet. We intend new regulations concerning the provision of information to members to cover the points made in this amendment.
Amendment No. 142A mirrors two of the recommendations made by the Pension Law Review Committee, both of which have been accepted by the Government. But again we consider it more appropriate to give force to those recommendations in secondary legislation.
Amendment No. 142B seeks to tackle a problem which does not seem to us to exist.
544
I hope that I have covered all the main points in the amendments in the group and that the noble Lord, Lord Haskel, having listened to me, or, more sensibly, having read in the morning what I have had to say, will be content.
9.45 p.m.
Lord Haskel: I thank the Minister for his response. He replied to a couple of amendments to which I did not speak. However, from what the Minister said, it appears that he intends to introduce secondary legislation to encourage best practice. I do not wish to stand in the way of that. My only regret is that he is going to encourage best practice in administration only and not in the management, which was the matter to which I was trying to refer previously. However, in view of what the Minister has said, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 31, as amended, agreed to.
Clause 32 [Choosing investments]:
Lord Lucas Lord Lucas moved Amendment No. 1.30:
Page 16, line 28, leave out ("this section") and insert ("subsections (2) to (4)").
The noble Lord said: I shall speak also to Amendment No. 132. Amendment No. 130 clarifies those subsections of Clause 32 to which trustees must have regard when they are making investment decisions themselves. The specific requirements for those trustees are contained in subsections (2) to (4). The amendment removes the reference to the whole clause and substitutes the relevant subsections.
Amendment No. 132 clarifies who may give proper advice when trustees make or hold investments which are outside the scope of the Financial Services Act 1986. I beg to move.
On Question, amendment agreed to.
[Amendment No. 131 not moved.]
Lord Lucas Lord Lucas moved Amendment No. 132:
Page 17, line 12, at end insert ("and to have the appropriate knowledge and experience of the management of the investments of trust schemes").
On Question, amendment agreed to.
Clause 32, as amended, agreed to.
[Amendment No. 133 not moved.]
Baroness Dean of Thornton-le-Fylde Baroness Dean of Thornton-le-Fylde moved Amendment No. 133A:
After Clause 32, insert the following new clause:
("Custody of investments
.—(1) Unless the Authority agrees the contrary, the trustees or managers of an occupational pension scheme or a personal pension scheme must secure that investments held for the purposes of the scheme are held in accordance with an agreement, made between the trustees or managers and an approved person ("the custodian"), which contains the provisions mentioned in subsection (2).
(2) Those provisions are—

(a) that the investments are vested in the custodian's name and he maintains adequate records for identifying them as belonging to the scheme and not to himself or any other person,

(b) that the custodian is required to safeguard the investments,

545

(c) that all documents of title relating to the investments are kept in the custodian's possession and may not be delivered to any other person except—

(i) in accordance with a request from the trustees or managers which is signified in the prescribed manner, or

(ii) in prescribed circumstances

(d) that all transactions relating to the investments are conducted and recorded in the prescribed manner and within the prescribed period, and, in particular, that any transactions which do not occur in the normal course of the holding of investments generally or of investments of the description in question are immediately reported to the Authority and the trustees or managers by the custodian,

(e) that the custodian is responsible for securing that the trustees and managers are fully informed of all matters relating to the investments within a period which is reasonable having regard to the importance of the information,

(f) that, in any case where the custodian is also a person to whom any discretion to make any decision about investments has been delegated under section 30, the functions exercisable by him as custodian are adequately differentiated from those exercisable by him by virtue of that delegation,

(g) that the custodian must establish and maintain such arrangements as may be prescribed for the purpose of securing so far as practicable that none of his employees or officers has the opportunity to perform any action which would or might result in a breach of the agreements,

(h) that the custodian is liable for any reduction in value in the assets of the scheme arising from any breach of his obligations under the agreement, and

(i) prescribed provisions.

(3) A person is approved for the purposes of this section if—

(a) he satisfies the prescribed requirements, and

(b) subject to subsection (4), he is not connected with the employer.

(4) Paragraph (3) (b) does not apply—

(a) where the employer is an institution authorised under the Banking Act 1987 and the arrangements made under this section comply with such further requirements as may be prescribed, or

(b) in prescribed circumstances.

(5) Where an agreement in relation to the investments held for the purposes of a scheme has been made with a custodian in accordance with this section—

(a) except in prescribed circumstances, the custodian shall not be regarded as a trustee or manager of the scheme by virtue only of complying with such provisions of the agreement as are mentioned in subsection (2), and

(b) the trustees or managers of the scheme are not responsible for any act or default of the custodian in the course of exercising his functions as such if—

(i) they have taken all reasonable steps to satisfy themselves that he is an appropriate person to appoint as custodian, and

(ii) they have continued to satisfy themselves by periodic review that he performs his functions under the agreement competently.

(6) Subject to any restriction imposed by the scheme, an agreement under this section may include provision enabling the custodian to make arrangements with another approved person for him to exercise any of the custodian's functions under the agreement; and where the custodian makes such arrangements this section shall, except in prescribed circumstances, apply in relation to the other person as it applies to the custodian.").
The noble Baroness said: I am somewhat encouraged by the fact that on Second Reading the Minister said that his mind was not closed to this matter. I hope that he is prepared to listen to my argument and perhaps to agree to the amendment.
I have no intention of speaking for as long as it would take me to read the proposed new clause. When one asks the advice of lawyers and parliamentary draftpersons one is presented with a long amendment such as this. Perhaps one may say it is belt and braces, but I assure the Committee that it is necessary.
The Minister also said that while his mind was not closed to this matter it was no guarantee against wrongdoing. He went on to say that we are talking about a package; and this is one element of that.
The proposal is not a new idea; most pension funds have the independent custody of investments. Understandably, they see it as being sensible. Most city fund managers when offering a service to pension funds automatically include this service. It is not expensive and therefore I hope that the Minister will not plead that it is an extra cost and an extra burden. People within the industry to whom I have spoken assure me that the cost is between one-tenth and one-twentieth of 1 per cent. It is a minuscule amount for the security that one would have with the independent lodging of investments.
On Second Reading the Minister also said that he believed that this change would not have helped the Maxwell scheme because the investments were lodged with independent custodians. That is not correct. Where the Maxwell funds were lodged with independent custodians—and many of them were—many of them were secure. However, a large amount of the assets was not held in custody independent of the employer. It is a fact that Maxwell's companies and his tentacles reached far and wide. Where the pension fund investments were not held within the company they were not necessarily independent of the employer. Had they been so, it would have been more difficult, if not impossible, to gain access to them. I do not say that it would have stopped him, but it would have made him think twice. Now many schemes are lodging funds independently. The additional dimension is the fact that much investment is made outside this country in many different parts of the world. We live within a global economy and it is essential that such investments are lodged independently.
The Minister may say that the custodianship of investments is already regulated. However, whereas the Goode Report did not call for that to be a requirement, it stated that there was no direct regulation of custodians. At paragraph 4.10.38 it stated:
"As stated … while custodians are normally authorised by a regulatory body for other purposes, custodianship is not as such an activity requiring prior authorisation or, indeed, directly regulated in any way".
Therefore, there is a gap in the regulatory system. At paragraph 4.10.33 Goode went on to state that, plainly, independent custodianship,
"places some rein on the freedom of action of an intending fraudster, because the possibility of a query about instructions outside the fraudster's authority will reduce the chances of such instructions being given in the first place".
I hope that the Minister will accept the amendment. It is welcomed generally in the industry. I was interested to read that Prudential Insurance has put out to tender some £400 billion of its assets for independent custodianship. Of course, most insured schemes have independent custodianship of their investments. Therefore, that is something which all good companies are doing. I beg to move.
Baroness Seear: I support the amendment moved by the noble Baroness, Lady Dean. She has direct experience of what can go wrong when custodianship is not properly organised, and I do not believe that I can add very much to what she has said.
Obviously there can be no 100 per cent. safeguard against fraud, but at this stage our obligation is to take all the steps possible to minimise the chances of that happening and to reduce the number of fraudulent cases. This amendment is clearly a practical and sensible way in which to achieve that. As has been said, a number of companies are already following that course. It would surely be wise and appropriate to give that legislative backing in the Bill.
The Earl of Buckinghamshire: I support the amendment moved so competently by the noble Baroness, Lady Dean. I realise that custodianship is a complex issue, in particular in relation to regulation. Indeed, question marks have been placed over the effectiveness of custodial arrangements.
Goode said:
"the fact that the assets are held by a custodian will not by itself be a sufficient safeguard. In other words, custodianship should be seen as an additional barrier to wrongdoing which may or may not prevent it".
That is an extremely important point. It would be an additional barrier to anybody attempting to commit fraud.
I do not believe that costs are an issue in this matter. The custodian business is extremely competitive. More people are trying to enter that market each year. Regulatory difficulties should not prove to be a barrier either. We have moved on in all areas of regulation and I do not understand why custodianship should be exempt from that.
In supporting the amendment, I draw the Committee's attention to compensation arrangements. Is it reasonable to ask schemes which have custodial arrangements to pay out for wrongdoing that has occurred in schemes with no custodian? I think not.
Lord Dean of Harptree: I support the amendment. From our debates, it is obvious that there is a reluctance to impose additional burdens on occupational pension schemes which, after all, are voluntary. If we proceed too far along the road of regulation, there is always a danger that schemes will not be improved or will not be set up.
In this case, we are not asking for anything new. As has been said, many schemes already have provision for independent custodians. That is good practice which is well developed in particular in larger schemes. Many small schemes are insured and, therefore, the intention is fulfilled in that way.
548
It has been mentioned already that the expense involved in having independent custodians is minimal in relation to the available resources. II was greatly encouraged to recollect that when he dealt with those points on Second Reading the Minister said that he had an open mind. If he is not prepared to go as far as accepting this rather detailed amendment tonight, I hope that he will at least be able to assure us that his mind is even more open and that he is more sympathetic than he appeared to be on Second Reading.
10 p.m.
Lord Mackay of Ardbrecknish: The amendment before us is very long and detailed. It follows on from the concerns expressed on Second Reading and again this evening by several Members of the Committee. As I said at the end of the Second Reading debate, I do not have a totally closed mind on the issue and I am prepared to listen to the arguments as they are put forward. I should stress that I am still in that position and I still have some difficulty about the amendment which I hope to lay before the Committee as briefly as I can to see what response I receive.
I seem to remember from many of the comments made on Second Reading the desire for the Bill to do something specific with regard to the security of scheme assets. I believe that noble Lords appreciated then—as, indeed, they did tonight—that independent custodianship of scheme assets is not a simple matter.
Several noble Lords made the point that the use of independent custodians would probably not stop a determined fraudster. But I believe that it would be foolish of me or anyone else to pretend that any legislation could give a total guarantee against such wrongdoing. The same considerations were thoroughly considered by the PLRC, which specifically asked:
"Should the use of independent custodians be obligatory?".
The PLRC concluded that they should not be. The committee was not convinced that the use of custodians would provide such a significant obstacle to the determined wrongdoer that their use should be made mandatory. Moreover, in a report which frequently sought to develop codes of practice wherever practical, the PLRC specifically declined to recommend that independent custodians should be a requirement of good practice.
Many issues occurred to me during the debate. For example, as custodians take instruction from the trustees, they would not be able to refuse to hand over assets if properly asked to do so by the trustees. Certainly it would not be a defence against the trustees making a wrong, properly arrived at decision. It is also the case that in the legislation the scheme assets would certainly have to be held separately from the employer. He would not, so to speak, have them in his safe; the pension scheme would have to have them in its safe.
The difficulties associated with this issue are, I believe, brought out in the amendment. It would require trustees to ensure that investments are held by an "approved person", defined as someone who satisfies the prescribed requirements. Nothing further is said on who that person shall be or what criteria would be used

549
to judge his fitness to undertake such an important role. Indeed, in introducing the amendment the noble Baroness, Lady Dean, said that custodianship is not presently regulated. My noble friend Lord Buckinghamshire also made that point. If we are to have proper protection here other than some hoped-for protection, it is vital to see what those prescribed requirements would be, what class of persons would be designated as custodians and who would ensure that they actually carried out whatever prescribed regulations are laid down for their task. In considering the question, we have to look at that important issue.
Contrary to what everyone thought—that they were delivering some sort of blow to my case before I stood up to speak—I am not going to pray in aid anything to do with cost. I believe that the answer is in the mechanism proposed by the PLRC. It is for the trustees, employers and scheme professionals, all operating under the new duties contained in the Bill, to ensure that scheme security is fully and rigorously enforced. That is backed by the new regulatory authority with wide-ranging powers and sanctions.
In considering their security needs, many schemes will conclude that it will be appropriate for them to use an independent custodian, and there may be many good reasons for them to do so; indeed, many of them do so at present. However, others may feel that any additional benefit provided by a custodian will be of little use under the particular circumstances of their scheme. It is, for example, in respect of smaller and medium-sized schemes that this is most likely to seem inappropriate because they may hold little in the way of transferable securities. A requirement that such schemes should use an independent custodian would, I believe, be unreasonable and would not add anything appreciable to the security of the scheme.
I recognise the genuine concerns that have been expressed over this matter but I believe—as I said at Second Reading—that a statutory duty to appoint an independent custodian is too prescriptive, especially in the light of the point I made earlier that the amendment, long as it is, does not address the question of how one defines such a custodian and how one regulates such a custodian. One would certainly have to have something in place to achieve that.
I believe that the general thrust of the Bill should remain as it is. The trustees and the scheme professionals are there to put in place the measures most suitable to meet the needs of the scheme as regards the important matter of asset securities. I hope I have not illustrated too closed a mind on the matter. I hope I have indicated to the Committee some of the considerable difficulties that attend to the issue. These difficulties (dare I say?) have not been fully addressed in the amendment or in the speeches of all those who have spoken, including my noble friends.
Baroness Dean of Thornton-le-Fylde: I must confess I am somewhat surprised at some of the comments the Minister has made this evening. Quite apart from myself, other speakers in this debate have a
550
wealth of knowledge in this whole area. I respect their knowledge and experience. I refer also to Members on the Benches opposite.
Goode said that this measure places some rein on the freedom of intending fraudsters. The Minister says that this is not a question of cost. Perhaps we have all been indoctrinated with the reputation that people from his part of the country have as regards money. However, I must withdraw that if cost is not a factor as regards obtaining regulation on pensions. I accept that. We shall refer to that in some of the later debates.
Lord Mackay of Ardbrecknish: The noble Baroness should not go too far. I said only that cost was not an important consideration as regards this provision.
Baroness Dean of Thornton-le-Fylde: The Minister cannot pick and choose. He cannot say that cost is not an important consideration only in regard to certain provisions. The Minister says that the measure refers to prescribed requirements. I am surprised that the Minister is such a wilting violet as regards accepting another area of prescription. After all there are already approximately 200 such areas within the Bill. I would not have thought that one more in this major area would have made much difference.
The Minister asks what would prevent trustees signing for the assets to be handed over. If anything is impossible in this life, I think it would be practically impossible to get an entire board of trustees—unless of course they are all employer trustees who connive together, but I think that is highly unlikely although it has happened on rare occasions—to act in that way. The fact is that the industry is calling for this measure. It is supported by the National Association of Pension Funds, by independent investment managers and by independent pension fund managers. The industry itself is calling for this measure. It is not something that we on this side of the Chamber have imposed. There is support all around the Chamber for this amendment.
Perhaps the Minister is taking comfort from his feeling that we do not have the wording correct. If that is so, we shall look at that and come back to it. I believe it is as near correct as we can make it. It has been drafted with a great deal of professional input on the part of people who are experts on pension fund rules and regulations and indeed law. I shall look carefully at what the Minister said but I would ask him also to consider seriously the points made in this short debate on what is a crucial area. This is about ethics, standards and integrity as regards pension funds. It is a matter of how not only the professionals but everyone approaches this whole area. If we had independent custody of investments, that would be yet another finger in the dike to stop some of the abuses that have taken place.
The Earl of Buckinghamshire: Before the noble Baroness decides what to do with the amendment, I ask the Minister to think again. If he would like detailed arguments from ten past ten until midnight I should be pleased to give them. However, I do not believe that that would be helpful to the Committee.

551
It is an important issue. I do not believe that authorising a custodian should be a difficulty. If one has authorised investment managers in this country one should be able to pick authorised custodians without difficulty. I hope that my noble friend will take note of what has been said from the Benches opposite and on this side of the Chamber. I wish to return to the issue at a later stage.
Lord Mackay of Ardbrecknish: Perhaps I may answer my noble friend. I sought to major on the point, essentially in shorthand at this time of night, about who the custodians would be.
Perhaps I may say this to the noble Baroness. She made a nice point; that I am not backward in coming forward in other parts of the Bill about regulations. I fully accept her point. Why should I be a shrinking violet in this case? I have not been able to devise such regulations as may be required in this situation to judge whether they are sensible and whether one could encapsulate all the people who should be custodians. That is what I invited her to do rather than to expand her already rather large amendment.
Baroness Dean of Thornton-le-Fylde: I accept that invitation to come back with proposals with regard to the prescribed areas. I take it on board. At this stage, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Monkswell Lord Monkswell moved Amendment No. 134:
Before Clause 33, insert the following new clause:
("Payments to members of scheme
At the end of paragraph 3(3) of Schedule 22 of the Income and Corporation Taxes Act 1988 there shall be inserted—
"( ) making payments to members of the scheme".").
The noble Lord said: In moving Amendment No. 134 I speak also to Amendment No. 135.
I had intended to say only a few words of introduction and then to ask the Minister to respond. However, given the Minister's response to Amendment No. 126, I have to elaborate a little more than I had intended.
Perhaps I may remind the Committee that Amendment No. 126, moved by my noble friend Lord Haskel, provides for the trustees to have a policy regarding the exercise of voting rights. The Minister responded on the basis that it was a requirement that the trustees should exercise their voting rights on shares held. It is important that we address the amendments and the intention underlying them. In that respect, I feel that I have to explain a little more fully than I had intended both what the amendments seek to provide and the reasons why I have put them down.
Amendment No. 134 amends .the Income and Corporation Taxes Act 1988 effectively to enable the making of payments to members of the scheme from pension scheme surpluses. It does not state that pension scheme surpluses have to be paid to members but that they can be paid to members.
Perhaps I may elaborate a little because I am sure that not too many Members of the Committee will have read the Income and Corporation Taxes Act 1988. It is two inches thick and is not the kind of legislation that one
552
carries around in one's briefcase. Schedule 22 effectively states that pension scheme surpluses can be reduced or eliminated by:

"(a) making payments to an employer;

(b) suspending … an employer's contribution;

(c) suspending … employees' contributions;

(d) improving existing benefits provided under the scheme;

(e) providing new benefits under the scheme".

Then there is a catch-all phrase,

"(f) such other ways as may be prescribed".

There is an imbalance in that there is no mechanism for enabling payments of scheme surpluses to be made to members of the scheme. That is the intention of my amendment.
Amendment No. 134 to Clause 33 effectively seeks to do the same. Clause 33 enables the making of payments to employers and the fund where there is a surplus. My Amendment No. 135 would enable payments to be made to scheme members.
Having explained the amendments, I thought it might be useful to advise the Committee why I have brought them forward. I must go back in history to my experience which I am sure is shared by many other people working in British industry over the past 15 years. Employers found their pension schemes in surplus at the same time as companies had problems, and employers made employees redundant. Usually they themselves took a pension contribution holiday while requiring employees to continue paying into the scheme. Then, if the surplus was sufficiently large, they took extra money straight into the company. That money has usually been used in two ways: first, to pay redundancy payments, effectively paying their employees off and making them redundant and, secondly, by straight disbursement to shareholders.
If the surpluses had been used for direct investment into the company, buying new plant and machinery, enabling the workers to be more productive and therefore retaining their jobs, there would be far less criticism. But the fact that the surpluses were used directly to benefit shareholders and quite largely to disbenefit the employees has caused anxiety and a real sense of unfairness. Much of the discussion we have had this evening has been between experts in the pension field. But at the end of the day members of the pension schemes are ordinary working people and the pensioners of the schemes are also ordinary people.
One of the problems with the pension industry is the sense of unfairness. The Maxwell case was high profile with horrendous wrong being done. But a whole climate of unfairness pervades our industry and commerce, with employers having a one-sided advantage, where there are surpluses, being able to use them for their own benefit.
My amendment seeks to bring a sense of fairness and equity to the situation. I remind the Committee that the amendments do not require the pension fund surpluses to be distributed to the members of the scheme. I could have argued that strongly, with much support throughout the country. But I felt it was only reasonable

553
to put forward amendments to the Committee that provide for the ability for pension fund surpluses to be disbursed to members. I beg to move.
Lord Mackay of Ardbrecknish: I hope to be able to persuade the noble Lord that his amendments are unnecessary. Paragraph 3 of Schedule 22 to the Income and Corporation Taxes Act 1988 sets out the ways in which a statutory surplus may be reduced or eliminated. Among the range of options is to use the surplus to improve members' existing benefits and provide new ones. Such benefit improvements may include lump sum payments to scheme members on retirement or death. It is, however, a condition of tax approval that the benefits payable to scheme members should be subject to upper limits. These are normally up to two-thirds of final salary for the pension and two-and-a-quarter times the pension for lump sums on retirement.
The purpose of these limits is to control the cost of tax reliefs given to approved pension schemes. In its effect the proposed amendment would appear to do no more than duplicate an existing provision of the Income and Corporation Taxes Act 1988 to make approved payments to members. It would also allow payments outside the approved arrangements to be made to members. That would be contrary to the pensions purpose on which the tax reliefs are founded and could add significantly to Exchequer costs. This is a tax matter, and the Committee may consider that it is best left to another place.
Members of the scheme already have the opportunity, subject to trustee approval, to have their benefits enhanced. Amendment No. 135 would not provide members with any more benefits than are potentially available under the existing arrangements. The Income and Corporation Taxes Act 1988 provides the trustees with a range of options to reduce or eliminate a surplus: for example, enhancement of existing benefits or providing new ones, which can include payments to scheme members. Of the options that are available, only a payment to the employer has additional conditions imposed upon it, originally by the Social Security Act 1990.
The effect of the noble Lord's amendment would be to make payment to scheme members subject to those conditions. One of the conditions which have to be met before a payment is made to an employer is that all pensions and payment must be increased annually in line with inflation up to the maximum of 5 per cent. for both past and future service. That may have been the noble Lord's intention, but what it achieves is in fact to curb the freedom of trustees to make benefit improvements for certain members.
The impact of the amendment would be to put at risk the ability to make discretionary payments to members by automatically requiring all pensions in payment to be annually increased in line with inflation first. I am sure that it is best to leave trustees to decide what scheme best fits their particular circumstance, but with the
554
safeguards contained in the Bill to cover the payment to employers. I hope, having listened to my explanation, that the noble Lord can withdraw his amendment.
Lord Monkswell: I thank the Minister for his response. I must admit that his reply surprised me a little. I had not expected the use of a tax argument—if I can put it that way—to come to the fore. I thought that the Minister would rely on the argument that employers have the responsibility to top up the fund, being the major contributors to the fund, and are therefore the major beneficiaries. But the Minister did not use that argument.
I feel that the tax argument falls down in the sense that, whatever the tax regime for the employer receiving the surplus from the pension fund—I do not know what the tax regime would be and I think that it is probably not good for this Chamber to consider that—there will be certain tax regulations that apply to that; and as an exceptional item of income to the company no doubt there is some form of taxation on it. But surely the same argument would arise with employees receiving a windfall form of remuneration. They would be liable to income tax in the normal way. So that argument does not hold water.
I hope that the Government will think again on this matter. I shall not press the amendment tonight. It was a probing amendment. Tomorrow I shall read with interest what the Minister said. I hope that he will also read what I have said. Maybe we can return to the subject at a later stage. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 135 not moved.]
The Chairman of Committees: I should inform the Committee that if Amendment No. 135A is agreed to, I cannot call amendment No. 136.
[Amendment No. 135A not moved.]
Lord Lucas Lord Lucas moved Amendment No. 136:
Page 18, line 15, at end insert:
("( ) If, where this section applies to any trust scheme, the trustees purport to exercise the power referred to in subsection (1) (a) by making a payment to which this section applies without complying with the requirements of this section, sections 3 and 9 apply to any trustee who has failed to take all such steps as are reasonable to secure compliance.
( ) If, where this section applies to any trust scheme, any person, other than the trustees, purports to exercise the power referred to in subsection (1) (a) by making a payment to which this section applies, section 9 applies to him.").
The noble Lord said: In moving this amendment I shall speak at the same time to Amendments Nos. 155 and 156.
Clearly it would be detrimental to the interests of scheme members if trustees or others made payments from a pension scheme surplus to the employer without complying with the statutory requirements. These amendments provide for sanctions to be imposed for breaches of the obligations in this regard in the Bill in order to encourage compliance. I beg to move.
On Question, amendment agreed to.
Clause 33, as amended, agreed to.
Baroness Dean of Thornton-le-Fylde Baroness Dean of Thornton-le-Fylde moved Amendment No. 137:
After Clause 33, insert the following new clause:
("Protective cost orders
.—(1) Where, on the application of a member (in this section referred to as "the representative member") representing the views of not less than 10 per cent. of the members of a scheme or of a member-nominated trustee appointed under section 14 above, a court is satisfied that serious or persistent breaches of trust may have been committed which do not fall within section 3, the court may grant an order in such form as it considers appropriate compelling the trustees of the scheme to pay to the representative member or to the member-nominated trustee the reasonable costs of obtaining legal and other advice in order to pursue claims on behalf of the scheme.
(2) Any costs ordered to be paid in accordance with subsection (1) of this section shall be payable only upon the presentation of a certificate by the solicitors acting for the representative member or the member-nominated trustee, as the case may be.
(3) A court may grant an order under subsection (1) of this section if it is satisfied on the evidence before it that—

(a) an independent trustee properly advised would have applied to the court for directions to commence or continue proceedings, and

(b) on such application the court considers that it would have given leave to such independent trustee to proceed.

(4) Where a court grants an order under subsection (1) of this section it may from time to time renew or amend such order.
(5) Where a court grants an order under subsection (1) of this section it may make provision for the payment of past, as well as future costs.
(6) On an application under subsection (1) of this section, a court may grant an order notwithstanding the fact that the breaches of trust which are or which form part of the grounds for the application fall within section 3, if it is satisfied that it is in the best interests of the members so to do.
The noble Baroness said: This amendment provides for the situation in which a minimum of 10 per cent. of members, or indeed a member-nominated trustee, can go to the court and, where the court is satisfied that there is a serious or persistent breach of trust which does not fall within Section 3, for the trustees of the scheme to pay reasonable costs for the legal action to be taken. The powers of the regulatory authority are clearly covered in the Bill under Clause 3 in Part I. On the first day of the Committee stage last week, the Minister said that OPRA would have all the powers necessary to enforce compliance with the law. Later in the debate he went on to say:
"While I am open to considering refinements in relation to OPRA's regulatory powers where there is a good case for doing so, we should not widen its powers in such a way that it becomes involved in trust law and other matters which are best left to the courts".—[Official Report, 7/2/95; col. 161]
I agree with the Minister because trust law goes much wider and has wider duties than has the Pensions Bill. That is why we have put forward this amendment. Presently, in the absence of a protective costs order, the beneficiaries will still be left without any way of seeking redress for grievances where OPRA either has no power to intervene or refuses to intervene. I say "refuses" because there are many cases where the regulatory
556
authorities—IMRO, for instance—have been asked to intervene in suspected wrongdoing and have refused and then those suspicions have been proven in fact.
This amendment is put forward because, first, the Bill will have limited powers; and, secondly, the trustees' responsibilities come under trust law. I should like to share with the Committee, even at this late hour, an experience which in my view makes such a clause essential.
In June 1986 a company called Imperial, which had recently been taken over by Hanson, sold two of its paper mills in the north-west to a company called Melton Meads. The trustees were challenged by members. The trustees refused to deal with the matter and investigate the serious concerns that had been raised, which included dishonest breaches of trust, from which the directors may have benefited personally. Certain beneficiaries commenced the action and their union, the GPMU, funded it. But even those funds were stretched to the point that they had to go to the courts. For the first time ever in this country a protective costs award was made.
That was in July 1993. An appeal was lodged and in July 1994 the appeal court upheld the order. The appeal court refused leave to appeal to the House of Lords, but the company petitioned the House of Lords for leave to appeal to the appeals committee, and I gather a decision on that is expected this week.
That concern began with seven beneficiaries who found no regulatory body to support them. In fact the SIB refused to even acknowledge them or help them until the case reached court. The SIB has now started its own action for fraud. The beneficiaries had no help from anybody except their union. The bill today stands at £891,000 for professional advice and support and we still do not know what the outcome will be. If the outcome is against the beneficiaries, the union will be left to fund the £891,000. But what if they had not had the benefit of the union? Who would have come to their aid? The Occupational Pensions Board said that it was outside its remit; they could not obtain legal aid for the action. They would have been left on their own in a situation where the directors of the fund are now being pursued in law.
The noble Earl, Lord Buckinghamshire, said earlier that one could wax eloquent till midnight on a previous clause. It is against that background that I could continue until two in the morning. However, I shall not test the Committee's patience that far. I beg to move.
Lord Mackay of Ardbrecknish: I have no objection in principle to what the noble Baroness, Lady Dean, proposes, but I hope to persuade her, as quickly as I can, that the amendment is unnecessary.
Trust law already provides the facility in the amendment by way of what is known as the Beddoe's summons procedure. That allows trustees and members to protect themselves from the cost of litigation on the very basis which the noble Baroness described.
Under the Beddoe's summons procedure, those wishing to engage in proceedings involving the trust can apply to the court for an order that the costs should be met by the trust. The court would grant such an order

557
only where there is some reasonable need for litigation and where there are reasonable grounds for its succeeding.
An additional point which the Committee may bear in mind when considering the amendment is that members who are concerned about the operation of their trust scheme will in future be able to bring their anxieties to the attention of the regulatory authority. The authority in turn will be able to investigate any complaint.
The intentions behind the amendment are already met, either under existing provisions of trust law or by the introduction of the regulatory authority. I hope that I have briefly explained to the noble Baroness that the amendments are unnecessary, and that she will feel able to withdraw her amendment.
Baroness Dean of Thornton-le-Fylde: I thank the Minister for that response, but pose a question back to him although I do not know whether he will be able to answer it this evening. The Minister said that there is a provision in trust law for members to go to court. If the members are not part of a union, who will fund them? There is no legal aid for these matters. The members felt obliged to go to court direct by themselves because the matter is not covered by OPRA, or OPRA does not want to know. So who will fund them? The amendment provides that the scheme will meet those costs where an award has been achieved. It gives some support to the individual member, or to at least 10 per cent. of them, or a member-nominated trustee who is equally concerned.
Additionally, although the Minister says that trust law provides the protection sought by the amendment, I am advised that the Melton Meads case is the first of its kind in the UK courts. I wonder whether that is because the costs involved in taking on such a case are frightening. One cannot simply go to court and plead for an order; one must also provide all the back-up for that application. That involves a not inconsiderable amount. In fact, before the union reached the court the costs had escalated to around £500,000.
I hear what the Minister says. I shall read with a great deal of interest in the morning exactly what he said this evening to the Committee. I may return to the matter at another stage, but in the meantime I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 34 [Restriction on employer-related investments]:
[Amendments Nos. 137A and 137B not moved.]
Clause 34 agreed to.
Clause 35 [Provision of documents for members]:
[Amendments Nos. 138 to 141A not moved.]
Lord Lucas Lord Lucas moved Amendment No. 142:
Page 19, line 22, after (" 50") insert ("or 51").
The noble Lord said: The effect of this amendment is to include certificates prepared under Clause 51 among the documents which trustees or managers of
558
occupational pension schemes may be required by regulation to make available to scheme members and others. I beg to move.
On Question, amendment agreed to.
[Amendment No. 142A not moved.]
Clause 35, as amended, agreed to.
[Amendment No. 142B not moved.]
Clause 36 [Time off for performance of duties and for training]:
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 142C:
Page 20, line 16, at end insert:
("(2A) Notwithstanding the provisions of paragraphs (a) and (b) subsection (2) above, "reasonable" shall be deemed to mean not less than ten days' training within the first two years of appointment as a trustee, and not less than three days in every subsequent year.
(2B) Where the trustee, whether an employee of the employer in relation to the scheme or not, does not take time for training at the minimum level specified in subsection (2A) above, the scheme administrator shall report the matter to the Authority who shall, if it deems it appropriate, take action under sections 3 and 9 of this Act.
(2C) Every trustee shall, on his appointment, undertake a short course of training and a failure to undertake such a course within 3 months of appointment as a trustee shall be grounds for disqualification under section 24.
(2D) It shall be for each person who is a trustee, in his own absolute discretion, to decide whether such training should be provided to him by the advisers to the scheme or other firms of advisers, other independent or professional bodies, or an independent trade union recognised to any extent for the purposes of collective bargaining in relation to the scheme members concerned.
(2E) The Authority shall maintain a register of all firms and organisations providing training for trustees in fulfilment of the requirements under this section.
(2F) The Authority shall produce a code of practice for training courses and training material, in consultation with those who appear to the Authority to have an interest in the training of trustees.").
The noble Baroness said: This amendment seeks to persuade the Committee of the need for mandatory training. All trustees should be trained. It should be a condition of their assuming office that they will do so within a defined period. We all agree that a measure of training is necessary. This has been reflected in the Bill, which requires employers to provide time off for that purpose. But we do not think that that goes far enough. Unless there is a requirement, we believe that there will be schemes where the trustees will remain untrained despite the fact that trustees will continue to bear very considerable legal liabilities of which, if they are untrained, they may not be fully aware. Equally, we want to ensure that the training schemes which trustees go through are approved and appropriate. Organisations such as the Pension Trustees' Forum and trade unions could together draw up an approved list of training courses. But if we want trustees to be effective, both in their fiduciary responsibilities and in meeting their legal liabilities, and, if appropriate, to whistle blow, they must be trained. I beg to move.
Baroness Seear: I support the amendment. Given the responsibilities that trustees have to assume, it surely is short-termism and a failure to operate a "stitch in time saves nine" policy not to put money into training. To say that it would cost would be a ridiculous reply if the cost of not training trustees would be very considerable

559
indeed. Schemes will not operate properly unless trustees are adequately trained. It would be a very good investment.
Lord Mackay of Ardbrecknish: This amendment would, in effect, require compulsory training. We are fully in favour of trustees being properly trained. But we do not believe that it should be compulsory. The training needs of trustees will vary according to the particular circumstances of each individual and each scheme. What is appropriate for one will be totally inappropriate for another. We believe that schemes themselves must decide the training needs of each of their trustees.
The Bill will require employers to allow trustees time off with pay for training. There will be redress to an industrial tribunal if there is any dispute. We do not believe it is sensible to go further in legislation. It may well be a matter which is more appropriate for the codes of practice which pensions organisations are developing. While I understand and share the wish of both noble Baronesses to ensure that trustees are properly trained, I believe that it would not be correct to be as prescriptive as they both would like to be.
Baroness Hollis of Heigham: I am disappointed by the Minister's reply. However, it is late at night. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 36 agreed to.
Clause 37 [Payment for time off]:
Baroness Hollis of Heigham Baroness Hollis of Heigham moved Amendment No. 142D:
Page 21, line 1, leave out ("an industrial tribunal") and insert ("the Authority").
The noble Baroness said: In moving this amendment I shall speak to Amendments Nos. 142E to 142N. They are very straightforward. We want to ensure that where an employee does not get facilities for training, in the shape of time off, that he has an adequate recourse. Under the Bill he may take his employer to the industrial tribunal. We have no objection to that except that that system is becoming heavily overloaded with the additional functions placed on it by government. It seems sensible to keep the matter with the regulator and give him powers to make orders which must be carried out. That is what these amendments seek to do by having recourse to the regulator rather than to the more cumbersome industrial tribunal procedure. I beg to move.
Lord Mackay of Ardbrecknish: The Bill sets out a clear commitment to allow trustees time off to attend to their duties as trustees and to undergo training. Employers have given their broad support to the proposal to allow employees time off as appropriate and there is no reason to suppose that large numbers of employers, if any, will not comply. Of course, I accept that employees should have an effective form of redress where an employer chooses to act unreasonably.
Where a dispute arises between an employer and an employee who is a trustee over time off, these amendments would have OPRA rather than industrial
560
tribunals adjudicate the matter. I cannot agree with that. OPRA's role is to enforce compliance with obligations concerning the security of pension schemes, not with employment matters. Industrial tribunals are much better placed to examine the full circumstances behind this kind of dispute and settle matters, awarding compensation and restitution of salary where appropriate. Any decision by an industrial tribunal will be in the public domain, so the intention behind one of the noble Baronesses' amendments would be fulfilled.
Our proposals mirror very closely the existing provisions relating to trade union and health and safety officials. In both cases there are limited rights to paid time off for the performance of recognised duties. In both instances it is recognised that disputes are matters relating to employment and fall within the jurisdiction of industrial tribunals. I believe that that is the right place for disputes regarding time off for trustees to stand.
Baroness Hollis of Heigham: I thank the Minister for that reply which clearly hinges on the notion as to whether time off for being a trustee is an employee-employer relationship in which it comes through the industrial tribunal, or whether it is instead a matter of being a trustee. The obligations of trustees to and for their schemes rest with the regulator. Our view is that this is an issue which belongs to the second—the trustee—category. The first category is an employee category.
However, we shall take on board what the Minister said and we may return to the matter on another occasion. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 37 agreed to.
Clause 38 [Time limit for proceedings]:
[Amendments Nos. 142E to 142H not moved.]
Clause 38 agreed to.
Clause 39 [Remedies]:
[Amendments Nos. 142J to 142N not moved.]
Clause 39 agreed to.
Clause 40 [Professional advisers]:
Baroness Hollis of Heigham Baroness Hollis of Heigham: moved Amendment No. 142P:
Page 21, line 28, at end insert:
("( ) Except with the consent of the Authority, the auditor to the scheme shall not be the same person, nor belong to the same firm as, the auditor to the employer in relation to the scheme.").
The noble Baroness said: In moving this amendment I shall speak to Amendment No. 142Q. I am sorry that such an important amendment has to be discussed quite so late at night although I shall try to be extremely brief. All the evidence from the Maxwell affair shows that there were at least six layers of "whistle blowers" who did not blow the whistle. One of the reasons, and only one, was that Maxwell the company and Maxwell the pension schemes used the same professional advisers. The House of Commons Select Committee made much of this point.
There was a conflict of interest and in the face of the powerful presence of Maxwell it was understandable, although regrettable, that many professional advisers resolved that conflict of interest in favour of the employer and not in favour of the scheme. With the experience of Maxwell it is crucial that professional advice be seen as disinterested. It is crucial that, when necessary, professional advisers are able to whistle blow. I ask the noble Lord opposite whether it is more likely that their advice is to be disinterested if they serve the trustees only or the trustees and employers both. Are they more likely to whistle blow if they serve trustees only or if they serve trustees and employers both? We all know the answers to those two questions. As Maxwell has shown, serving two masters inevitably produces conflict.
The Minister may say - he would be right - that the trustees appoint professional advisers, not the employer. But he rejected our previous amendment which sought to ensure some equity or balance on the boards of trustees), thus ensuring a built-in majority for the employer whose interests remain preponderant. Given that the employer will naturally see the advantages of sharing advisers, including that of cheapness, one cannot rely on the trustees being as independent of the employer's view as one might wish.
We are not unreasonable. We recognise that there can be exceptional circumstances; hence the phrasing of the amendment, which seeks to ensure that if a scheme wants to share the same professional advisers as the employer it must first seek the consent of the regulator. That seems to us to give the necessary flexibility in special circumstances where, perhaps because specialist knowledge is required, it would be useful to share scheme professionals. For the main part, we firmly believe that one way of checking Maxwell would have been for the company and the pension scheme to have separate advisers. We want to ensure that at least that never happens again. I beg to move.
10.45 p.m.
Lord Mackay of Ardbrecknish: The amendments relate to Clause 40 which deals with the appointment, role and responsibilities of pension scheme professional advisers. The noble Baroness referred to previous schemes which have gone wrong, such as the Maxwell scheme. I should like to point out that at that time there was no one to blow the whistle to, whereas in the future the whistle can be blown to the regulatory authority.
Amendment No. 142P prevents the same person or firm from acting as auditor for both the scheme and the employer without the consent of the regulatory authority. To inhibit appointments in this way may increase costs to both schemes and employers by complicating flows of information and knowledge without necessarily providing any greater security to the scheme.
In fact, the Pension Law Review Committee was in no doubt that there can be significant advantages in having the employer's auditor as the auditor of the scheme; for example, it is the employer who is
562
ultimately responsible for adequate funding in a balance of cost scheme and it is therefore helpful if the scheme auditor is familiar with the employer's business. For that reason we accepted its recommendation that the trustees should be free to appoint the auditor acting for the employer.
It is intended that regulations made under subsection (5) will require trustees to draw up terms of engagement with auditors. Such terms will make clear the respective roles and responsibilities of employer, trustees and auditor. They will require the auditor to take instructions from, and report to, the trustees and to make known to the trustees any areas of conflict.
The PLRC recognised, as we do, that there may be cases where it may be improper or inappropriate for the auditor to act for both the scheme and the employer. It saw no role for the regulatory authority because professional bodies are well experienced in issuing guidelines for managing such conflicts. Indeed it recommended no change, and nor do we.
I now turn to Amendment No. 142Q. The Government support the objectives of Amendment No. 142Q and in fact we intend to make regulations under Clause 40(5) (b) which will make provisions as to the terms on which the trustees will appoint professional advisers. Our intention is that the regulations will require an actuary working for both the employer and the scheme to declare this fact, to disclose any conflicts of interest and to notify the employer and trustees if such conflicts make it improper for him to act for either party. It is this kind of detail which we believe is best attended to via regulations rather than in primary legislation. The use of regulations also confers the flexibility to prescribe any additional requirements which may become necessary in future.
I thought it important to address the two issues which the noble Baroness raised even at this late hour and at perhaps a little more length than is usual. However, both points are extremely important and I wanted to get on the record the way in which I believe that the abuses she mentioned might be avoided.
Baroness Hollis of Heigham: The Minister has drawn our attention to Clause 40, to which this is an amendment. I take little comfort from his reply, although I take comfort from the fact that under Clause 40(4) regulations may make exceptions to subsections (1) and (2), and this may be a case where a different government might seek to make regulations to do by regulation that which the Minister is not prepared to accept on the face of the Bill. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 142Q not moved.]
Clause 40 agreed to.
Clause 41 ["Blowing the whistle"]
[Amendments Nos. 142R to 142W not moved.]
On Question, Whether Clause 41 shall stand part of the Bill?
Baroness Seear: I wish that this matter had not come at 10 minutes to 11 when the Chamber is

563
practically empty because I regard the clause as very important and one that we should not accept. It should be considered in conjunction with the amendment rejected by the Minister in Committee last week when we asked to strengthen the regulator's powers. It is complementary to that desire to see a far stronger regulator able to take pro-active action, and to take it effectively, and it is why I oppose Clause 41.
Clause 41 relies for the operation of the scheme upon the whistle-blowing which will come primarily, if the Bill remains as it now is, from the accountant, the auditor or the actuary. It is not good enough to rely on those people to blow the whistle in order to make the scheme function properly. But that is what the Government are doing.
We believe that the responsibility should rest with the regulator. We want a different, much stronger regulator than is envisaged in the Bill, partly because we do not believe that it is satisfactory to put actuaries and administrators in a position in which they are serving the scheme or the company and at the same time reporting to the Minister. That is a conflict of interest about which they are much concerned. But while that is important, what is more important is that we are relying on the whistle-blowing coming from those professionals rather than being in the hands of an outside authority which can take action to see that the schemes are running properly.
I know that the Minister will say that there are 150,000 schemes and ask how a regulator can thus regulate them. Factory inspectors have been doing this for a long time. They go into an organisation whenever they see fit and take the action that they then think is necessary. Factory inspectors can do that. Why cannot the regulator do it to enforce the Bill's requirements? I know that the Minister is dead against this, but I want to put on record the fact that it weakens the scheme to rely on whistle-blowing by the actuary and the administrator. It is an excuse for not having the kind of regulator that we need, with the power that could be given were the Government prepared to spend the money.
This time of night is not the moment to have a great debate on the issue. I am aware that the Minister's mind is completely closed on this, but I want it on the record that this is not the right way to go about this; the scheme is undermined before it starts; and the regulator does not have adequate powers. I oppose Clause 41.
Lord Dean of Harptree: I hope that the clause will remain in the Bill. I like the concept of whistle-blowing. It is fair better that the authority should concentrate on those schemes where something appears to be going wrong rather than crawl over the large number of schemes that exist.
Perhaps I may raise two detailed points with my noble friend the Minister before he replies. First, the Bill provides that if the auditor or actuary believes that something is going wrong he must immediately give a written report to the authority. I hope that that does not preclude giving those in the scheme the opportunity of putting things right.
564
Secondly, as regards the whistle-blowing, reference is made in the clause only to the auditor or the actuary. I hope that it is made clear somewhere in the Bill that anyone directly related to the scheme—in particular, trustees or members of the scheme—will be able to blow the whistle if they believe that to be appropriate.
Lord Mackay of Ardbrecknish: The noble Baroness, Lady Seear, returned to an issue that we debated on the first day of Committee and on Second Reading. Perhaps I may say first to my noble friend Lord Dean that the lack of "immediately" in the scheme means that professionals might be inhibited from having informal contact with OPRA before making a formal report. We believe that wherever there is a suspicion of irregularity a report should be made and the authority should be left to decide whether or not that constitutes a breach of obligation. However, we shall continue to talk to the professional bodies about both the material matter and the immediacy to ensure that proper account is taken of their concerns.
I was asked whether only actuaries and auditors may blow the whistle and be heard. This is an important point and I re-emphasise that anyone associated with the scheme will be able to blow the whistle. Only the actuaries and the auditors will be under a duty to do so.
The noble Baroness, Lady Seear, is mistaken in her desire to widen the role of the regulator to be the investigator of every single scheme on a monthly or yearly basis. It is better that the regulator should concentrate on the schemes that have been brought to his attention and which may have something wrong with them.
The noble Lord, Lord Marsh, who I am sorry but not surprised to see is no longer in his place at this late hour, spoke eloquently to the Committee on this subject. He rightly drew attention to the fact that vigilance and whistle blowing by professionals, trustees and members themselves is an extremely effective way of preventing abuse. In the past, the problem was that there was no one with the power to act on such reports. By setting up the authority we are providing the means to investigate and act wherever a report either from those who have a duty or from any other source indicate that there is a need to do so. I urge the Committee to reject the noble Baroness's opposition to Clause 41.
Baroness Seear: I wish to raise one further point even at this late hour. The time when it is important for the regulator to go in is before things have developed into a serious condition. Surely, in real life what will happen will be that in relation to a borderline case, when things are beginning to look unsatisfactory but have not developed into a serious state, the temptation will be not to take action because it will be difficult. However, that is the time when action ought to be taken, not when the scheme has practically collapsed. Anyone can see that action should then be taken but it will be too late.

565
I cannot believe that in real life one will have the kind of warning that is necessary; when it is doubtful that things are going wrong but nonetheless there are suspicions. If there is widespread whistle blowing from anyone who is interested that will be sufficient without putting the onus on the authority, which will believe that it is its responsibility but will be reluctant to undertake it.
Lord Mackay of Ardbrecknish: I hope that I have made clear to the noble Baroness that, whoever blows the whistle, the regulatory authority will look into the matter that is brought to its attention. We are saying that there is an obligation on the two specified people—the actuary and the auditor—to blow the whistle because we believe that they are in a special position.
In the circumstance of a scheme going wrong, which was outlined by the noble Baroness, if the regulatory authority carried out its weekly, monthly or annual inspection of the scheme the week before something went wrong, frankly, our criticism would be well made. That is why it is important that the actuary and the auditor are under an obligation to blow the whistle whenever they see something going wrong, and anyone else connected with the scheme is able to do the same.
On Question, Clause 41 agreed to.
Clause 42 [Other responsibilities of trustees, employers, etc.]:
[Amendments Nos. 143 and 144 not moved.]
Lord Lucas Lord Lucas moved Amendment No. 145:
Page 23, line 6, at end insert ("and for a prescribed period").
The noble Lord said: The purpose of this amendment is to enable us to require that scheme books and records should be retained for at least a specified period. I beg to move.
On Question, amendment agreed to.
Clause 42, as amended, agreed to.
Clause 43 [Resolution of disputes]:
[Amendments Nos. 145A and 145B not moved.]
Clause 43 agreed to.
Lord Lucas: I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.
House adjourned at one minute past eleven o'clock.

  Belarus
  Belarus
  Croatia: Discussions with Senator Dole
  Croatia: Discussions with Senator Dole
  Kashmir
  Kashmir
  Turkey: Suryiani Minority
  Turkey: Suryiani Minority
  Turkey: Ankara Metro
  Turkey: Ankara Metro
  China: Fourth World Conference on Women
  China: Fourth World Conference on Women
  St. Helena: Transport Links
  St. Helena: Transport Links
  Mental Health Act 1993
  Mental Health Act 1993
  Airlines: Carriers' Liability
  Airlines: Carriers' Liability