Sitting of 19 May 1995

Preamble
The House met at eleven of the clock: The CHAIRMAN OF COMMITTEES on the Woolsack.
Prayers-Read by the Lord Bishop of Newcastle.

Atomic Energy Authority Bill
The Minister of State, Department of Trade.and Industry (Earl Ferrers): My Lords, I beg to move that this Bill he now read a second time.
The Bill before your Lordships is intended to pave the way for the privatisation of the commercial activities of the United Kingdom Atomic Energy Authority. It contains provisions of the type which are normally found in legislation of this kind, but they are tailored specifically to the circumstances of the authority.
The United Kingdom Atomic Energy Authority came into being in 1954 as a nuclear research and development organisation. It took over certain responsibilities for the development of atomic energy which had previously been exercised by the Ministry of Supply. The authority was not intended to be an academic research institute, nor was it intended that it should pursue basic science. It was the vehicle by which the new technology could be developed on a commercial scale. But the operation of the technology, once it had been developed, was left to others. It was left, for example, to industrial consortia; to the electricity authorities; and to what ultimately became British Nuclear Fuels and Amersham International.
By the 1960s it was clear that the authority's skills and expertise could more effectively be exploited if the authority were permitted to undertake non-nuclear work. Therefore, the authority was empowered in 1965 to carry out non-nuclear research and development, and in 1974 its powers were further extended in order to allow it to work in the environmental field. Unlike the nuclear programme, which was financed mainly by money provided by the Government, non-nuclear work was done from the outset under contract to customers. Most of these customers were, to start with, government departments; but over the years the field has widened to include other public and private-sector customers, both here and abroad.
In a similar way, even in the nuclear field, almost all of the income which the authority now earns comes from work which is done on a contract basis. Because the authority's commercial activities were growing in importance, the decision was taken some 10 years ago to put the whole organisation on a trading fund basis. That was done by the Atomic Energy Authority Act passed by Parliament in 1986.
Since then, the emphasis has increasingly moved away from nuclear research and development and towards providing scientific and engineering services. The authority's nuclear facilities have largely been closed, and staff numbers have fallen from the peak in the 1960s of over 40,000 to some 6,000 today. Therefore, the privatisation of the Atomic Energy Authority's commercial
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activities is the next logical step in a process of technology transfer and exploitation which has been going on for many years.
The authority today consists of two divisions. One is called UKAEA Government Division and the other, AEA Technology. They operate at six sites. They are Harwell and Culham, both of which are in Oxfordshire; Risley, in Cheshire; Winfrith, in Dorset; Windscale, in Cumbria; and Dounreay, in Caithness. The Government's intention is to privatise AEA Technology. UKAEA Government Division will remain in the public sector.
The prime function of the government division is to manage the process of decommissioning the authority's nuclear facilities cost-effectively and to ensure that that is done in accordance with safety and environmental requirements. Following privatisation, the Government Division will retain the ownership of the authority's nuclear licensed sites as well as the responsibility for the safe management of the authority's nuclear liabilities and those operational nuclear facilities which still have life left in them.
The government division is also responsible for fusion research; for the UKAEA constabulary; and for the authority's other non-commercial activities. Again, these activities will not be transferred to AEA Technology but will stay in the public sector.
On the other hand, AEA Technology is responsible for all of the authority's commercial activities. It is an international science and engineering services business. It has a turnover of over £250 million, and it employs some 4,000 people who are spread across all six of the authority's sites. The business of AEA Technology is to identify problems and to try to find solutions to them based on the know-how which has been built up over 40 years of leading edge science and engineering. It operates in four closely related areas: in making the best use of industrial plant and improving production and processes; in product development and improvement; in safety and risk management; and in environmental and waste management.
It would take too long—and I fancy that it would be to the discomfort of your Lordships—if I were to describe even a selection of the many activities of AEA Technology in detail; but the breadth of its operations is demonstrated by its wide range of markets. For example, it is involved in manufacturing; in transport; in oil and gas; in defence; in energy supply, including the nuclear sector; in chemicals; and in healthcare. Some 40 per cent. of AEA Technology's business comes from the Government. A further 18 per cent. comes from the United Kingdom public sector. But in volume terms those markets are of diminishing importance.
AEA Technology's growth markets are in the United Kingdom private sector and overseas. In broad terms the United Kingdom private sector already accounts for nearly 20 per cent. of its turnover. Overseas markets now account for well over 20 per cent. of its turnover. Sales to both markets are growing rapidly. Privatisation will provide another stimulus to this process. It is clear to all those who have detailed knowledge of the business and, most important, to its management that privatisation represents the best—indeed the only—way forward for the business.

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There are enormous opportunities open to AEA Technology. But it will be able to take full advantage of them, and will be able to maximise its return to the United Kingdom, only if it has the freedom and the flexibility which being in the private sector will give to it.
In a nutshell, that is what this Bill is all about. Its purpose is to enable AEA Technology to exploit the opportunities which are there for it to grasp, and to enable it to realise its full potential as a business and as a valuable national asset which will be capable of making a greater contribution to the national economy.
Perhaps your Lordships will permit me to explain what our plans are for the future of AEA Technology. In his Statement of 17th February 1994 in another place, my right honourable friend the Minister for Industry and Energy announced the Government's intention to privatise AEA Technology. He explained that decisions on the form which privatisation would take would be based on AEA Technology's performance in the market place, and on the extent to which the various options met the requirements of the potential customers; would enhance competition; would help to improve United Kingdom competitiveness; and would maximise the return to the taxpayer.
Since then, the Government have made it clear that, for the time being, AEA Technology will continue to be managed as a single entity and that those criteria may be likely to be best satisfied if it is offered for sale as a single entity.
As the staff are the principal assets of this business, we have also make it clear that the Government will consider seriously any bid which comes forward from management and employees. We have also said that, whatever form the sale may ultimately take, we will be looking to achieve a substantial level of employee participation in it.
Final decisions on the form of privatisation must, though, depend on the performance of AEA Technology over the next few months; on the Government satisfying themselves that sale of the business as a single whole will best meet the needs and requirements of customers and, particularly, the specific requirements of government customers; and on confirmation from the market that a sale as a single entity will secure the best overall value for money for the taxpayer. Decisions on the method and the timing of the sale can, clearly, be taken only in the light of market circumstances at the time.
The Bill envisages that the authority's commercial activities might be transferred to the private sector by two possible methods. The first is to vest the property, the rights and the liabilities in one or more publicly-owned successor companies. Shares would be held either by the authority or by the Secretary of State. Those shares could later be sold to the ultimate private sector buyers. Alternatively, in the event of a trade sale and if the circumstances were right, assets might be transferred directly by scheme to the ultimate buyer. The business could be sold as a whole or in parts. The Bill leaves open the possibility of more than one transfer, and it leaves open the possibility of transfers being carried out on more than one date.
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The Bill does not refer to AEA Technology as such. AEA Technology does not yet have a separate legal identity within the authority as a whole. Therefore, the scheme-making powers relate to any of the property, rights and liabilities which are owned by the authority, but subject to the specific exclusion of nuclear site licences and freehold land which is subject to such licences. That kind of property may not be transferred under the terms of the Bill.
The exclusions are there to show that the Bill is not intended to pave the way for the privatisation of any nuclear liabilities or the privatisation of the authority's licensed sites. In so far as AEA Technology operates on or within a licensed nuclear site, it will do so in accordance with the authority's existing security and safety requirements. Privatisation will not affect existing safety or nuclear security requirements in any way. In addition, as I have already said, the other activities for which the government division is responsible will also remain in the public sector.
The Bill provides for the financial structure and control of the successor companies after they have been vested and while they are still publicly owned. And the Bill provides powers to enable these companies to borrow from the National Loans Fund while they remain in the private sector. There are also powers to permit the write off of the debt of the authority up to the value of its proceeds. Those powers are there for a specific purpose and it is this. The authority has an outstanding debt to the National Loans Fund of some £130 million. We want to ensure that the proceeds of the sale are offset against the net present value of that debt. In other words, we want to write off the debt, so far as is possible, by the proceeds of the sale. Clause 10 of the Bill specifically provides for that.
Clause 10 also permits the extinguishing of the National Loans Fund debt of publicly owned successor companies. That will happen where the debt is converted, so to speak, by the issue of an equivalent amount of securities or debentures to private sector buyers. Our intention is that if any successor company debt is not converted it will be repaid by the company or the net present value will be written off against proceeds. The tax provisions are intended to follow the precedents of earlier privatisation legislation. They aim to provide for tax neutrality—that is, that the transfer of property, rights and liabilities should not of itself give rise to tax charges.
On pensions, the Bill makes provision for all employees who are transferred to a publicly-owned successor company to remain in the authority's schemes until privatisation. At the time of privatisation, the Bill places a statutory duty on the vendor, whether the authority or the Secretary of State, to be satisfied that employees can join a pension scheme which taken as a whole is no less favourable than the authority's schemes. That means that the new scheme must offer benefits which are at least equivalent to the authority's schemes, although the mixture of benefits may be different. That reflects the Government's long-standing practice where public sector employees are transferred to the private sector. But we have set it out expressly in the Bill so that employees should know exactly where they stand.

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I hope that what I have said will enable your Lordships to realise why the Government feel that privatisation is the right way forward for this business. Apart from anything else, privatisation will provide the staff with the best opportunity for them to realise the full commercial potential of their scientific and engineering activities, and it should bring the maximum benefit to the United Kingdom as a whole.
Those are the reasons for the Government introducing the Bill. I commend the Bill to your Lordships.
Moved, That the Bill he now read a second time.— (Earl Ferrers.)
11.21 a.m.
Lord Peston: My Lords, I must thank the Minister for introducing the Bill. The Bill is curious in one way in that it is relatively short in terms of the amount of paper it occupies. But, in my judgment, it is intrinsically a very long Bill which raises an enormous number of questions most of which are not answered in the legislation. Indeed, there is so little said in the Bill about what will actually happen that we shall obviously have to have a long and detailed Committee stage merely to elicit from the Government what they actually have in mind and what they propose to do.
A further complication is that when the Bill was first introduced in another place the nuclear power White Paper had not appeared and the Government had not made an announcement on privatisation of nuclear power generation. When we are considering the Bill in detail it seems to me that we will also have to look at it in that context. Perhaps I may say, en passant, that I was waxing rather strongly about the need for your Lordships to debate the nuclear power White Paper at some time, but I have not seen anything yet on our forward-looking document as regards when we are likely to do so. However, I argued at the time—and I believe noble Lords on all sides of the House agreed —that we ought to do so. Indeed, that is still my view.
I should also add that one reason why we need to scrutinise the Bill is what emerged in the Statement on nuclear power generation privatisation. I fully agree that I ought to have appreciated the fact—although, as I said at the time, I did not—that the Government feel able to say that they have the powers to privatise nuclear power generation without returning to Parliament. In particular, so far as I can see, even though the other place has procedures whereby a way can he found to at least debate the matter, we have no procedure whatever which would enable us to look at nuclear power privatisation. That is because the Government say that they do not need any further legislative power.
The reason that I emphasise that fact - apart from regretting that that will happen—is that, unless I misunderstand the legislation, the Bill is in exactly the same form. Assuming that the Government are able to pass the Bill into law, when the time comes to make those transfers to the private sector the Government will simply do it. They will say, "Well, we have passed the Atomic Energy Authority Bill and that gives us the power to make such transfers". Therefore, there will be no need to come to your Lordships' House. The Government may come to
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us with the announcement that they have done so, but they will not require any powers in that respect. In other words, we shall not be able to do anything about it if, for example, the Government were to split up AEA Technology much against our wishes. Indeed, we could do nothing about it. That is another reason why we will have to spend a good deal of time on the Bill as it is. If I am right—and perhaps the noble Earl will confirm this in his response—this will be our only opportunity to look at such matters.
The Minister said that he hoped he had convinced us. I wrote down several of his expressions for my future use. I believe he said that the Bill was the next logical step. The noble Earl also used the expression, "the best and only way forward". I am not sure what else he quoted from the cliché book of the Department of Trade and Industry. I should tell the noble Earl that he did not convince me in any way about the need for such a "next logical step". Indeed, we have the usual paradox in that what AEA Technology demonstrates is how well such a body can do in the public sector. It can do very well and it can meet the market test. It is now operating on a trading fund basis and doing so successfully.
When a firm in the public sector is doing badly the Government say that it must be privatised but when a company is doing well they also say that it must be privatised. In other words, there is no logical basis to what the Government have to say. Essentially, AEA Technology is an affront to what we might call the "dying embers" of the Government's free market policies, most of which have now gone. It is an affront to what is left of their political philosophy and they feel that this is their last chance to do some damage to an extremely good public sector institution.
In that connection I have two further points to make. First, are the Government able to tell us at present how profitable the business is on a proper profit and loss account basis? Can we be told that information, or is it commercially confidential? Secondly, BZW (Barclays De Zoete Wedd) produced a report on the matter. I am not quite sure how to pronounce the name as I tend not to mix in those rather high-falutin merchant banking circles. Perhaps I should, as always, declare a complete lack of interest. None of them seems to feel that it is worth while to employ me as a non-executive director—yet. There is a copy of the report in the Library. As that places it in the public domain, I am wondering whether other noble Lords who are interested in the extremely bulky document could have their own copies because it is, rather easier to work with such documents when one actually has one's own copy. Incidentally, I should be quite interested to know how much BZW was paid for the report. So far, I have only managed to read the summary which claims to demonstrate the value of privatisation. I cannot find any serious analysis in that respect.
I turn now to AEA Technology. For my own interest, I was delighted to hear the Minister say that the Bill is not called the AEA Technology Bill. I have looked through the legislation—and I am not terribly good at such things—and I could not find any mention of AEA Technology in it. I believe that the noble Earl can confirm that that is not an error on my part. Indeed, it is not mentioned. Essentially the Bill gives the Government the powers not to privatise a whole section of the Atomic

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Energy Authority, but powers to privatise what is left over. What is left over turns out to be AEA Technology. It is a rather peculiar way of undertaking a privatisation. It leads to questions some of which the noble Earl answered.
The main question, apart from, "What it is?"—and since the Bill does not specify what AEA Technology is we have some difficulty from the outset in knowing precisely what we are talking about—is: "What are its assets?" What is it that you are selling? I entirely agree with the Minister who, I believe, said that really the assets are the people who are employed by AEA Technology, together with their skills and their know-how. To use a rather ghastly technical term, what we have here is an example of supra-additivity; namely, that the whole is worth a good deal more than the sum of the individual parts.
What matters is whether all these people as a whole and their know-how are to be transferred. I believe that the Minister in the other place originally took the view—but then he seemed to change his mind—that, if this business is to be sold at all, it should be sold as a whole. However, there is now no commitment to selling the business as a whole.
My interest, wearing a standard economist's hat, is in what there is to sell anyway, in so far as all the people who belong to AEA Technology are footloose. If one buys the company, that does not mean one owns the employees. They could work for someone else and even set up their own company as far as I can see. I am interested to know what, finally, there is to be bought. Do the Government have any indication of what the business is worth net—I mean what it is worth net of all its liabilities? That would he worth knowing.
That point relates to two other questions. Does AEA Technology have a series of long-range contracts which would be transferred with the privatisation? I assume that as we are talking about the transfer of property, included in what would he transferred would be intellectual property. In so far as the Atomic Energy Authority—I am not sure it is that body—or the Government own the relevant intellectual property, would that be included in the sale? I give the Minister notice of these questions but we shall deal with them in much greater detail when your Lordships sit as a Committee. One is interested in the liabilities, the nature of the possible write-offs and all that sort of thing.
I have referred to who would buy the business and what there is to be bought. However, are there any restraints on who could buy the business? I cannot see anything in the Bill that limits who the possible buyers could be. For example, can the business be foreign owned? Could it be bought by anyone abroad who can come up with the best bid? I can see nothing in the Bill which prevents anyone from buying the business. I should like to know the answer to that question. It is related to the matter which I raised at the beginning of my speech, in that presumably Parliament itself would have no say in that matter. If the business were to be sold to people about whom we might have doubts, we would have no locus to look at that. At no point does the expression "fit and proper person" or anything of that kind appear in the Bill. That is another matter that we need to consider.
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I have already referred to the fact that the Bill is an enabling Bill. I believe that the only way that I personally, or your Lordships, can obtain further information on what the Government will be enabled to do would be by means of laying down in Committee all sorts of further points about the transfers because we shall not get any other entrée into what the Government propose to do when the details of privatisation are revealed. The Minister said that we have done this before. The one case where we have done this before recently is that of nuclear power privatisation, and I have expressed my disquiet about that. However, even if we have done this before, it does not mean that it is right and that provisions which have a parliamentary interest should proceed without your Lordships having any involvement whatever.
I have referred to the overseas aspect of this matter. There are two other facets of that which I must mention. I believe the Minister said that the responsibility for decommissioning, waste management and all that will still remain with the Atomic Energy Authority. I may have misunderstood what he said and I hope that he can clarify that. I believe we can all agree that there should be no blurring of who is responsible for decommissioning, waste management and nuclear plant safety. When we were listening to the Statement on the White Paper the Government said that they did not resile in any way whatever from their concern about safety. I hope that that assurance will be repeated.
That leads me to the following question. Will the Atomic Energy Authority, if and when it is privatised, be able to use its skills to assist in the construction and operation of nuclear power stations and all aspects of them in any foreign countries whatever? Is there any limit on what it might be able to do? Could it be involved with foreign countries and nuclear power stations in those countries when those countries could potentially be unfriendly towards us? Is there any connection in the Government's mind between the Atomic Energy Authority's ability to use its skills for that purpose and the eventual proliferation of nuclear weapons capabilities in those countries? Is there any restraint on the people who work for the Atomic Energy Authority simply resigning and using their skills in those countries? Those are all matters which I believe we need to address, particularly in the context of privatisation.
There are two or three other points that I wish to raise at this stage. There are many others, but I believe that your Lordships, especially as we are discussing this matter on a Friday, would prefer me to save those other points until the Committee stage. However, there are two or three other points that I must mention now.
The Minister referred to the pensions question. He used the word "equivalent" and the words "taken as a whole". I for one do not regard the word "equivalent" as having the same meaning as "the same". I will stress in Committee that people who are currently employed in the public sector should have the right to have the same pension, if that is what they want. I do not like the expression "taken as a whole", which always strikes me as being a way of not giving someone the same provision. It is a way of making provision that is not really the same.

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I and my noble friends shall certainly return to this matter of pensions. That of course is not a million miles from the question of terms and conditions of employment.
One other overseas matter that I will have to ask the Minister about—however, we may be able to leave this to a later occasion—is whether there is a European Union angle to any of this. Are there directives, actual or potential, which will get in the way of what needs to happen? I cannot think of any but I am not an expert on that matter. The Minister's officials are experts on that matter. One would at least like to know whether there is a European Union angle to all of this.
Another point that I wish to mention is something that I find rather odd. I hope that the Minister will advise me on this. It is a matter that was dealt with briefly in the other place. Clause 11 of the Bill refers to membership of the Atomic Energy Authority. If I read it correctly—I am pretty sure that I do—the Bill proposes to reduce the minimum number of members of the authority. The minimum was seven but it will now be four. The original Atomic Energy Authority Act specified the sorts of people, and their expertise, who should be part of the Atomic Energy Authority. The Government wish to amend that Act to remove the requirement to seek people with particular forms of expertise. I believe in the other place the word used with regard to that proposal was "daft". I would never use such a word in the hallowed precincts of your Lordships' House, but I raise an eyebrow as to why that particular change to the Atomic Energy Authority Act needs to be made.
In conclusion, the Minister can see how helpful I am trying to be on this matter and how interested I am in the subject. I look forward to our rather brief debate today. I believe that we all look forward to the detailed scrutiny that we can give this Bill when your Lordships sit in Committee when we can elucidate a great many more of these topics.
11.39 a.m.
Lord Ezra: My Lords, the noble Earl in introducing this Second Reading debate gave us the background information to the Atomic Energy Authority. He reminded us that it had been started in 1954 to cover all aspects of nuclear R&D and that progressively over the years its functions had been modified leading up to the major reorganisation in 1994 under the current chairman, Sir Anthony Cleaver, when it was separated into three divisions.
There is the government division, which is concerned with the management of the Government's nuclear liabilities and the decommissioning of redundant plant. It emerged from the debate in the other place that those liabilities amount to something of the order of £8 billion, and are therefore very substantial. The service division puts together all the service activities for the purposes of running the organisation. That service division has now been transferred to a company called Procord, which will provide the necessary services and therefore does not figure in the Bill. Finally, there is the commercial division known as AEA Technology, which is what we are concerned with although. for the reasons that the noble Earl indicated, that is not mentioned by name in the Bill.
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Therefore one has to look at the Bill on the basis of a process of deduction to find out exactly what we are talking about. We are, in fact, talking about AEA Technology.
AEA Technology, in its present form as a separate division of the Atomic Energy Authority, has become one of the leading international engineering and scientific consultancies. Perhaps I may indicate to the noble Lord, Lord Peston, the results of its operations. My researches suggest that its turnover is currently £250 million. That has emerged in some of the documents that I have seen. It expects to earn a pre-tax profit of £10 million. Anyone who is familiar with consultancy will know that that is a good result. To earn a pre-tax profit of £10 million on that turnover is excellent. The chief executive of AEA Technology has indicated that he believes that the company could achieve a turnover of £400 million in three years' time, presumably with a corresponding increase in pre-tax profits. Therefore, from the public's point of view—and I emphasise that this is a company which is owned by the public, not by the Government—it is a very good investment.
That raises one or two questions. First, should the organisation be privatised now or would it be better to do so later?
Earl Ferrers: My Lords, I do not like to interrupt the noble Lord, but it is difficult to hear him. I do not know whether that is because the loudspeaker system has gone funny or the noble Lord is not near a microphone. All of a sudden his voice has gone to such a degree that it is difficult to hear. Perhaps he would be good enough to speak a little louder.
Lord Ezra: My Lords, perhaps I should advance nearer the microphone. That is better.
A noble Lord: Start again!
Lord Ezra: My Lords, start again? Goodness me. I shall leave noble Lords to read what I said in Hansard. I was coming to the nifty gritty. The rest was introduction.
We on these Benches regard the nature of ownership of an enterprise to be a matter to be decided on the merits of the case. Whether an enterprise should be publicly or privately owned should be decided on the basis of whether it can do better under one form of ownership or another. In view of the fact that AEA Technology is doing so well under public ownership and, according to its chief executive, has such good prospects, I must join with the noble Lord, Lord Peston, in asking the noble Earl, when he speaks later, to indicate more clearly what additional merits he thinks will arise from private ownership. We are entitled to know. Does he believe that turnover will increase more rapidly and profits will rise more rapidly than suggested by the chief executive? We are entitled to know before we make up our minds whether we think this is a desirable proposition.
Secondly, there is the question of timing. This is turning out to be a very good investment, producing £10 million on a turnover of £250 million. In three years' time we could be earning a good deal more than that, with a much higher turnover. If this were an enterprise owned by the noble Earl, I am sure that he would be thinking about whether he should sell now or later. If he could make

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much more money later, he might well decide to sell later. Why should he forgo that extra benefit? As a member of the public, as well as a Member of this House, I am interested in his answer. If we can make much more money later, why should we not make it later and hold on to an investment which already pays us well?
The third issue that I should like to raise is one, again, that the noble Lord, Lord Peston, mentioned. It is the way in which AEA Technology is to be privatised. I was glad to learn that on the whole the Government favour privatising AEA Technology as a single enterprise, but they have kept their options wide open. The Bill provides for the business to be sold in whole or in part; for the Sale to be carried out by the authority or by the Secretary of State; for there to he more than one transfer on more than one date; and for the sale to be either by flotation or by one or more trade sales. One could hardly have more options. The Government are leaving the whole matter wide open.
In my experience, no other privatisation measure has retained such wide options. Previous privatisations have all indicated broadly the lines on which the Government wished to proceed. There was a great deal of probing in the other place during the Second Reading of the Bill, but above all during the Committee and Report stages, to find out what the Government were going to do. Indeed, one of their own supporters, Mr. Robert Jackson, suggested that even if the Government would not accept an amendment to the Bill to indicate what they intended to do, when they had made up their minds they should come back to Parliament to enable Parliament to decide whether their proposals were desirable. However, that suggestion was thrown out.
I cannot understand why the Government are so reticent. I can only believe that they are reticent because the BZW report, to which the noble Lord, Lord Peston, referred said that in BZW's opinion selling AEA Technology in hits and pieces would be more profitable than selling it as a whole, although the report concluded that the Government should keep its options open.
We have to know from the Government what their priorities are in relation to this sale. Are they really seeking merely to make the maximum short-term benefit? If that is the case, they would strip the assets and sell them where they could get the most for them, but enterprise as a whole would disappear into oblivion. AEA Technology would no longer exist, having established itself in a prime international position. On the other hand, if the Government place more emphasis on continuing this enterprise along the path on which it has started so successfully with the present management, they ought to tell us so. To leave the matter wide open with such a range of options is not at all satisfactory.
One of the unsatisfactory aspects is that, so long as the uncertainty remains, the enterprise will find difficulty in obtaining new contracts. Its intending customers will naturally say, "Are you going to remain in being or aren't you? Which bits will be sold off and when? And what will happen to my contract if I enter into it if the body with which I have contracted no longer exists?". I understand
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from discussions that I have had with management that the organisation is already suffering from that uncertainty.
There is another reason for believing that the Government should make up their mind and, one hopes, tell us that they want to sell AEA Technology as a single entity. That reason is that AEA Technology undertakes certain activities in which it has achieved considerable eminence. There is, for example, the work it does on energy research, which is a subject in which I have considerable interest. A body known as ETSU, the Energy Technology Support Unit, was set up in the early 1970s to carry out research on energy subjects. It has established an enviable reputation of independence and effectiveness in that field. If that body were to be sold off separately and merged in some wider commercial consultancy organisation, that reputation would disappear. The credibility which ETSU has with its present customers would cease.
I am in the energy consultancy business. I declare that interest. We frequently turn to ETSU, not as competitors, but as a body which can provide us with useful research to enable us to carry on with our activities. That factor would disappear. If ETSU were swallowed up by a competitive consultancy enterprise, we would not dream of turning to it; and the independent energy efficiency information which it provides—it deals with industrial energy efficiency, renewal energy and waste technologies—would no longer have that significance.
There is a another aspect of the sale about which the Government ought to tell us their intentions. One choice among the various options which the Government have reserved for themselves is whether there would be a trade sale in whole or in part, or a flotation. Quite frankly, I would be opposed to a trade sale because the organisation, in whole or in part, would be swallowed up in some other existing body. The significance of having AEA Technology as an ongoing, separate organisation would be lost. I should like to hear the Government express their preference that AEA Technology should continue as an ongoing organisation. They should tell us why it should be sold now rather than later; and indeed why it could do better in the private sector; and state whether there would be a trade sale or a flotation.
Perhaps I may remind the noble Earl that when Amersham International was floated—it was hived off from AEA some years ago—for the manufacture of isotopes, it was several times oversubscribed. If the Government undertake a trade sale, how can we ascertain that they will obtain the best price? I believe that we can he more assured that we are getting a reasonable price if there is a flotation. I very much hope that the noble Earl will give us answers to these questions when he replies to the debate.
11.52 a.m.
Lord Sherfield: My Lords, I rise to say a few words in support of this Bill. It is, of course, a privatisation Bill. I have never been in favour of the principle of privatisation across the board; I believe that the circumstances of each case should prevail. I consider that this measure is a particularly good case.

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I have been following the progress of the enterprise for some time in view of my past association with the Atomic Energy Authority. Its record to date is very impressive, as has already been said. In many ways, the enterprise is unique because of the multiplicity and diversity of skills on which it can call, which enable it to deal successfully with complex contracts. It is important that that success should be allowed to continue.
The enterprise has been very successful under the present management which has built up a successful export business of great benefit to the balance of payments. That is one of the important reasons that it is essential for the enterprise to be sold as a whole. The possibility of drawing on this resource of engineering and scientific skills gives it what I believe is called synergy of a high order, which enables it to land and execute complex international contracts.
There is another important reason for ensuring that the enterprise is sold as a whole and not broken up into sections. I refer to the staff. As I understand it, they feel that it is of great importance to them that it should remain as a single unit. That aspect has been emphasised already in the debate. However, it would be helpful if the Minister will give a little more reassurance that the enterprise will remain as it is, enabling it to continue its present policy.
As has been said, one of the great strengths of AEA Technology is the quality of its people. It is important that whatever form the privatisation takes, those people should be encouraged and motivated in every possible way. In particular, they should be enabled to participate in the profitability of the company. For those and many other reasons it is essential that the enterprise should be sold as a whole and not broken up. That is the main point on which I wish to concentrate.
Perhaps I may add that the present management has proven itself; and in view of the complexity of a great many of its contracts, it should have the greatest flexibility in operation. That is one of the reasons why it is right that it should be passed into the private sector. The management should have full capacity to act without legislative or other restrictions upon it.
As the noble Lord, Lord Peston, said, there are a number of points to be discussed in Committee. However, with those few words I express the hope that in the end the House will give this measure a fair wind.
Midday
Lord Boyd-Carpenter: My Lords, it is a good example of the odd way in which the Business of your Lordships' House is being arranged at present that we are taking this most important Bill on a Friday morning. The importance, significance, long-term effects and difficulties are probably greater than with any measures which we have spent the earlier part of the week discussing. I hope that it will not he regarded as a good precedent for taking major, complex and important legislation on a Friday morning. I hope that those who arrange our business—if they do arrange it—will manage better in future. In the circumstances, all one can do is to ask a number of questions. My noble friend on the Front Bench always answers questions fully, even if he does not always give the answers for which one had hoped.
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First, will my noble friend answer the question put by the noble Lord, Lord Peston? What is the total value of the property which is to be transferred a:3 a result of the provisions of the Bill? I appreciate that he may not be able to give a precise figure, but perhaps he could give the order of magnitude of the value of the property which is being transferred.
As a former Treasury Minister, I observe with some amusement that the Bill is solid and fuel of provisions requiring the consent of the Treasury for almost anything that is done. I know that in many measures that is the effect of a Bill, but I cannot recall seeing any legislation in which the necessity for Treasury agreement is spelt out so frequently and fully. The Bill includes the fascinating provision of Clause 10(10):
"The Secretary of State shall not exercise any power conferred on him by this section except with the consent of the Treasury"
I do not think I have seen that spelt out so brutally in former legislation, although I accept that it is probably part of the effect. Noble Lords will see that throughout the Bill provisions that the Secretary of State will operate with the consent of the Treasury are explicit in practically every paragraph. The powers of the Secretary of State are undoubtedly fairly limited.
There are one or two small points with which perhaps my noble friend will deal when he comes to reply. Can he say why the number of members of the authority is to be reduced? I appreciate that some of their functions are being taken away, but that membership is still an important function. A good variety of experience is required in running the authority. I wonder whether reducing the number of members to four may not unduly narrow the general levels of experience and expertise which it would be useful to have on the authority.
Another quite small point is that I would be interested to know why in Clause 8 stamp duty is to be removed from certain transactions. In general, I am all in favour of removal of all kinds of taxes from all sorts of activities, but it seems odd to spell out that stamp duty is to he excluded from an area in which apparently it was previously imposed. It calls for explanation in due course.
I believe that I heard it said that the number of employees directly affected by the Bill is of the order of 4,000. But I should be grateful if my noble friend would spell out what the numbers are and broadly what categories of work they are engaged in. Even to transfer 4,000 employees—which is a comparatively limited number—is a substantial matter and of great importance and significance to them. It would be helpful if my noble friend could say whether that is the right figure. If so, will he give some breakdown of the types of work, professional skills and expertise which they represent?
As has been said more than once, the Bill will have to be considered in Committee in some detail. There are a number of points, several of which were raised by the noble Lord, Lord Peston, and which I will not repeat because I know that my noble friend made a note of them. I hope that he will realise that it is not only the noble Lord, Lord Peston, who wants an answer; many of us in your Lordships' House hope that the questions will be answered.

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As I began by saying, this is an important Bill. The activities it covers are of great significance for the future. They require careful management. I start with the presumption that a move towards privatisation is right. I know that noble Lords opposite do not share that view, most of them take the diametrically opposite view. I accept that the case for privatisation always requires to be made, there may well be exceptions to the general principle that a move to privatisation is a good thing.
When my noble friend comes to speak, and later on at the Committee stage, I hope that he will explain why at this moment it is desirable to introduce such a degree of privatisation. That area of work is of a complex nature; comparatively few people in this country fully understand it, even now. Therefore, there may be special circumstances which would raise a doubt as to whether the generally good principle of privatisation should apply. I express no view on it, I merely say that it is up to the Government to establish that both the act of privatisation and its timing are right. My noble friend always replies effectively, and I have no doubt that he will have answers to the questions. I hope he will give them.
12.8 p.m.
Lord Haskel: My Lords, as we have been told, this Bill is designed to privatise AEA Technology. AEA Technology is probably the most important contract technical research and consultancy organisation in the country. The Minister described its scope. It is an important asset and we must be very careful with it. It is therefore extraordinary that the Bill is so unpopular. It is unpopular with small and medium-sized technology companies because they find it impossible to get the same high quality advice elsewhere at reasonable cost. The Minister, who is also responsible for small companies, must know that other large contract laboratories just will not deal with small companies.
The Bill is unpopular with the 4,000 staff who are worried about their pensions and career prospects. My noble friend Lord Peston told us that the Bill is unpopular with Parliament because it is a paving measure which allows AEA management or the Secretary of State to set up a company or companies that can be sold off without further effective parliamentary scrutiny. It is unpopular with the public because they are worried about the effects of the privatisation on nuclear proliferation and safety. The sale is certainly not in the taxpayers' interests, because it does not make business sense. It is unpopular with the science community because splitting it up works to the disadvantage of the British science base. So far as I can tell, this privatisation is popular with the Government only because they need something to privatise, and popular with the City and consultants because of the resulting commissions and fees.
I shall examine the reasons for this unpopularity in a little more detail. First, why is this privatisation unpopular with business? Business looks at AEA Technology as an important source of technological development and consultancy. Because it is in the DTI, businessmen know that AEA Technology will deal with anybody, large or small, at reasonable cost. It is looked upon as a national
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resource. Because of the government connection, it has attracted other large technological projects to this country, such as the European Taurus laboratory, which is funded by the European Union and is located near Harwell largely because it has to be near AEA Technology.
The sale is also unpopular with business, because of the knowledge that businesses such as AEA Technology are best retained for their licence and consultancy income, and are best not sold. AEA Technology is a "people" business; and people businesses attract a very low price, for the reasons suggested by my noble friend Lord Peston. The Government will receive an even lower price for this business because the City simply does not understand contract technology research and consultancy and puts a very low value on it. Businesses like this are sold only in desperation. Another worry must be that somebody will buy the business and move all or part of it abroad. Can the Minister give any guarantees that that will not happen?
The Bill is unpopular with the staff since not only does it upset and diminish their career prospects—which even the Minister must agree is an important aspect of a people business—but also because there is uncertainty about pensions. At present, the Bill prevents employees' existing pension rights being transferred to the private sector. That is manifestly unfair. Pension rights are not guaranteed in the Bill. All we have been given are vague assurances about there being "no less favourable" rights. Perhaps the Minister can give us further enlightenment on this. The pension fund has been successfully managed for over 40 years and provides full index linking for members. Indeed, from time to time the fund has been in surplus. Once a business changes hands it is extremely difficult for the previous owner to exert any long-term control over the development of its pension fund. Therefore, it is important that employees should receive proper undertakings now.
The Bill is unpopular with Parliament because it gives the Secretary of State powers to reorganise and transfer parts of the business without further reference to Parliament. Is that because the Minister is prepared to leave it to the market to sort everything out? The United Kingdom Atomic Energy Authority and AEA Technology are an important national resource. Parliament needs to debate how it will be split up; how the safe dismantling of nuclear power stations is to be carried out; and how safety standards will be maintained. It needs to consider how AEA Technology is to be split up and sold. Is it to be a trade sale or a management-employee hey-out? Is it to be split up with important parts being closed down or going abroad? The Minister says that this depends on the performance over the next few months. The long-term national interest needs to be considered in regard to such an important national asset. This matter cannot simply be left to the sole discretion of the Secretary of State. Parliament must have further scrutiny.
The Bill will be unpopular with the public because the taxpayer will get a poor deal. As I explained earlier, people businesses realise low prices. So it is far better to keep them and benefit from the future income from royalties and patents. The noble Lord, Lord Ezra, told us that the business is doing well and that its profitability is increasing. I understand that it is establishing itself in

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eastern Europe to provide assistance in decommissioning and cleaning up nuclear power stations there. I happen to know that AEA Technology recently set up the National Centre for Tribology, which now has an income of some £3 million for solving problems concerned with friction, lubrication and wear. I join the noble Lord, Lord Ezra, in asking the Minister why he plans to sell the business now, when he could get far more for it later. Even so, it will be a poor deal for the taxpayer. By the time the Government have made contingent liabilities for the pension fund and made the write-offs about which the Minister told us, the Government may find themselves making no money at all from the sale.
The interests of the scientific community have certainly not been taken into consideration. The Office of Science and Technology's Technology Foresight Report, published a few weeks ago, strongly recommends that the expertise of companies such as AEA Technology should be supported and enhanced. Yet this Bill will lead to the opposite. Does the DTI talk to the Office of Science and Technology? Perhaps the Minister can tell us.
Therefore, not only does this privatisation make no economic sense; it makes no sense in terms of Britain's science base. Science is a long-term business and, in the DTI, AEA Technology can take a long-term view. In preparing the company for privatisation the City will take the usual short-term view that it takes with all technology companies. When the consultants were asked to look at the privatisation the interests of the British science base were not even mentioned in the terms of reference.
The worst thing that could happen to British science is that the company should be broken up and its fragmentation lead to a form of cherry picking that will undermine its activity. That would be to the detriment of our science and technology base, and contrary to the advice of the Office of Science and Technology—and all this for very little money. What a shambles!
The Minister says that the development of the company can take place only in the private sector, and he makes comparisons with other privatisations. This privatisation is unquestionably an exception and ought to be looked at much more carefully. One of the advantages of AEA 'Technology is that it is in the public sector, and that is why it has been so successful. It helps the private sector. Like the noble Lord, Lord Ezra, I cannot think of any private sector expertise which will help AEA Technology. It is a successful, integrated, well-respected and well-managed international business.
The Minister's words about privatisation being the best way forward and about freedom in the private sector is the language of the 1980s. The industrial world has moved on since then. Today the search is for world-class centres of excellence. Those are what make an economy strong and healthy. Ownership is irrelevant. Public and private should be in partnership, not in competition. AEA Technology is one such world-class company. What is more, it plays a crucial part in helping Britain create more world-class companies. Privatising it is not only selling off the family silver; it is destroying the source that creates the family silver. Lord Stockton must be turning in his grave.
12.19 p.m.
Lord Flowers: My Lords, with one misgiving, which I shall address presently, I support the Bill. Perhaps your Lordships will permit me to say that my adult life began in atomic energy, first in Canada during the war, then in Harwell, which in those days was the research establishment of the whole British enterprise. Under the inspiring leadership of Sir John Cockcroft, it soon became a major centre of broadly based research which could hold its head up against international competition, especially from America. I have remained more or less close to the nuclear industry ever since, although not always on its side on every issue, as the House may be aware. But nowadays our relationship is entirely informal.
I am aware that my historical perspective as an insider, so to speak, may differ a little from that of the noble Earl. But in those early days a great deal of basic research was needed on nuclear physics, on the properties of materials exposed to intense radiation, on the chemistry of new elements such as plutonium and on the behaviour of the various possible nuclear reactor types. As time went on and those issues became clearer, more work was done on more practical problems: on separation technologies, for example; on the disposal of nuclear wastes; and on environmental and safety problems. Of course, much of the work was done at the other sites of what was by then the Atomic Energy Authority.
During the 1970s it became generally understood that the AEA, especially, but not only, at Harwell, had developed many powerful techniques absolutely necessary for the extreme conditions found in nuclear plants which, however, could also be applied to great advantage to other types of plants outside the nuclear industry. The noble Lord, Lord Marshall of Goring, spearheaded those developments when he was director of Harwell.
Three major themes in particular have emerged. Safety analysis and techniques originally developed for nuclear installations have since been successfully applied to the rail, air and water industries among others. Environmental discharge control, first introduced for nuclear discharges, is now being applied to the control of hazardous materials more generally. In the course of that work an expertise has grown up in the operation of chemical plant as a result of which non-nuclear operators have been helped to optimise their plants, especially in the light of arduous safety and environmental factors. In the nuclear field itself, a great deal of work has been done on the decommissioning of nuclear plant, of which we hear much nowadays; it has already been mentioned today in your Lordships' House.
In recent years, that type of activity has been concentrated into the division of the Atomic Energy Authority called AEA Technology. As the noble Earl explained, it is no longer primarily a research and development organisation (although still perfectly capable of performing R&D) and it is not really part of the country's science base any longer. It is best described as a science and engineering-based company offering consultancy and technical services to a broad range of industrial customers at home and abroad. It acts, for instance, as consultants to the Ukraine and Slovakia on the decommissioning of old nuclear power stations,

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which was referred to by the noble Lord, Lord Haskel. What we have witnessed is the birth and sturdy growth of a new type of high technology industry of great importance and promise.
As we have heard, the Bill makes it possible to separate off the activities of AEA Technology from the rest of the AEA. The privatised company will continue to have the nuclear industry among its chief customers. Already, however, almost half the revenues of AEA Technology derive from its non-nuclear activities. Shed of the restrictions necessarily placed on it by the AEA—a major point which, in part, answers the question of the noble Lord, Lord Ezra —the non-nuclear proportion is likely to increase and its export earnings, it is hoped, will reach about a third of the total. There is no doubt in my mind, although such is my continuing affection for Harwell that it is with some sorrow that I say it, that the prospects of the company will be enhanced in the private sector.
Coming to the Bill itself, there is a clause without which I should strongly oppose the whole venture. Clause 1(3) retains in the hands of the AEA and therefore in the hands of Government the ownership of nuclear sites and the licence to operate them, subject to the provisions of the Nuclear Installations Act 1965. Given that clause, I do not consider that there are any valid health and safety or environmental objections to the proposed transfer to the private sector.
However, the form of the Bill arouses in me one misgiving, as I remarked at the beginning of my speech. I am glad to see that it is shared by other noble Lords. The Bill enables the Secretary of State, if he thinks fit—and he may well do so—to split up AEA Technology into a number of distinct companies. Perhaps they would each specialise in one aspect or other of the available business; perhaps they would be forced to compete with each other across the board. Either way I believe that it would be a great mistake.
As I have taken some pains to explain, the various skills of AEA Technology have grown from a single beginning and form a coherent and mutually supportive whole. I do not say that it should stay that way for ever. I am content to let market forces determine the longer term outcome. But I personally consider that it would greatly weaken the enterprise and its chances of success, which are at present good, if it were to be split up by ministerial fiat before it had found its own level of operation in the market place.
I agree that many points of detail remain to be resolved in Committee. But, with that one misgiving, of which the Minister has not quite rid me, despite his careful and courteous explanations, I am happy to support the Bill.
12.27 p.m.
Lord Wade of Chorlton: My Lords, I welcome the Bill. It offers an opportunity to that company and may bring great strength to the industry of the UK generally. Many noble Lords have explained in detail the enormous efficiency, competence and range of abilities that now exist in AEA Technology. The Bill presents that body with the opportunity to become a private company, free, as the noble Lord, Lord Flowers, said, from the controls that might be contained in its present structure and free of
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the involvement of government. It will have the opportunity to employ a very highly motivated workforce which can encourage the development of its technology and skills on a world-wide basis.
There is now, with the enormous development of technological opportunity, a great need for a world-wide company with a wide range of skills which can help in a structured and defined way to co-ordinate some of the wide range of activities that are now taking place. As the noble Lord, Lord Ezra, said, in recent years there has been a change in management which has brought a great deal of business expertise into the organisation which will enable it to be much more forward-looking.
I strongly believe that the Bill gives us the opportunity to create a single, unitary, large-scale business, I would hope with its employees having a share of ownership in the business to encourage their long-term commitment to the organisation. That would put British industry, and the technology that will back it up, on a world-wide basis and help bring a whole sector of British industry right on to the world scale.
Having said that that is the opportunity presented by the Bill, I am concerned that in fact the Bill does not emphasise that opportunity but rather stresses a range of possible things that the Government may decide to do. I am delighted that all the noble Lords who have spoken have said that if this measure is implemented, it should result in a unitary body—that is, apart from the noble Lord, Lord Haskel, who does not want it to happen at all. I hope that we take this opportunity to create a strong, single company.
I hope that, with that in mind, the Government will look closely at what they bring forward at the next stage. A number of noble Lords will be pressing for such a solution. They will seek a clearer definition of the company that they want and a clearer explanation of why they want it at all.
I hope that the Government want to use their decision to privatize—with which I am entirely in favour—to create something that is better than exists at the moment; that removes restrictions; gives the opportunity to grow, to raise more finance and encourage a longer-term commitment to the business. If that is their purpose, then I applaud it wholeheartedly, and I hope that the Government have the guts to say that that is what they want to do. On the other hand, if they want to raise short-term money by selling something, then they should make that clear because it would not receive the same support, either in this House or elsewhere.
I see a great opportunity for a new privatised AEA to be more involved in the exploitation of the research taking place in our universities. As I have said in this House before, in Britain there is a lack of the skills needed to exploit research opportunities and take them into the commercial world in a more effective way than many small organisations which operate in this field do at the present time. If AEA is properly structured and we have the right management with those ambitions in mind, it will play an important role in encouraging the exploitation of the excellent research which takes place in our universities and research establishments.

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I agree wholeheartedly with noble Lords who support the Bill and with those who feel that the Government need to be clearer in relation to what they want to do with it. It is inevitable that these matters will be pressed at the Committee stage. I know that my noble friend will be only too anxious, as he always is, to help us and find solutions to the problems so that we can give support to the Bill. However, I disagree with noble Lords who say that privatisation is not enormously successful. There is not a company in Britain that, having been taken out of the public sector, has not succeeded as a result; has not provided a better service to the customer; has not given a better return on finance and has not given a better return to investors at every level. I am positive that AEA Technology can offer the same benefits if presented as a whole unified company, and if given the opportunity to expand and grow and fulfil its ambitions on a world scale.
12.32 p.m.
Lord Clinton-Davis: My Lords, this has been an interesting debate and one which has caused some anxieties to be expressed regarding the way in which the Bill is drafted—those anxieties riot being confined to this side of the House. I shall return to that topic later. We take the view that this is not only an unnecessary Bill, but it is also undesirable. It is ideologically driven and no compelling case has been made for it. The noble Earl finds that amusing. But his Government are ideologically driven and they are being driven into the sands pretty rapidly.
The Bill may be seen as being a fairly logical consequence of the Government's failure to privatise the Post Office. They have to privatise something and they seized on this. Having failed to privatise the Post Office, they have made life extremely difficult for it, notwithstanding the fairly paltry attempts that were made recently to mitigate some of the problems. This is the logical consequence of that failure.
At the beginning of his remarks the noble Earl said that his explanation was a "nutshell" of the Government's proposals. I suppose that that is an appropriate word to use because nutty ideas have got to have nutshells! But this is not a sensible proposition. It is a reflection of the Government's belief—which I believe to be misbegotten—that somehow or other, regardless of the success that can be depicted in a publicly-owned industry, it must be privatised; that the market will resolve all the problems and that in this case the Government can safely ignore the great story of success which they themselves indicated both in another place and here today. They have conceded that the industry has been supremely successful not only nationally, but also internationally. I believe that the 4,000 employees of AEA Technology are entitled to be congratulated on the efforts they have made, which have brought such rewards not only for their company but also for their country. AEA Technology is a critical element of the ability of Britain to succeed in its research and development ventures.
When my noble friend Lord Peston opened the debate for the Opposition he posed a number of serious points, to which I hope the Minister will respond, and one of which my noble friend Lord Haskel reiterated. They pointed out that these proposals will have the effect of losing the synergy of the component parts of AEA Technology. That
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is part of the success of this enterprise. We believe that any possibility of fragmenting this enterprise, and to do so without being specific in law, is extremely damaging. I suspect that it will be fragmented; the best bits will be disposed of and a cherry-picking venture will be undertaken. That will be bad for Britain and also for the Government. The whole enterprise is another nail in their coffin.
At the beginning of the debate my noble friend Lord Peston —he was joined in this by the noble Lord, Lord Boyd-Carpenter—said he found offensive the way in which proper scrutiny by Parliament of the further progress of this madcap idea is to be undertaken. Is there to be any proper scrutiny? The answer clearly is no. It is wrong that the Government should bring forward measures of this kind. My noble friend asked a question and it is extremely important that it should be answered by the noble Earl: are there any procedures in this House to debate these further processes? I am not talking about a Wednesday debate or some form of Unmarred Question debate. We need the Minister to respond to that point and if the answer is no, as I suspect it will be, then this Bill is thoroughly unsafe and wrong. It is not the first time that the Government will have gone down this route.
This sell-off is effectively giving the Government a blank cheque. Of all people, this Government should not receive blank cheques. The Bill was introduced when it came before another place before any indication had been made of the Government's nuclear review. It is wrong that the House of Commons should be denied the opportunity to view the Bill in the context of that review. After all, that review has been promised since October 1989.
I turn now to the future role of UKAEA Government Division especially in areas of profitable commercial activities. The Minister has not discharged that duty, though if I misunderstood what he said I shall certainly look carefully at Hansard when it is published and we are able to examine the matter. However, grave issues have arisen in regard to pensions and my noble friend pointed to them and promised rightly that we shall return to them at Committee stage in order to obtain the clarification that is obviously needed.
There is too much uncertainty about the. Government's intentions in this regard. The term used in the Bill is that pension rights should be "no less favourable". It is an inability so far to define with precision what that term means that has led to considerable concern on the part of the employees. The terms "no less favourable" and "broadly comparable" have created great difficulties already in relation to the construction that has been placed on them by the Government Actuary's Department. The Institution of Professionals, Managers and Specialists has referred to the recent disposal,
"of two groups of employees to the private sector by sale. These are Facilities Services Division with 950 employees to Procord Limited and Harwell Dosimeters with 7 employees to EMS Medical Limited. Employees in both groups were not allowed to remain in the UKAEA index linked pension schemes. Neither of the new schemes on offer from the new employers offered full index linking but both had been given the Government Actuary's Department certificate of 'broad comparability'".
That seems extraordinary. Thereafter the union sought independent actuarial advice which concluded that the scheme offered in the Dosimeters' proposal is not broadly

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comparable. Yet the Government Actuary's Department certificate said that it was. There is a clear concern on the part of the employees, whether within unions or outside, about this matter. I ask the Government to examine it, as they will be forced to do anyway in Committee. We are not satisfied with what is proposed.
The Government's record in this respect has been less than satisfactory. A number of noble Lords will remember the difficulties that were experienced in relation to the Railways Bill. Because of the concerns expressed by employees, the noble Lords, Lord Peyton and Lord Marsh, together with noble Lords on this side of the House, were able to persuade the Government to change the provisions of the Bill. Some considerable progress, I must concede, was made as a result of that pressure. We do not believe that the criteria to be used by the Secretary of State in judging the terms "no less favourable" or "broadly comparable" are satisfactorily provided for in the Bill. They should be there but they are not.
My noble friend Lord Haskel also raised that point. I should like to add to what he said by asking another question. Why are the Government not persuaded in this regard to do what they did in the case of Amersham International, which was to give employees the opportunity to elect to remain within the Civil Service pension scheme until they chose as individuals to move out of the scheme altogether? After that case the Treasury demanded a change. Again, in this case, it is the Treasury that has determined the actions which the Government should be taking in relation to pensions. That adds force to the remarks that were made by the noble Lord, Lord Boyd-Carpenter, about the extraordinary force of the Treasury on this department in the Bill. I believe that there ought to be independent scrutiny of the whole matter. Employees have also expressed to us their great concern about the conditions of employment that are likely to be offered. That uncertainty also requires to be dispelled if the Government are to go ahead with this idea.
The Government say that AEA Technology has been impaired in its development by the application of the Treasury rules despite the extraordinary success that it has actually had. Perhaps the best answer to that would be not to interfere with AEA Technology but to do something about the Treasury rules, which are certainly in need of re-examination and which are impairing the activities of a great number of enterprises—perhaps more than in the case of AEA Technology. The Opposition are reexamining the situation and I hope that the Government will say that that is a perfectly proper thing to do.
I agree with my noble friends Lord Peston and Lord Haskel that the Government are being careless about the national interest. This agency has proved its ability in the field of research and development. That situation will change. It will pass out responsible control and the nation will lose control of the strategic direction of this prized national asset. My noble friend Lord Peston asked whether some provision should be made to ensure that that situation is defended. The Minister must answer that question in his response.
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The objectivity and independence of the agency are also at risk. Those qualities have been the hallmark of its approach. I fear that there is a real risk that the agency's objectivity and independence will be impaired as a result of these proposals.
Perhaps I may say a few words about the idea of a management buy-out. In the Railways Bill, although I was never quite sure as to whether it was wholly in conformity with the competition rules of the Treaty of Rome, the Government said that they were going to give preference to a management buy-out when bids for franchises were being considered. There is no provision for that in this Bill. Why not? If the Government are satisfied that their approach in relation to the Railways Bill was licit, why are they now not including in this Bill a provision to that effect?
Under Clause 3 the management is empowered by the Bill to do anything it deems fit to facilitate privatisation. What does that mean? Can it go about doing what so much of management of privatised industries has been doing recently—offering themselves larger salaries, share options, declaring redundancies in advance; all the great notions of success entertained by the noble Lord, Lord Wade?
In Clause 10 the qualifications for board membership are to be removed. Why? The Government have not explained this matter. There are certain qualities affecting the board members which were set out in the Atomic Energy Authority Act 1954. I shall not weary the House with those today but those were set out and defined in that Act. They are now to disappear. Why? The Minister also dealt with the question of privatisation and the write-off of debt. Why are the Government pursuing a different policy in this regard from what they have in relation to other privatisations?
A number of your Lordships from all sides of the House have raised highly salient points. Even some noble Lords who have supported this idea have also questioned the propriety of the way in which the Government are going about this Bill. These are very significant matters. I fear that even at the Committee stage we shall run into great obstacles about being able to obtain from the Government assurances affecting employees and affecting the nation as a whole. I do not believe that the people of this country want this form of legislation. I think that they are deeply concerned about it. The Government are ensuring once again—I suppose this is the happy part of the Bill—that they will lose the confidence of the people massively in at least two years' time.
12.50 p.m.
Earl Ferrers: My Lords, we have had an interesting debate, as I thought we would. It has stimulated a number of noble Lords to say a number of interesting things. The noble Lord, Lord Peston, ended his speech in a charming way, having put about 150 questions, saying that he realised that he was trying to be helpful. He is very interested in this subject. In this brief debate he referred to the fact that his speech was a good deal longer than mine. That is an irrelevance and I make no complaint about that. Indeed, it was three minutes longer and I call that a long time. I make no complaint about that, but simply draw attention to it.

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What really wounded me about the noble Lord's speech—normally he does not wound me at all—is that he said I had used every cliché from the Department of Trade and Industry. The fact is that I hate clichés. I have spent all my life removing them. The fact that he thought that I had used them all was a source of great distress to me. He and his noble friend Lord Clinton-Davis rattled out all the clichés themselves. They talked about the dying embers of the Government. The noble Lord, Lord Clinton-Davis, said that we were sinking into the sand and that we were cherry picking. He said that the Bill was ideologically driven and that it was introduced because we could not privatise the Post Office. That is the most astonishing argument. The worst cliché of the whole lot came from the noble Lord, Lord Peston, when he referred to "supra-additivity". I do not believe that even that word appears in the Department of Trade and Industry's glossary of clichés. All I can say to the noble Lord is that I suppose he must have just taken his children to see Mary Poppins and was thinking of "supercalifragilisticexpialidocious". If he had used that word I would have understood it.
Lord Peston: My Lords, the noble Earl is now hurting me. The word I used is not a cliché. It may be gobbledegook, but it is a standard word from my own dear subject of economics. He can attack me on those grounds, but I do not think he should accuse me of using a cliché.
Earl Ferrers: My Lords, I always regard economics as gobbledegook, anyhow. Of course that does not apply to the noble Lord's speeches because he seems to succeed in avoiding most of them.
I was particularly glad that the noble Lord, Lord Flowers, who is such a distinguished scientist, said that he approves this Bill, principally because the Government Division is going to hold on to all the nuclear responsibilities. That remains, as it quite rightly should, in the public domain. Therefore, as the remainder is being privatised he found that totally acceptable. He said that there were no environmental or health reasons for objecting to that. That was very clear and proper.
My noble friend Lord Wade asked about the reasons for privatisation and hoped that it was not just for short-term commercial gains. He is quite right in that it is not short-term gain. The Government's intention in privatising AEA Technology is to realise the potential of the business and to enable it to maximise its possibilities. We are not going to sell the business or the staff short. We are not bringing this measure forward for short-term financial gain. The sale will be made on terms reflecting the national interest and to secure the best value for money for the taxpayer.
The noble Lord, Lord Peston, was concerned about the financial responsibility of the new nuclear liabilities under these long-standing arrangements. These liabilities will continue to be managed by the Government Division. For the reasons which I have given to the noble Lord, Lord Wade,—and as he rightly said, there is an enormous world potential here—the fact that the nuclear side has been removed means that we are left with some really distinguished scientists. They are much better working in the private sector.
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The noble Lord, Lord Haskel, said that the people did not want this measure, the Atomic Energy Authority did not want it, and nor did the taxpayer. Then the noble Lord, Lord Clinton-Davis, said that the people of this country did not want it. I found that attitude of the three noble Lords opposite most astonishing and one of burying their heads in the sand. I thought that their party had said once and for all, after about 50 years, that it disapproved of nationalisation and that it had removed Clause 4. However, each of those three noble Lords said that they wanted this industry to remain in the public lector and that the nationalised part of it was better. They said that they did not want it transferred to the private sector. The reason that industries have gone into the private sector and that the party opposite has changed its views is that once these industries have gone into the private sector the firms have done better. One has only to look at gas, electricity, the telephone system and British Airways: the whole jolly lot have done better. That is why we believe that this organisation would do better if it were in the private sector.
The noble Lord, Lord Haskel, sits nodding his head backwards and forwards as though he had St. Vitus's dance. He must look to see what has happened in the private sector because nationalised industries have worked better there. The fact is that one cannot enable these scientists to get the full benefit if they are limited by government restriction. They are bound to be restricted, provided that the industry is in the public sector because governments are not in the business of allowing money to be used on a speculative basis.
Lord Clinton-Davis: My Lords, I am grateful to the noble Earl for giving way. How have this Government gone about restricting the activities of this particular enterprise?
Earl Ferrers: My Lords, the noble Lord, Lord Clinton-Davis, sometimes asks the most extraordinary questions. He knows perfectly well that if a. business is in the public sector, it is subject to Treasury restrictions. The reason it is so restricted is because it is not right to use public money for speculative ventures.
I am glad that the noble Lord, Lord Sherfield, made his intervention. As a previous distinguished chairman of the Atomic Energy Authority, his views are enormously respected. He was concerned that there should be unitary privatisation, as were the noble Lords, Lord Ezra and Lord Haskel. I can understand why people like unitary privatisation. It may well be the best way forward. But we cannot say definitely now that the organisation will be sold as a single entity or that the sale will take any particular form. It depends entirely on the way in which AEA Technology performs over the next few months as regards the requirements of customers and confirmation from the market that a unitary sale will secure the best overall value for money.
Lord Ezra: My Lords, the noble Earl has told us that the Government cannot yet make up their minds on the form to be taken. When they do, will there be an opportunity for us to debate it in this House?
Earl Ferrers: My Lords, as noble Lords know, how debates operate in this House is a matter for the usual channels and the business of the House. However, I

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undertake to ensure that the House is informed of the form that the sale will take. What happens thereafter must be left until that time.
The noble Lord, Lord Peston, inquired as to how profitable AEA Technology was. The noble Lord, Lord Ezra, very kindly answered the question for me and I shall not answer it further, save to say that the noble Lord was quite right. If he cares to answer any of the other questions which the noble Lord, Lord Peston, asked, I should be deeply grateful.
Lord Peston: My Lords, we are all being extremely helpful. I had seen the same £10 million figure. I wanted confirmation that that is the Government's estimate of profit correctly calculated on a profit and loss account basis. I take it that the noble Earl is saying that that is the right figure.
Earl Ferrers: My Lords, the noble Lord's interpretation is correct. That is what we expect and anticipate, but what actually happens is a matter of fact which we shall come to in the passage of time.
My noble friend Lord Boyd-Carpenter asked what was the total value of the property to be transferred. It is quite difficult to answer that question. It will consist basically of fixed assets, contracts in progress and intellectual property rights, which is a point about which the noble Lord, Lord Peston, also asked. It is our intention to secure the best value for money from the whole of the sale. My noble friend also asked about the net worth. It is not possible to answer that. At the moment AEA Technology does not have a separate legal identity or its own balance sheet, but the value of the business in the end depends on its performance right up to the date of the sale. My noble friend also asked about contracts. There are over 2,000 customers. Most contracts are short term but some, including contracts with the Government, run for a number of years and will form part of the sale.
The noble Lord, Lord Ezra, and the noble Lord, Lord Haskel, asked why we were going to privatise the organisation. I have tried to make clear that the Government have said on many occasions that greater commercialisation in the public sector is not an option. It is impossible to escape the fact that the Government have to stand behind any public body. Therefore, it is irresponsible to allow those companies complete commercial freedom. That would be gambling with the taxpayers' money and would be inappropriate, as I am sure noble Lords will agree.
The noble Lords, Lord Peston, Lord Ezra and Lord Flowers, referred to foreign ownership and asked whether foreigners could buy the organisation. The decision as to whom AEA Technology might be sold will depend on a wide range of criteria, including the need to maintain its reputation for independent and impartial advice, and on the form of the method of sale which will not be decided until nearer the date of the sale. The Government welcome overseas investment in this country and, provided that the potential buyer meets all the sale criteria, there is no specific reason why a buyer should be discouraged simply on the grounds of nationality. We are not talking about the Government Division which deals with the nuclear business. That is a very different matter,
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as the noble Lord, Lord Flowers, rightly said. We are discussing a body of scientists at the leading edge of science who are dealing with a number of very different issues at present, and will continue to do so—
Lord Clinton-Davis: Including defence?
Earl Ferrers: Including anything; including oil. They are giving advice as contractors. That is perfectly correct, and they will continue to do so. The AEA sells its expertise to nuclear operators overseas. It does so under strict controls, and those controls will remain in place after privatisation.
The noble Lord, Lord Peston, must have been prompted by his noble friend Lord Bruce of Donington when he asked whether there were any European Union aspects to this. The department has been in contact with the Commission which has indicated that, in principle, it does not anticipate that the Government's plans for AEA Technology will give rise to any significant state aids or competition issues.
The noble Lords, Lord Peston, Lord Haskel, and Lord Clinton-Davis—funnily enough, all three noble Lords are from the party opposite, but it sometimes happens that that party speaks with one voice—wanted to know about pensions. It is not possible for the pension scheme of the privatised company to be the same as the authority's scheme. I forget which noble Lord referred to the difference between "the equivalent" and "the same" and tried to drive a coach and horses between the two words. The new scheme cannot be the same as the authority's scheme. Some features of the authority's scheme may not be reproduced in a tax-exempt occupational pension scheme. I doubt whether employees would thank your Lordships if they had to pay tax on their pension contributions and lump sums.
The noble Lords, Lord Peston and Lord Clinton-Davis, and my noble friend Lord Boyd-Carpenter referred to the board's composition, which is the subject of Clause 11. They asked why the number of people is to be reduced from seven to four. Clause 11(2) states:
"the Authority shall consist of a chairman and not less than seven nor more than fifteen other members) for "seven" there shall be substituted "four"".
That does not mean that the board will have only four members. It means that the minimum will be four members but that the membership can be 15.
The noble Lord, Lord Clinton-Davis, said that certain qualities were required from board members under the Atomic Energy Authority Act and asked why that requirement was being removed. The answer is that in those days we were very much concerned with atomic energy and nuclear energy and it was therefore thought appropriate to specify in that Act certain qualities for board members. Now, AEA Technology is different, and it is better to allow the board to draw on a wide range of expertise as opposed to being restricted to drawing its membership from certain categories only.
The noble Lords, Lord Peston, Lord Ezra, and Lord Clinton-Davis, asked about parliamentary scrutiny. The Government have to be concerned about the interests of the taxpayer and about securing the best value for money if the sale goes forward. We can do that in two ways: by getting the best available price and by privatising the

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business on a basis that best enables it to exploit the opportunities open to it and to maximise its contribution to the national economy. It is usual for such legislation to be enabling. I do not think that it is appropriate to tie down the Government. It is necessary to retain the flexibility and freedom to enable us to act in the best interests of taxpayers. The Government have to get Parliament's approval in principle. It is then a matter for the Executive—in this case, the Government as a whole—to do that in the best interests of the taxpayer and the country. We shall, of course, be responsible to Parliament for what is done and Parliament will be kept fully apprised of progress.
The noble Lords, Lord Sherfield and Lord Haskel, referred to employee participation. That is an issue in all privatisations. It is of particular interest in the case of AEA Technology which is, as the noble Lord, Lord Haskel, said, a "people business". Employee participation is likely to be important in maintaining the commitment of the staff and in getting future contracts. It is in the long-term interests of any company that is to be privatised that a significant measure of employee share ownership is provided for, but I do not think that it is necessary to put that specifically in the Bill.
I turn now to another point made about pensions by the noble Lord, Lord Haskel. Employees will be able to leave their accrued rights in the authority's pension scheme or to transfer them to the new pension scheme. The Bill provides that the new pension scheme must be no less favourable overall. It therefore seeks to protect employees' interests.
My noble friend Lord Boyd-Carpenter asked: why remove stamp duty? The reason is that there is a broad policy intention that when the Bill comes into operation it should achieve what we call "tax neutrality", which my noble friend will understand entirely. Tax neutrality is about ensuring that the process of transferring AEA Technology to the private sector does not of itself give rise to tax consequences. Successor companies start life in the private sector as if they had always operated in the private sector. The removal of the obligation to pay stamp duty is consistent with that.
My noble friend also asked about AEA Technology staff and what they did. It would take too long to set out in detail all the skills and experiences of the staff, but a very high proportion are qualified scientists and engineers across a wide range of disciplines. AEA Technology has some 1,860 graduate scientists and engineers—almost half its workforce—spread across all six sites, with 613 engineers (of chemical, electrical and mechanical disciplines among others) and 411 other scientists, including those involved in biosciences, mathematics and the material sciences. There are also 836 chemists and physicists.
The noble Lord, Lord Haskel, referred to the Atomic Energy Authority and small firms. The AEA is closely involved in the process of technology transfer to small firms. It runs, or is involved in running, some 40 industrial clubs with a further 10 under development. Those activities will continue after privatisation on the same commercial basis as now. The noble Lord was also concerned about the implications for the science base. I understand that concern. As I said in my opening remarks,
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for the past 30 years UKAEA has operated on a commercial basis under contract. AEA Technology will continue to carry out research on that basis. The management has also made it clear that it will continue to set substantial funds—about 4 per cent. or 5 per cent. of the turnover—to finance its own R&D. That is not surprising because the success of the business depends on maintaining its scientific excellence.
I hope that I have answered most of the questions which your Lordships raised. It is right that your Lordships should ask such questions because the issue is important. The government division—that part which will remain in the public sector—still has a notable and vital role to play in overseeing the decommissioning of the authority's nuclear facilities.
AEA Technology is now an established international science and engineering services organisation which operates in a highly competitive market and is operating overseas. We must ensure that the resources and expertise which make up AEA Technology are used for the greatest benefit of the country as a whole. Despite the apprehension, concern and disbelief of noble Lords opposite, we believe that that is best done by putting AEA Technology where it can make the greatest contribution to the United Kingdom economy; that is in the private sector.
That is what the Bill is about. I have no doubt that in Committee your Lordships will wish to ask questions. However, as I have answered so many today I have no doubt that the Committee stage will be correspondingly brief. I am grateful to your Lordships for having taken part in the debate and I commend the Bill to the House.
On Question, Bill read a second time, and committed to a Committee of the Whole House.

Contracting Out (Functions of the Official Receiver) Order 1995
1.11 p.m.
Earl Ferrers Earl Ferrers rose to move, That the draft order laid before the House on 28th April be approved [18th Report from the Joint Committee].
The noble Earl said: My Lords, the order represents another little operation for contracting out, which I know will be welcomed by the noble Lord, Lord Peston. It is proposed that the order should be made under Section 69 of the Deregulation and Contracting Out Act 1994. The purpose of the order is to enable the statutory functions of official receivers to be contracted out, subject to the exceptions which are listed in the schedule. There are two reasons why we wish to do that. The first is because the Government's "competing for quality" programme is all about achieving better value for money for taxpayers, and higher standards for customers. Impressive savings have been secured by this programme throughout the Civil Service. The other reason is so that official receivers will be able to concentrate better on their investigative role in bankruptcies and compulsory company liquidations.
The recent recession placed a very heavy burden on official receivers and their staff because of the amount of insolvencies which occurred. The number of cases with which they had to deal rose from some 13,000 in 1989–90

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to a peak of some 43,000 in the 12 months to March 1993. Because they had to deal with the administrative burden of those additional insolvencies, official receivers became increasingly unable to devote sufficient resources to their investigative role. Following a report by the National Audit Office, the Public Accounts Committee of another place was critical of what it saw as the Insolvency Service's failure to bring disqualification proceedings in sufficient numbers against directors who were alleged to be guilty of misconduct. That failure—and the sharp reduction in the number of prosecution reports which were submitted—was in large measure a direct result of the pressure on the resources of both the Insolvency Service and the official receiver.
Contracting out offers the opportunity of using the more flexible resources of the private sector without the need for maintaining a costly permanent public sector structure in the administration and initial investigation of bankruptcies and compulsory company liquidations. This will leave the official receiver free to concentrate on the small minority of cases in which serious misconduct is suspected.
We asked Stoy Hayward Consulting to undertake a pre-feasibility study. This was followed by a feasibility study on which it reported in July 1994. It identified the possibility of contracting out insolvency cases immediately upon the making of the bankruptcy or the winding-up order as one which would enable the largest transfer of the work of the official receivers—involving up to 1,050 posts—to the private sector. That would enable greater concentration by official receivers on their investigative role.
It is that option which the Government now propose should be pursued and which the order before your Lordships would allow. However, I should refer to the concerns which were expressed by the official receivers when they replied to the consultation exercise which was conducted with them under the Deregulation and Contracting Out Act.
Your Lordships will be aware that we have published an agreed digest of the responses from the official receivers and their concerns are clearly set out in that document. Those concerns hinge principally on how they will discharge their investigative duty if the other work were to be contracted out to insolvency practitioners under the preferred Stoy Hayward option.
Their particular concern is the proposed division of the further investigation work which is undertaken in the minority of cases where something untoward is suspected as a result of the routine investigative work which is undertaken in every bankruptcy or liquidation. That routine investigation work is the basis on which any other investigation work is built. They are also concerned that the provisions of the Police and Criminal Evidence Act 1986 would be bound to have an adverse impact on their capacity to obtain information from bankrupts and from directors in the course of their further investigation.
We understand these concerns and we have considered them carefully. However, we believe that they are not wholly warranted. Stoy Hayward's advice was that preliminary investigative work could be undertaken by insolvency practitioners, or other suitable contractors
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without necessarily prejudicing the official receivers' further investigative role. It did, of course, recognise that proper and effective conduct of the initial investigation and the provisions of adequate information to the official receivers would be vital if the cases requiring further investigation were to be readily identified and pursued. We will need to be sure that arrangements with potential contractors are fully worked through in order to ensure that the concerns of the official receivers can be put to rest. As regards the Police and Criminal Evidence Act, we have clear advice from counsel that in the present state of the law the provisions of that Act will be no more likely to apply to a contracted-out arrangement than they would be at present.
The other major areas of concern for official receivers were their personal liability under any contracts and their liability in respect of any acts or omissions of contractor which may occur. They were concerned that there should be proper training and resources for adequate contract management as well as monitoring. And they were concerned that they should have sufficient resources to discharge not only their further investigative role but also their residual functions which we do not intend to contract out. These are perfectly legitimate concerns and they will be fully addressed in the course of the contracting-out exercise. Some of the concerns have been raised in other contracting-out exercises and have been satisfactorily resolved.
As was emphasised in the discussions on contracting out in relation to Companies House, contracting out is a process of testing. Potential bidders will be required to demonstrate that they can offer—and can provide—better value for money than would be achieved if the activity were not contracted out. By "better value for money", I do not mean simply a lower price. It will be essential that the contractor maintains and, where possible, improves upon the present levels of service. Unless that can be demonstrated, contracting out will not go ahead.
Another place approved the order on Wednesday and if your Lordships were to approve this order today we intend to carry out a series of negotiations with potential providers. A number of them will then be short listed to receive a formal invitation to tender at the end of September. We plan that any contracts would be awarded in December and that all contractors would begin work by 1st April 1996.
In discharging their investigative duty official receivers play an important role in ensuring confidence in the operation of the market. That is a role which we want to be enhanced by the process of contracting out. At the same time, contracting out offers the opportunity for getting better value for money. The order opens up the way to achieving both objectives and I commend it to your Lordships. I beg to move.
Moved, That the draft order laid before the House on 28th April be approved [18th Report from the Joint Committee]—(Earl Ferrers.)
Lord Peston: My Lords, I thank the noble Earl for introducing this order. We debated this subject during our discussions on the Deregulation and Contracting Out Bill, which is now an Act.

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I have a number of questions. I agree with the noble Earl that we should approach this subject in precisely the way that he says. Certain tests should be applied in relation to what goes on, and I shall refer to some of them. We must ask what is a better way of achieving the relevant objectives. By "better", we mean either that we achieve the objectives more effectively or we do as well as we did before but more cheaply; or, with any luck, a combination of the two.
That leads me to some questions. First, I take it that the effect of the order does not have any consequences for all of the other official receiver's responsibilities and functions. In other words, the Government are arguing that the role of the order is to enable the functions of the official receiver to be done more effectively.
Am I right in thinking also that the effect of the order is permissive? Even when the order has been agreed by both Houses, the Government are not obliged to go ahead in the sense of saying, "We must accept a tender" or "We must accept this or that firm". Am I right that, at least logically, the Government could simply use the private sector as a yardstick to measure what the insolvency service in the public sector does?
That leads me to ask what the Government are actually proposing to do. Are they proposing to use the order to contract out the whole of the insolvency service function in one go or are they going to contract out a small part of it and see how that works out? There is a significant distinction between the two.
Section 69(3) of the Act states:
"A Minister shall not make an order under this section in relation to an office-holder without first consulting him".
I—and I am sure that the Minister agrees—do not interpret that to mean that the office holder has a veto. However, I interpret it to mean that where the office holder raises very strong anxieties one should not proceed. I am bound to say that I am not 100 per cent. certain that all the anxieties of the official receiver have been met.
That takes me to our assessment of what is going on. The noble Earl referred to the Public Accounts Committee in the other place and its concern about the effectiveness of the insolvency service as it was then operating under pressure in the middle of a considerable down-turn in the economy. Are the Government now claiming that as a result of this order and the proposed changes there will be more prosecutions, more examples of fraudulent practice discovered and that more directors will be disqualified? Is that what the Government are predicting? When they are carrying out the studies and making the same privatisation claim that they have made in relation to other matters, are they saying that that is the test that they would like to see applied?
Can we be assured that all those matters will be monitored so that your Lordships will be told what has been done and whether there has been any decrease in the amount of fraudulent behaviour or an increase in the number of bankrupts prosecuted or the number of directors disqualified relative to what would otherwise be the case? In other words, if deregulation is to work successfully—and the Minister will notice that I am
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taking no ideological view on this but am approaching the order entirely in order of practicalities—we need to agree that that is the test to be applied.
I have one last point to make, which I do with great regret. The noble Earl referred to Stoy Hayward as government advisers. I believe that they have been paid for that advice as regards what should be done. It has recommended to the Government that the functions should be contracted out and the studies that have led to such recommendations were paid for. Am I not right that the particular firm to which the noble Earl referred is an insolvency practitioner firm which might bid for some of that business? Does the noble Earl not have any feeling of disquiet that the firm which advised him has an interest?
I should like an assurance from the Government that since Stoy Hayward advised the Government, in no circumstances would it be regarded as ethically acceptable for that company to bid for any of this work. That is my view which is clearly a matter of principle and is necessary to avoid a conflict of interest. Therefore, I hope that the noble Earl will say that the work was carried out totally objectively as was the research which was paid for and that that was done on the basis that it regarded itself as disqualified from being able to take on any of the work. That seems to me the minimum ethical consideration which should be applied.
Earl Ferrers: My Lords, I am grateful to the noble Lord, Lord Peston, for taking what I believe he described as a non-partisan view, or something like that, and for considering the order on its merits, which is very good. I do not know whether he considered the Atomic Energy Authority Bill on its merits.
Lord Peston: My Lords, I felt that on that Bill, the noble Earl was being rather ideological and, therefore, I too was a trifle ideological. We are both considering this order on its merits.
Earl Ferrers: My Lords, I always consider these matters on their merits. The noble Lord asked me a number of questions which I shall do my best to answer. He asked whether the order will affect the other work of the official receiver. It will not. The whole purpose of the order is to contract out the beginning work and to contract it out in such a way as to make it more expeditious.
The noble Lord asked whether the order is mandatory. It is not; it is permissive. If the public sector is seen to give better value for money than a potential contractor-out, then the service will be retained in the public sector. He also asked whether the measure would be carried out in bits and pieces or whether it would done right across the country. Of course, official receivers operate in different parts of the country. Whether or not the work is contracted out in one part of the country will depend on the circumstances in that part of the country.
The noble Lord asked whether there would be more prosecutions and whether more directors would be disqualified. I do not believe that that is the right way to look at the matter. As I explained in my original speech, between 1989 and 1993, which is about three years, the number of cases rose from 13,000 to 43,000. It is in order to deal with that problem that the contracting out is being considered. One should not judge the success of the work

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of the official receiver by assessing how many people have been thrown into prison or disqualified. It is important that the work should be done efficiently and expeditiously. That will be monitored.
The noble Lord also asked whether Stoy Hayward would be permitted to bid in the third phase. Parties who were interested in bidding in that third phase were advised that, in the event of the contracting out proceeding, the successful bidder would be precluded from bidding for any work to be contracted out in the first round of contracts. Stoy Hayward may bid, but information obtained by the company is confidential and, of course, it is not available to insolvency firms. We would need to analyse any remaining concerns and we shall look further at any procedures to see whether and how they might be approved if, after the negotiations, the official receiver still holds the view that contracting out will not work.
The noble Lord was also concerned about consultation. The Secretary of State is required to consider—in other words, he is bound to take account of what the people consulted say—but he does not have to follow what the consultants say. That is the duty of the Secretary of State. I hope that I have met the concerns expressed by the noble Lord, Lord Peston. If your Lordships are content, I commend the order to the House.
On Question, Motion agreed to.

Road Traffic (New Drivers) Bill
1.31 p.m.
Lord Astor of Hever: My Lords, I beg to move that this Bill be now read a second time.
The Bill was introduced in another place by my honourable friend the Member for Rochford, Dr. Michael Clark. It attracted enthusiastic support from all sides of that House and has now passed through all its stages there.
Its subject is one of great importance and concern. It deals with the behaviour of newly qualified drivers, most of them young. At a stage in their driving careers when they are still inexperienced it is all-important that they drive safely and pay attention to traffic regulations and the Highway Code. Even those whose behaviour is blameless will be more at risk of accidents than the experienced driver, simply because situations develop that they have not anticipated or do not know how to deal with. But that risk increases greatly if they get carried away, overestimate their skills, try to impress passengers or simply flout the law. It is at that irresponsible element that the Bill before your Lordships is primarily aimed. They are a minority, but the trouble they cause is disproportionate to their numbers.
The matter is of great concern among a wide cross-section of the British public. My honourable friend has had a large number of letters, not only from his own constituents but also from many other parts of the country, congratulating him on his choice of subject and voicing their own concerns about the dangers caused by inexperienced drivers on our roads. Some have been from the parents of children who have recently passed their driving test but who, in their view, are not sufficiently
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experienced or mature to be trusted to drive safely. Others are from people who have been injured in road accidents involving new drivers.
It was, nevertheless, with some trepidation that I approached my own family regarding the Bill. As some of your Lordships will know, it is my good fortune to have five daughters and a son. One is currently a learner and the others will no doubt wish to learn to drive when they are old enough. Therefore, I was prepared for quite a rough reception when I told them what the Bill was all about. I am very pleased to say that all of them thought that the idea behind the Bill was eminently sensible. My elder daughters were particularly supportive as they had been passengers—sometimes extremely frightened and anxious passengers—of young men whose driving was not as careful and as courteous as it should have been.
The Bill has also been welcomed by, among others, the police, the AA and the RAC, the Parliamentary Advisory Committee on Transport Safety (of which my noble friend Lady Gardner is a director), and the Royal Society for the Prevention of Accidents. I therefore regard it as an honour to be bringing it before your Lordships today.
Because most of us spend a great deal of our lives driving, we tend to forget or underestimate the risks involved, we forget that we have in our hands a lethal weapon that can kill or maim in a few seconds of inattention. Yet I shall never forget the terrible occasion, when I was about 18, when a close friend of mine was killed by a young man who was driving much too fast and had lost control. The driver survived unscathed. Far too many people have experienced tragic losses of that kind, and death in a road accident is one of the most pointless and unnecessary ways to die.
At present the Driver and Vehicle Licensing Agency issues about 1 million new provisional driving licences every year. That means there are 1 million new learner drivers or motorcyclists on our roads and, eventually, most of them will pass a driving test and become qualified drivers. About half of them begin learning at the age of 17, and a quarter of those who pass the driving test do so before they reach their 18th birthday. Many more do so between 18 and 21.
Those are the dangerous years. Just 10 per cent. of all driving licences belong to people under 21, yet those drivers are involved in a quarter of all fatal accidents. Things would be even worse if they drove as long distances as older drivers. Mile for mile, a youth of 17 is seven times as likely to have an accident as a middle-aged man.
That is not, in most cases, because they have not learnt the basic driving skills—after all, they learnt enough to get through the test. All too often, what happens is that, once they have passed the test, they think that they know it all and that they have suddenly become expert drivers overnight; and they want the world to know it. They want to prove to themselves and to their friends how fast they can accelerate, how ably they can corner, and how suddenly they can brake. Perhaps they cut up other motorists to prove the point. What they often lack is the ability to read the road ahead, anticipate hazards and know when to react. They may also lack tolerance and consideration for other road users whose reactions are slower than theirs.

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Even among young and inexperienced drivers, there is a real difference between the accident risk of a responsible driver and of a tearaway. The Transport Research Laboratory has been looking in detail at new drivers and has found that drivers who commit offences in the first year after passing the test are more than twice as likely to be involved in accidents as drivers who do not. They remain at twice the risk of accidents in their second and third years too. So there is a clear link between offences and the risk of an accident. That is why it makes sense to target the offenders and make them pay for extra lessons, another test and a great deal of humiliation, rather than, for example, making the driving test harder for everyone.
As its title suggest, the Bill is not only about young drivers, but about all new drivers. Not all of them are young—a survey of test candidates in the late 1980s showed that 43 per cent. were under 20, but 22 per cent. were over 30. Research shows that, at any age, inexperienced drivers are at greater risk of accidents than experienced ones.
The Bill will therefore apply potentially to new drivers of all ages for the first two years after they pass a test for the first time. I say "potentially" because it will not really bite unless they commit offences in that time. The vast majority keep their licences clean and they will be no worse off as a result of the Bill, though perhaps a little more cautious in keeping to the law. On the whole, the new drivers who fall foul of the law will be the younger ones, and predominantly male.
I shall now briefly describe how the Bill hangs together. Clause 1 defines its scope. Anyone learning to drive, or to ride a motorcycle or moped, starts with a provisional licence and L plates. As soon as they pass a test, either in a car or on a two-wheeler, they are entitled to a full licence in that class of vehicle. From that point on they are qualified drivers in the terms of this Bill and the two-year probationary period begins. Some of these drivers may go on to pass a test in another class of vehicle, but that does not make them probationers all over again. It is only on the first occasion that this clause will bite.
The clause applies the Bill to holders of British licences, whether they passed their test in Great Britain (as the vast majority do) or obtained their GB licence as a result of a test passed in certain places outside mainland Great Britain with which our authorities have a reciprocal arrangement. Where the date of passing a test outside Great Britain is known, as it normally will be in these cases, it is recorded on the British licence and thus defines the start of the probationary period. It is quite likely incidentally that by the time the Bill is in force newly qualified drivers will be issued with a new form of plastic licence with a photograph, on which the Government have recently been consulting.
Clause 2 contains the meat of the Bill. Its effect is that when, before the end of the probationary period, a driver gets six or more penalty points on his licence, either through a court conviction or by paying a fixed penalty, the licence is subject to revocation. The first two subsections deal with conviction by a court and require the court to notify the Secretary of State of the endorsements and send him the licence if it has it. If it does not obtain the licence, the Secretary of State has powers under existing law to demand its return, using the
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police if necessary. The remaining subsections cover the case of a fixed penalty, and require the clerk who accepts the payment of the fine to send the licence to the Secretary of State. In practice these functions of the Secretary of State are carried out by the Driver and Vehicle Licensing Agency in Swansea.
Clause 3 follows logically on. When the Secretary of State receives the licence or is notified of the conviction, he must serve notice on the holder that the licence is revoked. This person can no longer drive as a fully-fledged driver but may apply for a provisional licence and start again as a learner. Clause 4 goes on to the next stage. Now that he is a learner again he is not eligible for a full licence until he has passed another test. But to avoid unnecessary harshness, this clause does not require people who have passed more than one class of test before the revocation to pass them all again; passing just one of them will get back all the lost entitlements. Nor does it prevent these people from learning to drive a new type of vehicle and passing the test in that. But doing that will not win back their old entitlements as well.
Clause 5 deals with special cases where the person affected by the revocation appeals against a conviction that caused it. Provided that the Secretary of State is notified of this he must issue a licence to allow that person to continue to drive while the appeal is pending. If the appeal is successful enough to remove the penalty points or reduce them below six, then the Secretary of State must grant a permanent licence replacing the one taken away.
Clause 6 and Schedule 1 cover essentially the same ground as Clauses 2 to 5, but apply to special cases where a person has passed a driving test but not yet handed in the test pass certificate to get the licence to which they are now entitled. Current legislation allows a two-year period in which test pass certificates can be exchanged. Most people exchange them straight away, but there are a few who choose not to, or forget to. There are two such groups: those who have passed their first test and still have only a provisional licence, while being entitled to a full one, and those who have a full licence and have passed a test to drive another class of vehicle and have not upgraded their licence to be full in that class. The rather extensive provisions of the schedule are necessary to close potential loopholes which might allow the re-testing procedure to be evaded by people with unclaimed test certificates.
Clause 7 has two purposes. First, paragraph (a) prevents a person being doubly penalised if a court uses its existing powers to order a re-test. The court order takes precedence over anything in this Bill and once it has been made, the person is no longer regarded as being in the probationary period. In many cases the re-test ordered by the court will be a double length test, whereas the tests required by this Bill are always of the normal length. Secondly, paragraphs (b) and (c) prevent a person being caught in a continuous round of re-testing. Once that person has passed a re-test, he is no longer subject to the provisions in the Bill. But he is still in danger of losing his licence because passing the test does not wipe the licence clean of penalty points. Those six points are still sitting there, and if the driver gets a further six before they are

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cleared, making 12 in all, the court will disqualify him outright for six months under the existing totting up procedures.
The other clauses, and Schedule 2, are supplementary and I shall not go into detail except to make two important points about Clause 10. Subsection (2) of that clause allows commencement of the Bill to be on a day appointed by order. This flexible arrangement will give the Department of Transport, the police and the courts time to make all the necessary arrangements and to ensure the scheme is well publicised. And subsection (3) of this clause is drafted so that the provisions will not apply to anyone who was already a qualified driver before they came into force. This will avoid drivers being taken unawares by a change in the rules affecting licences they already have.
I hope your Lordships will agree that these provisions strike an appropriate balance between toughness and fairness. They will not make it any harder to qualify as a driver in the first place, but they will make it harder for people to keep their licences if they misbehave in the first two years after passing the test. Research suggests that drivers are more deterred by the threat of losing their licences than they are by fines. At the moment they need not worry too much until they get close to 12 penalty points, and that may allow them to commit as many as four speeding offences. This scheme will bite at six points. It will not stop people driving altogether, but it will force them into the world of L plates and the need to have an experienced driver by their side.
I am confident that the Bill will play a part in improving the standard of driving and behaviour among our newly qualified drivers. If it succeeds in that, it will make our roads safer for all users, as any one of us could be the victim of a new driver accident. I beg to move.
Moved, That the Bill be now read a second time.— (Lord Astor of Hever.)
1.49 p.m.
Lord Clinton-Davis: My Lords, at the outset I wish to thank the noble Lord, Lord Astor of Hever, for having introduced the Bill in this House in an eloquent and complete manner, having explained its individual clauses. I also wish to pay tribute to Dr. Michael Clark for his work on the Bill and the way in which he carried the Bill through Committee in another place. Dr. Clark is a friend of mine, and I recognise that the work that he and his noble friend in this House have undertaken is invaluable.
I want to say a word about procedure. I have made a number of complaints about Bills of this kind before, because this is self-evidently a government Bill. I do not believe that a Bill of this character should be introduced as a Private Member's Bill. It is noticeable that in the Committee stage in another place the Minister for Transport in London, Mr. Norris, was primarily responsible for answering all the difficult questions. A Private Member's Bill is subject to all kinds of difficulties, particularly in another place. The procedures can render the progress of the Bill very risky indeed. I hasten to say that we on this side of the House fully support the Bill. I have one or two questions to ask, but we
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support unquestionably the principle underlying the Bill. However, important Bills of this character should not be subject to the procedure I have described. I hope that the noble Baroness dealing with the Bill on behalf of the Government today will make that representation, although I fear that such representations fall on deaf ears. I do not think that that is right.
A number of organisations dealing with road safety have applauded the Bill, and rightly so. The Automobile Association has helped your Lordships with a brief representation of support. It has highlighted the point that new drivers, who are mainly young drivers, are substantially over-represented in accident statistics. Although it is a minority, far too many young drivers—about 35 per cent.—can be characterised as unsafe drivers. That is not merely an assertion. The point has been made on the basis of studies undertaken by Southampton University, commissioned by the AA's Foundation for Road Safety Research. That is a frightening statistic and more than justifies in itself the provisions of the Bill.
In fairness, the Bill must be seen as part of an overall strategy that has been declared by the Government, the purpose of which is to improve standards of driving among new licence holders. Again, we thoroughly applaud the Government's actions. It may be uncharacteristic for me to applaud the Government's action, but one can do so on so few occasions that it is nice to make an exception.
There is no purpose in my continuing to applaud the Bill. I have already done so. I support the idea of taking action which can deter behaviour which is wholly irresponsible. That was one of the main points of the presentation made by the noble Lord a moment ago.
It would be wrong to see the re-testing procedure simply as a humiliation or as a punitive measure. If new drivers have established that they are not sufficiently responsible to drive, whether they are young or old, as a matter of pragmatic necessity they should go through that procedure again. However, I dare say that some young men may see it as an attack upon their manliness. So be it.
I want to raise a number of points which were touched on in another place in Committee but were not dealt with wholly satisfactorily. I start with a point raised by my honourable friend Mrs. Dunwoody in connection with the holder of an international driving licence. The Minister and Dr. Clark admitted that a number of anomalies remained in relation to the Bill. I raise these matters now in order to ask the noble Lord and the Minister whether they feel that it is impossible to cure some of those anomalies by amendment. If so it could be done on an all-party basis. However, it may be that on reflection the Government feel that it is impossible to deal with those matters. We do not have the draftsmanship skills available to enable us to undertake that work.
The point made in relation to the international driving licence is that somebody holding such a licence could escape the provisions of the fixed penalty notices which apply to someone holding a United Kingdom licence. Consequently, such people would not be covered by the provisions of the Bill. It was argued in another place that that represents only a very small number of people; it is admittedly an anomaly but there is nothing that can be

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done about it. I ask the Minister and the noble Lord to let me know whether that remains their view. I believe that however much of an anomaly that is it is recognised as such and it ought to be cured. I hope that something can be done.
There is also the question of a British citizen living abroad temporarily and holding an international driving licence who may be able to escape investigation of the points that might exist on a previous driving licence. If there are points on that previous driving licence which are not indicated on the international driving licence, an anomaly is again capable of arising.
The noble Lord referred to the second European directive, which it is hoped will take effect on 1st July 1996. Perhaps the noble Baroness or the noble Lord will respond to this point. Am I right in thinking that the directive reinforces but is not to be seen as a substitution for the provisions of the Bill and that the provisions of the Bill will stand whether or not the directive comes into force on the due date?
As I understand it, the directive will deal with the case of a person who holds licences issued by two member states within the European Union contemporaneously. The difficulty at present is that a person might hold a British licence; he might hold a French licence. While travelling in Britain it might be more convenient to produce the French licence rather than the British licence in the circumstances envisaged in the Bill. That being the case, is it not possible that such a person would escape the provisions of the Bill?
At present one can hold a British and Irish licence contemporaneously. I do not know whether one can hold a French licence; that may have been an incorrect assertion. Whatever the position, the situation is quite clear. Substitute "Irish" for "French". One might hold the two licences and escape the provisions of the Bill. As I understand it, that will cease to be possible under the terms of the second European directive.
We do not yet know whether the directive will come into force. In the meantime, another anomaly could arise. It would be beyond the capacity of an ordinary bobby dealing with these matters to be able to resolve the Irish question, using the Irish example. It is difficult enough for Ministers to do that. How does the ordinary bobby manage to identify such a. situation?
I wish to pose another question which is not wholly germane to the Bill. However, perhaps the Minister will respond to it. Would it be possible to have a different form of L plate when this form of testing is being undertaken? If the intention is to distinguish between the provisional licence holder and the person who is going through the re-testing procedure, I should have thought it desirable to have a different L plate. It is not unknown. That procedure is undertaken in different parts of the country. The procedure outlined in the Bill is not unique; it has been tried before with success. Therefore I raise the question regarding the identification of the driver in those circumstances.
There has been a suggestion that a provision is to be introduced about theory testing by the Government. In her response, will the Minister indicate when that statement is
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likely to be made? Is it likely to be in advance of the adoption and implementation of the second driving licence directive?
My last point deals with what I believe to be the necessity for a European Union scheme. In my view there should be harmonisation throughout the member states of the European Union. The principles of this Bill, and similar provisions elsewhere, should apply throughout the European Union. Enforcement would remain with the member state. Nevertheless, because the principles which underlie the procedures are so compelling I should like to hear the Government suggest that a European Union wide scheme should be introduced and that such provision will be forthcoming from the Commission at an early date.
2.4 p.m.
Viscount Simon: My Lords, certain matters to which I shall refer do not come strictly within the scope of the Bill but I believe that nonetheless they should be mentioned. I support and welcome the Bill with very few reservations. Consequently, I intend to be brief in addressing your Lordships today. I hope that I am not being too provocative, but I believe that the provisions of the Bill should go further.
The Bill is intended, I believe, to penalise newly qualified drivers who choose not to drive well and to encourage the remainder to raise their standards. When we start driving we affix L plates to the vehicle and hope that more experienced drivers will display consideration and courtesy towards us. At the moment we pass the Ministry test we throw the L plates into the air, yell "Whoopee" and think that we are able to drive any vehicle in the class or classes passed. That is when problems can occur. We find out that we do not know everything about driving and are lucky if we do not have or do not cause accidents.
In the Australian state of New South Wales, where for a while in the 1960s I spent my leisure time working as a part-time examiner for the advanced motorists, provisional licensing (equivalent to the proposed probationary licensing) was introduced in 1966. Provision was made for both theoretical and practical re-testing of any P plate driver convicted of traffic or criminal offences involving driving. That remained in force until 1985 when only theoretical re-testing was required. That has worked well in New South Wales and, in their own formats, in other states of Australia.
Newly qualified drivers have to display P plates; they are limited to driving at 80 kph (equivalent to 50 mph); and the maximum blood alcohol level permitted is limited to 0.2 gm/100 ml. Probationary drivers are very careful. A provisionally licensed driver who has more than four points on his licence has the licence cancelled for three months—I assume for a longer period if warranted—and, after re-testing, starts the probationary period once more.
While still talking about New South Wales, a learner driver aged 25 or under must hold his learner's licence for at least six months before being able to take his test. What an excellent way of ensuring that he gains some road sense and experience. Are we still considering widening the scope of our test and making it harder to pass, as the noble Lord, Lord Clinton-Davis, mentioned?

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So what can we learn and perhaps include in the Bill? P plates, to differentiate them from L plates of any colour, indicate that the driver is a probationer and is gaining experience. I was going to say they indicate that the driver is still a learner, but all drivers should continue to learn until they stop driving. The presence of P plates would be a useful means of identifying drivers.
I feel sure that a traffic officer would deal more leniently and with more understanding with somebody displaying P plates than another person not showing them. Limiting the maximum speed which a newly-qualified driver can attain would ensure that experience was gained while, we hope, decreasing the chance of having an accident. While this might cause frustration in some drivers, it has worked well in Australia, so why should it not work here? A vehicle with even modest power output can be a lethal weapon in inexperienced hands, so should not consideration be given to limiting size or power of a vehicle being driven during the learning and probationary period?
According to the Department of Transport figures, drivers under 21, who comprise 10 per cent. of licence holders, are involved in 20 per cent. of road accidents. Yet they drive fewer miles than older drivers. They are involved in accidents that lead to 1,000 road deaths per year—and on many occasions the fatality is not the young driver. Research indicates that it is inexperience rather than immaturity which produces the higher than average figures.
The introduction of an extended test for drivers after reverting to learner status could well be part of an attainable package of measures aimed at achieving the highest possible returns in terms of casualty reduction. If the Bill can achieve this and, at the same time, increase a sense of responsibility in certain drivers, it will have achieved its aim. While I support it wholeheartedly, I hope that the Minister will reflect on the Australian experience which has successfully withstood the passage of time. We can definitely profit from our Australian cousins.
2.9 p.m.
Baroness Gardner of Parkes: My Lords, as the fourth speaker in the debate I was fascinated to notice that I am the third to speak in favour of P plates. The view I hold is not new; we debated it at great length under the previous road traffic Bill when marvellous statistics from Northern Ireland were produced where R plates, meaning "restricted", are used. I also quoted the Australian experience which has just been fully dealt with by the noble Viscount. I am delighted to hear him producing that case.
The noble Lord, Lord Clinton-Davis, also brought out the point that we need plates for the identification of the driver. I welcome the Bill, but the one big gap in it is that it creates a probationary period but does not in any way identify the driver. When we debated the matter in the mid-1980s with the last road traffic Bill, I made the point that it is not just the tearaway drivers that we want to identify. They have been clearly described by the noble Lord, Lord Astor. We must also remember the timid
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driver. Many new drivers find it frightening suddenly to lose their L plates and feel that everyone towers above them, terrorising them on the road. When the young driver whom I quoted last time who was in that position, and who asked me to take the point up, found that there was no hope of achieving the provision, she put in her back window a large notice saying "New Driver". She found that of enormous benefit because people did not get so impatient if she was making her turn more slowly, was slow moving off at the lights or made the car jump forward when she tried to move off. All those actions are poorly tolerated by drivers who, on the whole, are far too impatient.
We should have either P plates as in Australia, with the P being appropriate for "probationary", or R as we have in Northern Ireland, if we wish to continue with the UK practice rather than the P plate.
The point was also made about the re-testing period. There should be a case for a difference perhaps in the colour or with a P for the normal two years and R for the driver who is restricted while waiting to be re-tested. It is important for other drivers to know the status of a driver.
I do not intend to speak any longer, it is Friday and another Bill is also due to be discussed. I support the Bill and hope that it will be possible to amend it to include some kind of identification plate to identify drivers in their first two years.
2.12 p.m.
Lord Brougham and Vaux: My Lords, I too should like to thank my noble friend Lord Astor for introducing this Bill to your Lordships' House this afternoon and for the clear explanation of the Bill. I welcome the proposal within the context of the four initiatives which have the well-recognised blend of the carrot and the stick, aimed at influencing driver behaviour, specifically new driver safety, as reported in the Department of Transport's road safety report 1995.
However, I urge the department to raise its sights when considering the development of the attitude of young drivers. Again, I welcome the proposal to provide better road safety education for the 16-plus age group in schools and colleges but urge both the Department of Transport and the Department for Education to work together to enhance the provision of suitable material and general support for 12 to 16 year-old children. I ask my noble friend how the Scottish Education Department is progressing with the guidelines for five to 14 year-olds, and how the evaluation of educational material for 10 to 14 year-olds, both mentioned in the road safety report, is progressing.
We are all familiar with the excellent, well-established programmes that are available within infant and junior schools to help children learn to cross the road and ride a bicycle. But programmes of this scale are not yet available to prepare young adults for the challenge of preparing to learn to drive. I must emphasise in the strongest possible manner that the attitude and behaviour of young adults towards driving are being formed much earlier than the Department of Transport appears to recognise within its strategic plans.

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As chairman of the European Secure Vehicle Alliance, which is a network of manufacturers, insurance companies, police and many others who are committed to reducing vehicle crime, I can confirm that a working group has for the past three years sought routes to develop the relatedness between the national curriculum and the driving test.
England and Wales have the most serious theft of vehicle problem in the world—and yet we also enjoy one of the best road safety records in the world. Furthermore, vehicle crime is far more a young person's offence than is total offending in general. Over one-third of known vehicle crime offenders are aged 16 and under, while a further third are aged 17 to 20.
The recent curriculum developments proposed by Sir Ron Dearing have provided an opening at Key Stage 3, and especially at Key Stage 4, to introduce new teaching initiatives. I urge the Government to take the initiative in encouraging the development of material aimed at developing a responsible attitude towards vehicle safety and offending for pre-16 year-old boys and girls who have an interest in learning to drive.
Many young adults do not value the opportunity to continue in full-time education from 17 onwards but seek to become more economically active. As the Department of Transport report highlights, motorcycle registrations have fallen sharply, especially for young men; young adults' expectations are to learn to drive at the earliest possible opportunity. Surely for these young citizens we should aim to provide a pathway which offers them, as part of their mainstream education, the opportunity to prepare to become responsible motorists.
As an advanced driver for the past nine years, I welcome this Bill.
2.16 p.m.
Lord Monson: My Lords, the present emotional climate of opinion—the Zeitgeist, if you like—is such that anyone who expresses the slightest reservation about the desirability of imposing fiercer punishments for almost any offence one can think of faces an uphill task. Nevertheless, plod uphill this afternoon I must. This Bill is well-intentioned. It has a great many merits. However, I contend that it goes a little too far in some respects and that, above all, it is dangerously inflexible.
Under what circumstances are recently qualified drivers or motorcycle riders likely to acquire penalty points? In the first instance it is when they have insufficient basic driving skills—when they slip through the driving examiner's net, as it were. In this minority of cases, the provisions of the Bill would be totally appropriate and wholly worthwhile.
The second instance is when those recently qualified drivers have all the basic skills and all the knowledge of the Highway Code that is necessary to pass the test, but have not acquired the very different skills that we all know are necessary to drive safely at speed on dual carriageways and motorways. Those skills come only from driving mile after mile day after day. In other words, they come from building up a body of experience. In these particular cases, the provisions of the Bill could be positively harmful in that they could reduce the
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opportunity to drive long distances day after day and thereby progressively acquire the requisite intuitive skills which cannot be taught by any driving school.
Here I agree with noble Lords who spoke on the desirability of having a probationer's plate with a possible speed limit in the order of 50 or 60 miles an hour. Something of that sort would go a long way to remedying the particular instance that I just advanced.
Thirdly, there are circumstances where people are perfectly skilled drivers—possibly extremely skilled in a technical sense—but where youthful impatience, arrogance or the desire to impress or show off (testosterone, if you like) leads them to drive dangerously and recklessly. I am well aware of the statistics quoted by the noble Lord, Lord Astor, and others. But here again, it is difficult to see the relevance of making those people take another driving test. At Second Reading in another place, someone spoke of the humiliation that would be visited upon them if they were made to take the test again. I suppose that there is something in that. But surely the driving test should not be used purely as a punishment. Appropriate punishments would be disqualification, fines and, in extreme cases, imprisonment.
There is a quixotic, random nature about the penalty points system itself, which is doubly random in the case of speeding. If we are totally honest, most of us will admit to breaking the law in that regard several times a week. But equally, we like to think that we only do so when we consider subjectively that it is safe or relatively safe to do so in the circumstances. Those of us who are experienced drivers, as many of us are, know that it is much less dangerous to drive at 95 miles an hour on a totally deserted motorway at 4.30 a.m. on a summer morning than it is to drive at 40 miles an hour in a crowded shopping area. But the law has to be objective and not subjective. Accordingly, the first offence attracts a recommended six penalty points and the second offence, which is by far the most dangerous one, only three points.
There is also an undesirable rigidity in the penalty points awarded for failing to stop after an accident. If the accident is serious, involving death or injury to human beings or to animals in some cases, the maximum of 10 penalty points is fully justified. Indeed, one could argue that it is a little on the low side. But if the accident is trivial, for instance, knocking a flake of paint the size of a thumbnail off a farm gate when reversing in a country lane—I have established that that is, technically and legally an accident—the minimum number of penalty points that can be awarded—namely, five—seems much too high.
The point that I am trying to make is that the penalty points system is something of lottery, which does not necessarily reflect the degree of danger, cost or inconvenience caused to other road users or members of the general public by the poor behaviour in question.
Nobody so far has mentioned, either in this House or another place, the effect that the Bill, as unamended, would have on people who have to drive for a living. A few years ago I moved an amendment to the Criminal Justice Bill to raise the minimum period of disqualification for drivers convicted of causing death by dangerous driving. The amendment was opposed by the Government Front Bench and even more by the Labour

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Front Bench. I exonerate from my strictures the noble Lord, Lord Clinton-Davis, who was not covering that particular department at that time. It was opposed by the Labour Front Bench mainly on the ground that it would be unfair to those whose livelihoods depended on the possession of a driving licence. Fortunately, the Back-Benchers of all parties, not least the noble Lord, Lord Houghton of Sowerby, together with the Liberal Democrat Front Bench, fully supported my amendment and it was eventually accepted, although the Government insisted upon watering it down so that the minimum period of disqualification was reduced from three to two years.
However, it is somewhat illogical to argue that those whose livelihood depends wholly on being allowed to drive should be disqualified for as little as one year if they have killed someone as a result of driving recklessly or drunkenly, but that they should be disqualified for an effective minimum of three months, which is the minimum time needed to obtain another driving test, if they have merely broken the speed limit by 10 miles an hour and perhaps scraped a little paint off a farm gate.
The Bill is well intentioned and essentially to be welcomed. But it is too rigid and inflexible allowing the courts, as it does, no discretion whatever. Let it be amended so as to allow the courts either total discretion or limited discretion, for example, where the driver has accumulated between six and eight penalty points. It is always undesirable, unnecessary and dangerous to hamstring the courts and limit their discretion. I am sure that none of us wants to repeat the grave mistakes of the wholly inflexible Dangerous Dogs Act.
2.25 p.m.
Lord Lucas of Chilworth: My Lords, at the outset I remind your Lordships that I am a vice-president of RoSPA; I am also on the public policy committee of the Royal Automobile Club; and a member of a number of societies and institutions that deal with transport and driving matters. There is no other interest to which I should draw your Lordships' attention.
I give a warm welcome to the Bill. As my noble friend Lord Astor explained, I see it as part of a package of measures. While it is interesting to hear not only from the noble Lord, Lord Clinton-Davis, but also from my noble friend Lady Gardner of Parkes—the doughty proponent over a number of years for the using of other plates on the backs of motorcars—I say to the noble Viscount, Lord Simon, and others, that I hope my noble friend Lord Astor will resist any temptation to table amendments extending the scope of the Bill.
Over the years that I have been in your Lordships' House, when we have discussed motoring matters it has properly excited all those who took part. We always hear a wide range of views. The noble Lord, Lord Monson, discussed periods of disqualification. We have heard about different forms of plates, the Australian experience, education and a number of fair suggestions put forward by the noble Lord, Lord Monson. But I should like to think that the Bill is part of a package aimed at changing the culture, not only of existing drivers, but also and most particularly of the new driver.
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A number of figures were quoted. I was given a fair share by the RAC, some of which have been mentioned. My noble friend Lord Astor and the noble Viscount, Lord Simon, spoke of the percentage of licence-holders who are victims of a disproportionate number of accidents. One of the RAC's findings, which was somewhat surprising, was that 17 to 20 year-old males rated their ability to drive a good deal higher than in fact it was. That comes from the macho feeling that, "We can do it as soon as we have a licence".
Around 54 per cent. of young drivers admitted to an immediate deterioration of skills as soon as they obtained their licence—the devil-may-care attitude of "I have got it and off I can go". The Bill goes a long way towards saying to that group of people, "If that is so, you run a real risk of losing your licence for a period of time". The Bill must have a salutary effect. I do not want the effect to be humiliating, but new drivers have to accept that they must be even more careful because they face the risk of revocation of their licence.
It is interesting that young people are convicted of violations such as unofficial racing, breaches of blood alcohol limits, racing oncoming vehicles for a one-car gap, jumping red lights and disregarding speed limits. Those are all fairly serious offences and must be discouraged. I was going to refer to the Automobile Association findings in conjunction with Southampton University, a matter raised by the noble Lord, Lord Clinton-Davis. I endorse those findings and underline what the noble Lord had to say.
RoSPA's evidence deals with education, a subject raised by the noble Lord, Lord Brougham and Vaux. Attitudes have to change, and we have to bring in education at an earlier stage, but we should not attach that little parcel to the Christmas tree of this Bill, tempting as that might well be.
I wish to ask three questions. I am happy to have answers on another day, particularly as today is Friday, and it may well be that those questions might be better pursued by way of probing amendments at a later stage. What is the reasoning of the promoters of the Bill in conjunction with the Department of Transport for this mystical two years? New drivers, particularly the young, tend to be those who do a considerably lower annual mileage than the majority, which is around 11,000 to 12,000 miles. Young people tend to do less than that largely because they borrow their parents' cars and, of course, they are on holiday for a shorter period of the year. What is the mystique of two years?
My second question relates to the penalty of six points. In his introduction my noble friend Lord Astor spoke about points and I shall have to read carefully what he said. I think he said that this points limit would enable the driver to have as many as four speeding offences. The penalty points liabilities show me that speeding offences which are dealt with by fixed penalty can attract three points. Speeding offences which are dealt with by summons can attract three to six points. I should like to know why six points has been determined. Why should there be two chances of getting away with something? Why not just the one? Again, I would not wish to put

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down an amendment on that point and force a Division in your Lordships' House at a later stage because I should like the Bill to go through without any great problem.
My final question concerns a technical point which arises in Clauses 4 and 5 of the Bill. On page 3, line 24 and on page 3, line 38 we see the description "a full licence". A full licence is normally that which enables a driver to drive a number of vehicles—tractors and goods vehicles as well as light motor cars or motor cycles. I wonder whether the revocation and the restoration, particularly in the case of Clause 5 where the Secretary of State will be required to grant a person free of charge "a full licence", is right. Do we not mean a licence in the same category or the same class as that which has been revoked? If the driver has to be given a full licence without any further testing or experience, he can get a licence for a vehicle for which he has not undergone instruction or testing. I assure my noble friend that I am quite happy to be given an answer at some other time.
I give a warm welcome to this Bill. I hope that your Lordships will see that it goes through this House with as little delay as possible and that it arrives on the statute book as quickly as possible.
2.35 p.m.
Lord Chesham: My Lords, I too thank my noble friend Lord Astor of Hever for bringing forward the Bill in this House. I welcome and support the Bill as far as it goes. It is a step in the right direction. However, I agree with the noble Viscount, Lord Simon, that the Bill does not go nearly far enough to tackle the problems. If we do go far enough we will undoubtedly have the old civil libertarian arguments trotted out, as they were in the past over speed limits, the use of seat belts, alcohol limits and breath testing. If none of these measures had been translated into law we would have more room on our roads but a lot less room in our cemeteries.
I sound a word of warning here. We must ensure that there is stricter court or police action against those caught driving under age or without a licence. If just a caution is given, which I understand is common these days, a young person may prefer to drive without a licence and hope not to get caught rather than be subjected to the more rigorous proposals of this current and, I hope, future legislation. I well remember my father saying to me—some of your Lordships will know that he was very much involved in transport matters—"You will never find one way to reduce the death toll by 1,000 lives and the correlated number of serious injuries; you have to find 100 ways of saving 10 lives".
Some of those ways may be indicated by the remarks which follow. To some extent they are covered by remarks already made. I would like to see verbal or computerised testing of a candidate, prior to his receiving a provisional licence and being let loose on the road, to indicate general knowledge of the Highway Code. Serious consideration should be given to the reduction, preferably to zero, of the permitted alcohol limit for a probationary driver and to lower speed restrictions where appropriate. There are obviously areas such as motorways where to introduce slower-moving traffic would be a severe congestion factor.
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The noble Viscount, Lord Simon, and the noble Baroness, Lady Gardner of Parkes, have confirmed my belief in P plates, which I gained in Australia. The concept behind a P plate is not generally understood, I believe. It is that other drivers will be aware that the P driver has satisfied an examiner that he has adequate skills to continue to learn unaccompanied. This is all that passing the driving test can mean in this country until the test itself contains an element of motorway driving or night time driving. I am sure that the same old arguments will be trotted out that there is no statistical evidence that shows that P plates work; we have a different culture to countries where P plates have been accepted, etc. I do not know of any statistical evidence which says that they do not work or that they are detrimental. If there is such evidence we should obviously get rid of L plates as well. At least in that situation the driver is accompanied by a driver with more experience. I do not understand the reluctance to P plates, bearing in mind the reluctance, for example, to bring in seat belt legislation. No one in their right mind would suggest that the seat belt regulations should now be revoked.
If there is not a problem with inexperienced drivers, this Bill is not necessary. Let us accept that there is a problem and get on with tightening things up. If you believe that there is no problem, I suggest that you try to insure a car for a young driver or try to nominate a young driver for your own motorcar. Look at the premium quoted and then try to tell me that there is no problem. The premium is an assessment of risk and gives a clear indication that we should do much more than is suggested in this modest Bill to tackle the problem and to help the young, inexperienced driver to help himself.
I do not recommend going quite as far as is suggested in a press cutting relating to Dubai, which is headlined:
"Reckless drivers flogged in public".
That is probably going a little too far. However, let us stop pussyfooting around and create some real action which will produce some real results.
2.40 p.m.
Baroness Miller of Hendon: My Lords, I am grateful to my noble friend Lord Astor of Hever for explaining the case for this important measure so eloquently. I strongly endorse all that he said about its value. I also pay tribute to my honourable friend the Member for Rochford, Dr. Michael Clark, for introducing the Bill in another place and giving us the opportunity to legislate in this Session.
My noble friend has set out very clearly how the legislation will work in practice. However, it may help the House if I try to set the measure in a wider context while replying to some of your Lordships' questions, where I am able to do so. Before I do that, perhaps I may comment on a concern that was raised by the noble Lord, Lord Clinton-Davis, at the beginning of the debate when he asked why this is a Private Member's Bill as opposed to a government Bill. I shall pass on his message and no doubt everyone concerned will take note of what he said. I am sure that it would not be the Government's intention to restrict the ability of any Member of your Lordships' House or of another place to bring forward such Bills in any way that they wish.

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As your Lordships will know, the Government have set a road accident casualty reduction target of one-third by the year 2000. I am pleased to say that we are well on our way to achieving this target. Indeed, we have already exceeded the target in terms of both fatal and serious casualties, with six years still to go. We have made great strides in reducing casualties among pedestrians, cyclists and motorcyclists. But we still have a long way to go because of the persistently high number of slight casualties, particularly among car drivers and passengers. Improving safety among newly qualified drivers is a priority because their risk is disproportionately high.
The Department of Transport has for some time been running a major research programme to examine how to improve the safety of new drivers. It has consulted on a number of measures which, on the basis of this research, seemed likely to be most effective. These include measures to improve education and training in road safety, both before, during and after the period of learning to drive. Taken together, we hope that they will create a new climate of safety consciousness among new drivers. This may be ambitious, and it will not be easy, but it is certainly possible.
On 6th February this year, my right honourable friend the Secretary of State for Transport launched a training scheme, known as "Pass Plus", for drivers who have recently passed the L test. On completing the scheme, these drivers are entitled to more favourable premiums from a number of leading insurance companies. I am glad to say that the scheme is already proving very popular. Over 10,000 approved driving instructors have registered with the Driving Standards Agency to provide instruction, and in the three months since then some 2,500 new drivers have already taken advantage of, and completed, the course.
The Department of Transport has also prepared, as my noble friend Lord Brougham and Vaux mentioned, an educational package for the 16-plus group which is designed to encourage them to think about the responsibilities of driving and car ownership at an age when they are no doubt thinking about obtaining their own transport, even if they are not all quite old enough to apply for a licence themselves. The package will be based on the BBC "Drive" programme, which Her Majesty's Stationery Office plans to market as a video, with specially commissioned notes for teachers and pupils. We hope that it will be ready for publication in time for the next school year.
We are also planning to improve the driving test itself by introducing a substantial theoretical element in addition to the practical test. The noble Lord, Lord Clinton-Davis, asked when that would be possible. In a few days' time the Minister for Road Safety will make an announcement about the form which the theoretical test will take. When the changes are introduced in July 1996 learner drivers, if they want to pass their test, will not only have to master the practical skills of driving but will also have to give much more thought to what driving actually involves. Any re-testing that is required by the provisions of the Bill will include the whole of the normal driving test; that is the theoretical and the practical. The Bill is therefore not a piecemeal measure but will form part of a
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coherent package of measures to promote the safety of new drivers. It so happens that none of the other measures that I have mentioned requires primary legislation.
My noble friend Lord Brougham and Vaux suggested that the Government could be doing more to promote road safety among the younger age group. I can assure him that by focusing on the 16-plus age group we are not ignoring those who are younger. They are at an impressionable age and are also developing their personal beliefs and values. A number of local authorities and organisations such as RoSPA have developed suitable teaching material and the Department of Transport is drawing up a computer database of road safety material related to the national curriculum Key Stages 3 and 4. I am pleased to be able to tell my noble friend that the Department of Transport works closely with the Department for Education and an inter-departmental working group has been established which includes the Scottish, Welsh and Northern Ireland offices.
My noble friend Lord Lucas of Chilworth asked why the Bill provides for a probationary period of two years rather than three and why it allows drivers to reach six penalty points before their licences are revoked. We should bear in mind that three years is the period during which any driver is likely to be disqualified if he reaches 12 penalty points. When the Government consulted on the new driver safety, the responses on the probationary period were fairly equally divided between one year and two and there was little support for a period longer than two years. As regards the penalty points, a single serious speeding or a careless driving offence can be enough to put a new driver over the six-point threshold. It would seem a little harsh to penalise a new driver for a single three-point offence, which could well be the result of inexperience rather than deliberate misbehaviour. I expect the noble Lord, Lord Monson, will be pleased to hear that. The Magistrates' Association specifically favoured six points within two years and, after all, magistrates have to deal with traffic offences on a regular basis. The Government are therefore entirely happy with the formula as it stands.
My noble friend Lord Lucas of Chilworth also asked what "full" licence meant. A full licence simply means a licence which is not a provisional licence. My noble friends Lord Chesham and Lady Gardner and the noble Viscount, Lord Simon, raised a number of interesting points. We are introducing a theory test but it will not have to be taken before being allowed to drive as a learner. Our experts consider that it is better that driving theory and practice are taught alongside each other because they reinforce each other.
We have considered very carefully a lower drink-drive limit for new drivers, and I am prepared to believe that that has been very effective in Australia and elsewhere, but in Britain few drink-drive offences are committed within the first two years of driving. The worst age-group of offenders are those in their mid-twenties, most of whom have quite a few years' driving experience. It would give a very confusing message to allow them to drink more just at the stage when they become more likely to exceed the current drink-drive limit. And it would also

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make enforcement of the drink-drive law much more complicated for the police, who will not know for how long a person has been driving until they see the licence.
My noble friend made the point also that it might be better to drive without licence at all. That is not so because the DVLA holds a shadow licence and any points incurred before receiving a licence will be shown on the provisional licence.
We have also looked at speed restrictions on new drivers. There is a 45 mph restriction in force in Northern Ireland, but it is not well observed, and there is no conclusive evidence that it reduces accidents for new drivers. That limit would be rather low for most inter-urban roads in mainland Britain, and might cause other drivers to overtake dangerously. In any case, the majority of new driver accidents occur on built-up roads with a 30 or 40 mph speed limit. And drivers have to learn to drive at speeds of up to 70 mph at some stage. We must make sure we are not simply postponing the problem to a later date. Indeed, my noble friend Lord Chesham also complained that the practical driving test does not cover motorway driving. He cannot have it both ways. On that point, I should add that motorway and night-time driving are both included in the "Pass Plus" syllabus, which I mentioned.
Many noble Lords mentioned P and R plates. Most countries which impose restrictions on new drivers require them to display some kind of plate—in Australia it is P for "probationary"; in Northern Ireland, R for "restricted". Countries which do not impose these restrictions but apply tougher sanctions if offences are committed—as this Bill aims to do—generally manage without such plates. So far as I am aware, there is no evidence from anywhere in the world that the plates themselves contribute anything to road safety, though undoubtedly they make the restrictions easier to enforce. I have explained why the Government rejected the case for various restrictions, and the case for a probationary plate on its own is still, it seems, not proven. In any case, the really irresponsible drivers would simply not display the plates. I listened with interest to what my noble friend Lady Gardner said about timid drivers. When I first passed my test, I was just like that but I left on the L plate. No doubt my noble friend's friend could do that if she wanted to.
I agree with my noble friend Lord Astor that the main purpose of this Bill is to deter the minority of new drivers who offend. They are a minority. There are almost 1 million new drivers each year, but fewer than 20,000 currently attract six or more penalty points in the first two years after passing the test—the probationary period. We naturally hope that the numbers will go down even lower as a result of this Bill. It will surely be a powerful deterrent for offenders to know that if they break the law by their foolish or aggressive habits, they will once again have to display L plates, be accompanied while driving and, above all, have to pass another driving test.
The noble Lord, Lord Clinton-Davis, asked me several questions. In particular, he talked about anomalies. I want to make sure that I do not answer him incorrectly. So far as concerns non-British licences, the Secretary of State does not have the power to revoke them. Therefore, that
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would be another matter. Certainly, I am advised that a person cannot hold two licences at once. I see that the noble Lord wishes to intervene. I give way.
Lord Clinton-Davis: My Lords, I am much obliged. I believe that it is possible to hold an Irish and a British licence.
Baroness Miller of Hendon: Yes, my Lords; but I thought we were talking about French and other foreign licences. However, if I am incorrect in that respect, I shall write to the noble Lord.
The noble Lord referred to various anomalies; indeed, there were so many that I rather lost count of them. I do not know whether it would be better to deal with the anomalies which would entail the Bill returning to another place for further consideration, or whether it is much more important to get this Bill on the statute book and deal with any problems which may arise in some later road traffic Act. All I can say is that, at this stage of the Bill, my noble friend the Minister will undoubtedly discuss the matter with the Bill's sponsors.
Lord Clinton-Davis: I am sorry to interrupt the Minister again, but the issue really emphasises the point that I made at the very beginning of my remarks. Such Bills tend to come to us about this time of the year, or a little later, and we are always told, "If you start amending the Bill now, you will endanger it, because it will have to return to another place". That illustrates the mischief of the procedure. When it is a government Bill it ought to be dealt with as such. I say that with the greatest of respect to the noble Lord, Lord Astor of Hever. Indeed, it is one of the inhibiting factors which is imposed upon this Chamber. I hope that the Minister will, once again—indeed, it has been done many times on both sides of the House—indicate that there is some cause for concern in that respect to the Secretary of State.
Baroness Miller of Hendon: My Lords, as I said at the outset, the matter will be brought to the Secretary of State's attention in any event. I can assure the noble Lord, Lord Clinton-Davis, that the Minister will undoubtedly discuss the matter that he has raised with the sponsors.
Our aim should not be to mete out punishment or testing for its own sake, but to promote safer drivers and reduce accidents, particularly among the young. There is a further government commitment, under the "Health of the Nation" initiative, to reduce accidental deaths among the 15 to 24 age group by 25 per cent. by the year 2005. Road accidents are the most common cause of death among that age group, to which most new drivers belong. The Bill will help towards achieving that target as well as the more specific target for road casualty reduction which I mentioned earlier.
The Bill has the Government's full support, and I commend it to your Lordships.
Lord Monson: My Lords, before the Minister sits down, can she say whether the Government have any objection to giving the courts a measure of discretion, as legislation of this sort normally does?
Baroness Miller of Hendon: My Lords, the Bill before the House is a very simple and straightforward piece of legislation. I would not want to extend the discretionary

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powers of the courts while I stand here at the Dispatch Box. However, I shall look into the matter for the noble Lord, Lord Monson.
2.58 p.m.
Lord Astor of Hever: My Lords, I am most grateful to all noble Lords who took part in today's debate. Some very pertinent points have been made. I was interested to hear from my noble friends Lord Chesham and Lady Gardner and, indeed, the noble Viscount, Lord Simon, who addressed the subject from an Australian point of view. I am especially grateful to my noble friend the Minister for putting the Government's point of view so clearly and for dealing with many of the points raised by other speakers.
I should like to thank the noble Lord, Lord Clinton-Davis, for his kind words. I am sure he will agree that his concerns and questions were ably answered by my noble friend the Minister. The noble Lord asked whether one could hold French and British driving licences. Having worked in France for 11 years, my personal experience was that I had to hand in my French licence the minute that I returned to this country and became a British resident.
I should also like to thank my noble friend Lord Lucas who spoke with all his experience on the subject. I am sure that he, too, feels that his questions were well answered by my noble friend the Minister.
As my noble friend the Minister said, we are, as a society, making great strides in reducing fatal road accidents, but we have a very long way to go. It is a staggering thought that the number of deaths on our roads is equivalent to the death of every occupant on a fully-laden jumbo jet about once every six weeks.
This is a subject about which I know my noble friend Lord Brougham, who does so much to counter vehicle crime as president of ESVA, feels very strongly. I cannot pretend that one measure on its own will transform the way our young drivers behave on the roads, but I hope that it will act as a powerful deterrent for those drivers who are tempted to break the law or drive without consideration for others. The debate today has shown there is a great deal of support in this House for the Bill. I hope it will be given a speedy passage through this House and onto the statute book.
On Question, Bill read a second time, and committed to a Committee of the Whole House.

Human Tissue (Amendment) Bill [H.L.]
3 p.m.
Lord Finsberg: My Lords, I beg to move that this Bill be now read a second time. Before my noble friend Lord Clinton-Davis leaves us, I hope I may say that this may be a poor Bill but it is mine own.
"A little neglect may breed mischief … for want of a nail, the shoe was lost; for want of a shoe the horse was lost; and for want of a horse the rider was lost".
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But for want of a kidney, a life was lost. So might Benjamin Franklin have ended his maxim. How many lives could be saved by simple transplantation? How many people could have their sight restored by transplants? Hundreds of our fellow citizens die each year for lack of a new organ. I am informed that there are some 6,000 patients awaiting transplants to save their lives or to improve their quality of life.
Why have I introduced this Bill? I decided to leave my body, for what it is worth, for research purposes or for transplants, and to put that in my will. I only recently discovered that that express decision in my will could be frustrated by means of any member of my family or others objecting to it. My wife is in the same position. However, if she did not hold a similar view, she could say "no", or I could say "no" if she predeceased me. I find that an unacceptable state of affairs. Of course I understand the emotions of relatives when a loved one has died, but I suggest that if they try to overturn or interfere with a firmly expressed wish that has been made before death, that is showing disrespect and unkindness towards the person who has died who was fully conscious of the decision he or she wanted to take, and have taken after death.
I am afraid that, although I understand some people's deep emotions on the subject, I do not believe that they should be allowed to override the express wish of the deceased. It is therefore this one simple issue that I wish to see changed so that a donor's wishes would be paramount. The permissive expression in the 1961 Act should be changed to a mandatory one. Clause 1(4) seeks to make this wish crystal clear.
I wish to explain in a little more detail what the Bill, as drafted, seeks to do; namely, to impose an obligation on the person in charge of a body to carry out the wishes of the deceased with regard to organ donation, by amending the Human Tissue Act 1961. As I have said, this is achieved in Clause 1 by inserting the word "shall" in place of the more equivocal "may". By deleting paragraph (b) in subsection (2) and inserting a new subsection (3A) the Bill seeks to do what I have suggested, which is to stop any subsequent intervention to prevent the tissue donation. Paragraph (a) remains because it allows for a change of mind on the part of the person who is considering the donation of his own tissue.
The obligation is also subject to the provisions of subsections (5), (6), and (9) of Section 1 because they deal with the understandable possible need for an inquest by a coroner or, in Scotland, a procurator fiscal, and the exemption of someone who is charged with the care of the body only for its burial or cremation.
I know that the NHS organ donor register is doing tolerably well. Up to April some 150,000 people had joined it. However, I wonder how many of them realise, having signed and carried that small card, that it is no better than a piece of waste paper if someone objects.
The Bill has the support of my noble friend Lord Walton of Detchant, who apologises for not being present. He is abroad. He speaks with all the authority of a former chairman of the General Medical Council. The Bill also has the support of the British Medical Association. The council of the BMA, upon the recommendation of its medical ethics committee, agreed that a donor card can be

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considered an advance directive which cannot be vetoed by relatives. Therefore the Bill has widespread public support, and support among those in the medical profession about whom there has occasionally been doubt as to whether they all want this measure.
I hope that the Bill will receive a Second Reading and will proceed as soon as possible so that there is a chance of it passing into law this Session. I commend the Bill to the House.
Moved, That the Bill be now read a second time.—(Lord Finsberg.)
3.6 p.m.
Baroness Gardner of Parkes: My Lords, I am very pleased that my noble friend Lord Finsberg has brought the Bill before the House today because when it becomes law it could do so much to enhance the lives of those whose quality of life and often their very lives depend on receiving a transplant.
Until I discovered that the Bill was before us I did not appreciate that at the moment of your death your body no longer belongs to you and the consent of others has to be obtained to honour your wishes. The noble Lord explained that point very well.
The donation of corneal transplants seems to be less fraught, and corneas are more willingly given than any other organ. Perhaps that is because people feel that it is a less invasive procedure or because they are conscious of how important sight is to every one of us.
Let us stop and think about those hoping—longing—for an organ to be available. At the Royal Free Hospital, the NHS trust of which I am chairman, we carry out a large number of kidney and liver transplants each year. We presently have 160 patients waiting for a kidney. Last year we were able to carry out just 41 kidney transplants, one-quarter of those needed. That was due simply to the lack of donor kidneys.
Stop and think a moment more about renal dialysis and the procedures involved. Each year renal dialysis costs the NHS per patient five times more in a hospital and two to three times more at home than the necessary and continuing care of a patient who has had a kidney transplant.
Think again. Costs are not the important feature of treatment. Receipt of a new kidney transforms the whole way of life of a patient. The quality of life is restored, and the time, strains and even the hazards of constant dialysis are no more.
The waiting list for kidney transplants has risen in a linear fashion in the past 16 years. Kidney transplants peaked in 1990 and numbers have fallen since then due to a lack of donors.
As a dentist I am aware of the great increase in maxillo-facial work since the introduction of seat belts and crash helmets. There are now fewer fatal traffic accidents, and I welcome that. There has been an increase in voluntary donors, but not an equivalent number. So it means that we need more voluntary donors. The Bill goes some way towards ensuring that those who intend their organs to be offered will have their wishes met.
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I should like to see introduced in the UK, with the essential safeguards, the reverse system whereby a patient would have to opt out rather than opt in to organ donation. Relatives and loved ones are often in a highly emotional state at the moment of death. Even when death is expected, it always comes as a shock to those who suffer the loss. At such a sensitive moment, it is inappropriate that anyone should be asked to make a calm, clear, rational decision about organ donation. That would be the great merit if the Bill becomes law. I support it.
3.10 p.m.
Lord Rea: My Lords, the subject of this small but useful Bill is not a party matter. Therefore I speak from a personal viewpoint. However, I could hazard a guess that even if the Benches behind me were full, and it was Question time on a Tuesday instead of a Friday afternoon, the great majority of noble Lords on those Benches would accept the Bill and thank the noble Lord for introducing it.
As the noble Lord explained, there is a serious deficiency of organs for transplant in the UK compared with the need. The noble Lord gave the figure of 6,000 people—according to my information, the figure is 5,700; it is near enough —who suffer from conditions for which organ transplants work best, and in many cases are the only solution to their problems.
In October 1994 there were 4,976 patients waiting for kidneys, 282 for hearts, 164 for lungs and 112 for livers as well as several hundred waiting for corneal grafts. In 1993 185 people died waiting for heart, lung or liver transplants which could have given them years more useful life. Patients with kidney failure in need of transplants can be kept alive with intermittent renal dialysis, but that is a heavy burden on both the patients and the National Health Service, as the noble Baroness, Lady Gardner of Parkes, pointed out from her position as chairman of the Royal Free Hospital trust.
A successful transplant ends that expensive and tedious procedure—it is one which can give rise to a number of complications. As both the noble Lord and the noble Baroness said, there is a huge shortage of donors. People who might previously have died from a number of conditions can now be saved. In particular, the situation arises, as the noble Baroness mentioned, because there are fewer fatal accidents on the roads affecting healthy people. That is one of the effects of the seat belt legislation. From another point of view, that is wonderfully good news. It testifies to the wisdom of both Houses of Parliament in passing the compulsory seat belt legislation 10 or 12 years ago.
Sadly, 30 per cent. of relatives refuse permission regarding patients dying in intensive care units—patients who in life have not expressed a wish one way or another. In 6 per cent. of cases, the medical nursing staff do not even ask relatives, often because to do so would seem too intrusive in the very tragic and emotionally fraught circumstances of such deaths.
However, some countries operate an opt-out rule—Belgium and Austria are examples—in which the patients while living or relatives after death have to register an objection to prevent the organs of a deceased person being used where applicable. Here, and in most other countries,

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the opt-in principle applies before an organ of a deceased person can be used. Either that person in life or relatives after death have to give permission. That means that a number of organs are lost because even if the patient would have been willing, he was not carrying a donor card at the time of death or the relatives cannot be traced. Many in the health professions feel that the opt-out principle should be enacted in legislation in the UK. That would increase the number of organs available for transplant. I tend to think that way, but the arrangement is strongly criticised by many, including a sizeable minority of doctors. That is especially those involved in transplant surgery, because they are face to face with the fraught emotional circumstances surrounding the patient's sudden death or impending death.
The noble Lord referred to the computerised list of donors which was initiated in October last year to supplant the donor card scheme. Sadly the scheme has not been as productive as it might have been. Perhaps the noble Baroness has figures to show how it has improved on the scheme. It is early days yet and it has only been operational for about six months.
The noble Lord's Bill deals with a small group of donors who have indicated willingness to donate organs on their early demise, should it happen, but whose relatives object. The noble Lord did not give an estimate of the numbers, but in principle it seems quite wrong, as he said, for the deceased person's wishes to be overturned. It would be both an affront to that person and a negation of the interests of society as a whole.
Some patients in intensive care units are brain dead, but they can be kept alive by artificial ventilation for days or even years. I can understand how some relatives might object to a patient being kept artificially alive until the right moment for the removal of an organ. But in such cases, if the patient had previously wanted their organs used after death, I feel that the relatives' concerns should not prevent the use of that organ going ahead.
This small Bill is a useful measure which will be of assistance in a small way but perhaps it will point others in a direction which will further improve the supply of organs for transplant. I thoroughly support it and hope that the noble Baroness will give it her approval so that we may give it a speedy passage through the House.
3.18 p.m.
The Parliamentary Under-Secretary of State, Department of Health (Baroness Cumberlege): My Lords, I very much welcome the commitment of my noble friend Lord Finsberg to the increase of organs for donation. As he is a former distinguished Minister in the Department of Health, it is perhaps not surprising but nevertheless encouraging that he has not forgotten the challenges which face the department and indeed the NHS as a whole. One of those challenges is to ensure that there are a sufficient number of donated organs so that very sick people in need of treatment can receive it. In my view, there is no nobler bequest a person can make when they leave this world than the gift of life to a fellow human being.
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I welcome too the opportunity to explain the Government's position. The Government are entirely sympathetic to the aim of the Bill, which is to ensure that after people die their organs are donated in accordance with their wishes. Nor is there disagreement about the nature of the problem which has prompted my noble friend to introduce the Bill—the shortage of donor organs for transplantation. This shortage is a matter of great concern to the Government. We have introduced a series of measures to deal with it, including the computerised NHS organ donor register which we launched last October.
Thanks to advances in medical science and the skill and dedication of surgeons, around 1,600 people receive kidney transplants; more than 300, heart transplants; and more than 500, liver transplants each year. There are more people alive in the UK with transplanted kidneys—11,000 —than in any other European country.
However, as my noble friend Lord Finsberg and the noble Lord, Lord Rea, mentioned there are currently more than 5,000 people waiting for organs—4,000 of them waiting for kidneys. This is due not to lack of money or clinical expertise but to a shortage of donor organs. Vastly improved road accident figures and improvements in neurology have resulted in the pool of potential donors shrinking. Usually, only people who have died from sudden brain injury are suitable. This has led many people to seek ways of increasing the number of donors.
The underlying philosophy of the Human Tissue Act 1961 is that body donation should be a positive, voluntary choice, an act of altruism, the "gift of life" freely given. The Act provides that organs may be taken if the person who has died requested it unless there is reason to believe the request was subsequently withdrawn. The Act goes on to provide that organs may be taken even if that person did not request it unless there is reason to believe either that that person objected or that their relatives object.
A number of people view these provisions, particularly the provision for relatives to object, as restrictive. Indeed, a recent survey showed that about a quarter of usable organs are lost because the family object, although it is almost unknown for them to do so if they know that the dead relative wished to donate. My noble friend, quite reasonably, is looking for ways to overcome that problem.
I am aware that some people support a "presumed consent" or "opt-out" system under which anyone's organs may be taken unless they have registered their objection. This is seen by others as a drastic step, and the Government have consistently opposed it. This is because it is contrary to the philosophy of altruism, is not supported by a majority of the population, and because there is no clear evidence from countries where it is practised that it results in more transplants.
The noble Lord, Lord Rea, asked about the figures for relatives who refuse donation. Last year we carried out a MORI survey which indicated that the numbers refusing are falling. The figure is now 26 per cent. The survey gave a range of valid reasons. We do not believe that opt-out would significantly reduce that figure.
Although an opt-out scheme is not the intention of the Bill, its effect would be similar. It would require any person who had died to be made available for organ donation save where there was reason to suppose that that person

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had objected. Preventing relatives from objecting may look perfectly reasonable but would be difficult to achieve in practice. The medical profession generally takes the view that it has a responsibility for the welfare of those grieving for their loved one. That is why its members invariably consult the family if they are minded to take organs and will not proceed if there are objections. They are unlikely to cease doing so even if the law is changed.
Can your Lordships imagine a doctor trying to take organs against the wishes of the distraught parents of a young person killed in a road accident or a pregnant woman whose husband has just been killed? I am sure your Lordships can imagine the damage that might result both to the family and the organ donor scheme. I understand that this has happened in some European countries.
Doctors also attach great importance to being able to talk to relatives about any factors in a potential donor's life which might make them unsuitable for donation—for example risk of HIV infection. All organs are tested for disease, but with HIV there is a "window period" when the virus is present but may not be detected. Discussion with the family reduces the chances of such infection being unwittingly passed on.
The Government are fully committed to organ donation, and increasing the supply of organs for transplantation is a priority. They share the desire to reduce, and if possible eliminate, objections to donation. We are approaching this problem with a wide range of provisions. We know relatives rarely object if they are aware their loved one wished to donate, so our publicity campaigns, including TV and other media, encourage people to record their donor wishes and inform their families of their wishes.
We agree with my noble friend Lady Gardner that kidney transplant should be the treatment of choice for end stage renal failure, and cost is not the factor holding us back. It is very important to encourage more donors. That is the direction of this range of measures.
As my noble friend Lord Finsberg and the noble Lord, Lord Rea, told the House, people can now record those wishes on the NHS organ donor register at Bristol, which we launched last October. The noble Lord, Lord Rea, asked about the progress of that scheme. Already nearly a million people have applied to join. Because it is computerised, hospitals can obtain details of potential donors instantly and then discuss the donations sensitively with the relatives. On that point, we are encouraging the training of hospital staff in the most effective ways of approaching families.
My noble friend Lord Finsberg was very concerned that those who register may not realise that their views can be overridden. That is why the leaflet about the register that we distribute encourages donors to discuss the issue with their very close relatives.
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We have also introduced a reimbursement scheme for hospitals whose intensive care units look after potential donors, and have established organ retrieval teams to ensure that all donated organs are retrieved. As your Lordships may know, throughout the world the numbers of organ donors are falling. But in the United Kingdom the number of organs per donor is now increasing and of course it is possible for more than a dozen people to benefit from one generous person's gift of life.
In conclusion, I am most grateful for the interest shown in this vitally important subject. I am grateful to my noble friend for seeking to increase the supply of donor organs. That desire is shared by the Government. However, as I explained, a law forbidding objections by relatives will not stop doctors consulting or observing their wishes and it would permanently damage the scheme. We believe that with encouragement more and more people will become committed donors and will ensure that their families know their wishes. The Government will therefore continue to promote organ donation through publicity and education and will encourage people to join the NHS organ donor register and discuss their donation wishes with their families.
Finally, I should like to pay a tribute to all those courageous relatives who, in the midst of trauma and tragedy, have been prepared to look beyond their personal anguish and sorrow and give the chance of life to another. That is truly an act of altruism—the gift of life.
Lord Finsberg: My Lords, I am grateful to those who participated in the debate: my noble friend Lady Gardner and the noble Lord, Lord Rea. I, too, have views on opt-out but did not consider it right to put such a provision in the Bill.
I do not believe that talking to many relatives would disclose much about HIV. The sadness of HIV is kept very much inside the feelings of the individual. I do not think that it would help. I should have thought that the view now of the ethical committee of the BMA would have changed the point of view of the overwhelming majority of the medical profession.
With regard to the issue of grieving relatives perhaps I may tell the House that it had been agreed that when my first dear wife died her organs would be donated; but because she was so riddled with cancer there was no possibility of that. However, I am bound to say that I should not have put my feelings above her wishes. Anyone who tries to say that he or she would do so is, I think, being very insincere and very unfair.
I am grateful for the general interest and support. I hope that the Bill will be given a Second Reading and will proceed. I hope also that the less than enthusiastic point made by my noble friend the Minister may, by discussion, possibly be changed in time for the Bill to become law. I commend the Bill to the House.
On Question, Bill read a second time and committed to a Committee of the Whole House.
House adjourned at twenty-nine minutes past three o'clock.

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