Sitting of 26 November 1996

Preamble
The House met at half-past Two o'clock
PRAYERS
[MADAM SPEAKER in the Chair]
PRIVATE BUSINESS

  KING'S COLLEGE LONDON BILL [LORDS]
  Motion made, and Question proposed,
  That the Promoters of the King's College London Bill [Lords] may, notwithstanding anything in the Standing Orders or practice of this House, proceed with the Bill in the present Session; and the Petition for the Bill shall be deemed to have been deposited and all Standing Orders applicable thereto shall be deemed to have been complied with;
  That if the Bill is brought from the Lords in the present Session, the Agents for the Bill shall deposit in the Private Bill Office a declaration signed by them stating that the Bill is the same, in every respect, as the Bill which was brought from the Lords in the last Session;
  That, as soon as a certificate by one of the Clerks in the Private Bill Office, that such a declaration has been so deposited, has been laid upon the Table of the House, the Bill shall be read the first and second time (and shall be recorded in the Journal of this House as having been so read) and shall be ordered to be read the third time;
  That no further Fees shall be charged in respect of any proceedings on the Bill in respect of which Fees have already been incurred during any previous Session.—[The First Deputy Chairman of Ways and Means.]
  Hon. Members: Object.
  Debate to be resumed on Tuesday 3 December.

  >WESTERN ISLES COUNCIL (BERNERAY CAUSEWAY) ORDER CONFIRMATION BILL
  Considered; to be read the Third time.
Oral Answers to Questions
  DEFENCE

    Armed Forces (Deployment)
    Sir Michael Neubert: To ask the Secretary of State for Defence how many armed forces personnel are currently deployed outside the United Kingdom; and in how many countries. [4309]
    The Secretary of State for Defence (Mr. Michael Portillo): Over 44,000 British service personnel are currently deployed in 18 countries outside the United Kingdom.
    Sir Michael Neubert: Is it not a remarkable tribute to our resolute defence policies and the professionalism of our armed forces that our participation is sought in so many parts of the world? Would not that be put at risk by the "painful consequences" of a Labour defence review?
    With regard to Zaire, now that the Canadians have scaled down their estimate of the number of troops required by a factor of 10, to about 1,000, what are the prospects for the British contingent? Are they required at all?
    Mr. Portillo: It is indeed a matter of great satisfaction that our forces are so highly respected around the world. That is partly due to the fact that it is known that the Government give them full support. The Government have always been committed to sound defences; and the alternative Government, the Labour party, now pays some sort of lip service to our armed forces, but over a long period has been committed to sharp reductions in our defence.
    The situation in Zaire has changed considerably since I last spoke to the House about it, although my hon. Friend the Minister of State for the Armed Forces brought the House up to date last week. Large numbers of refugees have gone home. We have little intelligence about the refugees in the southern part of the Lake Kivu area. We are seeking further intelligence at the moment.
    There has also been a withdrawal of consent from a number of states in the area which we had supposed would be supportive of a multinational force. I think the correct posture for us is to continue to plan on a contingency basis and to make the most of the intelligence that we are busy gathering from the area.
    Mr. Cohen: The Minister told me in May that the cost of these overseas garrisons was £360 million a year. After excluding that amount, and other exceptional payments for nuclear weapons and for Northern Ireland, our defence budget is still £5 billion more than the average of our European NATO partners' budgets. Where does that money go?
    Mr. Portillo: It goes to maintaining the posture that is suitable for a country that takes its international responsibilities seriously. I know that the hon. Gentleman and many others in the Labour party—many who declare themselves and many who do not—want to cut our defences. As the hon. Gentleman says, he wants them cut

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    to the European average, which would mean £4.5 billion or £5 billion off the present defence budget. I see a Labour Member nodding in agreement. Many Labour Members want our defences cut, and if there were a Labour Government I believe that the pressure in that direction from Back Benchers would be irresistible. If a Labour Chancellor of the Exchequer were standing at the Dispatch Box this afternoon, we know that defence would be a soft touch—that is where the cuts would come, as the hon. Gentleman has clearly told me today.
    Mr. Colvin: As some of those deployments were on NATO missions, and as NATO is an organisation that has fulfilled its mission—the ending of the cold war, hardly a shot having been fired—and in the light of proposals to enlarge NATO, when will the countries concerned get together and decide NATO's new mission?
    Mr. Portillo: I believe that there will be a very significant summit on NATO's future in summer next year. I think that that would be the right time for NATO to decide on its new missions and restructuring, to begin negotiations with those countries that are applicants for membership of NATO, to begin serious discussions with them and to unveil a new partnership for peace for those countries that are not going to be members of NATO or are not going to be members of NATO at once. I believe that it will also be the occasion for NATO to strike a new relationship with Russia and probably write down what that new security relationship consists of.
    Mr. William O'Brien: Can the Secretary of State give the House a reason why members of the Gurkha regiments, which must leave Hong Kong to come to the United Kingdom, are not allowed to bring their wives and families with them? Is there a reason why the Secretary of State is taking that attitude?
    Mr. Portillo: I have taken no attitude beyond saying that the Gurkhas find themselves in a completely new position. Now that we are leaving the colony of Hong Kong, Gurkhas will be deployed in the United Kingdom. Those circumstances have not obtained before, so we must investigate carefully what their conditions of service should be.
    We have not declared a position on that. We have said that we must review their conditions of service. That review is under way, and it must address several important topics that have been raised, including whether the Gurkhas can bring their families with them. I give the hon. Gentleman an undertaking that that will be considered thoroughly and without any preconceived position on my part.

    Whittington Barracks
    Mr. Fabricant: To ask the Secretary of State for Defence if he will make a statement on the role of the Whittington barracks, Lichfield, over the next five years. [4310]
    The Minister of State for the Armed Forces (Mr. Nicholas Soames): There are no plans to change the role of Whittington barracks, which houses the Army training regiment, Lichfield, over the next five years.
    Mr. Fabricant: I thank my hon. Friend for his reassuring answer. Will he take the opportunity to praise the role of the Army training regiment, which forges young, timorous boys into hardy men?
    Mr. Soames: It is certainly a pleasing prospect. I join my hon. Friend in paying tribute to the work of the Army training regiments. They do remarkable work, and I am sure that the House will agree with my hon. Friend that they do an excellent job of converting the basic material of new recruits into a well trained and motivated Army of the future. The House will also want to know that the quality of training undertaken in the Army training regiments is second to none in any organisation of its type in the world, and we are lucky with our ATRs.

    Armed Forces Overstretch
    Mr. Eric Clarke: To ask the Secretary of State for Defence what assessment he has made of the problems of overstretch in the armed forces. [4311]
    Mr. Soames: The services continue to be very busy but are well able to meet their current operational commitments.
    Mr. Clarke: Does the Minister agree that it is gross Government incompetence to cut the armed forces by one third and make our troops overstretched? Can he explain that total incompetence?
    Mr. Soames: The hon. Gentleman has been ill briefed and ill served by his hon. Friends in asking so gauchely a question that has an important root—the nature and length of the commitments of our armed forces. As I have said, they are very busy—very pushed. We must be mindful of what we ask them to do. They are highly motivated, their morale is high and they are superbly equipped. Questions such as that make a fallacy of the truth.
    Mr. Key: Notwithstanding the superb performance of our forces in their peacekeeping role, will my hon. Friend always ensure that the country realises that our service men and women are recruited for a fighting and combative role above all?
    Mr. Soames: I am grateful to my hon. Friend. He may be assured that no one in the Ministry of Defence—including my right hon. Friend the Secretary of State, my hon. Friends the Minister of State for Defence Procurement and the Parliamentary Under-Secretary of State—or in any of the training arms of the armed forces is under any delusion in that regard. They know that all our troops must continue to be trained to fight the high-intensity battle and to be able to cope with the most demanding combat conditions as well as some of the new missions, which, as the hon. Member for Midlothian (Mr. Clarke) meant to say, are indeed imposing some strain on the armed forces. Whatever they are asked to do, they acquit themselves superbly.
    Dr. David Clark: The Government have allowed a situation to develop where the Army has a shortfall of more than 5,000 recruits. Why?
    Mr. Soames: The Army is, indeed, approximately 5,000 men under strength. At each Defence Question Time the hon. Gentleman asks the same question in a more gauche and foolish way. On each occasion he comes back with a more stupid question.
    The reasons for the shortfall, particularly in the infantry, are plain. We cannot compel people to join the infantry. It is interesting that the technical arms—the sappers, the electrical and mechanical engineers, the signallers—are almost fully recruited. It is clear that we will have difficulty persuading people to join the infantry. Not everyone wants to be battle-fit 365 days of the year. We have a great deal to do. I am sure that the hon. Gentleman will be gratified to hear that enlistments are on the up and recruiting has increased by more than 35 per cent. compared with this time last year.
    Dr. Goodson-Wickes: I am confident that my hon. Friend will welcome signs that recruitment shortfalls in the Army are levelling out. However, the Government's admirable policies will mean that unemployment will fall lower, which will make recruitment increasingly difficult. In that context, will my hon. Friend give the House an assurance that a decision in principle has been made in his Department to reintroduce the admirable concept of junior leaders? Will he press his Treasury colleagues to ensure that that scheme can be put into action? Perhaps we shall hear an indication this afternoon.
    Mr. Soames: My hon. Friend is right that the junior leaders provided extraordinary technical and military leadership throughout all ranks and sections of the Army. My right hon. Friend and I are studying the scheme closely. We intend to consider whether to establish a pilot scheme of some sort, but clearly such matters must take their place in the priorities of ensuring that our people have the equipment they need to undertake the tasks that face them. I do not dissent from anything that my hon. Friend has said, and his support is extremely welcome.

    Eurofighter
    Mr. Donald Anderson: To ask the Secretary of State for Defence what recent discussions he has had with his German counterpart concerning the Eurofighter project. [4312]
    Mr. Portillo: I met my German counterpart, Volker Rühe, last week. We had extensive discussions on a wide range of subjects, including Eurofighter. He told me that Germany expects to make a decision on participation in the production investment phase and the production phase of the Eurofighter programme early in 1997.
    Mr. Anderson: The Secretary of State will be aware of the Labour party's total commitment to the project, because of its vital contribution to the Royal Air Force, to our industrial defence base and to employment in the north-west and Bristol. Now that there is endorsement from every party in the German coalition, and following his conversations, is the Secretary of State convinced that
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    the period of instability is over and that we can proceed, confident that the project will commence not later than March next year?
    Mr. Portillo: I am pretty confident about the attitude of the German Administration, but the proposals must go through the Bundestag, and one can never take parliamentary votes for granted. We must therefore wait until that happens.
    In the run-up to the election and, as the hon. Gentleman says disarmingly frankly, with so many marginal seats, I fully expect the Labour party to be solidly committed to the Eurofighter before the election. I point out, however, that it is a £15 billion project. I observe that the Labour Benches are full of Members who hate defence spending. They are busy promising to spend money on one programme after another. I know that, if the shadow Chancellor were Chancellor of the Exchequer, he would be looking for cuts in the defence budget. I very much doubt whether Eurofighter would continue under a Labour Government.
    Mr. Wilkinson: Will my right hon. Friend make it clear to Herr Volker Rühe that the export potential of the aeroplane is of crucial interest to his Government and country as well as to us and to the Italians and the Spanish? In that regard, the longer the project's production is delayed, the more vulnerable the aircraft and export markets will be to competition. Finally, will my right hon. Friend remind Mr. Rühe that the United Kingdom spends hundreds of millions of pounds in the Federal Republic through the stationing of British troops in time of peace, not least through the payment of locally employed German civilians?
    Mr. Portillo: My hon. Friend will know that my approach to international negotiations is one of delicacy and sensitivity. Therefore, I naturally urge my German colleagues to participate in the programme, and I hope that they will do so. My hon. Friend expertly employs the right arguments: we want the plane to be thoroughly exportable and, if it is delayed, it will be less competitive because it will be late and more expensive. It would be a false economy to save money on the project now, because it would cost more in the long term. My hon. Friend utilises those arguments admirably.
    Mr. Spellar: It is unfortunate that, after a few good weeks, today the Secretary of State demeaned himself by attempting to undermine the important Eurofighter project with a petty political issue. Will he take the opportunity to redress that mistake by joining me in extending congratulations to British Aerospace and its work forces on their excellent work developing the Eurofighter? Will he convey to his German counterpart at their next meeting the strong views of both his Government and their successors that the production stage should commence as quickly as possible?
    Mr. Portillo: The hon. Gentleman must not think that British industry is naive: it knows what Labour Members of Parliament think. British industry players can read the motions put down at Labour party conferences, and they are not taken in by Opposition Front Benchers' Johnny-come-lately attitude to defence.

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    My hon. Friend the Member for Ruislip—Northwood (Mr. Wilkinson) referred to defence exports. The industry can read perfectly clearly the Labour party's attitude to arms sales and arms exports. It knows that Labour is strongly committed to global disarmament, and then where would our defence exports be? The hon. Gentleman must not assume that he has taken in British Aerospace or any other leading British company.

    RAF Equipment
    Mr. Sweeney: To ask the Secretary of State for Defence what plans he has for RAF equipment upgrades over the next three years. [4313]
    The Minister of State for Defence Procurement (Mr. James Arbuthnot): Over the course of the next three years, the RAF will take delivery of upgraded Tornado attack and fighter aircraft, EH101 support helicopters, additional Chinook helicopters and the advanced short-range air-to-air missile. These and other important programmes represent significant enhancements to the RAF's capabilities.
    Mr. Sweeney: I welcome those announcements. Does my hon. Friend agree that the maintenance of progress in updating our equipment is vital to the morale and efficiency of the RAF? Will he comment also on the implications for RAF St. Athan, which he knows is the biggest employer in the Vale of Glamorgan and does much high-quality aircraft maintenance work?
    Mr. Arbuthnot: I agree with my hon. Friend, and I pay tribute to his consistent support for the excellent work done at RAF St. Athan in his constituency. He spoke to me recently on that subject. The "Competing for Quality" programme at RAF St. Athan will continue, because it has helped to save hundreds of millions of pounds for the armed services, which can then be spent on equipment such as that to which I have referred.
    Mr. Hardy: While I welcome the fact that the Royal Air Force will receive updated and proper equipment, does the Minister recognise that it also needs high morale and good people? Does he recognise that, in the past few years, the Government have cut manpower in the Royal Air Force by almost two fifths and often subjected those who remain to gross overstretch? That situation needs attention.
    Mr. Arbuthnot: The morale of the Royal Air Force is very high and service men know that they are highly valued by the party in government, partly because of the equipment programme to which I have referred. As a result of that programme, spending on RAF equipment will almost double by the turn of the century. That is fantastic news for the Royal Air Force, and the hon. Gentleman should not downplay it.
    Sir Anthony Grant: Will my hon. Friend tell us when a decision will be made on the RAF TriStar support contract, which he will appreciate is of great concern to Cambridgeshire? We are anxious that the expertise of Marshalls—the company that he knows all about—should not be lost.
    Mr. Arbuthnot: My hon. Friend has spoken to me on several occasions about this important contract, for which there are a number of competitors. I hope to make a decision shortly.
    Mr. Murphy: On the day of the Budget, Ministers talk grandly about saving money. Will the Minister tell the House how much money was squandered on the Tornado disaster at RAF St. Athan? Was it hundreds of thousands of pounds, millions of pounds or tens of millions of pounds?
    Mr. Arbuthnot: The hon. Gentleman is doing it again: he is irresponsibly playing with figures. It is far too early to give the precise amount involved: there must first be a full investigation. If the Labour party came to power, it would undertake a strategic defence review with the painful consequences to which the hon. Member for South Shields (Dr. Clark) referred. We know that those painful consequences would be cuts in defence, cuts in the numbers of our armed services and cuts for our defence industry. The hon. Member for South Shields admits that those would be the painful consequences.
    Mr. Bill Walker: Will my hon. Friend remind those who are critical of our concern about the future of Eurofighter of the TSR2? We had a world leader and a world beater that was cancelled by a Labour Government. Will he also remind Volker Rühe that, when the German Parliament considers the future of the Eurofighter, it should remember that we could still go it alone? We could call it the Spitfire, and at a later date we would be happy to sell it to the Luftwaffe.
    Mr. Arbuthnot: What a tempting prospect. My hon. Friend referred to the TSR2. I think that it was a Labour politician who said that we do not need to look into a crystal ball; we just need to read the book. We know what would happen if there were a Labour Government.

    RAF Recruitment Costs
    Mr. Flynn: To ask the Secretary of State for Defence what was the cost of recruiting each new member of the Royal Air Force in each of the past five years. [4314]
    Mr. Soames: The average cost of a recruit to the Royal Air Force in fiscal year 1995–96 was £10,333. Figures for the previous four years were £22,000, £26,000, £19,000 and £6,000 respectively.
    Mr. Flynn: Is this not an Alice in Wonderland situation? In the year when it cost £26,000 to recruit one member of the RAF, the Government made 1,000 members redundant, most of whom were highly skilled. Most of them were made redundant against their wishes. In the following two years, when a new recruit cost £22,000, the Government made 2,000 and 3,000 redundant. Is that not financial mismanagement on an Olympic scale?
    Mr. Soames: No, it is not. I know that the hon. Gentleman is unable to participate in Defence questions very often, but it is clear that he has not been present in the past few months when these matters were exhaustively debated. He must try to understand that, despite the

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    considerable downsizing that has taken place, the RAF needs to maintain a viable recruitment organisation. We need to recruit fewer people into the Royal Air Force, so each recruit plainly costs more. As the number of recruits rises in the next few years, the recruitment costs will fall. I am satisfied that we have an efficient and effective recruitment infrastructure, and that in the years to come the cost per recruit will significantly reduce.
    Mr. Bellingham: Will my hon. Friend join me in paying tribute to members of 39 PR squadron at RAF Marham, who have been involved in recent reconnaissance missions over Zaire and Rwanda? Incidentally, it is the former squadron of my hon. Friend the Member for Wyre (Mr. Mans), himself an intrepid aviator. Will my hon. Friend pay tribute to those airmen based in my constituency, and wish them well in their mission?
    Mr. Soames: I believe that every penny spent on the recruiting of the crew of that squadron was money well spent. I will always join my hon. Friend in paying tribute to the extraordinary aviation skills of our hon. Friend the Member for Wyre (Mr. Mans)—and I also thank my hon. Friend for his splendid support for the RAF.

    Gulf War
    Ms Eagle: To ask the Secretary of State for Defence if he will make a statement about the use of organophosphate pesticides by British troops in the Gulf war. [4315]
    Mr. Soames: As I announced last month, we have initiated an urgent and comprehensive investigation into the use of organophosphate pesticides during the Gulf war. I will report further and in great detail when that work is complete.
    Ms Eagle: Does the Minister realise that it is two months since he told the House that the use of such dangerous materials was much more widespread, and had possibly affected our troops during the Gulf war? Does he recall saying last month that an investigation would take place? Despite that, we have still heard nothing. Can the Minister tell the House when we are likely to hear the details of the investigation initiated by his Ministry? There are hundreds of Gulf war veterans with Gulf war syndrome out there, and they are very worried indeed.
    Mr. Soames: The hon. Lady is right: when I answered a question—the same question—that she asked on 29 October, I did indeed say that we would report to the House as soon as we had the information to hand, and that remains the case. This is an extremely detailed and urgently conducted investigation. I hope to be able to make a statement to the House early in December, with all the information that it will need in order to reach a conclusion.
    Mr. Robathan: The whole House will join my hon. Friend in wishing to ensure that people injured by their service are well looked after by Her Majesty's forces. Does my hon. Friend not agree, however, that a bandwagon is trundling by, on to which many Opposition
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    Members and lawyers are jumping? Does he accept that, six years after my service in the Gulf, the awful cold I have is not a matter for compensation?
    Mr. Soames: I am grateful to my hon. Friend, who knows at first hand the great importance that we attached to looking after our troops during what was a major deployment. Interestingly, because of extraordinary advances in medical science, we were able to have a deployment that was relatively disease-free—certainly in comparison with the experiences of the desert army in the last war.
    I agree with my hon. Friend that it is important to keep in touch with reality, but there is no doubt that there are people who served in the Gulf who, having come home, are not well. It is also true that a substantial body of research in the United States, along with a good deal of research in this country, has concluded that there is no Gulf war syndrome per se, but that there are people who served in the Gulf and are ill. We must ensure that they are cared for properly, honourably and decently—and they will be.

    Arms Exports
    Mr. Harvey: To ask the Secretary of State for Defence what recent advice his Department has given to the Department of Trade and Industry about the licensing of United Kingdom exports of arms to Indonesia. [4316]
    Mr. Arbuthnot: My Department advises the Department of Trade and Industry on various aspects of export licensing. These would include the legitimate defence requirements of the recipient, the effect on regional stability and the risk of use against United Kingdom forces.
    Mr. Harvey: What heroic military exploits on the part of the Indonesian army marked its members out as natural allies of this country? Was it the killing of 200,000 East Timorese since the illegal occupation of their country, or the assassination of Muslim protesters in Jakarta or that of Timorese people in Dili? Why do we keep an office in Indonesia for the Defence Export Services Organisation? Why did we underwrite half a billion pounds' worth of exports to the Indonesian military in 1992–93? Why do we send armaments, aircraft and tanks whose manufacturers describe them as ideal for internal security? What is it about these people that marked them out as our natural allies?
    Mr. Arbuthnot: The hon. Gentleman has ruined his case. Unfortunately, all export applications are examined very rigorously by this country. The hon. Gentleman ought to welcome positive developments in Indonesia: he ought to welcome, for example, the formation of the National Human Rights Commission there. We have thoroughly investigated every report that Hawk aircraft have been used against East Timor, and we have found that there is no evidence to support those claims. The hon. Gentleman does himself no service whatever.
    Mr. Atkins: Will my hon. Friend join me in ensuring that his advice to the Department of Trade and Industry is to congratulate companies such as British Aerospace, which is closing substantial deals with Indonesia, Qatar

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    and Australia? That is evidence of the efforts of that great company, which is represented by so many of our hon. Friends, who were working a jolly sight harder for British Aerospace at all levels long before that lot were.
    Mr. Arbuthnot: My right hon. Friend is right. What was notable as he asked his question was the total silence from Opposition Members. Although they profess to support British industry, in practice the Labour party hates British defence industry exporting any equipment at all.
    Mrs. Clwyd: The Minister is wrong. Hawk aircraft have been spotted in East Timor by Hugh O'Shaughnessy and by people who live there. The trouble is that the Government prefer to believe the Indonesian Government rather than eye-witness accounts. Why is he always telling us that Hawk aircraft are used as trainers in Indonesia when, during a military exercise last week, Hawk aircraft were used to fire rockets? The accounts are that the rockets reduced the target to scorched earth. Where were those aircraft converted for that use—in Britain or in Indonesia?
    Mr. Arbuthnot: I am sorry, but the hon. Lady is wrong. The minister counsellor at the Indonesian embassy has written that the Indonesian Government have never and will never use the Hawks to suppress the East Timorese. We have no evidence to suggest that that is untrue. We do not believe that it is untrue.
    As I have said, we welcome the positive developments in Indonesia. The National Commission on Human Rights is also to be welcomed. The hon. Lady should welcome that as well. I regret that she does not. I am pleased that her Front-Bench team is at odds with her on the issue. When we export equipment, we need to be absolutely sure that it is not used for the repression of internal civilian populations; in this case, it certainly is not.
    Mr. Richards: What is my hon. Friend's assessment of the level of international competition for defence contracts with Indonesia?
    Mr. Arbuthnot: It is high. It is because British industry is so successful in being competitive, in creating good equipment and in offering good prices that we are able to take such a high proportion of the world defence equipment market. That is good news for British jobs, for British influence and for the Ministry of Defence, which is able to reduce the prices that it pays as a result of large cost runs. British industry's success should be welcomed not only by the Conservative party but by the Labour party. I wish it were, but it is not.

    Army Commitments
    Mr. Home Robertson: To ask the Secretary of State for Defence if he will make a statement on the effects of overstretch in the Army. [4317]
    Mr. Soames: A third of the Army is deployed on, preparing for, or recovering from operations. Although I am conscious of this high level of commitment, which inevitably places a strain on soldiers and their families, I am confident that the Army remains supremely capable of meeting all its main tasks.
    Mr. Home Robertson: Is it not a fact that the Government are taking liberties with our soldiers in the armed forces and damaging their morale by increasing their work load at the same time as cutting their resources? Would I be far wrong if I were to suggest that the resident battalions in Northern Ireland are, on average, 80 men under strength, that soldiers there must spend 51 per cent. of nights away from their quarters and that the average number of hours worked a week by a soldier is 98.6? The Minister may use the term "busy", but those are intolerable conditions for our soldiers in Northern Ireland and elsewhere.
    Mr. Soames: The hon. Gentleman is always wrong on these matters and, today, he is wrong again. That was a misquoted farrago and tissue of innuendo and hopeless, incompetent fact. The Army's morale is extremely high. The Army is very busy, and that is one reason why its morale is high. Of course we are conscious of the fact that we can ask too much of our people, and that is why we take great care of their families and of them. Our people are well trained, well motivated and well equipped, and they do a wonderful job. The hon. Gentleman's portrayal is a fatuous travesty.
    Mr. Brazier: Although I am glad to hear my hon. Friend's comments on overstretch, does he agree that one way in which we could be certain to make the situation very much worse would be to cut defence and to take on all sorts of extra third-world commitments—the type of programme that we could expect from a Labour Government?
    Mr. Soames: My hon. Friend is right. As he knows, the nature and scale of the commitments that the armed forces of the Crown are invited to undertake are subject to the most rigorous and detailed scrutiny, particularly because our regular forces—which are all volunteer—are already heavily committed. The British Army will remain what it has always been: a supremely professional armed force, capable of high-intensity land battle, and not what it would be under the Labour party—some type of super-gendarmerie.
    Dr. Reid: What a load of codswallop. Will the Minister confirm reports that, under the Government, even the SAS is short of recruits—recruitment has plummeted and its members are leaving—and that that dates from when the Secretary of State pledged his undying allegiance to the SAS, at the Tory party conference? Is it true that, last year, we were 3,000 soldiers short, and that the Minister pledged to redouble his efforts? He has redoubled them, but with what result? He has doubled the shortage. There is no problem that the Government, when they put their mind to it, cannot make worse.
    Mr. Soames: That is a very silly little intervention, and I do not think that anyone will take it seriously. The hon. Gentleman knows perfectly well that that is not the case. Recruitment is up 35 per cent. this year on last, enlistments are way ahead, and the only limitation on recruits for the airborne or the special forces will be the ability of those who undertake the selection test to pass it.

    Isle of Wight Companies
    Mr. Barry Field: To ask the Secretary of State for Defence what assistance the Defence Export Services Organisation has provided to Isle of Wight companies in each of the past three years. [4318]
    Mr. Arbuthnot: The Defence Export Services Organisation daily provides assistance to British defence equipment companies to help them promote their products and services overseas. The assistance is available to, and used by, companies resident on the Isle of Wight.
    Mr. Field: Will my hon. Friend point out that more than 360,000 jobs in the United Kingdom—which still includes the Isle of Wight—are dependent on sales exports and orders? I thank him and the staff of the Defence Export Services Organisation for the help that they have given and are giving to Isle of Wight companies. Does he agree that, if the Opposition's policies were ever implemented, those jobs would be at serious risk and that the Opposition's defence policies are about as reassuring as a cross-eyed marksman?
    Mr. Arbuthnot: I agree with my hon. Friend. I should also like to acknowledge the support that he has given to Pilatus Britten Norman Ltd. and to Turbine Support Ltd.—both of which are based on the Isle of Wight—in bids for overseas business. The Defence Export Services Organisation is and has been astonishingly successful. It is a magnificent blend of Government help to industry with the support of the armed services and embassies. It has also enabled us to achieve the second highest performance on British defence exports, second only to the United States. It is a great success.

    Armed Forces (Asia)
    Mr. Legg: To ask the Secretary of State for Defence what will be the role of United Kingdom armed services in Asia after the United Kingdom's withdrawal from Hong Kong. [4319]
    Mr. Portillo: After withdrawal from Hong Kong, British armed forces will continue to contribute to security and stability in the region, in support of this country's wider interests.
    Mr. Legg: In view of our strong trading and investment links and the presence of 5 million United Kingdom nationals, will my right hon. Friend tell the House what role the UK will play in the peaceful resolution of disputes in the region?
    Mr. Portillo: It is important that we reaffirm our support of the five-power defence arrangements, which include Singapore, Malaysia, Australia and New Zealand. At about the time that we leave Hong Kong, we shall dispatch to the Asia-Pacific area a large carrier battle group, including a carrier, three destroyers, a submarine and about 15 Tornado aircraft. That will demonstrate our continued commitment to the area. We shall, of course, also maintain the Gurkha battalion at Brunei.
    Mr. Menzies Campbell: The Secretary of State told the House a moment ago that there was to be a review of the conditions of engagement for Gurkha troops. Will he assure us that two particular factors will be taken into account? We must remember, first, the unparalleled loyalty and service that those troops have demonstrated to the British Crown and, secondly, the fact that they are increasingly used to remedy deficiencies in numbers in other British Army units. In those circumstances, are there not compelling reasons for permitting Gurkha troops redeployed from Hong Kong to the United Kingdom to bring their families with them?
    Mr. Portillo: Those are important points. However, in my earlier reply I did not say that I would be considering those issues; I said that I was considering them. The review is well under way and I hope to be able to complete it shortly. My regard for the Gurkhas is not second to that of the hon. and learned Gentleman.

  PRIME MINISTER

    Engagements
    Mr. Wray: To ask the Prime Minister if he will list his official engagements for Tuesday 26 November. [4339]
    The Prime Minister (Mr. John Major): This morning, I presided at a meeting of the Cabinet and had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today.
    Mr. Wray: Is the Prime Minister aware that the Government took £7.2 billion in tobacco duties last year? Is he also aware that the Health Education Authority says that tobacco costs the health service £680 million and 110,000 deaths annually? I know that the Government are against litigation by the Department of Health, but does the Prime Minister agree that a further ban on tobacco advertising is needed?
    The Prime Minister: As the hon. Gentleman knows, we have shown the dangers of tobacco in many advertising campaigns and also, of course, on every packet of cigarettes. That is an appropriate way to indicate the dangers—together, of course, with the disincentive of the taxation on tobacco.
    Sir Michael Grylls: Will my right hon. Friend find time today to consider the cash flow crisis that is affecting so many lorry drivers, many of whom come from small firms or are self-employed? Their problems are due entirely to the failure of the French Government to keep their highways clear. As a practical measure, will he consider asking the banks to be patient with those firms? Will he also do everything that he can to the French Government to ensure that they act responsibly?
    The Prime Minister: I am concerned about the consequences for British drivers and companies of the dispute, which is, of course, in France and has nothing to do with them or their customers. We have indicated to the French Government that we expect compensation claims for loss of earnings or for damage to perishable stock to

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    be met. I hope that they respond to that plea. My right hon. Friend the Secretary of State for Transport has already written to his French opposite number calling for an end to the dispute and making the point about necessary compensation. I shall not hesitate to raise the matter elsewhere if necessary.
    Mr. Blair: Given that the Prime Minister fought the last general election on the specific pledge that he would cut taxes every year, will he now at least apologise for the fact that, whatever the Chancellor does today, after 22 Conservative tax rises, the average British family will pay more in tax at the time of the next election than it did at the last, and that his promise was broken?
    The Prime Minister: I think that the right hon. Gentleman is confused. As he will know, we now have the lowest basic rate of income tax for 50 years. Even before today's Budget, the average family will be £700 better off this year, after tax and inflation, than it was at the general election. If the right hon. Gentleman is concerned about transparency in tax matters and tax promises, perhaps he will publish his own tax plans, which his deputy leader said it would be stupid to do.
    Mr. Blair: Perhaps, then, the Prime Minister would answer an even simpler question, as he could not answer that one: does he recall promising before the election that he would not raise national insurance contributions, and then raising them after the election? Does he recall that—yes or no?
    The Prime Minister: The right hon. Gentleman knows the reductions that we have made in tax. Whatever he may seek to do, he cannot deny that taxes are lower today than they have been in the past, that they are lower than they would be under any Labour Government, and that, if he were to begin to meet the spending pledges that he made at his party conference and then sought to deny, taxation in the United Kingdom would rise and rise again were he ever to have any responsibility for the Exchequer.
    Mr. Blair: If the right hon. Gentleman cannot answer the first two questions, perhaps he will answer this one: does he recall going into the last election saying that he would not put VAT on fuel and power and then doing just that? Will he answer—yes or no?
    The Prime Minister: If the right hon. Gentleman wants to discuss value added tax, perhaps he will tell us why he can make promises on VAT, but he cannot tell us about the windfall tax, the tartan tax, the London tax, the teenage tax, his spending promises, his taxation promises or anything that is relevant to the management of the economy.
    Mr. Cash: Does my right hon. Friend recollect that, in the most welcome statement yesterday, my right hon. and learned Friend the Chancellor of the Exchequer said in respect of one of the regulations that he would be most reluctant to contemplate using the veto? Bearing in mind that the Dublin summit will be a European Council meeting and not a meeting of the Council of Ministers and that the scrutiny reserved will be applied to the Economic and Finance Council meeting, does my right
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    hon. Friend agree with my right hon. and learned Friend the Chancellor in his reluctance to veto one of those regulations?
    The Prime Minister: Presumably my hon. Friend is referring to recital 13. If he would care to look at what was said yesterday, he will see that my right hon. and learned Friend made it clear that he would reiterate to the meeting of Finance Ministers that there was no legal basis on which countries not participating in the single currency could have sanctions imposed on them. In reply to my right hon. Friend the Member for Wokingham (Mr. Redwood), my right hon. and learned Friend made it clear that he would seek the best possible language to ensure that that understanding was copper-bottomed.
    Mr. Pearson: To ask the Prime Minister if he will list his official engagements for Tuesday 26 November. [4340]
    The Prime Minister: I refer the hon. Member to the answer I gave some moments ago.
    Mr. Pearson: Will the Prime Minister confirm that cutting VAT on domestic fuel and power will help every household in Dudley and nationally, while scrapping inheritance tax and capital gains tax will benefit, at most, 3 per cent. of the population? Why does the Prime Minister persist in supporting policies that favour the few instead of the many?
    The Prime Minister: The policies that we have followed have produced the best economic circumstances for generations, and that will help the many and encourage domestic investment, inward investment, job creation and growth—all of which are happening in Britain in a way that the hon. Gentleman cannot demonstrate as happening in any other European country.
    Mr. Colvin: To ask the Prime Minister if he will list his official engagements for Tuesday 26 November. [4341]
    The Prime Minister: I refer my hon. Friend to the answer I gave some moments ago.
    Mr. Colvin: Has my right hon. Friend seen the report by the International Labour Organisation that was published today? It shows that, in every other country, unemployment is rising, while in Britain, exceptionally, it is falling? Is that not further evidence of the merits of the Government's economic policy that has made Britain such a success? Was not Baroness Thatcher quite right last week when she said in a speech, "Don't let Labour ruin it"?
    The Prime Minister: When the news is improving, unemployment is falling and the economy is growing, as it is at the moment, there is very little for the Opposition to say: they hate good news, because they know that it is extremely bad news for them. They did not help to bring about the strongest economy of any western European country, which is what we have; they did not help to get more people in work, which is what we have done through the labour reforms that we have

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    produced; they did not help to make this the No. 1 country for inward investment anywhere in western Europe; and they did not help to create the lowest basic rate of tax for 50 years. My hon. Friend is right, as was my right hon. and noble Friend last week—Labour is still not fit to govern and I doubt that it will he in a position to do so.
    Mr. Heppell: To ask the Prime Minister if he will list his official engagements for Tuesday 26 November. [4342]
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Heppell: In view of the Prime Minister's completely unsatisfactory response to my right hon. Friend the Leader of the Opposition, may I ask him again why he promised tax cuts before the last election and subsequently broke that promise?
    The Prime Minister: The hon. Gentleman may recall the urgings of his Front Benchers and our determination to protect people during the recession. I make no apology for the fact that we sought to protect people during the recession; I make no apology for the fact that, by doing so, we have delivered the best economic circumstances that he can ever remember. If he wants transparency in tax matters, I challenge him to publish his own party's tax plans, about which the right hon. Member for Kingston upon Hull, East (Mr. Prescott) said it would be stupid to let the public hear.
    Mr. Couchman: Further to the question of my hon. Friend the Member for North—West Surrey (Sir M. Grylls) about the lorry drivers' strike in France, has my right hon. Friend contacted the European Traffic Commissioner? If so, did he find him conscious of the plight of British drivers, or was the European Commissioner too busy studying leaked documents from the Treasury?
    The Prime Minister: I have not contacted the European Commissioner, but I understand that he has made representations to the French expressing concern about the drivers' welfare.

    Jobseeker's Allowance
    Mr. Corbyn: To ask the Prime Minister what plans he has to visit a jobcentre to discuss the operation of the jobseeker's allowance. [4343]
    The Prime Minister: I have no immediate plans to do so.
    Mr. Corbyn: The Prime Minister should be ashamed of himself for not being prepared to go along to a jobcentre to discuss the introduction of the jobseeker's allowance, which is having a very serious effect on many
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    people, especially because of the parallel introduction of incapacity benefit; many disabled people who have to face an all work test will lose their benefits altogether and will have to try to get unemployment benefit through the jobseeker's allowance. When the Prime Minister visits a jobcentre, will he consider that point and what he intends to do for the 220,000 disabled people who next year will apply under the jobseeker's allowance for unemployment benefit, but will probably lose it and end up destitute as a result?
    The Prime Minister: The hon. Gentleman is talking nonsense, and I think that he knows he is doing so. The purpose of the jobseeker's allowance, as he should know, is to help people to plan the most effective route back into work. It creates a better framework of advice and support for the jobseeker and ensures that claimants better understand that benefit is dependent on the activities that they undertake to look for work. I believe that that principle is well understood and well supported across the country.
    The jobseeker's allowance is also, of course, underpinned by the jobseeker's agreement, which sets out what each jobseeker agrees to do to find work. That is infinitely preferable to the old system of unemployment benefit and income support, which was confusing and in many ways unfair.

    Engagements
    Mr. Patrick Thompson: To ask the Prime Minister if he will list his official engagements for Tuesday 26 November. [4344]
    The Prime Minister: I refer my hon. Friend to the reply I gave some moments ago.
    Mr. Thompson: Is my right hon. Friend aware of the exhibition to be held in the Upper Waiting Hall in the House of Commons next week to highlight the tremendous achievements of our engineering and manufacturing industry in this country? Does he agree that engineering offers attractive career prospects for our young people and will he pay tribute to those who are working to promote the achievements of the engineering industry through the Year of Engineering Success campaign next year?
    The Prime Minister: I am grateful to hear about the exhibition that my hon. Friend mentions. I certainly agree with his sentiments; they were a key aspect of the competitiveness White Paper a short while ago and the reason we launched the action for engineering programme, to increase engineering's contribution to the national economy. There are now about 150,000 more people employed in manufacturing than three years ago. That reverses a long-term trend and is very welcome. In addition, some 40,000 to 50,000 people are on modern apprenticeship schemes. I agree entirely that engineering is an important part of the British economy.
    Rev. Martin Smyth: To ask the Prime Minister if he will list his official engagements for Tuesday 26 November. [4345]
    The Prime Minister: I refer the hon. Gentleman to the reply I gave some moments ago.
    Rev. Martin Smyth: Has the Prime Minister noticed the change in emphasis between the hard man and soft man of IRA-Sinn Fein? Martin McGuinness is now promising to move heaven and earth—I know that he has tried to move earth in the past, but I do not believe that he has any influence in heaven—and Mitchell McLaughlin is now threatening lethal consequences, if the Prime
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    Minister does not come up with terms. Will the Prime Minister speak on behalf of the nation and say that we are not prepared to bow to the threats of terrorists?
    The Prime Minister: As the hon. Gentleman knows and as the House wholly accepts, IRA terrorism is utterly unacceptable for any purpose, at any time, in any place. It is also completely counter-productive if there is any suggestion that terrorism will bring Sinn Fein to the negotiating table. It emphatically will not bring it to the negotiating table. If I may quote what the Taoiseach said recently—with which I entirely agree—
    "If Republicans are committed to peace, as they say they are, let them call a ceasefire now and make it a credible one".

WAYS AND MEANS
  Budget Statement
  Mr. Deputy Speaker (Mr. Michael Morris): Before I call the Chancellor of the Exchequer, it may be for the convenience of hon. Members if I remind them that, at the end of the Chancellor's speech, copies of the Budget resolution will be available to hon. Members in the Vote Office.

  INTRODUCTION
  3.31 pm
  The Chancellor of the Exchequer (Mr. Kenneth Clarke): Contrary to popular belief, I always look at the mirror in the morning. I am reasonably well prepared for this occasion and I am about to deliver the real Budget statement. I think this is positively my last appearance in the House in a speaking capacity this week, or so at the moment I expect it to be.
  The British economy is today prosperous and successful. This Budget is going to make it even more prosperous and an even bigger success over the coming years.
  When I presented my first Budget in 1993, it was against a very different economic background from today. Although the recovery had begun then, consumer confidence had not yet returned. Growth was not yet firmly established. Further firm action was needed on the public finances, and our critics, in 1993, were peddling doom and gloom about the British economy. The recovery is now in its fifth year. Consumer confidence has returned and we are achieving something unprecedented for a generation in this country—growth with low inflation and without a widening trade gap. But one thing has not changed in 1996—our critics are still peddling doom and gloom. With all their predictions of impending disaster, it is obvious that there is probably more than one Cassandra lurking in the Labour party.
  In my first two Budgets I curbed the growth of public spending and took firm decisions on tax, which have brought borrowing down by almost a half since 1993. Last year, in my third Budget, I was able to return to cutting tax while spending more on the public services which the people I know care about most—health, schools and the police—and keeping borrowing on a firm downward path.
  This year, I am presenting a Budget which builds on the last three. This Budget reduces public spending plans further, while providing more money for priority services. It makes responsible progress on our tax-cutting agenda, while getting borrowing down faster. This is not a reckless Budget on either tax or spending. In the run-up to Christmas I am not going to play Santa Claus, but this year I do not have to play Scrooge either.
  I have one overriding aim, which is the lasting health of the British economy. [HON. MEMBERS: "And winning the election."] The lasting health of the British economy might win elections, that is true, but my first aim is the lasting health of the British economy. We are securing that by creating the best conditions for British businesses and British men and women to earn a living. All my
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  Budgets and all my policies have been designed to set this country on course to be the strongest industrial economy in western Europe in years to come.

  ECONOMY
  The British economy is in its fifth successive year of steady, healthy economic growth, with falling unemployment and low inflation. These are the best circumstances we have faced for a generation and that is the only sensible background to debate in this House. It is a Rolls-Royce recovery and it is built to last.
  The International Monetary Fund and the Organisation for Economic Co-operation and Development confidently expect the United Kingdom to be the fastest growing major European economy again next year. By next year we will have grown faster than either France or Germany for five years in succession for the first time in half a century.
  This time—unlike so many previous recoveries that many of us remember—healthy growth has been accompanied by the best inflation performance for nearly 50 years and restrained growth of earnings has been good news for jobs. The British labour market has become our flexible friend. Employment began to rise sooner and unemployment began to fall sooner than in the previous recovery. Growth creates jobs quicker, as long as we retain a flexible labour market.
  The OECD has praised us for having one of the least regulated labour markets in the industrialised world. High social overheads, minimum wages and unnecessary legislation do not protect workers—they cost jobs. Unemployment is still rising in France and unemployment is still rising in Germany. It has fallen sharply here, to its lowest level for over five and a half years.
  In the bad old days, recoveries were derailed by balance of payments crises. In this recovery, the current account has actually improved, despite the slowdown in our main European markets. In fact we now have a current account broadly in balance, which is our best overall trading performance for nearly 10 years.

  ECONOMIC POLICY
  Mr. Deputy Speaker, I want to ask the British people this question: in the years ahead do we seriously want to be prosperous in this country? I think that we do. That is why I am setting out an economic policy aimed at the next five years, not just the next five months. I am setting out an economic policy that will go on delivering our enviable combination of rising prosperity, low inflation and more jobs. That is my purpose in this Budget. This Budget secures a prosperous future for all sections of our people and their families.
  The last thing that the British economy needs now is a change of direction. We need at least another five years of this Government's continuous vigilance on inflation. We need more of this Government's determination to get government borrowing down. We need another five years of this Government's commitment to raise the wealth-creating potential of the British economy, by improving incentives, reducing the role of the state and creating a climate for enterprise.

  GROWTH
  Let me begin by turning to my forecast for growth. I expect the British economy to grow by 2 per cent. this year and 3½ per cent. next year—and there are few serious commentators who would disagree with me. I hear mutterings from the shadow Chancellor; there are few serious commentators who would disagree with me.
  By keeping a close eye on the prospects for inflation up to two years out, and by taking sensible early action if and when necessary, I intend to ensure that healthy growth continues without inflationary pressures emerging. That is what I have always promised—no return to boom and bust.

  CONSUMER SPENDING
  I expect consumers' expenditure to continue to be the main engine of growth next year. The real value of take-home pay is growing strongly.
  The housing market recovery is now firmly established. I hope that negative equity can soon be consigned to the economic history books.
  People are feeling the improvement in their family finances. Consumer confidence is at its highest levels for more than eight years.
  I expect consumer spending to grow by 3 per cent. in 1996 as a whole. But it has been strengthening through the year. So I expect stronger growth to continue, with consumers' expenditure rising by more than 4 per cent. next year.

  INVESTMENT
  But this recovery is not just about a more confident consumer. Businesses are optimistic too. The climate for business is excellent. Strong demand at home and a recovery in our key export markets present British industry and commerce with tremendous opportunities.
  Interest rates and tax rates remain low, and profitability is high. The result has been business investment growth of 6 per cent. so far this year. I expect business investment to continue to grow strongly—by almost 10 per cent. next year.
  These excellent conditions for business are not lost on overseas companies looking to invest for the future inside the European market. Let us never forget the most valuable practical endorsement that we get for our sound economic policies.
  The United Kingdom remains the No. 1 destination for inward investment into the European Union. Keeping our enterprise economy on course at the heart of Europe will keep us in pole position.

  EXPORTS
  Exports have grown by almost 20 per cent. over the past two years—an impressive performance in the face of weak demand in our key European markets. The achievement is down to our strong cost-conscious British exporters. They will benefit further next year as the tentative recovery on the continent becomes more established. I expect export volumes to rise by more than 7 per cent. this year and by 6 per cent. next year.
  The current account has been close to balance during the last two and a half years, thanks to strong growth in exports and income from our investments overseas. I expect the current account to remain broadly in balance this year and next.

  JOBS
  As I said earlier, I am glad to say that our thriving economy is creating jobs. Employment in the United Kingdom has risen by more than ¾million real jobs since the recovery began. Unemployment has fallen by almost a million from its peak. It will soon drop through the 2 million mark. But that is still too high. I want it to go on falling and I expect it to go on falling.
  I hope that during the debate the shadow Chancellor will say that he forecasts that unemployment will now rise, month after month. That seemed to help our performance in the labour market the last time he said it.

  INFLATION
  We are on course to get underlying inflation down to our target of 2½ per cent. or less, and to keep it there. In October underlying inflation rose to just over 3 per cent. This should not have surprised anybody who looked at last year's statistics. It is a temporary and inevitable reflection of the exceptional falls in the price level 12 months before.
  Let me give the House my concrete reasons for being so confident about low inflation. Apart from oil prices, which have risen sharply, commodity prices are steady and are not putting upward pressure on inflation. Earnings growth remains sensible and modest. Producer price inflation—a good indicator of what is in the pipeline for retail price inflation—is at it lowest levels in this country since the 1960s. Producer input prices are actually lower than they were a year ago.
  Any risk to this recovery from inflationary pressures re-emerging remains a good way off. But as I have demonstrated again and again, when I see any risks, I will act. I will continue to stay ahead of the game on monetary policy. Eddie will keep me steady and I intend to continue to be canny.
  I expect underlying inflation to meet our target of 2½ per cent. or less. I will ensure that we go on meeting that target for the foreseeable future.

  PSBR
  We have made good progress in reducing public sector borrowing, but it has not been as fast as I expected. The Budget therefore targets public sector borrowing again. The general public may ask why I concentrate on public sector borrowing in the way that I do. [Interruption.] It is suggested that I do so because I am a Tory. That is a good reason for concentrating on public sector borrowing as I do.
  One reason why I continue to concentrate so heavily on public borrowing in setting policy is that money spent paying the interest on our debt is, in my opinion, money that I would prefer to spend on public services and the reduction of taxation.
  We are making good progress on bringing down borrowing, but lower than expected tax revenues mean that it has not fallen as fast as I expected in the last Budget. This is not bad news for everyone. People are no doubt quite glad not to be paying as much tax as I expected. But as I am the Chancellor, I strongly prefer to keep any tax cuts under my own control.
  The causes of these shortfalls in our forecasts of tax revenue—primarily on VAT, but also on direct taxes—cannot wholly be explained by any experts inside or

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  outside the Revenue Departments. But there does seem to be an increasing tendency to exploit loopholes and use special reliefs in an artificial way to reduce tax bills. Those sort of tax cuts are unacceptable. On that, I seem to have agreement. If they are not tackled every year in the Budget, they mean that a few people pay less tax, but the rest must pay more.
  In this Budget I will propose a number of measures to stem tax leakage, to protect the ordinary tax payer and to make sure we get the right tax from the right people. When I reduce tax, I want to do so in a way that is fair for all businesses and fair for all hard-working British men and women.
  Government borrowing has been steadily coming down for three years. This Budget will ensure that Government borrowing keeps coming down. I expect the public sector borrowing requirement to be £26½ billion this year. That will mean it has halved as a share of GDP over the past three years. I expect it to come down to £19 billion next year and to be broadly in balance by 1999–2000.
  That pattern of declining borrowing is very much better than the one I had to put in my summer economic forecast last July. Since I produced the summer forecast, which was debated in the House last summer, I have reduced my expectations for next year by £4 billion.
  A large part of that improvement is the result of the measures that I am taking in this Budget. This Budget tightens fiscal policy. The reason why I am tightening fiscal policy now is to reduce the risk of having to tighten monetary policy excessively as I set policy to hit my inflation target.
  My decisions are always taken solely in British interests to benefit the British economy. But my decisions in this Budget also mean that, by happy coincidence, we will meet the Maastricht debt and deficit criteria in 1997, and we will do even better than that in the medium term. [Interruption.] I do not need any assistance from nationalists. It is a happy coincidence for everyone because those criteria make sound economic sense, as we all agree, with or without a single currency.
  Our option whether to join or stay out of a single currency, based on British national interest, remains a genuine choice. We will qualify, but we will choose in the next Parliament when the time comes.
  This Government is the champion of sound public finances, of limited government and of low taxation. Our combination of low taxation, low public spending and low debt is the best in Europe. We intend to stay in that enviable position. We can do that only if we continue to bear down on public spending.

  PUBLIC SPENDING
  In the 1980s, across the rest of Europe, the modern state remorselessly took an ever greater share of almost every nation's wealth. We in Britain held the line. The proportion of GDP going into Government spending in the United Kingdom is now 8 per cent. lower than the average in the rest of the European Union. If our spending had risen to continental levels we would now have to raise nearly £2,300 a year more in tax from every British household.
  I have set a target of 40 per cent. or below for the share of national income that goes on public spending. Making progress towards that desirable target means tough
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  decisions on public spending every year, but this year we have had to cope with the costs of BSE, and with larger than expected increases in the costs of social security, as more and more elderly and disabled people receive benefits to which they are entitled.
  Against that background, we had to keep the rest of public spending within the tightest possible limits, in order for us to spend more on the public services that people really care about: education, combating crime and our national health service. This country has been well served by my right hon. Friend the Chief Secretary who has successfully tackled that problem. Despite all the difficulties, we have been able to reduce public spending plans over the next three years by a further £7 billion in this Budget. Public spending next year will be more than £24 billion lower than was projected when I became Chancellor—a reduction of 7 per cent.
  We have been able to reduce spending plans because we have lower inflation, falling unemployment, a continuing campaign for efficiency in the public sector, sensible policy priorities and a Government capable of taking decisions about those priorities. On top of that, the Government's relentless drive against fraud and the abuse of tax and benefits will be stepped up another gear.
  Next year, we will meet our target of 40 per cent. for the share of national income that goes on public spending. In last year's Budget I said that I would make 40 per cent. in 1997–98. This year's Budget secures that important goal. So long as we keep—as the next Conservative Government will keep—the growth in public spending down below the growth in the economy, we will go below that.

  EDUCATION
  Education is the key to the future of any prosperous and civilised society. It helps to determine how well the economy performs in the long run. It also helps to determine the sort of citizens that we have and the sort of society that we have. The Government are committed to raising standards in education.
  As a result of last year's Budget, £878 million extra was provided for schools this year. We are giving schools priority again in this Budget. Planned expenditure on schools will rise by another £830 million next year. A large proportion of that money—£633 million, an increase of 3.6 per cent.—will be channelled through the local authorities. I see the hon. Member for Sheffield, Brightside (Mr. Blunkett) shaking his head. Perhaps the money did not reach his schools; I am not as familiar with Sheffield as he is.
  Judging by last year's experience, some local authorities are reluctant to pass on the increases in their standard spending assessment to their schools, preferring to spend the money on other areas. It is no good local authorities campaigning for more spending on education in the autumn and then spending their money on other things in the spring. Parents will want to make sure that their local authorities spend money on the things that they want for their children: good teachers and better equipped schools. I hope that the hon. Member for Brightside makes the same efforts to ensure that Sheffield passes the money on, if it did not last year.
  A good school has a value far beyond its buildings; but the quality of school buildings in which our children are taught is still very important. We have a long way to go

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  in the post-war era to get up to the standards that we require. We will be providing an extra £50 million on top of the previously planned provision for more capital investment to improve the fabric of our schools.
  By setting high standards for schools and increasing choice for parents, this Government are delivering better trained and better qualified young people. Almost one in three young people now goes on to university, compared with one in eight in 1979. And our universities and colleges maintain some of the highest standards in the world despite the pressure on their unit costs that this unprecedented explosion of opportunity for young people has produced.
  But I recognise this pressure—I have heard about these pressures—and I also realise that our universities and colleges make an important contribution to the economy.
  My Budget therefore includes £280 million to boost further and higher education over the next two years. This includes an extra £20 million next year for science equipment. We want to ensure that the British science research base remains the best in the world, which it certainly is at the moment.
  As my right hon. Friend the Secretary of State for Education and Employment announced in September, the Government are planning a substantial sale of student loans debt. It makes no sense for the Government to keep a huge portfolio of loans on their books when the private sector could manage it more effectively and is better placed to cope with the risk. I emphasise that the sale will have no effect on the terms on which students can get loans.
  The substantial reduction in the figures for education that Members will find published in the new spending plans is more than accounted for by the sale of this debt. As I have just described, we will actually spend more on the things that really matter—educating our children and young people.

  COMBATING CRIME
  This Government believe that effective law and order are an essential part of making Britain a nation at ease with itself. A good quality police service and an effective system of criminal justice are very high on the list of this Government's priorities.
  When it comes to spending on law and order this Government have a record as long as your arm. [Interruption.] Spending more money on a much better police service and a much better criminal justice system—I plead guilty as charged, if that is indeed the charge against the Government. Spending on law and order has already doubled in real terms since 1979.
  Provision for combating crime—police and prisons—will now rise by another £450 million next year. Our plans provide for 2,000 more police constables by the end of next year. We are well on course to meet the Prime Minister's pledge for 5,000 more constables.

  HEALTH
  Our British national health service, with treatment free at the point of delivery, is the envy of the world. It is the best system of health care that I have ever encountered. In every modern civilised society the demand for better health care, for new techniques to save lives and improve
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  our quality of life grows constantly and remorselessly. This Government completely understand that. That is why we have increased spending by some 75 per cent. in real terms since 1979.
  That is why the Prime Minister has pledged on our behalf more resources for the national health service in real terms every year, throughout the next Parliament—a pledge which, to my continual mystification, the right hon. Member for Sedgefield (Mr. Blair) has not yet brought himself to match.
  We are also spending that money better. We have reformed the NHS so it is much better managed and much more efficient. It is no good opposing these improvements, because when waste is reduced, more can be directed to higher quality patient care. This means that patients get more treatment and care out of every extra pound that we spend.
  For next year, we will increase current spending on patient services in the NHS by £1.6 billion, or 2.9 per cent. in real terms. The real increase in current spending for hospitals next year over and above inflation will be 3 per cent.
  On top of this, private finance initiative investment will play an increasingly important role in providing new health care facilities. The PFI contract for the Norfolk and Norwich hospital scheme, worth close to £200 million, was signed yesterday, and others will follow. [HON. MEMBERS: "Oh."] I am grateful to my right hon. Friend the Secretary of State for Health for not signing it tomorrow, but I do not think that he had the Budget in mind. There are many in the pipeline—[HON. MEMBERS: "Oh."] He had the people of Norfolk and Norwich in mind and the efficacy and investment in our national health service. PH investment in the NHS will reach some £900 million over the next three years on top of the increased public spending I am announcing. I think that the Labour party has at last belatedly become converted to that source of investment in our great national health service.
  The NHS will continue to grow and continue to improve. We are totally committed to the national health service as a public service providing high quality up-to-date treatment, free at the point of delivery.
  By our decisions on public spending, we prove that the NHS remains at the top of the Government's priorities. The NHS has been safe in our hands, it is safe in our hands and it will always be safe in our hands.

  OTHER PROGRAMMES
  This year's spending round was as tight as any that I can remember—I keep describing it as eye-wateringly tight—but we never lost sight of our objective, which is to sustain and improve the key public services that the British public care about: education, combating crime and our national health service. In part we have achieved that by increasing efficiency within the priority services, but inevitably we have also had to find savings in other programmes. [HON. MEMBERS: "Whisky."] You will find out in a minute.
  Falling unemployment and lower inflation has helped to reduce the social security and employment programmes. We are also continuing to transfer activities to the private sector where this is more efficient as it is for student loans. We have refocused the housing

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  programme to encourage the use of private finance and the transfer of the local authority housing stock to the private sector. We are stepping up our programmes against fraud. We are continuing our remorseless squeeze on the costs of bureaucracy itself. And we have looked in every department for ways of achieving our objectives more economically. With efficiency savings, most departments will be able to deliver their programmes next year, but with less public money in real terms.

  PRIVATE FINANCE INITIATIVE
  People pay their taxes in order to get good quality public services, not to accumulate state-owned buildings. This simple truth has led to the development of the private finance initiative.
  The PFI helps to square the circle of sound public finances and growing demand for better and more modern public services by tapping the expertise and the resources of the private sector.
  A year ago we had agreed £1.5 billion worth of deals—now we have agreed £7 billion, and we are on course to double that by March 1999. Time and again the taxpayer is getting better value for money, through new road schemes, new prison services, and information technology projects. And reforms to local government rules are bringing the PFI into new areas, notably schools.
  London is currently experiencing a transport investment boom under the PFI: the channel tunnel rail link, Thameslink 2000, the docklands light railway extension, and the A40 and A13 improvements. This is in addition to conventional public and private capital spending on the Jubilee line extension, the Heathrow express and the new A12-M11 Hackney link. Investment in London Transport is now running at 50 per cent. in real terms above the average for the 1980s. London will soon become one of the biggest construction sites in the country. As a defiantly provincial Nottingham man, I can only say that I hope that London will be even nicer when it is finished.
  Adding traditional capital spending to PFI investment, publicly sponsored capital spending in the United Kingdom in the next three years will be substantially higher in real terms than it was in the 1980s.

  SOCIAL SECURITY
  One third of all public spending goes on social security. Our social security system is there to provide an income when people cannot earn because of sickness, disability, unemployment, caring for relatives or old age. People on the left and the right of politics continue to search for a radically different and better way of meeting those needs in our wealthy nation. I have studied many of their proposals closely and so far, I am afraid, nobody has yet come up with anything remotely sensible or practicable.
  Until people come up with a radical alternative, if they ever do, our welfare safety net must remain affordable. We must not allow the welfare state to damage the incentives of individuals or businesses in the private sector, because it is the wealth-creating enterprise economy that sustains our entire social security system.
  In the post-war period social security has grown in real terms by around 5 per cent. each year. In recent Budgets we have taken action to bring that growth under control. We now expect future growth of 1½ per cent. a year—well below the growth of the economy.
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  Year after year, this Government have also vigorously attacked fraud and reformed benefits to target them on those in genuine need. The measures that I now propose in this Budget intensify those efforts yet again.
  We plan a further move to align the benefits paid to lone parents and couples with children, because both care for children. From April 1998, new awards of family premium and child benefit will be the same in value for lone parents as for couples. We are introducing a number of measures on housing benefit and council tax benefit to ensure that those on benefits do not have a more comfortable life style than some of those who are supporting themselves on modest incomes. The contrary would be unfair and unwise. Full details will be made available later today by my right hon. Friend the Secretary of State for Social Security who, with your permission, Mr. Deputy Speaker, will speak later in the Budget debate.
  In my Budget two years ago, I announced a whole package of measures to help the unemployed get back to work—from improvements to the family credit system to national insurance holidays for employers taking on long-term unemployed people. Those are contributing to the steadily improving jobs position.
  In this Budget I am providing another £100 million worth of new money for new measures mainly targeted on people who have been unemployed for two years or more. First, they will be required to attend a compulsory programme of interviews with the Employment Service to give them a helping hand to compete in our ever improving market for jobs.
  We are expanding Project Work pilots to a further 28 areas. That will create tip to 100,000 new opportunities, on a programme with a good track record for getting long-term unemployed people back to work. The pilots have been successful.
  I can also announce pilots for a new scheme called Contract for Work. Private contractors will help people to find work. Those firms will be paid by results. As with Project Work, if the scheme works better than the existing approach, we will expand it. We have drawn on some American experience. We will adapt it to Britain and, if it works, we will widen its application. We must tackle the problem.
  Dependency on welfare impoverishes us all. The welfare system should provide a safety net. It must provide the support that a caring society wants to give to our less fortunate fellow citizens. But the welfare system must never be allowed to become a way of life. We do not want our social security system to be undermined by resentment.
  We have to take these careful measures. We must move people from dependency to responsibility for themselves and their families, because we are serious about protecting those in genuine need and we want to go on delivering that protection for the future.

  SPEND TO SAVE
  We want to combine a strong, affordable welfare system with a successful low-tax economy. That means that when we spend money on social security, it must go only to those who need it. It also means that when we levy taxes, we must make sure that they are paid and not evaded by those who ought to pay them.
  As part of our continuing fight against tax and benefit fraud and tax loopholes, I am introducing a package of measures called "spend to save". That involves the

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  planned spending of money, carefully targeted to save much more money for the general public, and to raise revenue. There will be more money next year to clamp down on benefit fraud. There will be more visits and checks on benefit claimants in high-risk groups, and the information that we already have on benefit claimants will be used more effectively to catch cheats.
  Inland Revenue tax experts will be redeployed to investigate even more rigorously how some big, sophisticated companies seem to pay so little tax. They will make sure that companies are paying what they owe, and what we intended they should owe. In short, we intend to do more about companies being "economical with their tax".
  There will be more resources in the Revenue and Customs to stem the growth of the shadow economy. Tax cheats put law-abiding small entrepreneurs out of business, and we all lose from that. There will be more Customs and Excise officers to tackle value added tax and other tax abuse, including yet more to target the smuggling of alcohol and tobacco.
  The "spend to save" package will cost £800 million over the next three years to secure, in a well-planned and measured way, revenue and expenditure savings of well over eight times that amount—£6.7 billion. These measures are additional to the effective steps that we have taken previously.

  RUNNING COSTS
  "Spend to save" protects the ordinary taxpayer and the people in genuine need of benefits. It is certainly not about more bureaucracy or more red tape.
  We remain a Government committed to deregulation, and we are committed to a more efficient civil service. We have cut overall central Government Departments' running costs by 8 per cent. in real terms since the start of this Parliament and we are going to reduce them by a further 7 per cent. by the end of the decade. Civil service numbers are already below half a million, and we expect this fall to continue.

  TAXATION
  The first duty of Government is to make sure that people can live their lives as they want and that businesses can flourish. People must have the opportunity of a good quality job to go to, a good standard of living, good schools and hospitals, and safe streets to live in. It is only when those essentials are secure and only when the Government have made sure that they are not borrowing more than they should, that a responsible Government can start to think about tax cuts.
  Last year I cut taxes paid by the ordinary family and this year I am able to cut a little more. I think that the message I have repeated over recent months has now been understood. If there are to be tax cuts, in my opinion they must be for keeps. That means that they must be backed not only by sound spending decisions but by a sound fiscal judgment.
  Consumer spending is strong and inflation remains in check. But a fiscal stimulus to the economy at this stage could be just as damaging as letting go of monetary policy. So, in setting my Budget, I have struck a careful balance.
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  I want to cut taxes, but first I have to continue my drive to secure the tax yield. I want to make sure that the tax due is turned into tax paid. The balance of the tax burden must be distributed sensibly and fairly and it must not distort decisions or competition.
  I am introducing a number of measures which will help us to achieve this. I am plugging some loopholes to raise revenue, I am ending some tax reliefs that have done their job to raise revenue and I am adjusting some indirect tax rates.

  SECURING THE TAX BASE
  Even though VAT revenues have revived in recent months, they are still coming in significantly below what was expected last year. This Budget includes a crackdown on some of the rather ingenious wheezes that have sprung up to get around paying VAT. The measures I am announcing will raise £¾ billion in revenue next year, but they also protect a further £1½ billion a year of existing revenue from further attack from ingenious accountants, acting lawfully and acting to take our revenue.
  Customs will restrict access to special VAT schemes for retailers. We will also tighten up the rules of VAT relief schemes for bad debts and the option to tax commercial property to prevent widespread abuse of these reliefs. I also propose to take steps against retailers who reduce their VAT bills when selling insurance with their products.
  We have already announced a three-year limit on repayments of VAT claims. This was a sensible precautionary measure in the national interest—not just that of the Exchequer. Recent high-profile court cases have revealed the potential exposure of the Exchequer to enormous claims for tax going back to when VAT was first introduced. No responsible Government could leave the Exchequer and, ultimately, all taxpayers exposed in that way. Government needs to strike a balance between what is fair to the individual taxpayer, and what is fair to the whole body of other taxpayers. The three-year cap that I have announced strikes that balance.
  But one feature that attracted particular criticism from not only accountants and their clients but others was that Customs and Excise retains the right to claim underpaid tax going back six years. That argument was rather disingenuous, because Customs and Excise does not claim underpaid tax on unexpected changes to the interpretation of the law when they go against taxpayers. However, Government must not only be fair—it must be seen to be fair. I have, therefore, decided that Customs' right to claim underpaid tax, in cases where no fraud or malpractice is involved, should be restricted to three years as well.
  I will be releasing today details of a package of measures to stamp out tax abuse in a number of areas, including leasing transactions, the abuse of foreign tax credit rules and paying employees in their own company's shares. I am sure that they will be accepted by the House and others as necessary and sensible measures to stem the growing loss of tax revenues, and thereby to protect the ordinary tax payer. I will not tolerate tax abuse. A number of those measures are being introduced—subject to the Finance Bill becoming law—with effect from today.
  Special tax reliefs can be a powerful tool. They can play an important pump-priming role, and encourage companies and individuals to change their behaviour in a

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  way that benefits the wider economy. But by their very nature, they need to be used very selectively. We owe it to the ordinary taxpayer to keep each and every special tax relief under constant review to determine whether it is still justified, or whether it has now served its useful purpose.

  PROFIT-RELATED PAY
  The tax relief that the Government introduced in 1987 to promote profit-related pay schemes has been a success. It has played a key role in reinforcing the Government's strong beliefs that employees' rewards should depend on the success of the business for which they work.
  I have always believed, and have argued publicly for many years, that in a modern enterprise economy people's pay should be closely linked to the performance of the business for which they work. The best way for businesses to motivate their staff is to let them share in the rewards of success. I am delighted that tax reliefs have helped to get that idea accepted so widely.
  Tax relief on profit-related pay was always intended to be a pump-priming measure, and it was introduced in very different circumstances. In the 1986 Green Paper, Nigel Lawson said:
  "There is considerable inertia to overcome, so it might make sense to offer some temporary measure of tax relief."
  Profit-related pay is now firmly established as part of British businesses' pay policy. It is one of the reasons for our success. More than 3.7 million people are in schemes. Ten years on, the temporary tax incentive has successfully served its pump-priming purpose.
  I can no longer justify the ever increasing cost of the tax relief to the 22 million taxpayers who are not in profit-related pay schemes. We cannot permanently divide the work force into groups of people who pay different levels of tax on the same earnings depending on whether the firm that they work for is in a scheme or not. The aim of the relief—a widespread use of PRP—has been achieved, and I would rather make faster progress on lower taxes for everybody. We have changed the culture.
  Good managers in today's enterprise economy no longer need a tax relief to know that pay should be linked to their firm's performance. Pay linked to profits produces it own rewards on the bottom line in a thriving economy.
  I shall describe to the House how the Government will start to withdraw this special tax relief. I intend to do that gradually, so I must ensure that businesses which need to adjust their pay packages and their sharing of the rewards of success have ample time to make those adjustments.
  The upper limit of pay attracting the relief will remain unchanged at its present £4,000 until 1998, which means that no one will be affected before then. [HON. MEMBERS: "In time for a general election."] But during the lifetime of a Conservative Government. It will then be progressively reduced until the year 2000, when the relief will be withdrawn altogether.

  CAPITAL ALLOWANCES FOR LONG LIFE ASSETS
  Investment is vital to our recovery, and business investment is now growing strongly. The tax system recognises investment through capital allowances. These allow the cost of investment to be written off against tax bills, frequently faster than it is written off in commercial accounts. But within that system, for plant and machinery with a long lifespan, the rate at which costs can be written
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  off for tax is far more generous than for other types of investment, and bears no relation to the useful economic life of the asset. This is an unjustifiable distortion in the tax system in favour of particular types of business and investment.
  I propose changing the capital allowance for plant and machinery with a life of more than 25 years to 6 per cent. on a reducing balance basis. That will spread the tax relief more evenly over the average life of these assets. Groups spending less than £100,000 a year on such assets will be exempt. This will mean that the vast majority of small companies will not be affected. Ships and railways will also be exempt.

  OIL PRODUCTION
  I also propose to withdraw the 100 per cent. corporation tax deduction for the intangible costs of drilling most production oil wells.
  OTHER TAX CHANGES
  The Government recognise that low marginal tax rates on income are a spur to hard work and enterprise. Taxes on spending do less damage to effort and enterprise than taxes on income, but the balance of the taxes that we do impose on spending must be right, and I am making some changes to taxes which help to move towards a better balance for the tax system as a whole.

  INSURANCE PREMIUM TAX
  I propose to increase insurance premium tax, which applies to most general insurance, to 4 per cent. Three quarters of all insurance—including life insurance, and other long-term insurance—will remain exempt. Insurance remains undertaxed for consumers compared with other services in this country.
  The introduction of the tax—I made it a very low rate—did not harm the healthy insurance industry that we have. Most companies absorbed the tax, and some premiums actually fell for a time. Even after this further modest change—which I think is lower than many people expected—the overall rate of insurance premium tax in the UK remains very low, lower than in almost any other European Union country.

  AIR PASSENGER DUTY
  Air travel has also been undertaxed, because it has proved difficult—still proves difficult—to get international agreement to tax its fuel. The rates of air passenger duty are to be increased. The £5 rate on flights to most European countries will be increased to £10, and the £10 rate on flights to the rest of the world will be increased to £20. Those increases will not come into effect until 1 November 1997. [Laughter.] I realise that we are all thinking of a forthcoming election, but the reason why the Opposition cannot produce a responsible economic policy is plainly that they are obsessive about it. The very good reason for delaying until November 1997 is to give tour operators who have already sold their packages time to reflect the new rates in the prices that they publish in their holiday brochures. I announce necessary things before an election. That is responsibility; that is what is totally lacking among Opposition Members, who seem to propose to announce nothing whatever of any substance, apart from a windfall tax, this side of the election.

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  Business travel is soaring, and the holiday business is booming at the moment in prosperous Britain. This modest change will not stop it booming in future prosperous years. About 40 per cent. of the revenue raised by passenger tax is borne by overseas visitors.

  VEHICLE EXCISE DUTIES
  I am making the same changes to the main vehicle excise duties this year as I did last year. The cost of a car tax disc will go up by £5, around the rate of inflation. The cost of a lorry tax disc will be frozen for the seventh year in succession.

  ROAD FUEL DUTIES
  I firmly believe that motorists should bear the full costs of driving—not only wear and tear and congestion on the roads, but the wider environmental costs. Even those of us who frequently have to drive—and, contrary to rumours that Ministers always travel in limousines, that includes most hon. Members—can take steps to cut fuel consumption and we all ought to consider carefully the use of our car.
  I intend to stick to my 1993 Budget commitment to raise road fuel duties by an average of at least 5 per cent. each year in real terms. In line with this, I am raising the tax on all petrol and diesel by 3p per litre from 6 o'clock tonight. Those tax rises will encourage fuel efficiency and help to control harmful pollution.

  AIR QUALITY PACKAGE
  I am glad to say that pollution from vehicles is already coming down, helped by tax measures in previous Budgets. The tax measures that we took to encourage unleaded petrol were a huge success. It now accounts for two thirds of the petrol market. I want to go further in this Budget for green purposes or, to put it more sensibly, to attack pollution in cities and to improve air quality by effective steps to reduce particulate emissions—the smoke produced by diesel engines.
  In recent years, new evidence has come to light strengthening the health arguments for reducing particulates. This pollution is being reduced, but we all want to see it being reduced further and faster.
  Ultra-low sulphur diesel is cleaner than ordinary diesel and it is slightly more expensive to produce, so I want to create the conditions where ultra-low sulphur diesel can cost the same at the pump as ordinary diesel. I have just said that I am increasing the tax on diesel by the same amount as petrol. I plan to reduce the duty on ultra-low sulphur diesel by 1p per litre relative to ordinary diesel, when I get the necessary international agreement.
  I also want to encourage high-mileage vehicles in our towns and cities to switch to cleaner gas power. Last year's Budget changes broadly equalised the pump prices of liquid gas and petrol. From 6 o'clock tonight, I am reducing the duty on road fuel gases by a further 25 per cent.
  I also intend to reduce vehicle excise duty by up to £500 for lorries meeting very stringent emissions standards from early 1998. That will give an incentive for lorry owners to fit particulate traps or to convert to gas power. We will be consulting on the practical details of those changes.
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  I believe that this air quality package will significantly speed up the reduction of urban emissions of particulates, helping us to meet our air quality targets for 2005 and beyond. We intend to ensure that the economic growth that we are achieving faster than others in this country is consistent with a healthy environment and with sustainable development as we become one of the most successful economies in the western world.
  In my 1993 Budget, I gave a commitment to raise duty on tobacco by more than inflation each year. I believe and accept that that is a fair and effective way to hammer home the message that smoking can seriously damage one's health. So far as I am concerned, this announcement is necessary masochism in the wider public interest.
  From 6 o'clock this evening, the tax on a packet of 20 cigarettes will increase by about 15p, on a packet of small cigars by about 7p and on a packet of pipe tobacco by about 8p, but I am limiting the increase in the duty on hand-rolling tobacco to the rate of inflation. Hand-rolling tobacco is proving to be by far the easiest tobacco product to smuggle, although it represents a very small part of the tobacco market.
  Mr. Terry Lewis: What time do the shops close?
  Mr. Clarke: Not yet.

  ALCOHOL
  I am aware of the serious problem that cross-border shopping and smuggling of alcohol causes our drinks industry in Britain. I have already announced that customs is further stepping up its efforts to catch smugglers.
  Last year, I was able to freeze the duty rate on beer and wine. This year, it will remain frozen. The proportion of tax on the price of a pint in the pub is now at its lowest level for 30 years. For some of us, that helps to keep our small cigars affordable—[Laughter.]
  Last year's cut in the duty on spirits was the first cut that any Chancellor had made for 100 years, and I was tempted to maintain a striking rate of once every 100 years. But I am sure that the industry will be glad to know that it will not have to wait so long this time. From 6 pm tonight, the tax on whisky, gin and other spirits will fall by another 4 per cent., which is worth 26p. The reduction in the rate on spirits boosts an important industry in the United Kingdom, and it will also reinforce last year's signal to overseas authorities not to discriminate against our products. Only smugglers will regret that we are slowly moving our duty on spirits nearer to the continental level.
  From 1 January, the tax on alcoholic soft drinks will be increased by over 40 per cent., which will put up the price by between 7p and 8p a bottle—for those who have not yet tried them. That increase will meet public concern about the attraction of the "alcopops" for under-age drinkers, but it will also attack a distortion of competition by bringing the tax broadly into line with that on beer. The House will notice that I have considered carefully the balance of my overall package on this matter, and I have not yet been converted to a bubble-gum flavoured "alcopop"—[Laughter.]

  BUSINESS
  Nothing matters more for business than a stable economic environment—low interest rates and low inflation—and businesses throughout Britain are benefiting from the healthy sustainable growth in the economy that I have described today.
  As I promised in my last Budget, there will be, from April 1997, a cut in the main rate of employers' national insurance contributions, to 10 per cent. The cut will be paid for by the proceeds that we are receiving from the landfill tax. A tax on waste is cutting a tax on jobs, and it will benefit employers in Britain and make it even cheaper to create new jobs in our growing economy. Our overheads on jobs are already less than half those in Germany, France or Italy. I am determined that we must keep that advantage over our competitors on the continent, where the creation of new jobs, in the rest of the European Union, is overregulated and overpriced. That fact is another practical reason for being confident that our unemployment will keep falling.
  In this Budget, I propose to keep the three intermediate thresholds for employers' national insurance contributions where they are now. I propose to increase—by £10 and £1, respectively—the upper and lower earnings thresholds for employers' and employees' national insurance contributions.
  In this Budget, I also want to deal with a particular concern of our small businesses, upon which so much of our future economic prosperity depends. I think that small businesses are most concerned about the burden of non-domestic rates.
  The uniform business rate is a fixed cost which can rise each year beyond the control of the manager of any business, and it hits the small business hard. Since the last revaluation of business rates, I have repeatedly slowed down the increase of rates for those businesses whose rates have had to go up. No business property has seen its rates go up by more than 7½ per cent. above inflation in any one year. But I want to do more than that; it is not good enough. I have decided to freeze next year's rates bill for all small businesses whose rates would have gone up. Small properties whose rates are falling will have those reductions accelerated, which will benefit over 1 million small business properties, by up to £130 a year.
  I want to go further. A freeze is a significant step that I can make right away, this year. We have already reduced business rates for rural village shops. But I realise that the current system of business rates bears particularly hard on smaller businesses, for which it represents a much bigger proportion of total costs compared with their large competitors. We must therefore move on as soon as possible to make more changes in the system to recognise this and to redistribute the burden more sensibly between smaller and larger businesses. My Budget next year will be a convenient opportunity to proceed with that.

  INHERITANCE TAX
  The Government are committed to reducing and then abolishing capital gains tax and inheritance tax. I repeat those commitments. But we have always said that we will cut these taxes only when we can afford to do so. This is a responsible Budget which is protecting future growth
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  and prosperity by putting the public finances into a healthier state. We will not be able to make progress on both these taxes this year.
  Mr. John Prescott: Next year.
  Mr. Clarke: The right hon. Gentleman can come back next year and discover from the same seat that he is now occupying.
  I am pleased to announce that we can take a further significant step towards abolishing inheritance tax. Inheritance tax is nowadays a penalty on thrift, independence and enterprise. It is a growing anachronism.
  Lloyd George's maxim that the "the most convenient time to tax the rich is when they are dead" no longer holds. Inheritance tax today is largely paid by people of modest means who either cannot or simply do not make careful plans to avoid it. [HON. MEMBERS: "Modest!"] Modest means in the opinion of all those outside the hard core of the labour movement, that is.
  Last year I made significant progress towards our commitment. In this Budget I will build on that by raising the value of the inheritance tax threshold to £215,000.
  Mr. Dennis Skinner: I read that this morning.
  Mr. Clarke: The hon. Gentleman appears to know that from this morning. Is he also aware that the Government have raised that threshold by 40 per cent. in only two years?

  TAX REWRITE
  In last year's Budget I announced a project to rewrite Inland Revenue tax legislation in plain English. That is a tall order. The project is as ambitious as translating the whole of "War and Peace" into lucid Swahili. In fact, it is more ambitious. I am told that "War and Peace" is only 1,500 pages long. Inland Revenue tax law is 6,000 pages long and was not written by a Tolstoy. We have consulted extensively on how the project should be carried out, and I am glad to say that there is wide consensus. The Inland Revenue will publish the plans and arrangements shortly after the Budget.
  The aim is to prepare a series of rewrite Bills, the first of them to be ready for enactment in the 1997–98 Session. My noble and learned Friend Lord Howe has produced a thorough and helpful report on how Parliament might handle those Bills. We endorse his broad proposals, and invite the Procedure Committee to consider how the House is going to handle the Bills in a sensible fashion. I can announce that my noble and learned Friend Lord Howe has agreed to chair the steering committee that will oversee the rewrite project.
  The project will bring the benefits of clarity and certainty to businesses and ordinary taxpayers. It has been widely welcomed and deserves the continuing support that it has enjoyed in all parts of the House.

  INCOME TAX
  The Government have led Britain towards our clear goal of a low-tax economy in which private enterprise has the incentive to generate jobs, investment and wealth to make people and their families more prosperous. We are

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  moving towards a low-tax economy in which individual living standards continue to rise and the Government can afford the excellent public services that people want.
  Low direct taxes are the most effective way to encourage enterprise and hard work—a message to which we have not converted Labour Members, but one that they no longer dare to deny. Under this Government, those who do an honest day's work and those who take entrepreneurial risk will keep more of what they earn and save by their own efforts.
  This year, people have taken more heed of my speeches on the overriding priority of securing future prosperity and jobs and financing key public services. Sensible people already expected my cuts in direct taxation to be modest before they read the one leak and many guesses this morning. They know that their well-being depends on lasting growth and more jobs and that living standards rise from a combination of steadily rising incomes in a successful economy and steadily lowering taxes. Tax cuts matter a lot to low-paid people and to men and women in ordinary jobs.
  I announced my income tax cuts last year as a return to our tax cutting agenda and, for the second year in succession, as a result of all the steps that I have announced, I can afford to deliver an instalment of that agenda. The choice is how best to do so. It is the old dilemma between thresholds and rates. Today it is between The Guardian, the Daily Mirror, The Independent or The Sun.
  I want to ensure that tax does not start to be paid at too low a level of income and I want to improve work incentives. Therefore, I propose to raise the threshold below which no income tax is paid at all.
  In this Budget, I am making an increase in the basic personal allowance of £280. That is 3½ times more than necessary to cover the rate of inflation. It will also ensure that each and every person who pays any income tax at all will get a direct benefit out of the Budget.
  I am also increasing the married couple's and related allowances by £40, maintaining the extra tax allowance to all married couples. It will now be worth nearly £275 each year for married couples. The tax system does recognise marriage, contrary to popular belief.
  We also give a special tax allowance to blind people. This year, I am increasing that by the rate of inflation. I am also moving to put indexation of that allowance on to the same statutory basis as for the other income tax allowances. I also propose to raise the threshold above which people start to pay the 40p higher rate tax by £600.
  One of the Government's most important pledges is that we will move to a basic rate of income tax of 20p as soon as we can. We are proving that we can move towards the delivery of that promise and still maintain healthy public finances. Every step that we take makes that more credible and makes it more affordable to reach the ultimate goal to which we are getting tantalisingly near and which a Conservative Government will achieve. As a further step towards that, I propose to widen the lower rate band of 20p tax by £200—twice as much as is required to meet indexation.
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  That will mean that the slice of income on which a 20p tax rate is paid will have more than doubled during the lifetime of this Parliament. More than one in four of all taxpayers will now pay a marginal rate of tax at 20p in the pound.
  They are wide thresholds, so were the newspapers wrong? Am I indeed going to cut a penny off the basic rate of income tax? What the newspapers did know was that my control of public spending and borrowing and the responsibility of my Budget means that I can raise thresholds, widen the 20p band and also responsibly afford to reduce income tax as well. If I had put it all on tax rates, I could have taken 2p off the basic rate of income tax, but I preferred instead to raise personal allowances and widen the 20p band for those at the bottom end of the scale. In addition, I am able to reduce the basic rate of income tax by one penny to 23p in the pound.
  The small companies rate of corporation tax will be reduced to 23p in line with that, helping 400,000 companies. The main rate of corporation tax of 33p is already lower than in any other major industrialised country. I look forward to hearing what the Labour party says about the basic rate of income tax.
  Seventeen years of steady progress—so far—means that the basic rate of income tax is now a full 10p lower than the rate that we inherited in 1979. The standard rate is now the lowest for nearly 60 years—since Stanley Baldwin was Prime Minister and Wally Hammond scored a double century at the Oval.
  Another penny off the basic rate is a significant further step towards this Government's target of a 20p basic rate of tax. For more than 7 million people, our promise of a 20p basic rate is already a reality. I am bringing other income taxpayers ever closer to that reality. A basic rate of 20p is a realistic and attainable goal for the next Parliament. We shall not be content until we have completed the task of getting it down to 20p and every Budget that I have presented has shown step by step how we shall get there.
  With increases in real earnings and all the tax changes in the Budget, a family on average earnings will be another £370 better off next year over and above inflation. We said it last time and it happened. The same family will have more than £1,100 more to spend each year after tax and inflation than they did before they voted Conservative at the last general election. In 1992, the background was one of a worldwide slowdown, but now we are enjoying strong growth and rising living standards, and we shall enjoy more of the same.
  In November 1993, I promised that I would put Britain firmly on course for a sustained period of rising prosperity and falling unemployment, based on low inflation and healthy public finances. I have done what I clearly said I would have to do and I have delivered on those promises.
  The Budget cuts public spending next year by £2 billion, and it generates an extra £½ billion in revenue through "spend to save". It contains a balanced tax package—it includes tax cuts of £2 billion while it secures the tax base by £1 billion. Taken together, the effect of the Budget is to tighten fiscal policy and so protect healthy lasting recovery—and still achieve our target of cutting the basic rate towards our 20p goal.
  I am a man of the world: I realise that virtue does not always brings its own rewards. I am probably not a particularly virtuous Chancellor, but this virtuous Budget

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  will bring rich rewards—the rewards of economic success to the hard-working men and women who are now in the best economic circumstances for years. It will also bring rewards to the Government. We should never forget that good economics is good politics.
  This is not a Budget just for the next few months; it is a Budget for many prosperous years to come. It is a Budget that the Government will build on again in 12 months' time and I commend it to the House.

  PROVISIONAL COLLECTION OF TAXES
  Motion made, and Question,
  That, pursuant to section 5 of the Provisional Collection of Taxes Act 1968, provisional effect shall be given to the following motions:—

  (a) Spirits, and wines of equivalent strength (rates of duty) (motion No. 2);

  (b) Hydrocarbon oil (rates of duty and rebate) (motion No. 7);

  (c) Tobacco products (rates of duty) (motion No. 9);

  (d) Vehicle excise duty (increase in general rate) (motion No. 12).—[Mr. Kenneth Clarke.]

  put forthwith, pursuant to Standing Order No. 50(2), and agreed to.
  Mr. Deputy Speaker: I now call on the Chancellor of the Exchequer to move the motion entitled "Amendment of the law". It is on that motion that the unified Budget debate will take place today and on succeeding days. The remaining motions will not be put until the end of the Budget debate next week and they will then be decided without debate. After the Finance Bill has been brought in, the House will be invited to dispose of proceedings on a motion dealing with public expenditure, which will have been debated along with the Budget resolutions.

Budget Resolutions and Economic Situations

  AMENDMENT OF THE LAW
  Motion made and Question proposed,
  That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance; but this Resolution does not extend to the making of any amendment with respect to value added tax so as to provide—

  (a) for zero-rating or exempting a supply, acquisition or importation;

  (b) for refunding an amount of tax;

  (c) for varying any rate at which that tax is at any time chargeable; or

  (d) for any relief, other than a relief which—

  (i) so far as it is applicable to goods, applies to goods of every description, and

  (ii) so far as it is applicable to services, applies to services of every description.—[Mr. Kenneth Clarke.]

  4.49 pm
  Mr. Tony Blair: We have heard a Budget that was very, very big on boasts, but let us look, one by one, at the facts of what the Chancellor of the Exchequer said. The one advantage of what has happened in the past 24 hours is that the Opposition are perhaps a little better prepared than normal on exactly what those facts are. We shall go through every one of the claims and test them out—first, tax. [Interruption.] I know that Conservative Members may not like to hear the facts, but they are going to get them from us, if not from the Chancellor.
  One thing that we now know for certain is that taxes will be higher at the next election than they were at the last. The Conservative party, which fought the election on the promise that it would cut tax, will, after all the changes that have been made today, leave the average British family £2,120 worse off in tax. The Chancellor announced a crackdown on tax cheats. I think that he should start with the Conservative party.
  There have been 22 Tory tax rises. Mortgage tax relief has been cut, the married couple's allowance has been cut—and not made up for by what he did today. National insurance has been raised, and not compensated for by what he did today. VAT was raised—we did not hear much about VAT, did we? It was as if that was never touched. The Chancellor said, of course, that the Conservatives have reduced the burden of tax. If one takes into account all the Tory taxes, the burden of tax is greater now for the average family than it was.
  On what we thought was coming, I was going to say that, as a result of the Budget, the Government have subtracted 2p from the equivalent of 7p that they have put on the standard rate of tax, which equals a 5p rise. I thought that that was going to be good enough, but that would be too generous.
  The other point that one notices when one goes through the facts is that the Government are back to their old Tory tricks. Let them confirm this: council tax, on their figures, is due to be put up by £4 billion over the next three years—a 6 per cent. rise. The Chancellor said that profit-related pay would not bite until next year, but will he confirm that some of the people on profit-related pay are low-paid workers, and that, when all the changes come

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  into effect, some of them will face a change in their income equivalent to about 8p on the standard rate of tax? We heard nothing about that.
  Insurance tax is also going up, airport tax is going up, there are measures on lone parents and there are measures on company cars. The record of the Tories over the years is that they give with one hand and take with the other.
  We may like to ask just how credible the Government's tax promises are. Days before the last election—in fact, in the Budget before it—the then Chancellor, the right hon. Member for Kingston upon Thames (Mr. Lamont), said:
  "I now turn to the question of value added tax. I have a very important announcement to make, to which I hope the whole House will listen carefully. I have no need, no proposals and no plans either to raise or to extend the scope of VAT."—[Official Report, 10 March 1992; Vol. 205, c. 761.]
  If they told those untruths then, why should we believe them now, no matter what they say?
  I thought that the most extraordinary point that the Chancellor made was about the great cuts in public spending that will come about as a result of the closure of loopholes and a more effective policing of the tax regime. I must point out that, when my right hon. Friend the Member for Dunfermline, East (Mr. Brown) used to talk about loopholes, the Chancellor said that the problem was that they did not exist, and that my right hon. Friend was living in an "Alice in Wonderland fantasy". Now, the right hon. and learned Gentleman's spending plans rest on such loopholes. He says, apparently, according to the press release, that there will be 2,000 extra Inland Revenue civil servants, who will be hammering down—
  Mr. Jerry Hayes: He has seen the press release.
  Mr. Blair: I am sorry, but these things have already been put out by the Government. Perhaps the hon. Gentleman is not aware of that. Perhaps he thinks that, although the Chancellor is able to say such things, we are not able to respond to them in any way.
  I should like to quote a figure to the House. According to the Chancellor, he is going to get £7 billion over the next few years out of the changes and—apparentlycracking down on tax avoidance and loopholes. First such loopholes are an "Alice in Wonderland fantasy"—now, the entirety of the Government's spending plans rest on them.
  The Chancellor says that borrowing will come down, but I should remind him of another promise that the Government made. At the last election, the Prime Minister proclaimed that he was going to cut the national debt, and that borrowing was going to come down. Perhaps the Chancellor recalls that, according to the Government before the last election, the borrowing requirement by 1994–95 was going to be zero. It was actually £44 billion. This year, on the original plans, it was supposed to be £6 billion—it is now £26 billion.
  Having won an election on the pledge that he would cut taxes and cut debt, the Prime Minister has doubled the national debt. As a result—again the Chancellor did not give the figure; he was being very coy about the figures he gave in certain parts of the Budget—and according to
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  the Government's figures, the interest payments on that debt will amount to £25 billion a year. That is more than we spend on law and order and on defence, and all from a Government who promised to cut taxes and cut borrowing.
  The Chancellor said that one of the other ways in which he would get the money is through our old friend the public finance initiative; that somehow, hey presto, the money—[HON. MEMBERS: "Give some details."] Conservative Members want me to give some details. Fortunately, I am able to do so again. Last year, the Tory party said in the Budget that it was going to build 12 new hospitals; the contracts would be signed, and one hospital a month would be signed off. I shall tell the House how many hospital contracts have been agreed: one—last night, by an extraordinary and mystical coincidence, just minutes before the Budget was due to be announced.
  The Tories say that there will be more money for health and education. They always say that; they said it before the last election. A newspaper report said:
  "Christmas comes early. Big increase for health. Lamont puts spending up £11 billion. Extra for health, transport and education."
  Let us look at the facts and what is happening in our national health service today. Waiting lists are rising again, 36 trusts are in deficit, there are 20,000 more managers under the Conservatives, and there are 50,000 fewer nurses.
  I have something more to announce to the House. We have the plans on NHS spending, and I find in them a very curious inconsistency with what the Chancellor said. He said that he was going to put up spending by almost 3 per cent. in real terms next year, but in the provisional plans for the two years after that, the increase is down to 0.2 per cent. and then 0.1 per cent.
  In other words, there will be a boost for election year, but the Department of Health's actual total spending in the year after next, which obviously includes some of the community care and personal social services, will in fact fall by 0.7 per cent. Even on health, there is an absolutely classic example of the Tories giving with one hand and taking with the other.
  Let me tell the House what else we learn from the press release from the Department of Health. I presume that we are allowed to have the press releases from the Departments. Let us look at the national health service press release.
  We did not hear anything about capital spending earlier. According to the press release, it will be down 10 per cent. According to the press release, prescription charges will increase. According to the press release, there will be a new maximum dental treatment charge of £330. What the Government will try to say is that, yes, they are reducing some health service spending, but they are transferring community care to the local authorities. But the local authority spending plans show that they will get no more money for those increases. So that is another complete Tory con trick.
  On education, we are told that there will be another £800 million. My memory may be playing me tricks, but I remember £800 million for education last year. What actually happened was that, because local authorities—
  Mr. Robert Atkins: Labour authorities.
  Mr. Blair: It was nothing to do with that. [HON. MEMBERS: "Yes, it was."] No, it was not. Because local authorities were already spending £800 million above their limit, the real increase was less than inflation. That again was just a Tory trick.
  Here are some more facts the House should know. According to our figures—if the Government want to dispute them afterwards, I am happy for them to do so—the Government's planned expansion of nursery education has been cut. There is a £56 million cut in the money allocated for the introduction of the voucher scheme. The training and enterprise council budgets—the training and skills budgets—will be cut in cash terms by £34 million.
  The Chancellor boasted about the money that will go to universities. They, apparently, will get a capital spending cut next year of £20 million. As for the Chancellor's spending pledges on crime and the police, the Government have not yet made good the pledge they made at the last election to put matters right. Their problem is not just the trade gap, the investment gap or the skills gap: it is a credibility gap.
  Most extraordinary of all, days before the last election, the Prime Minister said—it has some echoes of what we have heard today—
  "Vote Tory and the recovery starts on Friday."
  "The economy is transformed", he said.
  "What do we offer? A strong economy, free from the threat of inflation, in which taxes can fall."
  But within months, taxes went up, borrowing went through the roof and the pound was devalued by 20 per cent.
  However, the most remarkable quote of all from the Prime Minister comes after the election, not before it. He was interviewed, about a year later, by the Los Angeles Times and this question was put to him:
  "a year later, you find yourself under tire. What happened?"
  He answered:
  "Fiddle-de-dee!"
  I do not know why he said that, but he did. [Laughter.] It is a somewhat unusual sound bite. He continued—this is the important point—
  "I said … the day after we won the election, with a number of people around me: 'Within (he next 12 months the government will be the most unpopular we have seen for a long time!"
  The Prime Minister said that he said that the day after the election. I do not understand that. If the recovery was to start the day after the election, if taxes were going to come down, if the public debt was to be halved, if industry was to boom, why were the Government going to be so unpopular? I will tell the House why the Prime Minister said that the Government were going to be unpopular—because he knew the truth; but it was not told at the election.
  Of course, the final point the Tories make is the one they always make before every election. We hear it every time—that we are now living through an economic miracle. I remember them saying that in 1987 and in 1992, but they are not running on the record of a few months and the figures before an election—they are running on the record of 17 years.
  Over those years, we have had one of the lowest rates of growth of any major European country. We rank today ninth in the prosperity league. Even now, with the same
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  population and all the problems they have, the French economy is a third bigger than ours. We have fallen from 13th to 18th in the league table of living standards. Why? Because the Tories have never paid attention to the fundamental weaknesses that remain. They say they have learnt from past mistakes, but the recent inflation figures and interest rate rises show otherwise. We are now 11th out of 15 for interest rates and inflation. That is the old stop-go disease and the Tory boom and bust that we all recall.
  We lack the investment we need to make recovery last, and our manufacturing base is still too weak. The Chancellor did not tell us that, according to the figures, manufacturing investment is some 14 per cent. down on a year ago. Nor did he tell us that he has had to revise his figures down from 2.5 per cent. to 0.25 per cent. Productivity still lags behind that of our main competitors, and the trade deficit, according to the figures published today, is due to worsen. We still have a lot of ground to make up.
  We are not equipped for the future in education and skills. We are now 42nd in the education and skills league and that is not good enough. Cuts in the training budget will not help us to do better.
  The Government boast of their record in falling unemployment, but if we measure not those claiming benefit—of course, there have been 32 changes to the way that is calculated—but the number of homes with people of working age in which no one is working, the figure is one in five, or 20 per cent. That is worse than many of our main competitors. The Chancellor chose a very good time for him on the job statistics. Since the Prime Minister came to power, the number of jobs in the economy has fallen. Last year, which is supposed to be the year that the Government boast most about, the number of full-time male jobs fell.
  Nothing in the Budget tackles those fundamental problems. The Conservatives cut training, do nothing but provide a few make-work schemes for the long-term unemployed, make cuts in infrastructure, and give no help to investment. Without measures for the long term to increase investment, boost education and tackle structural unemployment, we will never have a recovery or prosperity that will last. That is why we say the Conservatives have failed.
  The Chancellor mentioned welfare dependency, but the Government have doubled welfare dependency in this country. That is their failure. They spend money and the welfare bills are up, but investment is down. They have had the colossal bonus of North sea oil and asset sales—£200 billion—and squandered it. The tax burden is up—except, of course, for the most wealthy. Why? Because they have always thought that, if they looked after a few at the top, the many would prosper.
  The Government thought that it did not matter how divided, fractured or unequal our society became. They thought that, if they satisfied the short term, the long term would look after itself. But it does not work like that. An under-educated people will never make a prosperous country. A society marked with gross inequality simply spends money cleaning up the consequences of it. If we do not invest now, we will never reap the reward for the future, and a nation run for the few will never be fit for the many. Those are the fundamental questions that the Budget does not answer.

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  The problem is not only that the Chancellor was wrong on many of his figures or that he has concealed many of the facts, but that, when those fundamental questions are met and have to be answered, the Conservative party has no vision for the future that can answer them.
  This is the last-gasp Budget of a Government whose time is up, who cannot be trusted with the future and who cannot make amends for the past. We have heard all their promises before. We heard them at the last election, and we did not believe them. The difference this time is that the country now does not believe them either. They cannot be trusted on tax. They cannot be trusted on the economy. They cannot be trusted on the health service. They cannot be trusted on education. They cannot be trusted with our future. The truth is that, after 17 or 18 years of one Government, there are no excuses left. There is nothing left for them to do, except go—and the sooner the better.
  5.9 pm
  Sir David Knox: In the past, when Neil Kinnock or the late John Smith was Leader of the Opposition, one could expect a reasonable and reasoned response to the Chancellor's Budget. Today, we have heard no more and no less than a shambling rant. The right hon. Member for Sedgefield (Mr. Blair) will have to do better if he is ever to become Prime Minister of this country. The right hon. Gentleman complained that the Chancellor gave with one hand and took with the other. Some of us remember Labour Governments: they took with both hands and gave nothing back.
  I congratulate my right hon. and learned Friend on his fourth Budget speech. Like his previous ones, it was well constructed, well delivered and commendably brief—especially in view of the fact that it was a unified Budget. I recall some long speeches from previous Chancellors who were dealing only with the revenue aspects of the Budget. Today, my right hon. and learned Friend has maintained the high standards that he established with his previous Budget speeches. Of course, he had a good story to tell. Since spring 1993, he has managed the economy with skill and sound judgment, and has proved himself to be one of the most successful Chancellors in the post-war era.
  I give a general welcome to the Budget and the measures it contains, but I must confess that I am more enthusiastic about some than about others. On the positive side, I feel that the Chancellor has got the balance between public expenditure and taxation about right. He has been wise to resist the silly suggestions from some quarters that he should introduce substantial tax cuts. That could have been done only if public expenditure had been cut significantly, or if he had gone on an irresponsible borrowing spree. He has done neither, and he was right to do neither.
  Instead, although he has kept overall public spending under tight control, he has been able to increase spending on health, education and the police in real terms in the coming year. At the same time, he has generously increased tax allowances, broadened the 20p band and reduced the standard rate of income tax. To my mind, the public want more spent on health, education and the police, and, when possible, they want a little relief from the burden of taxation. Like me, they will conclude that the Chancellor got it right today.
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  I am pleased that my right hon. and learned Friend has managed, once again, not to increase the duty on beer and wine, and that—more important in my view—he has reduced the duty on spirits, particularly whisky. As he did last year, he has faced up to the problem of cross-border shopping in the European Union, and he has attempted to bring some sense to the issue. I want to see uniform duties throughout the European Union, and the best way to achieve that is if we were to continue to reduce duty, and the other EU countries put theirs up.
  I welcome the relief on non-domestic rates. Small businesses in my constituency and elsewhere find that non-domestic rates place a heavy burden on their finances. They will all be pleased to learn of the relief, and I am sure that it will enable them to maintain better finances and be more prosperous.
  I am glad that my right hon. and learned Friend is to plug loopholes in the tax system, wherever they occur, because they undoubtedly cause much resentment. A great deal of highly paid accountants' time is spent trying to discover such loopholes. I do not know whether plugging them will make any difference to that activity, but one would like to think it will.
  I have some reservations about the increase in petrol duty. I represent a widespread rural constituency, where local people are highly dependent on motor cars. The continual increases in duty place a heavy burden on people who live in rural areas, and many such people are not especially well off. I understand the environmental arguments, but there is a balance to be struck. I hope that the practice of increasing petrol duty by 5 per cent. plus the rate of inflation will not continue indefinitely.
  In the modern world, the Budget is but one of the means by which the Chancellor tries to control the economy. There is a time lag of between 12 and 18 months—perhaps even longer—before measures announced in the Budget affect the economy. The consequences for the economy of today's Budget therefore will not become apparent for some time. By then, we will also be feeling the effects of those external factors over which the Chancellor has little or no influence, far less control, and which he can only try to anticipate at this stage.
  I wish that some of the Europhobes would remember that. They should recognise that we do not have complete sovereignty over our own economy and that we might have greater sovereignty if we were participating fully within the European Union.
  Although my right hon. and learned Friend's Budget judgment is about right, we shall not know for certain for about 18 months. What is certain is that he has been able to introduce his Budget in more favourable circumstances than any of his post-war predecessors was able to. That was also the case last year, and in 1994. All the economic indicators are today pointing in the right direction: we have steady economic growth, low inflation, falling unemployment and a satisfactory balance of payments. I emphasise that last factor, because, up until the last couple of years, our balance of payments position was weak, and we ran an excessively high deficit on the current account for a long time.
  All those favourable factors are a great tribute to my right hon. and learned Friend, who has managed the economy with great skill, caution and prudence over the past three and a half years, and who—unlike so many of

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  his predecessors—has resisted the temptation to stoke up rapid expansion for electoral purposes, while ignoring the eventual disastrous consequences. As a result, the prospects for the British economy are good, especially in respect of inflation and unemployment.
  I never cease to be amazed by the short-term nature of so much that passes for serious economic comment in this country. Until slightly less than a fortnight ago, there was a consensus among commentators—with the exception of some monetarists—that inflation was under control. Then, because last month's figure showed a disappointing rise in the rate of inflation, those commentators are now suggesting that inflation might be running out of control, and that there should be a change in the direction of economic policy.
  It would be more sensible to wait for the figures for the next two or three months before drawing any conclusions. They might well show that last month's figure was merely a blip—indeed, there is evidence to suggest that it was.
  Over the past 20 years or so, the main restraint on the expansion of the British economy has been the size of wage and salary increases and the consequent increase in earnings. From the mid-1960s until the middle of 1993, wage and salary increases ran well ahead of the rate of growth, and so contributed to high inflation.
  Since early 1993, however, wages and salaries have been increasing by about 3.5 per cent. a year, and earnings by just under 4 per cent. a year. Although that is slightly in excess of the rate of growth, it means that wage and salary increases have had only a marginal cost-inflationary effect during the past three years. That, as much as anything, has contributed to the more stable prices that we have enjoyed.
  It is especially encouraging that, although the economic recovery started four and a half years ago, and although unemployment has been falling for four years, the steadily increasing demand for labour has not resulted in higher pay settlements; nor is there any sign that it will.
  During past economic recoveries, rising pay settlements quickly became apparent, and at higher levels of unemployment than obtain today. It is far too soon to suggest that we have broken clear of the earnings-prices spiral, but the prospects are much better than they have been for more than 30 years.
  It would be foolish to claim that we have conquered inflation generated by excessive increases in earnings, but it seems that, because attitudes to pay bargaining are more sensible today than for several decades, the situation is under control to a degree inconceivable a few years ago.
  Not only does that bring enormous benefits in terms of inflation: it also means that the restraint on economic expansion, and thus on lower unemployment, has been greatly eased. It should therefore be possible to achieve lower unemployment than we have experienced for quite a long time.
  At present, unemployment is about 2 million. That is much better than having 3 million out of work, as we had four years ago, but unemployment is still unacceptably high. In addition to its appalling social consequences, it is economically wasteful.
  For the first 30 years after the war, we had full employment in this country. The number of people out of work fluctuated a little, but rarely exceeded 600,000, or 2.5 per cent. of the working population. In 1955, and again in 1966, unemployment was as low as 1.1 per cent.—about one seventh of its level today.
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  For the past 20 years—I must emphasise that that covers the period in office of the Labour Government as well as that of the Conservative Government—unemployment has stood at more than 1 million, and has usually been much higher. Twice, in the mid-1980s and again in the early 1990s, unemployment has exceeded 3 million. Those figures show how far we have fallen from the high level of attainment during the 30 years after the war.
  Because of the damage that unemployment does, the major economic task facing my right hon. and learned Friend the Chancellor of the Exchequer in the next few years is to ensure that demand for labour rises, so that the supply of labour is much more fully utilised than it has been in recent years, and that, as a consequence, unemployment is much lower.
  A continuation of sensible pay bargaining should make that possible, and enable us to expand economic activity without producing earnings-cost inflation. That would bring much greater economic success and social harmony to our country.
  5.23 pm
  Mr. Paddy Ashdown: Delivering a Budget speech is always a test of a Chancellor, and our Chancellor—or, rather, the Government's Chancellor—delivered his with his usual panache and robustness. However, by far the more difficult job on Budget day is the response that must be made immediately by the Leader of the Opposition—although perhaps this year the Leader of the Opposition may have had a little more preparation than usual.
  I do not believe that, since I entered the House, I have heard a more attacking or a better speech by a Leader of the Opposition than that made today by the right hon. Member for Sedgefield (Mr. Blair)—although I am bound to say, gently, that his speech would have been better if, as well as attacking the Government so effectively, he had told us what he and the Labour party intended to do. In my speech I shall certainly seek to explain my party's intentions.
  No doubt this year's Budget will always be known as the leaked Budget, but I believe that, long after the row about the leak has subsided, the real effects of it will continue to be felt, and that almost all of them will be bad.
  The leak is the least important aspect of the Budget. It should be known not as the leaked Budget, but as the smoke and mirrors Budget, for which canny Ken turned into conjuror Ken. The Chancellor's Budget pretends to do what it does not. It pretends to be what it is not. It pretends that the small things that it does are big things; the really big things it does not do at all.
  By far the most important thing about the Budget is not what it does, but what it does not do. It is complacent about Britain's mountain of debt, and fails to tackle the problem of rising interest rates. It will not control inflation, as we shall find out to our cost.
  A Budget should be judged not by what it looks like at the time, but by what it looks like in a year's time. The 1988 Lawson Budget, delivered in circumstances similar to today's, was also described by the then Chancellor, and by most City commentators, as responsible. But it was not. The Liberal Democrats, almost alone, spoke and voted against it, saying that it would overheat the

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  economy, plunge us into debt and worsen the economic slump that would follow. It did all those things, and cost many thousands of people in Britain their jobs, their homes and their businesses.
  Last year, unlike the Labour party, we, again almost alone, voted against the Chancellor's tax cuts, saying that they would deepen debt and cause underfunding in the public services. They did both those things, and the price has been paid in larger classes in schools, closed wards in hospitals and cuts in local services.
  There will be three consequences of today's Budget. Within three months, interest rates will go up—at least, they ought to; if they do not, the only reason will be the fact that the Government have an election coming. Within a year, the income tax cuts will be reversed, and within 14 to 18 months inflation will be rising sharply again.
  Both the Chancellor, who proposed the income tax cuts, and the shadow Chancellor, who will not oppose them, know that perfectly well. They know that it does not matter which of them is in government, the tax cuts that they both agreed today for the sake of the election will have to be put back some time after the election. They both know that when, in a year's time, inflation starts to go up, belts will have to be tightened, public spending will have to be cut, and taxes will have to go up again.
  Again, the British electorate will feel that they have been lied to about tax—and they will be right. Again, trust in politics and belief in politicians will diminish, and again everyone in the House will wonder why the people of this country do not believe a blind thing that we say.
  Both the Chancellor who proposes the tax cuts, and the shadow Chancellor who dares not oppose them, know perfectly well that, when in due course the economic cycle turns down again, we shall carry into the next recession an even bigger pile of debt than we carried into this one. Britain will spin once again around the cycle of boom and bust that has done us so much damage under both Tory and Labour Governments for the past half century.
  Let us face some facts. The economy is in better shape than it was four years ago—but when we consider the appalling state of the economy at that time, that is hardly surprising. There is a recovery, but it remains a modest one and it has happened—as the public know, despite Tory propaganda trying to tell them otherwise—as much despite the Government as because of them. The Chancellor is to be congratulated on, up to now, following economic policies that, up to now, have, by and large, sustained that recovery, but now he has decided to put all that at risk.
  This recovery, such as it is, does not belong to the Chancellor but to the British people, who have paid for it during the past four years in terms of jobs, mortgages, negative equity and broken businesses. The Government have decided to put their recovery, won at such a painful price, in jeopardy for one purpose—to get themselves re-elected. The truth is that the economy is now, at last, growing steadily, but the Government are broke and they intend to squander our economic chances to improve their electoral ones.
  The Chancellor claims that he has delivered today a triple bonus of good things—a kind of triple whammy of lower taxes, lower borrowing and higher public spending.
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  This is conjuror Ken defying gravity. In fact, it is not a triple whammy but a triple con trick. Borrowing will be lower today, but only because it was deliberately increased as a target over the summer. It seems probable that the borrowing outturn from this Budget will be higher than the dangerous levels that we reached at the previous Budget, which the Chancellor then told us he was determined to bring down.
  The books that the Government have published today show that, during the next three years, borrowing targets have been raised by a full £14 billion over what the Government predicted—only one year ago—they would be. The Chancellor has promised today—as he did last year—that, this time, he really will bring borrowing down. But once again, that depends—as it did last year—on predictions of growth, inflation and public cuts that neither he nor anyone else has ever managed to achieve in the past. He might achieve one, but not all of them.
  Meanwhile, Britain's national debt—going now for 300 years—is now double what it was six years ago. The Government's borrowing is now double what they promised it would be two years ago, and the debt we are now incurring is still rising at a rate of £600 a second. Meanwhile, interest rates in this country are higher than those in any other European country except Greece, and are higher even than those of Italy and Portugal. As a result of the Budget, they will go higher still. The short-term consequences of that are bad enough, but they are even worse for the longer term. If we are still piling up debt in this, the fifth year of an economic upswing, I hate to think what level of debt we will carry into the next economic downturn when it comes. God knows what the consequences will be then for tax levels, mortgages, interests rates and public services.
  The Chancellor's second claim is that he has cut taxes, but even here he uses sleight of hand. Yes, he has cut income taxes—although he should not have—but he has raised other taxes, especially indirect taxes. In fact, what he has clawed back from raising petrol prices, insurance taxes, air taxes and cigarettes amounts to more than he has cut. Contained within the Budget is an increase in council taxes of £700 million, and the total tax rise in this Budget amounts to well over £1 billion. In fact, at the end of the process—as a result of a Budget that pretends to give people tax cuts—the average British family will be £41 a week worse off. As my hon. Friend the Member for Gordon (Mr. Bruce) is fond of saying, "When this Government talks about tax cuts, don't watch their lips—watch your pockets."
  The third deception in conjuror Ken's three-card trick is his claim to have boosted spending on health and education. This trick is one of those "now you see it, now you don't" affairs. What he gives us today, he will take away in May by forcing up the council tax. That is fine, because the Conservatives do not control many councils and the blame cannot be put on them. This cynical exercise is not about shifting resources into public services but about shifting blame on to somebody else.
  It is dishonest of the Government to say that they are increasing spending on education when the overall amount given to councils will be cut this year. Most sensible councils—such as mine, and many others—are spending well above the standard spending assessment levels on education, but the Government are now telling us that they are to increase spending on education. They will lie to the electorate by saying that, and they will then

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  cut the amount going to councils. The consequence will be either cuts in services and in education, or rocketing council tax bills.
  Here is a message for the Labour party. If it does not have the courage to vote against the tax cuts in this Budget, it does not have the right to campaign against the slashed school budgets, the rocketing council taxes and the underfunded local services that are the inevitable consequences of the Budget in the months ahead. Basic honesty suggests that, if Labour will not vote against the tax cuts here, it should not be campaigning against them outside.
  Here is what the Budget should have done. It should have had as its first aim the consolidation of the present recovery. Even a wholly neutral Budget would probably have been wrong, as this is the time to provide a touch of the brake. The Budget should have had at its core a clear strategy for reducing public debt, rather than handing out tax cuts—even small ones. A central instrument in that strategy should have been the immediate establishment of an independent reserve bank.
  The Budget's immediate target should have been to prevent long-term interests rates from rising again, and to start instead to bring them down to German and French levels. If we did that, we would save £8.5 billion of public expenditure in just five years. We pay a premium in this country because we have failed to convince the world that we will not continue to follow a policy of competitive devaluation. That results in our paying a real price in public expenditure, taxes and failing local services. A commitment to responsible economics should be the foundation stone for a debt-reduction strategy that will lead to sustainable lower taxes in the future and the more solid basis for the nation's finances that we need.
  The Budget should have aimed to shift resources away from consumption and into investment—especially investment in education. Britain simply cannot succeed while we are 47th out of 49 in the world education league tables, or when one third of our primary children are taught in classes of 31 or more—a figure that has risen by 10 per cent. in the past year alone. We will vote against the penny cut in income tax proposed in this Budget; we would put that £2 billion into education, where it can do the most good for this country and our children.
  The Budget should have taken a much larger step towards a long-term shift towards environmental taxation by reducing tax on the things we want more of—such as jobs and wealth—and increasing tax on the things we want less of, such as pollution, energy and the use of finite natural materials. This is not tax raising but tax shifting to create not just a strong economy, but a sustainable, clean and safe environment.
  This should have been a Budget to tackle poverty and to begin to get people back to work. The gap between the haves and the have-nots in Britain is growing dangerously wide and now threatens the very fabric of our society. Rickets, malnutrition and tuberculosis have reappeared—a return to Victorian values indeed. The levels of poverty and deprivation in Britain are now a national scandal, and it is time we started to tackle them.
  I find nothing wrong with saying that those who have benefited the most from the Tory years should be prepared to pay their bit to tackle poverty. We should be prepared—as I regret the Labour party is not—to raise tax for those with taxable earnings of more than £100,000
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  a year to 50 per cent. To those who say that that would drive away the entrepreneurs, I say rubbish. In many countries, such as Japan, the highest earners pay 50 per cent. tax on similar earnings; and in many others, such as France and Germany, 50 per cent. taxation begins well below the £100,000 a year threshold that we propose. I do not see top earners flooding to leave those countries.
  With that money we could lift out of tax altogether hundreds of thousands of those who have suffered most during the Tory years; we could provide new incentives to work; reduce the country's social security bill; and lower the taxes for 99.5 per cent. of taxpayers across the board.
  The Budget could and should have been the start of a new contract between politicians as tax spenders and the public as taxpayers. We have to raise the level of the tax debate above the silly, puerile battle of insults between Tory and Labour that we have heard over the past few weeks. The Conservatives won the last election by lying about tax, and they appear to have decided to try the same trick again. I am sorry to say that Labour appears to have decided to join them.
  I fear that we are about to witness the most sterile, negative and childish general election that we have ever seen. Let me make it absolutely clear: taxes are the subscription charge that we pay to live in a civilised society. The public should be entitled to the truth about tax, to influence how their money is spent and to know that it is spent wisely.
  We have proposed a new framework for the debate through a fiscal responsibility and tax contract Act, but there are many other ways of achieving the objective. It is clear that, having been lied to so often on tax, the British public rightly do not believe a word that most politicians say about it. We in the House must recognise that truth and begin to tackle it, or one day we shall find that the basis of our system of public finance, and perhaps even the basis of government itself, has been fatally damaged.
  This is a Budget of slick tricks and small measures. It pretends to be responsible; but it is not. It pretends to give big tax cuts; but it does not. It pretends to invest in public services; but it will not. Though the measures in the Budget may be small, the damage that it will do will be big, because it is notable not for what it does but for what it does not do.
  Instead of consolidating the recovery that we have bought at such a high price, the Budget will place it at risk. Instead of lessening the huge burden of debt piled up by the Government, it will leave it for some future Government to pay for. Instead of investing in education, it tries to invest in the Conservatives' re-election. It is a bad Budget from someone who has up to now been rather a good Chancellor, and I am sad about that. We shall vote against the Budget and against the tax cuts that it contains, and we shall look forward to the real Budget that Britain needs and for which we must now wait until after the next general election.
  5.42 pm
  Sir Anthony Grant: I do not agree with what the right hon. Member for Yeovil (Mr. Ashdown) said, but he had the decency and the honour to admit frankly that his policy was to increase taxation. That is more than we ever get from the Labour party. We all know that a Labour Government would

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  increase taxation, but Labour Members do not have the decency to admit it. The right hon. Gentleman was positive in his speech—positively wrong, but positive compared with the Leader of the Opposition.
  We were entertained by the Leader of the Opposition's speech, although I thought that it was more appropriate to Hyde park corner than to the House of Commons; in fact, there were moments when I thought that he was about to emulate my hon. Friend the Member for Welwyn Hatfield (Mr. Evans) and talk about "That lot over there". The speech was entertaining, if not in any way positive.
  I want to say a word about the leak that took place. I do not agree with the Leader of the Opposition that it is not important or relevant. It is extremely serious when, through either wild incompetence or disgraceful dishonesty, matters as important as the nation's Budget can be leaked. We cannot go on like this; whether we have a Labour or a Conservative Government, we cannot conduct the nation's affairs if we cannot have trust in the people who are employed by the state.
  If the distrust continues, the alternative, I regret to say—I have said it in other debates, such as that on Ponting and the defence leaks—is that, when the Administration change, parties will bring in their own people, which would not contribute to the stability and well-being of the country. I hope that the situation can be rectified as a result of what I regard as a deplorable event.
  I have spoken in nearly all Budget or Finance Bill debates since I entered the House a very long time ago; this will be my last. Walking down memory lane, it has not always been a pretty sight. I am old enough to recall selective employment tax, which was such a disaster; the introduction of the first capital gains tax, which was a disaster; devaluation, when the pound in our pockets was changed dramatically, despite what Harold Wilson said; and the collapse of the Labour Government's economic policy when Denis Healey was Chancellor and the International Monetary Fund had to be called in—so much for the sovereignty about which we boast so much.
  I can also recall the biggest tax hike in my experience, brought in by Roy Jenkins, who has since dissociated himself from the Labour party. He was cheered to the echo by Labour Members, and I shall never forget it. Of course, the party then lost the general election. I remember all those gloomy events. I am old enough to remember what it was like when Labour was in office, and I shall continue, whether in the House or out, to remind the public of it.
  The tests that I have always tried to apply in such debates are as follows. Did the Budget encourage the spread of ownership throughout our country? I have been a pioneer of spreading ownership since long before I became a Member of Parliament, and I rejoice that today there are 10 million shareholders, compared with 3 million when we took office.
  Did the Budget reduce the power of the state to interfere with individuals' ability to develop and care for themselves and their families and did it also care for those who are sadly unable to care for themselves? Did it ease the burden on small businesses, which are fundamental to the growth of the economy as a whole? That is a cause that I have espoused ever since I became the very first very small Minister to have responsibility for small firms, many years ago.
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  Did the Budget encourage thrift and responsibility and, above all, did it enhance stability and create the confidence that a free, civilised trading nation demands? I believe that this Budget passes my test of many years' standing. I am especially pleased that my right hon. and learned Friend the Chancellor has recognised the difficulties of small businesses with the uniform business rate. That is something that I have urged for a long time.
  I am glad that the Chancellor has got his spending priorities right in education, law and order and health. Those are the issues about which my constituents are concerned, and he has wisely recognised that; his proposals are extremely welcome. Above all, his record has been one of creating a stable economy, and I want to emphasise the test of stability.
  Since 1992, we have had the strongest recovery of any major European Union economy. Inflation, to which my right hon. Friend the Prime Minister attached so much importance when he took office—it was almost an obsession—has been below 4 per cent. for longer than at any time during the past 50 years. Income tax is at the lowest rate for 50 years. One million fewer individuals pay that tax, and that figure may well go up. As a trading nation, we export more per head of population than does the United States or Japan. That is a great tribute to our exporters. Mortgage rates are at their lowest for 30 years. As that continues, I hope that it will stimulate the emerging recovery of the construction industry and confidence in the housing market.
  In a nutshell, the economy is in better shape than at any time I can recall since I entered Parliament. The Chancellor has maintained that stability on which business, industry and the individual depend. There have been persistent calls from some of my hon. Friends and others for reduced taxation, although I confess that there has not been much clamour for that in my constituency postbag. Certainly, I want reduced taxation; I have always believed that money belongs to the individual, not the state, and should therefore be extracted and redistributed with the utmost care and reservation.
  Way back in the 1950s, the late Anthony Crosland, the great intellectual of the Labour party and a much respected man, said that there was no hope of increasing individual welfare through redistribution via the tax system. That sentiment was unpopular and unfashionable at the time—I do not know what view the Labour party takes now.
  Over the years, I have welcomed the necessary shift from direct to indirect taxation—I openly admit that. Direct taxation is a tax on work and enterprise. No less an authority than Lord Healey would support me on that. He said in 1976 that a
  "high level of direct tax does discourage enterprise".
  I entirely agree with him.
  Indirect taxation, on the other hand, is a tax on spending. Both types of taxation include an element of choice. Capital taxes, however, are the worst of all, for they are a tax on thrift and saving, about which there is no choice whatever. I am therefore pleased that the Chancellor has maintained the right balance between direct and indirect taxation, between taxes on work and on spending, and has also gone some way—perhaps not far enough, since I do not like capital gains tax—towards helping by easing inheritance tax. That is welcome,

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  because it will help a great number of people who want to build up wealth and pass it on, or who want to develop their small businesses. The policy is right in that respect.
  If the price of reducing taxation is increasing interest rates, I would plump for interest rate stability every time. The Chancellor has said much the same thing. The CBI wrote in a recent publication:
  "The more stringent the Chancellor is in his Budget, the less will be his subsequent need to rely on higher interest rates".
  I am glad that my right hon. and learned Friend has not gone as far as some people would wish on the tax reduction front.
  Of course interest rates are a weapon in the battle against inflation, but I congratulate my right hon. and learned Friend on keeping things so well in perspective. We do need fiscal as well as monetary measures to control inflation. I strongly hope that we shall never revert to the rollercoaster years of the past, or to the appalling state of affairs that prevailed under the last Labour Government: the IMF was called in, interest rates went through the roof, unemployment was rising and industrial confidence fell through the floor.
  Nor should we tolerate a return to the 1980s, when, egged on by Labour and Liberal Members, and many others—I include myself in that; I have uttered my mea culpa in the House before—the Chancellor reduced interest rates too far, with the resulting boom and bust from which this Government and this Prime Minister have struggled so hard, successfully now, to recover.
  I congratulate my right hon. and learned Friend on his Budget. The only sane economic policy for any industrial nation must be to contain inflation, to keep Government debt at least below 60 per cent. and the deficit below 3 per cent. of GDP, to seek stable exchange rates, and to keep interest rates at no more than 2 per cent. above the European Union average. Those are, of course, the EU convergence criteria, but curiously they also coincide with the economic philosophy put before the electorate at all 10 general elections in which I have participated. The only surprise is that the criteria should strike such terror into the hearts of modern journalists and the broadcasting media. In or out of EMU, in or out of Europe, there is no escape from this discipline.
  Whatever we do, we will be economically affected by what the European Union does. We can no more sail in economic isolation from the EU than Scotland or Cambridgeshire can sail in isolation from the rest of the United Kingdom. All sensible people—all except the Opposition and certain receivers of stolen goods—will therefore share my confidence that, with patriotism and integrity, this Chancellor has the ability and the determination to do what is best for our nation.
  I have referred to all the elections in which I have participated. I shall close with the theme of the very first election I fought, in 1959, because I believe it to be applicable to today's Budget and today's political scene: "Life's better under the Conservatives—don't let Labour ruin it".
  5.55 pm
  Mr. Roy Hughes: Like the hon. Member for South-West Cambridgeshire (Sir A. Grant), I have been a Member for a long time, and like him I have spoken in many Budget debates. The pattern seems
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  always to be the same. Beforehand, the pundits make a deep economic assessment of what the Budget is likely to contain. Those forecasts are sometimes supported by leaks, official and unofficial. In Wales we know all about leeks—we actually bow down to them—but this time there has been an unofficial leak of gigantic proportions. The whole Budget litany has been blown asunder.
  What we heard from the Chancellor—we could have read it elsewhere—was that income tax was down by 1p, to 23p for the basic rate. That represents a giveaway of £1.9 billion. Like the leader of the Liberal Democrats, I think that that money would be far better spent on education and training, or perhaps on the national health service and infrastructure. The starting threshold for inheritance tax has been raised from £200,000 to £250,000. That will benefit only a small section of the community. Petrol is up by more than 3p a litre. That will put up the price of just about everything and will negate the tax concessions in the Budget.
  I look at this Budget from the perspective of the Conservatives having been in office for 17 and a half years. What do they have to show for this unprecedented period of office? First, there is the remarkable fact that taxes are higher today than they were when Labour left office in 1979. In that year, 32.2p in the pound of gross pay went to the Exchequer; now it is 34.9p. More recently, on 30 March 1992, the Prime Minister said:
  "Never has low tax been so vital for the economy. Never would it be so wrong to increase tax".
  What has happened since then? There have been no fewer than 22 tax increases—before today's Budget—since the last general election. A typical family—two adults and two children—has been landed with an extra tax bill of more than £2,000.
  Britain remains a relatively wealthy country, and since 1979 Conservative Governments have received no less than £128 billion in North sea oil revenues. In addition, they have received the massive sum of £80 billion from the sale of public assets—"the family silver", as they were aptly described by the late Earl of Stockton, Mr. Harold Macmillan.
  In contrast with all that wealth, one of the first acts of the Conservative Government after their election in 1979 was to cut the link between state pensions and average earnings. That has had the effect of cutting the basic state pension by £20 in real terms since 1979—a dastardly thing to do. In the unlikely event of the Conservatives being re-elected, my forecast is that they intend to means-test the basic state pension.
  We remember too the Chancellor's vainglorious attempt to increase VAT on fuel to 17.5 per cent. I am glad that the Labour party has given a specific pledge that it intends to reduce it to 5 per cent.
  The Government boast that unemployment is falling, but they need to be reminded that it is double the figure it was when Labour left office in 1979, despite 32 changes to the basis on which the statistics are calculated. What is more, as the shadow Secretary of State for Education and Employment, my hon. Friend the Member for Sheffield, Brightside (Mr. Blunkett), says, 2.75 million men are economically inactive in this country today and excluded from the unemployment figures. Job insecurity is endemic. People are stressed and worried that they might not have a job in the near future.

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  Consider, too, that one in five households in Britain have no working member—20
  per cent. "Ah," it will be said, "but what about other countries?" The figure for France is 12 per cent. and for Germany 13 per cent.—a good deal lower, and those two countries are our principal partners in the European Union and in economic terms, as well as our principal competitors.
  In the early 1980s, we witnessed a collapse of our manufacturing base. I agree that, since then, some leeway has been made up by foreign investors. Several Japanese car firms are established in Britain, and Koreans are investing heavily in engineering, microchips, and so on, but one quarter of our manufacturing output and half our manufacturing exports are now produced by foreign firms.
  I have never been able to understand why British manufacturing companies do not invest in Britain. They talk about their investments in Europe, the Pacific rim, and so on, but when asked about investment in this country they go all coy. Ministers should give much more attention to that issue, because we have invested less as a proportion of our national income than any European country.
  A modern, dynamic economy needs a highly trained, highly skilled work force. In fairness, this afternoon the Chancellor appeared to recognise that fact. Yet figures compiled by the World Education Forum show that, under Conservative Governments, Britain has fallen to 42nd of 48 in the world education league. Investment per worker is 18 per cent. higher in Germany, 51 per cent. higher in France and 68 per cent. higher in the United States of America. At the age of 18, twice as many Germans are in full-time education as young British people. Overall, that is nothing like the rosy picture painted by the Chancellor this afternoon. His Budget did little to redress the position.
  Over the years, I have taken an interest in road transport. To some extent, I shall address my remarks on that subject to Opposition Members as well as to the Government. Experts in the field are gravely concerned about cuts in the roads programme. The bulldozers are grinding to a halt; the environmentalists are claiming victory. Indeed, we have a bike-riding Secretary of State for Transport. Cycling is a very healthy activity. I have no wish to decry it, but I wonder what happens to all his red boxes. How do they get around?
  When I was a youngster in the south Wales valleys, the errand boys in the butcher's shop and the grocer's shop had one of those bikes with a huge frame in front in which they could carry parcels. Perhaps the Secretary of State for Transport should get one of those. I understand that those red boxes are conveyed separately by car. If so, it will be seen to be a queer way of protecting the environment.
  The Highways Agency's budget is 25 per cent. smaller than it was two years ago. Local authority road building has come under the axe and the supplementary grant has been halved in real terms since 1993–94. The Government derive massive income from road transport—£25 billion in 1995–96 from vehicle and fuel taxes, 25 per cent. of which was spent on roads. I understand that there will be further cuts in the roads programme.
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  From time to time, motorists are exhorted to leave the car at home—we heard it from the Chancellor this afternoon. Despite all the revenue that the Government receive from motor taxation, they do not invest anything like enough in new forms of public transport.
  We need to remind ourselves that Britain is essentially a road-based economy. Ninety-four per cent. of passenger traffic and 92 per cent. of freight traffic is reckoned to be by road. Moreover, it is estimated that traffic is reckoned to be will double in the next 25 years. If there is not greater realism about that issue, we are in danger of becoming little more than a pothole economy. The Budget has done nothing to rectify that problem. The Government are concerned only about grabbing funds from more taxation, yet traffic delays have huge social and economic costs.
  Finally, I quote from a speech by my right hon. Friend the Leader of the Opposition at the recent Labour party conference in Blackpool. He said:
  "A young country that wants to be a strong country cannot be morally neutral about the family. It is the foundation of any decent society. Behind strong communities lie strong families."
  I certainly agree with that sentiment.
  The Government claim to be the party of the family. It is difficult to reconcile that assertion with what has happened in practice. Since 1979, they have done more than any other Government to undermine the institution of the family. British couples face a tax penalty the moment they have a child. By comparison, the French tax system is heavily biased towards the family. Italian and Spanish parents enjoy similar benefits, yet the Chancellor cut the married couple's tax allowance in his very first Budget. He described it as something of an anomaly in today's world. What a statement! I notice from the measures that he announced this afternoon that he has repented a little.
  The Chancellor must surely be aware of the crime, mugging and drug taking in which rootless teenagers are involved. Invariably they are unemployed. Youth unemployment is still on the increase. I am glad that my party is pledged to get 250,000 under-25s off benefit and into work. That will be paid for by a windfall tax on the privatised utilities. I fully back such a proposal. It is well worth a try.
  Some of those youngsters are the victims of family disintegration and re-formation. If we are serious about repairing the moral fabric, major steps should be taken to redress the balance of the tax and benefits system in favour of married couples with children. Such measures are long overdue.
  The Budget is an attempt to win the next general election for the Tory party. What we needed was a Budget for Britain. Soon the people will have their say, and they will say emphatically, "Enough is enough."
  6.12 pm
  Mr. David Martin: Today's Budget is a thoroughly Conservative one—with both a small and a large C. It is a responsible package of measures. It reduces the mainstream burdens of taxation, particularly on those least able to bear them, but it also reduces public debt and public expenditure while finding extra money for health, education and law and order, which are dear to our constituents.

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  I welcome the shift of emphasis from a premium on single parenthood, and the other tax changes, especially those directed at employment and businesses. The tax on jobs has been reduced and the uniform business rate is to be frozen for small businesses. That will help the people I represent in Portsmouth.
  Overall, the measures should mean that people feel better off and less imposed upon, as the Government recognise that every unnecessary penny taken in taxation restricts people's choices and decisions to save or spend, and handicaps business enterprise and employment.
  Such a Budget would not be possible from a Labour Government. Even allowing for exaggeration in the costing of Labour's statements and promises in the excellent document produced the other day by my right hon. Friend the Chief Secretary, there is no doubt that a Labour Chancellor would be unable to resist politically the clamour of his spending Ministers, spurred on by hon. Members behind him, to pay off all the lobbies and interest groups, including unions, and meet the prejudices about inequalities and underfunding that have accumulated over the years, fanned by a Labour Opposition.
  After a couple of years of that—or perhaps sooner—we would see all the signs of old Labour haunting the new: increased taxes, increased public expenditure and inflation, more regulations, militant union power and rising unemployment. That does not include the little European difficulties that will crowd in, which I shall deal with in another context.
  It is all very well for the shadow Chancellor to claim, when challenged on the cost of Labour's plans and who will pay for them, that he has not seen the books. The books are no secret these days. We even know what happens at meetings between the Chancellor and the Governor of the Bank of England. Not knowing what is in the books is not the problem: being responsible for them will be the source of Labour's difficulties and the difficulties of the British people, including my constituents.
  One aspect of education has not been sufficiently costed by Labour or the Liberal Democrats, and the damage that they would cause has not been properly quantified. I refer to the proposal to abolish the assisted places scheme, in order, they say, to fund smaller class sizes. Leaving aside for a moment the damage that abolition would do to poorer families with gifted children, whose extra choice of a school would be arbitrarily removed, let us consider the false economics of such a vindictive policy.
  The basic cost of the present scheme—ignoring the cost of the Government's intention to double it—is about £134 million for the education of about 34,000 children from the backgrounds that I mentioned. Without the assisted places scheme, those children would require extra funded places in the state sector. Even assuming that those places were available, which would not be the case in Portsmouth without more school building, the cost would be about £100 million on present overheads.
  That appears to leave £30 million to £35 million for a Labour Chancellor to allocate, but matters would not work out as simply as that. Some schools in the private sector that provide a significant proportion of assisted places would go under, and for the rest the fees would rise. Parents who are just outside the criteria for getting
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  assisted places help for their child or children—some families have more than one child at such a school—would have to give up the struggle to meet the school fees. Many more pupils would therefore need state sector places. It is a fair bet that the cost of educating those children would use up most of the £30 million to £35 million supposedly saved by the abolition of the scheme. Abolition of the assisted places scheme is not only a vindictive policy, but ignorant Labour economics.
  As my right hon. and learned Friend the Chancellor recognises in his Budget and in the background to it, the big questions for the future, overshadowing all Budgets, whether Conservative or Labour, will be the economic, political and constitutional questions raised by economic and monetary union and the single currency—whether we will abolish the pound and adopt the euro. For want of something more magical to hold the Conservative party together on that issue, I accept the formula that we should not exercise our opt-out now, so long as, when push comes to shove, we are not foolish enough to take all the necessary steps that are required to join it, nor are we compelled into economic arrangements that effectively shadow it.
  On the opt-out itself, all the recent troubles about the stability pact and the ins and the outs—or the "pre-ins", which is the Commission's rather sinister description—boil down to a matter of trust. Our partners have done their best to cheat us out of our social chapter opt-out, and many of us suspect that they would do the same if it comes to the even more immensely important matter of a single currency. That is why I welcome my right hon. and learned Friend's assurance yesterday that we will not agree to any mechanisms that will assist such cheating in the future, and will seek health warnings or what he described as a "copper-bottomed text"—or language, as my right hon. Friend the Prime Minister described it today—which must be proof against the encroachment of our partners through the Commission or the European Court. That is a tall order, but it is essential and must be met.
  The preparations for a single currency in stages 1 and 2 are difficult enough for countries to harmonise. One has only to look at what is happening in France at present, as the country grapples with its grossly overblown state sector and the sort of stranglehold union power that used to cripple Britain's economic and social life until Conservative Governments sorted things out. France has just fiddled billions of francs in Telecom pension funds from an industry that was successfully privatised here years ago and is now a world beater. Any recent visitor to France—who travelled in the ordinary manner and not as a VIP—will know how overvalued the French franc is and of the widespread discontent among those who can do little or nothing to restrain their leaders' obsession with meeting the Maastricht criteria for a single currency in 1999.
  Those who think that it is practical to join France must first explain away our disastrous experience of being in the exchange rate mechanism and our economic success since leaving it and how it can possibly be practical politics to rejoin it in the foreseeable future—let alone for two years before joining a single currency, as the Maastricht treaty provides. The facts cannot be massaged away.

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  Secondly, they must explain how we would make the Bank of England independent next year—which is another necessary precondition under the treaty—and, thirdly, how on earth they will sell the idea to my constituents, via a referendum or some other means. How will they explain to those who are already exasperated by the powers of the European Union institutions that those institutions will decide vital economic and political policies rather than our present economic and political system, including—quintessentially—our Parliament?
  I believe that the single currency project will divide rather than unite Europe—it is doing so already—and will put strains on the European Union that it cannot bear. All those countries that submerge themselves in the project will pay a heavy price—and I hope that Britain will never be one of them.
  Finally, I turn to the measures in today's Budget that are not related to taxation. Particularly welcome in Portsmouth is the introduction of project work—or workfare as it is popularly known—to help back into work those who have been unemployed for two years or more and to winkle out of the statistics those who wrongfully claim benefit. Project work has produced good results in areas where it has been tried and it has proved instrumental in boosting the morale of the long-term unemployed by providing real jobs.
  I welcome the spend to save scheme, announced by my right hon. and learned Friend the Chancellor today, which will crack down on frauds and cheats. Of course we must help those who need our assistance—all hon. Members are united in that aim—but nothing causes more resentment among our constituents than people fiddling the system. The Chancellor is right to support further the efforts of my right hon. Friend the Secretary of State for Social Security in tackling that problem.
  My right hon. and learned Friend announced expenditure increases that will enable the employment of more Customs and Excise officers and make more certain the detection of those who abuse the generous import rules applying to tobacco and alcohol. That measure is welcome in Portsmouth, where the ferry port gives easy access to illegal supplies—to the grief of local tobacconists and alcohol outlets, who are convinced, with some justification, that abuse is adversely affecting their businesses.
  In summary, this is a carefully crafted Budget from a careful and crafty Chancellor. I am convinced that it does what is required in great style.
  6.23 pm
  Mr. Dennis Canavan: This is certainly the last Budget of this Parliament, the last Budget of this discredited Government and, hopefully, the last Tory Budget of the millennium.
  The Government have been in power for 17½ years and, for many in this country, they have been 17½ years of lost opportunities, of decline and of economic and social disaster. Unemployment has doubled and homelessness has more than doubled. Poverty has trebled to the extent that one in six people are now dependent on means-tested benefit. Britain has dropped from 13th to 18th place in the world prosperity league and we are 42nd out of 48
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  in the world education league. Yet the Chancellor of the Exchequer had the brass neck to come to the Dispatch Box this afternoon and tell us that, during the past 17½; years of Tory rule, the British economy has been prosperous and successful and will continue to be so.
  In fact, over that time, Britain's economic growth has been the slowest of any G7 member country. Our balance of trade in manufactured goods went into deficit in 1983, for the first time since the industrial revolution, and has remained in deficit ever since. Since 1979, Britain has had the lowest investment rate of the 24 Organisation for Economic Co-operation and Development countries. As my hon. Friend the Member for Newport, East (Mr. Hughes) pointed out, the irony is that the Government have accrued £80 billion from privatisation, that is from the sale of assets that belonged to the people of this country. They have also had the benefit of £128 billion in North sea oil and gas revenues.
  Instead of investing that money in the nation's future, the Government have frittered it away on tax concessions for their rich friends. The Tories try to pretend that they are the party of low taxation: their rich friends may have benefited from tax concessions, but the vast majority of taxpayers have suffered an increased tax burden under this Government. There have been 22 tax increases since the last general election, which means an additional tax burden of £2,000 for the average family.
  Today the Chancellor announced a 1p cut in the basic rate of income tax and some other changes to the personal taxation system. The truth is that, even taking those changes into account, the typical family in this country will still pay more tax today than they paid at the time of the last general election. If the Government were serious about cutting tax fairly, they would do as the Labour party has promised and cut value added tax on domestic fuel and power from 8 per cent. to 5 per cent. I am sure that such a move would be widely welcomed by pensioners and others on low incomes, particularly in view of the severe weather affecting Scotland and other parts of Britain at present.
  Instead of lowering the rate of VAT on domestic fuel and power, the Government propose to raise the threshold of inheritance tax from £200,000 to £215,000I think that is what the Chancellor said. He repeated the Tory party commitment to the eventual abolition of inheritance tax and capital gains tax—despite the fact that only a minority of very rich people would profit from those measures. For example, the directors and senior executives of the privatised water companies would stand to gain more than £30 million if capital gains tax were abolished, because they would not have to pay tax on share options.
  I look forward to a Labour Government not simply retaining capital gains and inheritance taxes, but introducing a windfall tax on the privatised utilities in order to invest in jobs for a quarter of a million unemployed people under the age of 25. Young people should have a right to real jobs and real training opportunities. That would be a good example of using the taxation system and public expenditure to invest in the future, rather than to fritter away whatever money is in the kitty through tax concessions to very rich people.
  Unfortunately, the Government do not have any effective strategy to invest in jobs or training opportunities. They are now faced with a social security

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  bill of more than £90 billion a year, which is almost double what it was in 1979 when Labour was last in power. The Chancellor had to admit that social security expenditure now amounts to about a third of total Government expenditure.
  We all agree—at least, I hope so—that people without work and people who are on low incomes need and deserve benefits. I deplore the fact that the Chancellor is abolishing the single parent premium. That will hurt many lone parents on low incomes. It is important to use the benefit system to help people most in need, but that must be combined with a more effective strategy to improve education and training and job opportunities, so that a decreasing number of people are dependent on benefits.
  In his Budget statement, the Chancellor announced a modest increase in educational expenditure. Investment in education should be seen as an investment in the future of our country, but we are investing in education only 5.1 per cent. of our gross national product, compared with 5.4 per cent. when Labour was last in power. Even with the modest increase that was announced this afternoon, the Government will still not achieve the 5.4 per cent. figure that they inherited. They are going backwards instead of forwards.
  The Government have strange priorities when it comes to disbursing the total amount of educational expenditure. More than £1.1 billion has been spent on the assisted places scheme to subsidise private fee-paying schools, yet local education authority schools, which educate the overwhelming majority of our children, lack sufficient resources. It is no wonder that we are 42nd out of 48 in the world education league and we have a lower proportion of young people in full-time higher education than any other western industrialised country.
  It is also no wonder that an increasing number of people, especially young people, are looking for change. The Government offer no hope, no vision and no future. The Chancellor reminded me of a poker player in the last chance saloon. His hand has now been revealed—it was revealed prematurely last night—and it is not good enough to save the Government's skin. It is time for them to go, and the sooner the better. I look forward to a Labour Government leading us into a new millennium, and building a better future and a better society for all the people of this country.
  6.33 pm
  Mr. David Congdon: The hon. Member for Falkirk, West (Mr. Canavan) is totally wrong. It is wrong to say that the Government offer no vision and no hope, when unemployment has fallen by more than 900,000 since its peak. He should consider comparative countries in Europe and see how well our economy has done since 1979—and even since 1992. Opposition Members should study what is happening in some European countries. In France and Germany unemployment is rising, whereas in this country it is falling. It is depressing to hear Opposition Members talk as if Government have the solution to all our problems, because in some cases they are part of the cause.
  Ms Diane Abbott: Opposition Members have studied what is happening in France and Germany. We found that France and Germany had far fewer households in which no one
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  was earning, whereas in this country one in five households have no wage-earner. We have a worse record than France and Germany.
  Mr. Congdon: Part of the problem in this country may be the break-up of the family structure. I did not intend to raise that subject, but I would submit that that break-up is one of the side effects of a welfare state. That is an important subject to debate. It was interesting that the hon. Lady did not mention the strikes that are taking place in France at this very moment. The lorry drivers' strike is preventing the transport of food into this country. Is that an example that this country should follow?
  There is always a danger of grossly over-hyping the impact of any one Budget. We should remember that our gross domestic product is round about the £700 billion mark, and that Government expenditure is round about the £300 billion mark. No one item in a Budget—whether it is £0.5 billion here or £1 billion there—has a greatly significant impact on the real economy. The economic climate that is created is more important than the minutiae of the figures in the Chancellor's statement. Businesses want stability so that they can plan for the future, and the Government have given them that.
  Last year, the Chancellor introduced a prudent Budget. Cuts in public expenditure of £3.25 billion were matched by tax cuts of an equivalent amount. I say public spending cuts, but in fact that is a misnomer. Public spending cuts are often cuts in so-called planned increases. The language is sometimes debased, because in reality public expenditure is never cut: it grows inexorably. The only issue is the rate of increase.
  When I spoke in the Budget debate last year, I praised the Chancellor for his prudent Budget. I also said that it was important to see what happened to interest rates. I hoped that interest rates would fall, so I was delighted to see that in the following year they fell four times and were increased once. We now have interest rates significantly lower than they were a year ago—lower by 0.75 per cent.
  The economy has improved steadily in the past 12 months. Today's Budget continues the trend that the Chancellor set last year of fixing a prudent Budget. Public spending has been reduced by about £2 billion, and taxes are down by about £700 million. As the Chancellor said, that is taking a fiscally tough stance to avoid having to introduce tougher monetary measures later. That is a prudent approach. It is a bit rich of Opposition Members to accuse the Chancellor of setting a Budget for an election when he has taken such a fiscally realistic view of the economy.
  The Leader of the Opposition must have written his speech a few weeks ago, because there was nothing in it about the Budget or about the Labour party's tax proposals. The public are none the wiser. It is clear from listening to Opposition Members whenever they open their mouths that they would spend and tax more than the Conservative Government, so the public should be warned.
  Much mention has been made today of our proceeds from privatisation and North sea oil. Despite the continuing pretence that somehow those proceeds have been squandered, they have in fact been spent on essential public services, and as a result taxation is slightly lower than it would have been if the money had not been raised. It is misleading to pretend that it has been squandered.

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  The leader of the Liberal party, the right hon. Member for Yeovil (Mr. Ashdown), said that the Budget did not consolidate the recovery. I find that somewhat hard to understand. This is clearly not a giveaway Budget containing massive tax cuts designed—as some Opposition Members would have liked to be able to say—to bribe the electorate; as I have said, it takes a fiscally tough stance. The right hon. Gentleman said that he would have liked a greater reduction in the public debt. So would I—but, in a complete non sequitur, the right hon. Gentleman went on to say that, instead of the tax cuts announced by my right hon. and learned Friend, he would have liked the money to be spent on education. So, at the first opportunity to reduce the public sector borrowing requirement, the right hon. Gentleman has spent it. That is all too typical.
  My hon. Friend the Member for Portsmouth, South (Mr. Martin) referred to economic and monetary union and the single currency. My concerns about the single currency are primarily economic. I strongly believe that a single currency would lead to significantly higher unemployment rates throughout Europe, and I think that this and other European countries would come to regret those higher rates if they joined a single currency. I also think that there is a grave danger of higher interest rates. I consider it fundamentally important for this country to maintain its freedom of action, and I welcome what my right hon. and learned Friend the Chancellor said about that yesterday.
  Listening to my right hon. and learned Friend's speech, I wondered what he would have been able to do and say if, 10 years down the road, we had joined a single currency. Would he have been able to announce all those tax changes, or would his hand have been totally constrained by some other body in Brussels or elsewhere? The last thing I want is for the Chancellor of the Exchequer—whatever party is in power—to become little more than a local authority director of finance. I do not dispute the fact that the convergence criteria are good in themselves, in economic terms, but, when the chips are down, this is the acid test: if a country wanted to go outside those criteria, would it be constrained by another body? That is the danger of being involved in economic and monetary union.
  Let me say a little about the general economic position. We now have lower inflation than we have had for a generation; but, equally important, we have seen stable growth levels. I was pleased to hear the latest growth forecasts in my right hon. and learned Friend's statement—2.5 per cent. this year, and 3.5 per cent. next year. Of course a balance must always be struck to avoid overheating of the economy, but I see no great danger of that, although my right hon. and learned Friend is right to take a prudent approach. As I have said, unemployment has fallen by 900,000 since its peak.
  I believe that, to ensure that more people get into work and to build on the success that has already been achieved, we must ensure that the United Kingdom economy secures sustainable levels of growth, and that we do not go into recession at some future stage. We can argue about what is a sustainable level of growth; I do not believe that the level is fixed and immutable for ever and a day, and, as I have said, I welcome the forecast of 3.5 per cent. for next year.
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  I said just now that a good deal of nonsense was spoken about public expenditure. In fact, whatever Chancellors say, public expenditure goes up in real terms in the long run, for a variety of reasons. One of those reasons is the existence of a growing elderly population; another—rightly—is the rising expectations of the public. The fact is—it is contained in the public expenditure statements—that public expenditure in real terms has risen from £219 billion in 1978–79 to £295 billion in 1995–96. That is an increase of £76 billion.
  We are often told by Opposition Members that that is to do with unemployment, and that much of it is connected with the fact that the economy was in recession. Again, however, the figures are in the Red Book. Cyclical social security costs about £14 billion a year. In fact, most of the growth is to do with such factors as the growth of £16 billion, in real terms, in the health service over that period. There has been growth of £4.8 billion in real terms in health since the last general election—and that excludes the extra growth announced today. Education has grown by £8 billion over the period, and law and order by £6 billion.
  The reality is that public expenditure goes up over time. I do not regret that; the challenge to the Government is to try to ensure that the rate of growth is sustainable, because otherwise the growth in public expenditure crowds out private expenditure.
  A good deal of nonsense is also talked about public expenditure as a percentage of gross domestic product. The figures show that, when Labour left office, the figure was 44 per cent. For 1997–98, it is planned to be 40 per cent., which is a reduction in anyone's book. The public sector borrowing requirement is lower as well. I think that that is all good news, and I would have expected Opposition Members to welcome it.
  The crucial question, however, is this: what is the overall judgment of the Chancellor? What I liked about this and, indeed, the last Budget was that, along with comparatively modest reductions in taxation—I welcomed those, including the reduction in the basic rate of income tax by 1p in the pound—there was sensible extra investment in the key public sector services. As a member of the Select Committee on Health, I particularly welcome the extra money announced for the health service today—£1.6 billion in cash terms. That is good news, which will be welcomed.
  As I have said, there has been significant extra investment in the NHS since the last general election and, indeed, since 1979. Of course demands increase year on year as people get older—and people are living longer than ever before—but it is a fact that we are spending £80,000 a minute on the NHS. The hon. Member for Falkirk, West (Mr. Canavan) mentioned education spending as a percentage of GDP, but the number of youngsters in education has dropped over that period. That is one of the reasons for the figures, although they are increasing again now.
  Interestingly, the percentage of GDP being spent on health is up from 4.7 per cent. to 5.8 per cent.—and that excludes the figures announced today. That is why the NHS can treat more patients than ever before, and why the number of patients treated in the last financial year was up by 6.5 per cent. We do not hear much about that from Opposition Members. I do not regret public

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  investment through taxes in services such as the NHS, on which we all depend: that is what I think a modern state should do.
  I believe, in principle, in low taxes. I think that it is far better to allow people to have more money in their own pockets, to spend as they wish. Of course taxes cannot be reduced to zero; we must have public expenditure. The challenge is, can they be kept at a comparatively low level as a percentage of GDP?
  My hon. Friend the Member for South-West Cambridgeshire (Sir A. Grant) mentioned the iniquitous selective employment tax introduced by a Labour Chancellor in—if memory serves me right—the 1960s. The danger is that, if taxes must be raised, some Governments—particularly Labour Governments—want to raise them on businesses, as if they were a soft touch. They are not, because taxes on businesses destroy jobs. That is why it is important to keep taxes as low as possible.
  I am getting sick and tired of hearing Opposition Members criticise previous tax increases when, in practice, they have opposed each attempt to rein back public spending. Unless the state borrows ever larger sums, taxes have to equate to public spending. It is dishonest to the electorate to pretend otherwise.
  I support the moves in the Budget to reduce taxes. I have mentioned the changes to income tax. I am pleased that there have been further attempts to plug loopholes. I noticed that hon. Members were jumping up and down and saying, "We told you that loopholes needed to be plugged," but it is a continual battle to plug such loopholes. As we plug one, another opens. Therefore, it is not a battle that suddenly ends. It is a battle that must be continued for a long time—probably for ever.
  I welcome the changes to the uniform business rate, particularly to help small businesses, and the proposals to consider how to redistribute the UBR burden. I have received representations from smaller businesses that the burden bears down excessively on them. It is important to ensure that it is fair.
  One Opposition Member said that taxes were a higher percentage of GDP than when the last Labour Government left office. I could not believe those figures, so I checked them in the Red Book. Having done so, it is clear that the percentage is marginally lower than in 1978–79—it 38 per cent. of GDP as opposed to 38.75 per cent. More important, in 1978–79, the public sector borrowing requirement was 5.5 per cent of GDP; in 1997–98 it is 2.5 per cent. Therefore, in 1978–79, the total amount that was being spent was 44.25 per cent. and it is now down to 40.5 per cent. It is misleading, therefore, to pray in aid the argument on the size of the PSBR, which is, in effect, what was being done.
  Another story keeps being trotted out that misleads everyone—that the Conservative Government have introduced 22 tax rises. Last week, the Evening Standard, which I do not often pray in aid in any argument, kindly published the list of the 22 rises, which include interesting items that have been counted not just once, but on a number of occasions.
  Fuel duties that have increased more than the rate of inflation and car tax increases, all of which would have been supported, I should have thought, by Members who profess to be concerned about the environment, account for five of the 22. Alcohol duties account for one of them.
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  Allowances being frozen and restricted count for seven and reducing mortgage interest relief at source accounts for two. One can argue whether they are tax increases, but it is misleading to regard each one as a tax increase. Have Opposition Members told the public that five of their 22 rises involve extra taxes on cars, which I thought most Members on both sides of the House support in terms of improving the environment? The list is therefore misleading, to say the least.
  We also hear much from Opposition Members about the need for more investment. I agree with the need for more investment, but where I part company with Opposition Members is that I do not believe that Government can decide where investment should be made in the economy. The only people who can decide that are those who invest—Britain's businesses. If they believe that an investment is worth while and that there is a market for the product, they will invest. All experience shows that, when Governments say, "We should invest in this and we should invest in that," the investment is doomed to failure.
  What is the one proposal we have from the Opposition that would have a negative effect on investment? It is the windfall tax. What would that do for investment in the privatised utilities? What incentive do they have to manage their businesses properly when they think that a Government might snaffle any money that they manage to raise as a result of that successful investment? What a message to consumers, who will undoubtedly end up paying those higher prices.
  I welcome the Budget. The Chancellor has achieved the right balance with some sensible changes in public expenditure, and some significant extra investments in the key public services of education, health and law and order. I should have thought that they were sensible priorities. At the same time, he has managed to find room for sensible tax-changing measures—both the raising of the thresholds and the reduction in the standard tax rate.
  If the Chancellor had wanted to have an election budget, he could have taken 2p or 3p off the standard tax rate. He did not, because he wanted, rightly, to have a prudent tax Budget that would sustain Britain for the future.
  6.55 pm
  Mr. Gerry Sutcliffe: I, too, welcome the Budget, but not because of its content. I welcome it because it will, I hope, be the last that a Tory Government will inflict on Britain's people. Tory loyalists defend the Government, but it is complacent of them to say that there have always been tax loopholes. Two years ago, and even last year, the Chancellor did not accept that there were tax loopholes. Labour Members have been saying for long enough that people should pay tax, and that clever accountants were robbing the Revenue because it was not collecting taxes that people should pay. It is interesting that, finally, the Chancellor has recognised that fact.
  I am saddened by the Budget, because we are here to represent our constituents, and nothing in it will do anything for my constituents in Bradford, particularly the long-term unemployed. The Budget should have contained a strategy for the future, but what we have is the usual thing. After 17 years, this Government think about the next few months. They think not about the economy's long-term prosperity, but about a Budget for

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  their election chances, which, after today, are far weaker. We should have had a Budget strategy that equips us for the 21st Century and lays the foundations for a sound and sustainable economic success. We have not had that.
  In the past 17 years, we have had failure. The Tories have increased tax 22 times. It is untrue for the hon. Member for Croydon, North-East (Mr. Congdon) to say that they have not raised taxes 22 times, because they have. The main point is that the Tory party emphasises that it is the party of tax cutters, but it is not.
  We have the highest tax regime ever, despite all the opportunities that the Tories have had—North Sea oil, for example. There is a great imbalance in wealth. The earnings of the top 10 per cent. have increased, and those of the bottom 10 per cent. have decreased by 17 per cent. That is a disgrace. As we have said, this is a Government for the few, not for the many.
  The economic failures are legion. Investment is growing more slowly in this recovery than in any this century. When we talk about investment, we mean internal investment—not inward investment from abroad, but British investment within Britain. Britain lacks the education and skills needed. We are 42nd in the world skills league. As has been said, one in five families are without work—more than in Germany, France and the United States of America.
  Since 1979, Britain has fallen from 13th to 18th place in the world prosperity league. Since 1992, we have seen a fall in living standards—a clear breach of Tory election promises. That proves that we could not trust the Tories then, we cannot trust them now, and the electorate should not trust them in future.
  The boom-and-bust recovery is built on sand. For years, the Government have neglected investment in industry, in education and in skills. Unless we invest in the future, the recovery will prove unsustainable, as happened in the 1980s. Again, the people who were hit were ordinary families.
  The Budget should have tackled the British economy's fundamental problems. Instead, it chooses to paint a rosy picture than no one outside recognises. We are judged on how the electorate view us—that is the simple test. That is why Labour has won the past nine by-elections. That is proof that people do not trust the Tories.
  As I said, under the Tories, we have fallen from 13th to 18th place in the world prosperity league, and, at 9th out of 15 countries, we are in the bottom half of the European prosperity league. In 1979, Britain was above the European average for living standards, but, by 1995, we were below the average. Far from being the enterprise centre of Europe, Britain has suffered economic decline with the Tories. We have had the slowest average growth rate of any major industrialised nation.
  Our manufacturing base has collapsed under the Tories. In 1979, manufacturing accounted for 30 per cent. of GDP, and employed more than 7 million people. By 1995, manufacturing accounted for only 20 per cent. of GDP, and employed only 4 million people. Industrial production has grown at a slower rate than in 11 other European countries, and matters have not improved much since the recession. In August 1996, manufacturing output was barely above the level before the recession. The collapse in manufacturing has undermined our ability to trade with the rest of the world.
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  In 1983, the UK's balance of trade in manufactured goods became a deficit for the first time since the industrial revolution, and the situation has remained unchanged ever since. That fact is truly an indictment of the Government. Our share of world trade has slumped to the lowest level this century, and it is less than the share held by Italy, Germany, Japan and the United States.
  The Economic Secretary to the Treasury (Mrs. Angela Knight): That is wrong.
  Mr. Sutcliffe: Wait; we will no doubt soon hear what the Minister has to say.
  The two worst recessions since the war have been brought to us by the Tories. The most recent hit home owners, workers and taxpayers alike. Home owners were hit as interest rates doubled to 15 per cent. and house prices plunged. Negative equity has affected nearly 2 million home owners, and the taxpayer was left to pick up the bill for the Conservative's failure. There have been 22 tax rises, which, since 1992, have meant an additional £2,000 in tax for the typical family.
  When the Tories let inflation get out of control on the most recent occasion, they had to raise interest rates to 15 per cent. in fewer than 18 months to get it back under control. The same pattern could be repeated if the Chancellor does not tackle the economy's fundamental weakness. Today's inflation rates are poor by European standards. Britain is 11th in the European inflation league, and, of the other major industrial nations, only Italy has higher inflation.
  Investment is the key to our economic success and to future growth and economic well-being. The recovery is lacking investment. In 1995, investment was still 11 per cent. below the 1989 level and, over that six-year period, investment has accounted for an even smaller proportion of national income—down from 23 to 17 per cent. Private sector investment is only 9 per cent. higher than it was in the depths of the recession. At the same point in the most recent recovery, such investment was about 30 per cent. higher. That is a slower rate of recovery in investment than in any recession this century, including the 1930s, and the manufacturing investment rate is still lower than it was in 1979.
  Under the Tories, we have invested less as a proportion of our nation's income than any other European country. We have been watching what has been going on. Investment per worker is 18 per cent. higher in Germany, 51 per cent. in France and 68 per cent. in the United States.
  A modern, dynamic economy requires a highly trained and highly skilled work force. However, under the Government, Britain has fallen to 42nd place out of 48 countries in the world education league. We have fewer 17 and 18 year-olds in full-time education than any other country except Turkey, and the percentage has decreased over the past two years. Only 67 per cent. of the work force are qualified to NVQ level 2 or above, compared to over three quarters of the work forces of Germany, France and our other major competitors. At the age of 18, twice as many Germans are in full-time education as young British students.
  The central task of economic modernisation for Britain in the 21st century will be to overcome the long-standing problem of under-investment in people, industry and our

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  economic and social fabric. The only way in which to achieve the higher level of sustainable growth and employment we all want is to invest and for those investments to grow. Since 1979, however, Britain has had the lowest level of investment of any of the 24 Organisation for Economic Co-operation and Development countries, and the Tories have failed to recognise the role of Government in encouraging investment in the private sector, and the importance of investing in infrastructure and setting up true partnerships.
  Any sensible Government would have used this Budget to ensure that we had a platform for economic stability, which is essential for sustained growth. Labour would have created regional development agencies to work with venture capital to encourage the provision of more long-term finance for small businesses, considered other ways in which we could enable the tax system to encourage long-term investment, and shown interest in the Confederation of British Industry's proposals for a two-tier capital gains tax, to encourage assets to be held over the longer term.
  We should be bringing the public and private sectors together to invest in major infrastructure projects of national interest. Labour would radically improve the private finance initiative by prioritising projects and streamlining the decision-making process. In rebuilding our infrastructure, the way ahead is not to resort to the Tories' methods—relying solely on privatisation—and it is not to rely on the public sector to do everything. We should instead consider constructive and lasting partnerships between the public and private sectors. Britain badly needs capital investment across the range of our infrastructure, and especially in our physical infrastructure.
  Transport is vital to the future of our economy and to the everyday life of each of our citizens. We value it because it provides us with access to our jobs, to leisure, to services, to family and to friends, and it is crucial to the quality of life. The effects of transport policies reach far beyond the transport sector itself. They effect nearly every aspect of the nation's life, yet Britain is currently investing only 0.7 per cent. of GDP in transport infrastructure, which is about half the rate of our closest European neighbours.
  Transport congestion costs British business £19 billion a year, according to the CBI's figures, which is equivalent to £800 for every household in Britain. But the Tories persist in refusing to set a national transport strategy, and continue to be driven by dogmatic faith in free market solutions—rail privatisation, bus deregulation and, now, privatisation of the road network.
  I wonder whether people noticed today's cuts in the roads programme, which were mentioned by my hon. Friend the Member for Newport, East (Mr. Hughes). Those cuts will mean that we will not have many necessary roads which were called for by local authorities and communities. Our road, motorway and trunk road networks will suffer chronic congestion by 2005, and, based on current trends, all but one of the major roads into London will be gridlocked. According to the Automobile Association, one of every seven miles in our motorway network and over 4,000 miles of our primary roads urgently require repair.
  Parts of the London underground system are now 120 years old, and the King's Cross inquiry was told only a few years ago that the disaster revealed
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  "an endemic and long-standing under-investment in technology at a risk to safety."
  Consider what happened to the underground system last Wednesday, when the entire system was shut down because of the total failure of a 91-year-old power station.
  Rail privatisation has squandered more than £450 million in fees for consultants, lawyers and accountants, although service and standards have become worse. Rail privatisation has fragmented a nationally integrated British Rail into more than 100 different companies. They were sold off at knockdown prices, with separate companies owning the trains and the track and running the services. Those companies have now called for large public subsidies before they can do anything to increase the amount of freight currently carried by road to rail.
  The situation has come about because of the Government's actions of the past 17 years. They have been driven by a dogmatic belief in free market solutions, irrespective of the transport consequences. A road-building programme that was meant to cater for an ever-growing demand for car use has suddenly been chopped back, with no alternative plans in place. Meanwhile, the Government-driven privatisation of the rail network and deregulation of the bus industry has led to further decline in public transport provision. Nationally, since deregulation, there has been a 35 per cent. reduction in the number of bus passengers. That failure of the people is absolutely outstanding.
  We have fallen behind our European competitors in vital transport investment. France already has a high-speed rail link to the channel tunnel, but the building of Britain's has not even begun.
  Conservative policies have denied real choice in transport. People with cars are forced to suffer traffic jams and fumes, whereas those who wish to use public transport suffer declining services, and those who wish to walk or cycle cannot find safe and unpolluted streets.
  The Government's role is to set the framework and then to enable much of the provision to be privately funded. There must be a genuine public-private partnership, in which stated public policy aims have central place. The role of the private sector would then be to participate in those projects, to which it can bring its expertise and investment. Investment is lacking in our transport infrastructure, and that is the Government's legacy after 17 years.
  We have heard from the Chancellor today that the 1p to be cut off income tax will be lost to local government, whose funding will again be attacked by the Government. Local government is at the sharp end of dealing with the day-to-day realities of the problems in our communities—the lack of investment in our schools, in community care and in other essential local services. Local government needs £2.3 billion just to stand still and avoid service cuts.
  Local authorities will need to spend £19.2 billion on education next year. We always say this, because it is true and has been true when local authorities of all political persuasions have gone to Ministers to argue against the central Government funding formula.
  More than 1 million primary school children are educated in classes of more than 30 pupils. That figure has risen by 500,000 since 1992. Large classes can damage young children's chances, but class sizes have

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  risen steadily over the past six years. If more resources are not found, there will be serious consequences: pupils with special needs will not get the help that they need and have been promised; there will be a further deterioration in pupil-teacher ratios; and the condition of school buildings will continue to be a national disgrace. There are more temporary classrooms in my constituency than in any other constituency in the country because of the authority's inability to spend money on capital projects.
  Britain has the lowest level of publicly funded services for young children in Europe and the wider industrial world. As Secretary of State for Education, Baroness Thatcher pledged to provide nursery education free of charge to all three and four-year-olds whose parents wanted it. Despite her pledge, the Government have undermined nursery expansion through repeated cuts in local authority budgets, forcing a squeeze on discretionary services. In a skills-based economy, local authorities cannot provide the standards necessary to meet the needs of future generations.
  The cost of providing an acceptable level of personal social services will rise by nearly 8 per cent. next year, due to factors beyond the control of local authorities. Personal social services are already severely underfunded, particularly community care. Many people who need services and would have received them in the past now receive none because of the implementation of charges or the inability of the local authority to provide the services. The transfer of responsibility for community care from the Department of Health to local authorities requires additional funding of £127 million next year.
  Increased investment in public services such as personal social services can save money for central Government programmes. It has recently been shown that increased investment in preventative programmes in community care could lead to lower NHS expenditure on long-term hospitalisation.
  Many local services have already been cut or underfunded to protect services such as schools and community care. That will continue. The Government say that they will make more money available to schools, but the reality is that they take it from the other side of the pot. That is the true situation. People will find out that they are paying more for less.
  The Government have ensured that local government has suffered. Those who look to the local authority to provide the services they so badly need have been let down time and again by central Government, because not enough money has been allotted to local government. Some 85 per cent. of local authority spending is controlled by central Government. That does not meet local needs or give local authorities the opportunity to develop programmes to do so.
  The Government have tried to play it both ways with the electorate, but I am sure that the electorate will not be hoodwinked as they were in the past. They have seen that the Government that promised tax cuts gave them tax rises. The Government will not be allowed to get away with that trick again. We want a Government who care about the future of the country and can take the young long-term unemployed off the dole queues and put them into positive work. We want investment, and a Government who care where the country is going in the
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  wider world, not a Government who want to look after only those that they have looked after for the past 17 years.
  The Budget will go down in history as a leaked Budget, as has been said, but it will also go down as the last one from a Tory Government who did not care about the people of this country. The people want to hear speeches such as that of my right hon. Friend the Leader of the Opposition. He spoke about the country's future, and about putting things the way the people want. I am confident that Labour will win the next election. For many people in this country, that cannot come soon enough.
  7.14 pm
  Mr. Dafydd Wigley: I agree with much of what the hon. Member for Bradford, South (Mr. Sutcliffe) said about the additional expenditure needs for many programmes—for local government, for community care, for our transport infrastructure and all the rest. I part company with him on his castigation of the Government for having pushed taxes up, since I must assume that he would prefer a lower level of tax.
  To sustain the level of public expenditure we need—I agree with him on the expenditure that is needed—the money must come from somewhere. We cannot go on borrowing indefinitely. If we believe in the need for the expenditure, we have to believe in the means of raising the wherewithal to fund it. Sooner of later, the Opposition will have to come clean. I shall come to some of the details in a moment.
  The background to the Budget in Wales is that our income per head has dropped to the lowest of any country or region in the United Kingdom. We are at something like 82 per cent. of the UK average. Our unemployment does not differ much from the UK average—it is very similar, although there are pockets of high unemployment and pockets in which the economy is going fairly well. That underlines the need for specific action in those areas that still have high unemployment and those areas with very low income per head.
  I am thinking particularly of the western parts of Wales—the old counties of Gwynedd and Dyfed—and of the old coal mining valleys of south Wales. In an all-Wales context, we need a strategy from the Chancellor to ensure that the economy in those areas is stimulated. If the overall economy does not need stimulation—that is the general thrust of the Chancellor's strategy—we need some devices to ensure that resources, either through public expenditure or some other means, are targeted on those areas that have pressing needs.
  We can compare and contrast our position in Wales with that over the water. My nearest capital city is Dublin, which has a growth rate two to three times that of the United Kingdom. The GDP per capita of the Irish republic passed that of Wales for the first time ever in 1995. During the past two years, the Irish republic has created 56,000 new jobs. I know that the level of unemployment there is still too high, but the Irish have a dynamism that we are failing to achieve in Wales, and we need policies geared to achieving it.
  How have the Irish achieved that? Obviously part of the answer can be found in Ireland's internal strategies and the way in which it attracts internal investment. Ireland's rate of corporation tax is an incentive—at 10 per cent., it cannot but be an incentive. It has negotiated a

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  derogation on that. That leads to the second part of the answer, which relates to Ireland's success in achieving a substantial input from the European Union—some £478 per head a couple of years ago, compared with £45 per head in Wales.
  Given the need to target, I have no doubt that we should make a serious approach to gain objective 1 status for the western coast of Wales—the old counties of Gwynedd and Dyfed—and for the old coal mining areas. On all the criteria by which objective 1 status is calculated, it is needed.
  That provides the background to the Budget, because such approaches are needed to overcome our economic problems. I judge the Budget against that background, and I find it deficient. It is deficient on the central issue of creating employment. Some 100,000 people in Wales are unemployed. We would prefer them to be paid perhaps £160 a week to do work that needs to be done in our communities than £80 a week to rot on the dole.
  We know that work needs to be done in the environmental sector, in the transport sector, in community care and in education. All around us is work that needs to be done, and people who want to do that work. They may not have the right training, but work can be done on that as well. We would prefer the cost of the depression to be borne by the taxpayer, paying those people to do the work that needs to be done, rather than leaving them idle on the dole.
  Of course, that would presuppose a higher rate of tax. We voted against last year's reduction in income tax, because we believed that the money was required to pay for work to be carried out in our communities. That is why we shall be voting against the penny reduction in income tax this year as well. We would be happy to retain a standard rate of income tax of 25p in the pound, and raise additional resources.
  That does not mean that people on low incomes should be hit so hard by the taxation system. Therefore, I welcome the steps taken by the Chancellor to raise the tax threshold by £280, but, frankly, it is not enough. The erosion in the income tax threshold since the war, and particularly in the past 20 years, is staggering. Before I came to the House in 1972, the personal income tax allowance for a single person represented some 30 per cent. of average earnings. It is now down to 19 per cent. of average earnings. In order to restore it to its previous level, it would have to rise to more than £6,000. That how far people on low earnings have been drawn into the tax net.
  Increasing the personal allowance by some £500 would have taken some 830,000 people out of income tax, and would have made a considerable difference to those on low incomes. Had that same allowance been applied to people over 65, it would have taken a further 300,000 people out of income tax, including some 20,000 in Wales.
  We needed such a strategy. It would have cost money, but it could have been funded by removing the upper limit on employees' national insurance payments. The present ceiling of £455 a week has been increased by £10 in the Budget. If that limit were removed, the proceeds would be more than enough to pay for the changes that we have
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  advocated. We believe, therefore, that our proposals could be implemented. However, the Budget implements a strategy that is geared to the general election.
  Mr. Tim Devlin: That is silly.
  Mr. Wigley: The hon. Gentleman, who has just entered the Chamber, is making sedentary remarks. If he wishes to intervene, I shall give way to him. As he does not, I shall continue.
  We are aware that the Budget is geared to the general election, so there is a give-away on the standard rate of income tax. I do not believe that the electorate will buy that as a strategy. They want services to be maintained rather than eroded.
  The Red Book sets out the cuts in expenditure that accompany the reduction in taxation. I am particularly worried about the cuts in capital grants to local government by £1.5 billion. The Department of Education and Employment has lost £1 billion. Overseas aid has been reduced by £150 million, although we see on television starving children around the world. Should we rest quietly before a general election when that cut is paying for our tax bribe?
  On agriculture, apart from spending on BSE, there is a reduction of £90 million. The Department of Trade and Industry, the Department that would create the jobs that I mentioned, has also suffered a reduction of £90 million. The Department of National Heritage faces a reduction of £60 million. We know what that will do to the Arts Council. In other words, there is no such thing as a free lunch.
  Tax reductions have to be funded. My great fear is that the biggest cut of all will be in the money available to local authorities. Given their additional burdens, local authorities will be forced to increase council tax significantly to make up the deficit. The Welsh Office budget is to be cut by £120 million, rising to £270 million in 1998. I have little doubt that that will impact on the money available to Welsh local authorities.
  There are some good points in the Budget. We welcome the approach to pollution and sustainability, and the increase of £280 in the tax threshold, although it is not enough. We also welcome the steps to close tax loopholes on VAT and the limit on the business rate, which is a severe burden on small businesses. We welcome the small reduction of 0.2 per cent. in the employers' national insurance contribution. Although we welcome those small matters, the overall strategy is not putting the resources were they are most needed.
  In conclusion, let me draw the attention of the House to one group of people who have not been mentioned today—pensioners. The state pension will rise from £61.15 to £62.45—an increase of just £1.30. Let me quote the Chancellor of the Exchequer directly:
  "Individual living standards continue to rise."
  That may be true for some people, but, over the past 10 or 12 years, living standards have not been rising for the 40 per cent. of pensioners who have no income other than their state pension and benefits. Benefits have increased with the cost of living, but decoupling them from the link to earnings has meant that, instead of £83, a single pensioner receives only £62.45 after the increase in the Budget.

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  Some people have benefited from the increase in living standards, but pensioners are the only group who have not benefited, and who can do nothing about it. The Government will pay a severe price for letting pensioners down and not allowing them to enjoy any increase in their standard of living. Against that background, we find the Budget unacceptable, and we shall vote against it.
  7.25 pm
  Mr. Tim Devlin: I welcome the Budget because it is pragmatic, effective and philosophically correct. It is pragmatic because, contrary to the assertions of the hon. Member for Caernarfon (Mr. Wigley), it has not been framed solely with the election in mind. As my right hon. and learned Friend the Chancellor made clear, he was looking at the medium and long term as well as the short term. I know that he very much looks forward to presenting another Budget next year and in the subsequent years of Conservative government after the next election.
  When we consider the various options that were floated before the Budget—including massive tax cuts and various other amazing vote-winning strategies—it is clear that the Chancellor has been extremely pragmatic, working within the strict parameters that he set himself, to ensure that the economy is well based and on an even keel for the future, whether we win, lose or draw at the next election.
  The Budget affects matters that concern people in my constituency. It provides an extra £875 million for education, an extra £450 million for law and order and the police service, and a substantial increase of £1.6 billion for the national health service—and that does not take into account the important news about jobs and the economy.
  I very much welcome the extra £50 million grant for urgent school repair. I draw the attention of the House to my visit to a school in my constituency in July which resulted in the headline:
  "We need to spend more cash on schools now".
  I should mention to the hon. Member for Bradford, South (Mr. Sutcliffe) that one of the big problems about giving money to local authorities to spend on education, among other matters, is that they do not hand it over. If Stockton council is serious about providing a new primary school at Preston in my constituency, I hope that it will apply to the Government for the money now and not wait until 1997–98, as I was told in a parliamentary answer last week. There is no reason for delay. Two years is a long time in the education of four, five and six-year-olds. The council should apply for the money and start work as soon as possible.
  I welcome the £50 million for school buildings, and hope that Labour-controlled local authorities will hand the money over to the schools that need it.
  I also welcome the £129 million provided to nursery education, particularly the introduction of the voucher scheme, which will enable parents throughout the country to choose the education that their children receive. It is very important that this Budget should be a Budget for the family and that the Conservative party should be the party of the family. I therefore think that it is important
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  to give money to parents so that they can make real choices about their children's education. If local authority nurseries are so good, as local education authorities contend, I am sure that parents will stick with them and hand over their vouchers to them. Parents would still be exercising an important element of choice in doing so.
  I welcome the £280 million that is to go to universities and further education colleges. Under the Government, there has been an enormous growth in higher education. In 1979, only one in eight young people went on to higher or further education. Now, one in three do. We have a much better educated work force and many people enjoy the many benefits—not just academic ones—of further education. I welcome the extra money that will be given to such institutions.
  I welcome most particularly the £450 million that will be spent on law and order. More important, the underlying philosophy taken forward by the Government of judging all our public services by results and what they deliver, rather than allowing them to continue with age-old containment strategies, means that we are getting much more value for our taxpayers' pounds.
  I was very heartened by a report in The Daily Telegraph on the adoption by Cleveland constabulary of a profiler—a Cracker-style person who will profile criminals and be able to track them down more successfully. I was even more heartened when I read that our assistant chief constable said:
  "It is only recently that the police have come to the conclusion that we can cut crime. In the Eighties we perhaps mistakenly felt we could only contain crime. Now we are putting our money where our mouth is, we can and we will cut crime."
  Coupled with the money that is being spent by the Exchequer on law and order, that will be a very welcome piece of news to the electorate in my constituency.
  The hon. Member for Bradford, South said something about congestion in London bringing the whole city to a halt before very long. He put me in mind of when I was reading up for my history degree many years ago. I remember reading that a leading pundit in the 1890s said that, if the growth in horse-drawn carts in London continued at the rate at the time, London would be 6.5 ft under horse muck by 1915. That did not happen, although the roses in London may have been spectacular during those years. I am very dubious about some of the predictions about traffic congestion and traffic growth. In my experience, an invisible hand guides people, and they leave their cars at home when they find that it is too difficult to take them on the road.
  The hon. Member for Bradford, South asserted that the railways were far worse since privatisation. I was interested to read a commentary in one of the newspapers that said:
  "Trains are running on time more frequently under privatisation than when they were State-owned, according to official performance figures.
  The statistics, compiled by the Office for Passenger Rail Franchising, show that the first eight operators to be sold to the private sector increased service punctuality by two per cent between February and October, compared with the previous 12 months under British Rail."
  I happen to know that that is a fact because I am a regular traveller on the railway system, especially on the east coast main line, which has recently been taken over by Great North Eastern Railway. Not only are the trains

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  running far more punctually and, with the new blue livery, looking nicer, but the range of services on trains and at stations has broadened enormously because of the concentration on service delivery and customers rather than the operating convenience of the unions and the service providers. That underlying philosophy has been very effective in all our public services.
  It is very easy to say that local government is strapped for cash, but it is possible to go to certain parts of the country, such as where I live on the borders of Stockton, Middlesbrough and Hambleton district councils, and discover that two councils, which are control led by Labour, impose some of the highest band D council tax anywhere in the country, whereas the third—Hambleton—imposes a considerably lower council tax. When we ask why, we are told that Stockton and Middlesbrough have much worse social problems than Hambleton, which is in North Yorkshire. We find also that council tax in Stockton and Middlesbrough is considerably higher than it is in Hambleton despite the fact that the Government hand over more per head to Stockton and Middlesbrough than they do to Hambleton.
  It is important that we guard our environment as we approach the millennium, and I very much welcome tax differentials for less polluting fuels such as low-sulphur diesel. When I was a newly elected Member of Parliament, I visited the first lead-free pump in Stockton-on-Tees, filled the car up and gave an interview to the media about the importance of tax differentials to encouraging good environmental behaviour. Since then, lead-free petrol has taken off throughout the land and I hope that, in due course, low-sulphur diesel will do the same.
  Above all else, the people in my constituency care most about jobs. They will be very heartened to learn from the Chancellor today that unemployment throughout the country has fallen by 950,000 from its peak and that 750,000 more people are in work than at the end of 1992. They will also be particularly pleased to learn—if they do not know it already—that at 8.1 per cent., the United Kingdom's unemployment rate is lower than that in Germany, where it is 9 per cent., lower than that in France, where it is 12.5 per cent., and lower than that in Italy, where it is 12.2 per cent. Indeed, of all the countries in Europe, the UK has the highest proportion of its population in work.
  My constituents also recognise the importance of Europe as a framework and a market in which to expand and operate. They see, almost weekly, huge inward investment coming to the north of England from Japanese companies such as Nissan, Korean companies such as Samsung and smaller companies such as Tabuchi and Sanyo. Such inward investment is being made because we are full players in the European Union but do not have the burdens of social legislation that other countries have.
  When I consulted businesses in my constituency about what they would like to hear in the Budget, 83 per cent. replied that they would not want any form of minimum wage, and 79 per cent. said no to the social chapter being introduced. Opposition Members will have a job to explain to the business men of the north of England why they want to saddle them with such additional costs when businesses so clearly do not want them.
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  I am also very pleased that the tax on jobs in the form of employers' national insurance contributions has been cut and that it will be partly financed by the landfill tax—a tax on waste.
  The Budget is effective because it helps the real engines of growth in our economy: small businesses. As I have already said, they do not want to be saddled with unnecessary social legislation. They will be pleased by today's announcement on the non-domestic rating system and by the reduction in small companies' corporation tax to 23 per cent. Many of them in villages are already pleased by the changes in the rates for village shops. Indeed, Cleveland council's voluntary services wrote to me to tell me how delighted it was and how important such changes are to the future of our local communities.
  As we consider the effectiveness and correctness of the Budget, it is important to take into account whether we shall get borrowing back into balance. I am very pleased that we are, and that we shall do it relatively quickly. That move has been financed not just by the success of our domestic companies, but by the success of our exporters. If I have one tiny criticism of the Chancellor, it is that, when he said that we now have the best trade figures for many years, he did not mention the sterling efforts of my hon. Friend the Minister for Trade, who is at this very moment negotiating yet another big trade deal for us in Buenos Aires. I look forward to seeing him back in this country, and I am sure that companies in my constituency and many others will look forward to the contracts that he will bring back with him.
  The Budget is philosophically correct. We believe in low taxes because it is better to leave people to make choices in life with their money. The Government do not have any money: they have only taxpayers' money. The money that we invest on behalf of the whole community has to be well spent and well accounted for, but it is important too that individuals make choices about their lives, make provision for themselves and their families and take responsibility and feel a sense of duty towards their families and their immediate communities. To do that, they have to be left with the resources to make real and beneficial choices. They cannot do that if the community takes their resources from them and distributes them on their behalf. If that happens, the only choice individuals get in the matter is when they come to elect a Government and then come cap in hand to ask for money for particular causes.
  One of the special features of the past 17 years has been the enormous growth in charitable giving. Individuals have personally supported a plethora of good causes. On Teesside, we have seen massive charitable giving to local causes through the Cleveland Charitable Foundation. Local needs have been met by new enterprises that have arisen quickly in the voluntary sector. The hospices are a good example, and they are entirely supported by voluntary donations. That is an important philosophical feature of the Budget. We want to leave people the resources to make those choices possible, and to give people the opportunity to get meaningfully involved in their local communities.
  What have we heard from the Labour party? We have heard a lot of carping. In all the years I have known the right hon. Member for Sedgefield (Mr. Blair), today he made one of the worst speeches he has ever made. It had no content. Here was a great opportunity for Labour to

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  say what it would have done in the Budget, and he blew it. The right hon. Gentleman represents a neighbouring constituency, and I know that he will blow it again.
  Opposition Members disclaim any responsibility for the 89 pledges that were recently identified and costed by my right hon. Friend the Chief Secretary to the Treasury. They say that they cannot get the pledges past the right hon. Member for Dunfermline, East (Mr. Brown), but the reality is—and I know enough Labour Members of Parliament well enough to know it—that those 89 pledges represent the aspirations of most Opposition Members. They will disavow those pledges only for as long as it takes to get them into power, but if they do not get into power they will be in a serious situation—they will have dumped everything they believed in to try to get elected and they will not have anything to show for it. What will happen then? Presumably they will chop their nice, smiling leader and find themselves a proper socialist leader, if such a thing exists nowadays.
  Alternatively, if the Opposition get into power, what will happen? Will they still disavow the 89 spending pledges, or will they be queuing up outside the door of the new Chancellor of the Exchequer to demand that more money be spent on road congestion in London, rail services in Bradford and the many and various different causes that they have espoused without attaching price tags? Today was a great opportunity for the future Labour Government, if that is what Opposition Members really think they are, to set out their agenda to the nation, to tell us where they would spend the money and where they would raise the money. What happened? The right hon. Member for Sedgefield blew it, and he will continue to blow it.
  This has been a good Budget for the family, which will pay less on average than single people, and a good budget for all taxpayers. It shows that my party is serious about reducing the burdens of taxation. The Budget has shown that, for all the waffle, the Labour party is not so inclined and does not have the heart to do it. It had the opportunity to tell us, if it could, how it would reduce the standard rate of tax to 10p, as it once fatuously said it would. It had the opportunity to tell us which spending commitments would be chopped so that it could do that.
  We could have learnt today how Labour would spend so much on education, the national health service and all its other sacred cows, but we heard not a word from the Leader of the Opposition. I doubt whether there will be another word on the subject from the Leader of the Opposition, the shadow Chancellor or any other Opposition Member this side of the general election. After the next general election, when they are in opposition again, I look forward to the great squabbles about what went wrong.
  7.45 pm
  Ms Diane Abbott: It is almost—but not quite—touching to hear and watch Conservative Members try to put a brave face on the Budget. The truth is that this was the Tories' last chance Budget and they were desperate for big, splashy tax cuts which, for many of them, were their last, threadbare hope of holding on to power. As the Tories flowed out of the Chamber after the Chancellor's speech,
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  many of them must have been seeing their political futures drain away before their eyes, because it simply was not enough.
  One has to have some sympathy for the Chancellor. The Budget was, in many ways, blown off course by events. Harold Macmillan, when asked what was the most difficult thing in politics, said, "Events, dear boy, events." First, the Chancellor faced the mischance of having his entire Budget leaked to the Daily Mirror the day before delivery. That is unheard of in the history of Budget speeches. Then we had the unfortunate incident yesterday, when the Chancellor was dragged to the Dispatch Box by uproar in his party over economic and monetary union, which is the biggest economic issue facing the House in the coming 18 months.
  The Chancellor was more than a little disingenuous in his performance yesterday. For the Chancellor to claim that matters being discussed at ECOFIN have no relevance to this country because of our opt-out seems to me to be playing games with the truth.
  The Exchequer Secretary to the Treasury (Mr. Phillip Oppenheim): It would be helpful to the general course of the debate if the hon. Lady would ensure that her comments comply with the facts. The Chancellor said no such thing. I shall ask her a straight question for a yes-or-no answer. Are there any divisions in her party over economic and monetary union—yes or no?
  Ms Abbott: The real question is whether there are any divisions in my party about Europe. My party is united in the belief that we should stay in Europe, but, as the days go by, more and more Conservative Members of Parliament are coming out of the closet—the economic closet—and declaring themselves to be in favour of this country coming out of Europe. What more misguided and kamikaze policy could there be than that?
  Mr. Oppenheim: I am not sure about the hon. Lady's dodgy metaphors, but I shall ask her the question again on the off-chance that she will give me a straight answer this time. Are there any divisions in her party over EMU—yes or no?
  Ms Abbott: On that issue, as on all issues, my party is 101 per cent. united behind the leadership of my right hon. Friend the Member for Sedgefield (Mr. Blair).
  Mr. Oppenheim: You used to be honest.
  Ms Abbott: No, I was never honest—your mistake.
  It seems that the Chancellor is being disingenuous on the question of EMU, and he will have to return to the Dispatch Box to answer the real questions of what is to be decided at ECOFIN and afterwards. Anyone who has made any study of economic and monetary union knows that the one thing of which those in France and Germany are terrified is that countries that stay outside EMU might thereby gain competitive advantage. There is no question of every European country fulfilling the criteria for entering EMU on target—for example, the notion that Italy can hit the Maastricht criteria and enter EMU within the timetable is wholly fatuous.
  The question of how to bind countries that stay outside EMU in the first wave to continuing scrutiny and oversight of their public spending and taxation plans is

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  not merely a by-chance of ECOFIN's deliberations, but a central concern of the discussions. For the Chancellor to come to the Dispatch Box and attempt to reassure his mutinous Back Benchers by saying that, if we stay out, none of that can apply to us, flies in the face of the facts and of political opinion in France and Germany.
  I notice that, in a throwaway line, the Chancellor said that, by a happy coincidence, we were currently hitting the Maastricht targets on spending and borrowing. Innocent right wingers on the Conservative Benches should wake up to the fact that the Chancellor has a clear and relentless political commitment to entering EMU and that he will guide this country into EMU, whether his hon. Friends like it or not. As an admirer of the parliamentary process, I was saddened to see hapless Tory Members of Parliament so easily bamboozled yesterday.
  Turning to the contents of the Budget, I want to highlight Conservative Members' entirely dishonest claims about increased spending on the health service. On Monday, I was in my local general hospital, the Homerton hospital in Hackney. Conservative Members should go to hospitals, especially inner-city hospitals, and talk to staff there about increased spending on the health service. The figures on increased spending are phoney figures—they completely ignore differential rates of price and wage inflation in the health service.
  If one really wants to know what is happening in the health service, ask a nurse—any nurse. Far from more money flooding into the health service, as Conservative Members insist it is, nurses are voting with their feet and there has never been a greater shortage of trained nurses in the health service. That is not because there are no trained nurses about—I know many trained nurses—but because nurses have left the health service because of cuts, the increased work load, the pressure and the weight of bureaucracy.
  My local health authority, in the middle of London, has to go as far afield as Finland and Scandinavia to recruit nurses to work in the east end of London—not because there are no trained nurses in Hackney but because trained nurses are fleeing the health service. They know that, despite the Government's boasts about increased spending, the reality is cuts and increasing bureaucracy, year after year. The Government's boasts will sound hollow to ordinary people and health service workers who know what is really happening in the health service.
  I note that the Chancellor today glossed over a matter that will have a severe impact: the rise in prescription charges.
  I also want to touch on the proposals in the Budget relating to single mothers. I have to declare an interest: I head a single-parent household. One of the more distressing aspects of recent political debate is the concerted attempt—especially by Conservative Members—to stigmatise single mothers and to make them scapegoats for society's ills as a softening-up process before cutting benefits.
  I read with interest the press release issued by the Secretary of State for Social Security in respect of the cuts in benefits for single parents. He said:
  "Research shows that the only substantial extra expense lone parents have … is the cost of childcare."
  The Secretary of State must know that that statement is wholly misleading. Single parents do not have extra expenses as such; but, because lighting a flat costs the
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  same for a one-parent family as for a two-parent family and because housing expenses are the same for one and two-parent families, single parents' unit costs are far greater.
  That the social security system has had a lone-parent premium in the past is not a perverse incentive for single-parent families, but the state's recognition of the fact that, penny for penny and in terms of unit costs, running a single-parent household is relatively more expensive. That is not because there are specific extra costs but because the same costs are not divided between two wage earners.
  Hidden in the Budget announcement were cuts in housing benefit for single people and single mothers. It is wrong for the Chancellor, in his search for areas in which to scrape up money for tax cuts, to attack single-parent families, who are the poorest and most vulnerable families in our society. That measure does not do either the Chancellor or the Government any credit.
  In their final months in power, Conservative Members persist in proclaiming that theirs is the party of low taxation. Who believes that now? The fact is that, when one looks at the totality of taxation—direct and indirect—one finds that the only people who benefited in real terms throughout the 1980s from the Government's tax-cutting measures were those earning more than £70,000 a year. This is a Government for the people, by the people—but only the people who earn £70,000 a year.
  The public have seen through the Tories on tax. The reason the Chancellor could not come here with fatuous proposals to cut taxes is that he knows that the public would not believe him. The Tories have lied to the public about taxation too often and now the public see through the Tories entirely. This was the last Budget of this Parliament and, happily, it is the last Budget that many Conservative Members will be in the House to see.
  7.56 pm
  Mr. Barry Jones (Alyn and Deeside): I thought that my right hon. Friend the leader of Her Majesty's Loyal Opposition made a fine speech and was on good form. I disagree with the hon. Member for Stockton, South (Mr. Devlin)—when last was there so vigorous, so savage and so comprehensive a response to a Budget statement? I only hope that my constituency party workers observed my right hon. Friend, because it would make them work even harder organisationally to deliver a Labour Government on 1 May, or earlier.
  For the Government, the Chancellor of the Exchequer began in a smiling and jocular manner. He played the House with aplomb and great professional finish, as he always does and always enjoys doing. I heard him promulgate his five-year plan, but it was based on consumerism. I shall remember this general election Budget as the Budget that sold off the student loans book. Put in that context, we realise what a humbling predicament the Chancellor found himself in. The Chancellor's statement had a valedictory flavour. He was speaking for the record on exit from Government and hoping to put the best possible spin on his activities as Chancellor of Great Britain for the past four years.
  I wanted a Budget to strengthen Britain's manufacturing industries. I wanted a Budget to make serious inroads into the long-term unemployment totals. I also wanted a Budget to tackle the disturbing youth unemployment totals.

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  I had hoped for a Budget that would signal extra money for the hard-pressed county councils throughout Wales, and a Budget dedicated to stimulating the building industry, especially in terms of building houses at affordable rents, and the modernisation of the large, aging council estates that are so difficult and so cold to live in now.
  I wanted the Chancellor's Budget to signal real assistance for the beleaguered hospital trusts throughout Wales, because they fear a winter of unremitting pressure on their beds and services.
  I certainly wanted a guarantee that no local education authority in Wales would have to make even one teacher redundant, especially not in my county of Flintshire—but I fear that redundancies are on the horizon. I deplore the cuts in the training budget; those are folly. I also deplore the increase in prescription charges; that is unjust.
  In their determination to create a lean and powerful economy for the next century, the Government have neglected the moral challenge of long-term unemployment. They have neglected to provide for the young unemployed. It is one thing to aim for and to boast of profitable industries—certainly those exist—but what of the huge cost of paying benefit to the 2 million unemployed people in our country?
  That represents a ruinous charge of billions of pounds on the country. What of the financial consequences of the despair and alienation of the long-term unemployed and of young people who have left school and have no meaningful work? The Budget is silent on that question, which is so important for all the citizens of our country.
  This summer, 870,000 people had been out of work for more than a year, more than 500,000 had been jobless for two years, and 370,000 for more than three years. We have to face the fact that, with 37 per cent. jobless for more than a year, long-term unemployment for men is at a scandalous level.
  Those are grievous statistics for any nation in the western world, especially for our nation, with its previous record. I regret the fact that the Government appear to have no real determination to tackle the causes of deep-rooted unemployment.
  Why do the Government not designate a named Minister to take special responsibility for such a large problem? I remind the House that the Conservative party once gave the right hon. Member for Old Bexley and Sidcup (Sir E. Heath), who later became Prime Minister, special responsibility for the north of our country, with the aim of reconstituting an ailing economy and tackling unemployment.
  I conclude that Her Majesty's Government do not appreciate the terrible blight of long-term unemployment in the areas of our country that once sustained large, viable and profitable industries such as textiles, steel, shipbuilding, coal mining and brick making. Those industries have all but disappeared, or at least have substantially contracted.
  However successful we are in building a new local economy in the regions—we are successful from time to time—there are never enough new jobs to cope with the people who are still out of work. The tragedy in the 1980s was that the Conservative Government let too many of
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  our manufacturing jobs go to the wall. Within three years, when Sir Geoffrey Howe, now Lord Howe, was Chancellor and Sir Keith Joseph was Secretary of State for Industry, we let 2.5 million jobs go.
  Too many willing but unskilled men have no work, and they lead a wretched existence. They are without a skill and without a job, having only a memory of their previous pride in their job and their previous status in their communities. For years, they have had no formal role in life whatever.
  Neither the present Government nor previous Conservative Governments have addressed those people's predicament. That is unjust, and it is not good for our nation. It could be said that those tens of thousands of men, and some women, are rotting away. They exist, but the good things of life are not for them. They see, but they do not experience; they see, but they do not have.
  The Government are not battling for those people, or aiming to get them into work in sufficient numbers. They appear to have no strategy, no plan and no commitment; they appear not to care. It cannot be right for Britain that that cancer in our midst is allowed to continue. A Government must tackle the problem.
  The long-term unemployed and the young men and women who have recently left school have no real work. Not for them are the high wages of the skilled worker. They cannot share sufficiently in the good things of life in which most of us share. For them, there is only basic unemployment benefit.
  I would be the first to say that I do not want a dependency culture; the Chancellor was right there. But I want a Government programme to get the jobless into work. I want to see a success in that sphere of policy, to save Britain the cost of providing benefits on such a mighty scale. My right hon. Friend the Member for Dunfermline, East (Mr. Brown), the shadow Chancellor, has pointed the way forward in that respect, and his policies are commendable.
  I draw to the attention of the House some sobering figures—the social security benefit rates paid by the Benefits Agency. These are the most recent figures that the Library can give me. A person aged 16 to 17 who is out of work will have £28.85 each week. Someone aged between 18 and 24 has a total of £37.90 to exist on for a week. For a man or a woman aged 25 or over, the total is £47.90.
  The challenge that I put to the House is: how can such people manage their weekly lives with so small a sum? Tens of thousands of people must face that daunting challenge. What is the House prepared to do for those who are in such a predicament? What are the Government prepared to do? Why did the Budget not address that problem?
  It must be a harrowing experience to try to live on so wretched a sum for one year, let alone for two or three years, yet tens of thousands of people have to do it. That cannot be right. Nowhere are the Government addressing that problem that is so central in our communities. They are deaf to the cries of those who are poverty-stricken and unemployed. The problem must be tackled, for the sake of social justice and fair play. That is what I ask of the Government.
  The Budget is for the whole nation; it shapes life for us all. But at the grass roots, among the common people, what helping hand does it extend to the millions who are

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  elderly, disabled, poor, ill or jobless? It does not, and it is a failure. It is on behalf of my jobless constituents that I make my protest. I believe that the Government must face our people soon, and I hope that the electorate will send them packing.
  8.9 pm
  Mr. Michael Stephen: As we have come to expect from my right hon. and learned Friend the Chancellor, this has been a well thought out Budget delivered with his customary skill and good humour.
  We are constantly reminded by Opposition Members that before the last general election the Prime Minister indicated that he had no plans to increase the scope or rate of VAT. The Prime Minister is an honest man and I have no doubt that when he said that, he meant it.
  Someone once said that a week is a long time in politics, but six months is an eternity in economic affairs. Nobody knows what the economies of the world will be like in six months or a year, and any Government who said at any time—before or after a general election—that they would never increase taxes would be wrong. No Government can, nor ever should, fetter their ability to manage the nation's economy and to deal with new circumstances that the world economy may present.
  In my view, the Conservative Government had no choice but to increase taxes after the election. We could have increased borrowing—as the last Labour Government did—but that would simply have thrown the burden on to our children and grandchildren, and no responsible Member of Parliament could have done that. We could have cut spending on the national health service, on schools or on pensioners, but again, no responsible Member would have wished to do so. Certainly no Conservative Member wished to do that. The Government had to bite the bullet and do what Conservative Governments always do—they took a hard choice, even though that choice might turn out to be electorally unpopular. We raised taxes, and we should not apologise for that—it was the right thing to do in the circumstances.
  Opposition Members forget that, at that time, Britain and the entire western world were going through the worst economic recession since 1929, which had flattened the economies of the United States, France, Australia, New Zealand and many others. In so far as any action by the British Government exacerbated that situation, I have to say that it was entering the ill-advised exchange rate mechanism.
  We must remember, however, that at that time everybody was saying that we should enter the ERM—the Confederation of British Industry, the Trades Union Congress, the Labour party, the Liberal Democrats and pundits in The Spectator and The Economist all agreed that Britain ought to go into the ERM. It turned out to be a disaster, and I for one was extremely glad when the then Chancellor decided that we should come out. Since we came out, the British economy has not looked back and we are now in our strongest position for many years.
  Dr. Lynne Jones: Is the hon. Gentleman not being disingenuous in suggesting that the then Chancellor actually decided to come out of the ERM? After black Wednesday, he had no choice. Was not the reason why we had to come out the fact that we
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  had entered the ERM at far too high a rate in the first place? The reason why the economy has improved since is because the pound has now fallen to a more reasonable level. Sadly, it is now rising again and the Chancellor had better beware of the effects that that may have on his much-vaunted recovery.
  Mr. Stephen: I am grateful to the hon. Lady for making that intervention, because it shows how little she knows about the economy of the real world. There is no such thing as a correct rate to enter a system such as the ERM. If we had gone in at a lower rate, the dynamics of our economy and that of the world might—and probably would—soon have shown us that the rate was too low. The result would have been that interest rates would have been too low and inflation would have begun to stoke up.
  Mr. Bill Walker: Is it not a fact that, at whatever rate one enters any exchange rate mechanism, it is the other activities that matter? One can never say with certainty that a country operating within a fixed exchange rate mechanism is invulnerable to the events of the market.
  Mr. Stephen: My hon. Friend is absolutely right. King Canute could have told us that it was a mistake to go into the ERM. So much money crosses the exchanges every day as to be greater than the sum of money contained not only in our Treasury but in all the Treasuries around the world. No one can stand against those tides, any more than King Canute could stand against the tide, even though his courtiers suggested that he might be able to do so.
  We are told frequently that this Conservative Government have put up taxes 22 times—that there have been "22 Tory tax rises". But when we look at them, we see that four of them were increases in vehicle excise duty, four were increases in tobacco duty, four were increases in petrol duty and one was something to do with gold and the way in which tax is levied on bullion dealers. Come on! No Conservative Member has shirked the real tax rises and the restrictions in allowances. But for the reasons to which I referred a moment ago, the Government were right to make those tax rises, however unpopular they were in electoral terms.
  Would the Labour party have taxed less, had it been in power? As the Duke of Wellington suggested, "Anyone who believes that would believe anything." Those of us who listen to Opposition Members day after day and week after week realise that, if they had their way, there would be more spending on just about every left-wing interest group who approached them at their surgeries and in their offices here. Calculations have been made that Labour would introduce some £30 billion in extra spending. That is a vast sum of money which would have to be found by the Labour party.
  Perhaps Labour would not have raised taxes, but would instead have gone back to its old habit of borrowing money as though there were no tomorrow. I have no doubt that, if Labour gets into power at the next election, it will go back to its old ways of taxing, spending and borrowing, and it will take perhaps another 20 years for the next Conservative Government to put matters right. I sincerely hope that the British public will not be misled by the press, the media and the nonsensical propaganda that we hear every day from the Labour party into making the dreadful mistake of putting Labour into power.

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  One other factor that we must consider in terms of the "22 tax rises" is that interest rates have fallen. Interest rates are perhaps the biggest item in the budget of any family. They affect mortgage rates, which have now halved since their peak in 1990. That has done even more to benefit the average family than the tax cuts that my right hon. and learned Friend the Chancellor has been able to announce. When one looks at the overall picture, there may have been extra taxes but they are now coming down. The average family are now a great deal better off—after paying their taxes and national insurance contributions—than they were when we came into office.
  The hon. Member for Alyn and Deeside (Mr. Jones) mentioned the training budget. It is hardly surprising that, at a time when unemployment is declining as rapidly and consistently as it is at present, the Government might think it appropriate to reduce the amount of spending on training. Any hon. Member who talks to business men, as I do, will have been told that the Government should not be in the business of training at all. Business men want the Government to send them well educated, numerate and articulate young people, and they—the companies—will train them to do the jobs. The problem in this country is not lack of training, but lack of demand for trained workers. Resources are always scarce, but such resources as we have must be put into creating a climate in which businesses will think it worth their while to create jobs, rather than into training people for jobs that will not be available.
  I am glad that my right hon. and learned Friend the Chancellor was able to provide more money for the Home Office and that the police force is now better paid and better equipped than ever before. Those of us who remember the last Labour Government will remember that the police force was so demoralised that policemen were leaving in droves.
  But all the policemen in the world cannot protect us against crime, because throughout the western world crime is an entirely different entity from what it was 20 or 30 years ago. The root of crime today is drugs, which cause people to behave in a deviant way and to commit crime in order to get money to feed their habit.
  Drugs do not drop out of the sky. Hard drugs are imported and enter the country through our ports and airports. I do not care what the continental Europeans want to do: if they want open borders, and drugs, flooding across their countries, that is a matter for them. The English channel and the sea around us have given us a priceless defence against crime and drugs, and we must never let it go. I hope that my right hon. and learned Friend the Home Secretary will make that absolutely clear to his opposite numbers in Europe. Britain must maintain its frontier controls.
  Drugs come in through our ports and airports, carried by passengers or in freight consignments. We have to wage a war on drugs and we must put into it the same resources that we put into the war in the Falklands. Galtieri could have taken the Falkland Islands, but he could not attack the heart of our community and corrupt and destroy our young people as drugs are doing. There is the strongest possible case for a war on drugs.
  We should have not hundreds but thousands of sniffer dogs at our ports and airports. Every passenger entering the country should go through a screen that sniffs for
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  drugs and detects other contraband. We have no such screens. Extra money is to be given to Customs and Excise to check on beer smugglers—that is welcome, because I know the damage that they do to our drinks industry—but catching drugs smugglers is more important. I would have been pleased if the Chancellor had been able to put more money into the fight against drugs. I hope that he will do so in his next Budget.
  Those of us who visit prisons see the terrible destruction and blight that drugs cause to the lives of otherwise intelligent young people. When I visited Downview prison in Surrey, I sat with a group of prisoners who were there because of drugs. I was immensely impressed by the successful programme there, organised by the Addictive Diseases Trust, which forces young people to come to terms with their drug addiction and deviant behaviour. I know that the Minister of State, Home Office—my hon. Friend the Member for Maidstone (Miss Widdecombe)—has been to Downview to see the programme for herself, and I urge my right hon. and learned Friend—to put more money into the fight against drug addiction in our prisons.
  It should be absolutely impossible to get drugs into prisons. I know that we have tightened the procedures, but any prisoner who is found to have drugs in his blood or urine should be denied any future contact visits. If prisoners cannot be trusted, they should have no contact visits.
  Combating drugs is also a process of education. Companies spend millions of pounds on television advertising to persuade us to buy the latest products, but how much is spent on persuading our young people of the dangers of drugs or invested in a system that could turn 10 per cent. or 20 per cent. of them away from destroying their lives through addiction? Very little is spent, and I urge the Home Secretary to devote more money to a drugs education programme.
  In my view, this has been a good Budget, but I wish that we would declare war on drugs and fund that war properly.
  8.24 pm
  Mr. Clive Soley: It would be naive to assume that there was not a political agenda, just as there is an economic agenda, to every Budget, but many people outside the House will be surprised at the lengths to which the Government have gone to try to win the next election by manipulating the Budget to their political advantage. I do not believe that that strategy will work, but it will do considerable damage to our long-term economic recovery.
  I do not believe that people will be taken in by the Budget, especially on taxation. My right hon. and hon. Friends have made it clear that there is no longer anyone who believes the Conservatives about taxation; but there are more serious problems than that. The hon. Member for Shoreham (Mr. Stephen) said that the Government faced a difficult choice—to put up taxes or to increase borrowing—and that they chose to put up taxes; in fact, they dramatically increased borrowing as well.
  The Government have a dismal record. They have not only dramatically and unnecessarily increased public sector borrowing and taxation over the years, but they have maintained high interest rates throughout my 17 years in this place, doing enormous damage to our industry. That is a singular failure. The Government have

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  had all the advantages of North sea oil, of privatisation assets and of low commodity prices during the 1980s. That happy coincidence of events should have been of enormous advantage to a Government throughout the 1980s, and it was wasted.
  Mr. Oppenheim: One of the many myths promoted by new Labour is that we have had a massive oil bonanza. Does the hon. Gentleman know what oil receipts were in real terms in the last year of the Labour Government and what they have been for the past five or six years?
  Mr. Soley: What matters is that in the last year of the Labour Government they were rising dramatically. It was too late for that to influence the general election in 1979, but everyone knew that whoever won that election was likely to be in power for 10 years; after that, the oil revenues continued to increase, reached a plateau and then began to decline. Is the Minister really trying to convince me or anyone else that the Government had no advantage from North sea oil?
  Mr. Oppenheim: I can help the hon. Gentleman with the figures. In the last year of the Labour Government, oil receipts in real terms, in today's prices, were close to £1.3 billion; this year, they are expected to be close to £1 billion. In the past three or four years, they have cruised at around £300 million to £500 million. The only time at which they were briefly higher than in the last year of the Labour Government was in the mid-1980s, for three or four years.
  Let us hear no more of this myth about the great wasted oil revenues. They never existed: we are a very large country, so oil revenues as a proportion of gross domestic product are low, and United Kingdom oil is difficult and expensive to extract, which is why taxation on it does not yield as much as it would if the oil came from the Arabian desert.
  Mr. Soley: It is a pretty desperate argument to say that North sea oil was not a great advantage to the Conservatives in the 1980s. The House, and anyone reading this debate, will notice that the Minister did not deal with the figures before 1978–79.
  Mr. Oppenheim: I was referring to that year.
  Mr. Soley: I agree that revenues were high in that year, but before that they were low. They rose in 1978–79, stayed high throughout the 1980s, with a couple of dips, and then declined slightly. If it is the Minister's case that North sea oil did not benefit this country, he is denying what every economist knows to be true. It was an enormous benefit. North sea oil receipts, combined with all the assets of privatisation and low world commodity prices, is the explanation. Together those three items gave any Government, however incompetent, an enormous advantage.
  The problem is that the Government of the time kept interest rates so high that they damaged British industry—the Government know that, and so does British industry.
  I acknowledge that the Labour party lost the argument over tax for a number of years, but the fact remains that the burden of taxation under the Conservatives has been historically high. Theirs is not a party of low tax. If any
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  Conservative Member doubts that, he can turn to page 71 of the Red Book and see that throughout the 1980s, and, except for a short period, in the 1990s, the tax burden and social security contributions as a percentage of money GDP have been higher than under Labour Governments.
  The difference between our two parties is that the tax burden for the very rich has declined under the Conservatives, but for the lower paid and those on middle incomes it has increased.
  Mr. Oppenheim rose
  Mr. Soley: The Minister should be less keen to intervene, given that he does not seem to be able to get the economy right. Yesterday's "Panorama" programme revealed that the Institute for Fiscal Studies had assessed each of the groups that I am describing in such a way as to offer considerable support for my argument. The Red Book supports it too.
  Mr. Oppenheim: I shall ignore the hon. Gentleman's catty remark. I see it as an important function of mine to put him right on certain key figures. He says that the tax burden now is higher than it was in 1979. Is he aware that borrowing under the Labour Government averaged 7 per cent. of GDP, twice the average rate under this Government? If we had carried on borrowing at the rate Labour borrowed at between 1974 and 1979, income tax would be 14p higher than it is now. That borrowing was merely deferred taxation; we have spent 17 years paying off much of the debt incurred by the last Labour Government.
  Mr. Soley: The Minister is plain wrong, as page 65 of his Red Book shows. The public sector borrowing requirement is very high under this Government—
  Mr. Oppenheim: Half Labour's rate.
  Mr. Soley: The Minister should listen; he keeps seizing on particular statistics and then thinks he has won the argument. It is not like that.
  The Government came to power in 1979 claiming that they were going to cut public expenditure. They failed to do so and they have failed to reduce the PSBR significantly over 17 years. The reason is simple: high unemployment. High unemployment inevitably entails high public expenditure. So the Government are paying the price in the form of public sector payments, even though they have cut the money for unemployment and have fiddled the figures. The PSBR and borrowing generally have been so high because of the Government's failure to deal with unemployment.
  Mr. Bill Walker: Is the hon. Gentleman suggesting that, if people work for the state, it does not really matter whether they work at all? If the state, paid people to do that, we would be in the same position as the Soviet Union was—relatively no unemployment but broke.
  Mr. Soley: The hon. Gentleman is over-simplifying. No one is suggesting that we give people jobs and print the money to pay for them. Henry VIII discovered that that did not work, although not for the same reasons. We need to create employment and set up training schemes that give

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  people jobs and skills that are relevant to a modern economy. What is impossible is to pay people to be unemployed and expect to have a low PSBR. Unless all the unemployment benefits paid to people are abolished, they will remain the biggest burden on the Exchequer.
  Mr. Stephen: Of course we are all concerned about unemployment, but does the hon. Gentleman accept that the two main reasons for recent unemployment have been, first, the technological revolution that we are still undergoing—scores of men bent over workbenches are replaced by five or six robots—and, secondly, the world recession to which I alluded?
  Mr. Soley: I agree that the world recession has been a factor, but not enough to explain the problem. During the 1980s, the Conservative Government simply pulled the plug on the old rust bucket industries, watched them sink and put nothing in their place. Mazda in Japan and AEG in Germany also owned rust bucket industries, but they turned them around.
  I am happy to criticise the last Labour Government on one score: we subsidised industries with no clear idea of how to bring those subsidies to an end. But when the Conservatives took over in 1979 they just pulled the plug, and unemployment rocketed. Then they were surprised to see the PSBR go up and stay up. That should not have been surprising. Even the Conservatives do not deny that unemployment stood at 3 million—all those people had to be paid money and their taxes and productivity were lost to the economy. That led to high borrowing and the need to put up taxes. That, in macro-economic terms, is precisely what happened.
  Page 71 of the Red Book shows that taxation will again be higher towards the end of the century, and that, from 1998 on, total taxes and social security contributions as a percentage of GDP will again be higher than under Labour. So it is not just a matter of a few blips; the Government themselves are predicting a higher tax burden.
  That shows what is wrong with this Budget. It is a short-term effort to avoid defeat at the general election; and because the Government know that they are unlikely to win that election, they are not too troubled about the knock-on effects.
  I shall not deal this evening with growth or investment, important though they are, because I want to mention a highly political issue which will be profoundly damaging. I refer to the Chancellor's clearly stated intent to increase council taxation by £4 billion over the next three years. So the Conservatives are making councils put up local authority taxes from the spring of next year—when there will be an election—to pay, over the next three years, for the tax cuts that the Chancellor has announced today.
  The results will be deplorable, and not just for the council tax payer. This will be a body blow, too, to the ordinary person in the street in Hammersmith—but the Government will try to distance themselves from the increase, claiming that it is all the fault of Labour local authorities.
  I am also troubled about the effect on services. In today's Budget, the Chancellor of the Exchequer imposed on local authorities additional duties for care in the community, but he has said that there will be no additional money for such programmes.
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  I know of numerous cases in Hammersmith of care in the community not working as well it should, sometimes because of lack of resources. I am not unique in that. People throughout the country, and I suspect some hon. Members in the Chamber, know of such cases. I know of cases of people who are regarded as a danger if they stop taking their medication after release from hospital, receiving minimal support, not because of lack of concern or of ability to do the job, but because the money is not there.
  Care in the community is a good idea if it is well resourced, but without resources it is a disaster. At times, that disaster has been expressed in extreme forms of violence by some mentally ill people who do not have the support they need to survive in the community.
  We are imposing on local council employees the burden of paying extra to ensure that that job is done, or not paying it and seeing the job left undone. As usual, councils will try to do their duty—whatever their complexion, although there are not many Tory councils left—but it will be done in a penny-pinching way, so care in the community will not work properly. The consequences will be very serious.
  I shall now discuss an issue that we have not addressed properly for several years. It relates to the wider family issue, but I shall focus on the social security payment. I believe that most people accept that we need a radical reform of social security.
  I have never understood how the Conservative party has managed to continue the crazy policy that puts people in a trap, so that if they earn a bit more money they lose benefits. They are faced with the unenviable choice between earning money illicitly and risking the knock on the door by the fraud investigator or whatever, and living off their benefits.
  Let us suppose that, to give him a reasonable income, a person receives family credit to top up the money that he earns by working—usually part time, but perhaps full time. The taper is so steep that, if that person earns slightly more, family credit tapers off rapidly and other benefits are withdrawn.
  I recently heard of a classic example of a woman who earns the maximum that she can without losing family credit, but by doing so she loses free school meals, so suddenly she must find £15 or £20 a month extra. What does she do? Should she work extra time and try to find extra work and not declare it? That is illegal, but we know that many people do it. Or does she not pay for school dinners, and perhaps give the child a packed lunch?
  Is that a good family policy? When we speak about concern for the family, is that what we mean by a good policy? Of course it is not. It is no good the Chancellor of the Exchequer saying in the House, as he did today, "I care about the family because I shall treat married families slightly differently from the way that we have done." In that sense, marriage is not the issue.
  What matters is giving families of all shapes and sizes enough support to make them a functioning unit, and a unit that enables people to get back to work. That should apply in the care in the community case of an elder son or daughter looking after an elderly parent, or of the mother at work who receives family credit but does not receive enough to pay for school meals.
  As the hon. Member for Shoreham (Mr. Stephen) said, the change in the technology of this country has been dramatic and continuing, and as a result the nature of

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  work will continue to change. The dramatic change in family structure is not to do with the decline of marriage per se—that is merely a symptom. With the collapse of heavy industry, the set-up whereby the man went out to work and earned a living and the woman stayed at home and played the traditional housewife role has gone. It will not return, because the existing industry is seeking people to do part-time, short-term work—contract work and so on. That is often more attractive to a woman. It also often pays less, so it gets the woman into work, not the man.
  If we really want a family policy, we had better work out our Budget in a way that helps families without moralising about whether they are one-parent, two-parent, married or unmarried. That is not relevant. The relevant issue is to help parents be good parents by providing the infrastructure necessary for good functioning as a parent. I shall end with a couple of examples of that.
  How long will it be before we hear a Chancellor of the Exchequer says, "I want to help the family. There is no advantage to anyone in a parent trying to bring up a child in bed-and-breakfast accommodation or even temporary accommodation. We shall put an end to it"? I also want to hear a Chancellor of the Exchequer say, "We shall give support for nursery provision so that we can spot problems in the early stages and help parents manage the juggling that goes on between the modern structure of work and the problems of parenting, and we shall create a structure of financial, social security and other systems that support that." It will not necessarily cost more, although I accept that it may cost more during the transition.
  The Chancellor is saying today, in all these wonderful documents, that he will spend to save. I am fascinated by that. We shall even have more customs officers. Only six months ago I was trying to save from the sack some customs officers who dealt with small businesses in my constituency. Perhaps this is a sudden about-turn to do with elections.
  This is a sad Budget. It is a political one. The Conservatives have been rumbled by the public, and not before time; they could have been rumbled in the 1980s, but they were not. Fair enough; that is the way that these things go. But unless we address these issues in a more serious long-term way, we are destined to relive some of the problems with which we have struggled in the past few years.
  8.47 pm
  Mr. Peter Thurnham: I felt some sympathy with the Chancellor of the Exchequer when he was called to the Chamber yesterday at a time when he obviously expected to be preparing for his Budget. I was not surprised when he let slip a remark referring to
  "a country that is already struggling to cope with an excessive deficit."—[Official Report, 25 November 1996; Vol. 286, c. 30.]
  We already knew that the national debt had doubled in six years, and we have learnt today how the national debt continues to rocket upwards. The country is not cutting its borrowing—far from it. Borrowing continues to increase at a frightening rate.
  The figures for this year and next year come to a total of £45 billion of borrowing—two and a half times as much as the Chancellor projected in his 1994 Budget and £8 billion more than he projected in last year's Budget. I do not understand how he can honestly talk about
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  reducing tax by a penny—and more than talk about it, do it—when our deficit continues to grow at such a rate. A Budget that cuts tax when deficits continue to increase at that rate—much faster than was projected two years ago or last year—is not honest.
  We are all paying for it. We are all suffering because interest charges on borrowing are now reaching the prodigious figure of £26 billion per annum. That is a massive amount. If we were not paying it, we would have been able to have an honest Budget and have a tax reduction in that way, or to increase services in areas where they are hard pressed.
  The Financial Secretary to the Treasury (Mr. Michael Jack): I could not allow the moment to pass when the hon. Gentleman spoke about the public sector borrowing requirement. Does he agree that in 1997–98 it is forecast to be 2½ per cent. of gross domestic product, dropping in the next two years to 1½ and ½ per cent., which illustrates that the Chancellor has the matter well and truly under control?
  Mr. Thurnham: It is not possible to say that the Chancellor has the matter under control, when his projections were so far wrong. Two years ago he projected it at £18 billion, and it now comes out at £45.5 billion. That does not suggest that it is under control. He is now projecting a balance, but I do not believe that, as his earlier projections have not come true.
  Mr. Mike O'Brien: Does the hon. Gentleman agree that the Chancellor's projections today must be considered as reliable as they have been in the past, which is not reliable at all?
  Mr. Thurnham: Perhaps at one time people were prepared to give the Chancellor the benefit of the doubt, but that is running out with such massive borrowing figures.
  Where will the blow fall? It is clear to me that the impact will be felt in local government, as the hon. Member for Hammersmith (Mr. Soley) said. There will be massive increases in council taxes; that is unavoidable. The Red Book shows the increase for the current year as the best part of £1 billion. There will be cuts in services, although households will pay an extra £1 a week.
  In his speech the Chancellor made great play of increasing spending on education by £633 million or 3.6 per cent. Then he gave the game away with his comment that councils were reluctant to pass on education increases—they prefer to spend on other things. It is not a question of what councils prefer but of councils themselves reaching such decisions.
  The figures show that there has been a considerable increase in the demand for and provision of community care services, again as the hon. Member for Hammersmith mentioned.
  Spending on schools has gone down per pupil. In 1992 spending on each pupil was £2,988 in today's money. The latest figures for this year show it at £2,728. So there has been a fall in spending on education of £260 per pupil or some 8 per cent., even though that is said to be a priority for all the parties.
  The figures prove that the expenditure is going elsewhere. As the hon. Member for Hammersmith rightly observed, the pressures are on community care. The

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  figures show that there has been an increase of 6 or 8 per cent. in the demand for those services and the provision of home care and home help. This year local authorities are spending £570 million above the standard spending assessment. That shows that the provisions are not sufficient and local government is forced to find the money elsewhere to provide the bare minimum of services. This year only a 1 per cent. increase is allowed in the SSA, whereas the figures show that it should be much greater.
  Next year the joint local authorities submission shows that an extra £665 million or 8.9 per cent. is needed to maintain a satisfactory level of personal social services. Yet the figures suggest that nothing like that sum will be forthcoming. We shall have to wait and see the figures in the local government statement tomorrow.
  It is already known that there will be substantial demands. The growth in the number of elderly means that there must be increased spending of 1 per cent. Cost shunting from health authorities will be over £100 million. The capital disregard figure which has been changed previously will be over £30 million. Inflation will lead to calls for an additional £200 million.
  What will happen? It is clear that some of the most vulnerable people in our society will suffer. The elderly will be faced with even tighter eligibility criteria if they want to go into a residential home. Cruel decisions will have to be made. Increasing demands for intensive care in health authorities are being shunted into residential care, although that is not always appropriate. The disabled will suffer; there will be increased charges for home help services, and false economies if that leads to more people going into hospital than would otherwise have been the case.
  With regard to children's services, as the hon. Member for Hammersmith said, there is a need for co-ordinated preventive services. False economies will lead to increased law and order budgets later. The voluntary sector will suffer and organisations such as Home Start in my constituency, which does an excellent job helping under-five-year-olds, are vulnerable if there are intense pressures on local government spending.
  Far from an increase in spending on education, the number of teachers will be cut and class sizes will rise. Elderly people will be left to die alone and neglected in their homes because of insufficient funding for local authorities. We shall look keenly at tomorrow's figures, but in the present circumstances I do not see that there will be sufficient funding for the most vulnerable in our society. On that basis I do not see how the Chancellor of the Exchequer could say that this was an honest Budget. It is not; it is a dishonest Budget.
  8.55 pm
  Dr. Lynne Jones: The Chancellor's Budget has been almost entirely as predicted. No wonder the Daily Mirror decided that there was no great scoop in publishing the leaked documents that it had obtained.
  The Chancellor knew that very few people were clamouring for tax cuts. Business people do not want tax cuts; they want investment. According to a recent survey, even quite well-off members of the public see the need
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  for increased spending on welfare benefits and public services. The Chancellor had to respond to the clamour on his Back Benches for tax cuts of some kind. The 1p cut in the standard rate was widely predicted.
  This is not an honest or even a prudent Budget. It does nothing to address major concerns about growing inequalities, the fracturing of our society and the breakdown in the fabric of our public services. People want more investment in health, education and law and order, but when we examine the figures we will probably find that the Chancellor's promises turn out to be almost entirely illusory.
  When the Chancellor quotes the number of additional police officers, I notice that he always refers to "additional constables", not to an increase in the overall police establishment. The Government have used that trick before. Last year's increase in education spending was entirely illusory. As usual, they gave with one hand and took away with the other. That summarises their approach. The tax cuts will be paid for through increases in council and other taxes.
  I do not want to be entirely churlish. I welcome the Chancellor's air quality package, as he called it, the trend towards green taxes, and the slight reduction in taxes on employment through the employers national insurance contribution.
  It is widely recognised that now is not the appropriate time to cut taxes, because of concern about the public sector borrowing requirement. Although the Chancellor predicts that we shall break even by 2000, why should we believe him? The amalgamation of independent forecasts predicts a deficit of about 2 per cent. of gross domestic product in 2000.
  As we have seen in the past 17 years, the more the Government talk about cutting taxes and reducing borrowing, the more they increase them. Borrowing has exceeded Government estimates at the last election by £40 billion, and it is £25 billion more than was predicted in the 1995 summer economic forecast. As hon. Members have said, why should we believe the Chancellor's predictions now?
  We must examine the nature of the PSBR. Government spending and borrowing has increased, largely because of high levels of unemployment and a lack of investment in this country. One of the few budgets that is set to increase in real terms is the social security budget. We are not seeing the reduction in welfare spending and the increase in tax revenues that should flow from the decline in the claimant count about which the Government proudly boast.
  The unemployment figures are down because people are becoming economically inactive and moving from one type of benefit to another, or are starting training schemes. Analysis shows that 80 per cent. of those who undertake Government training schemes are back on the dole within 12 months.
  The Chancellor seemed rather perplexed about the shortfall in tax revenues—he does not seem able to predict why tax revenues have not increased as forecast. Perhaps one explanation is the nature of the jobs created in our economy in the past 12 months—most of which were part-time and low-paid. One has only to look at the difference between the tax revenues generated by those types of jobs and those generated by full-time jobs with average male pay rates to see why revenues are down.

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  Tax revenues from part-time jobs are one thirteenth of the revenues generated by full-time jobs with average male rates of pay. The creation of low-paid jobs—many of which are temporary—has not provided the expected boost to the economy and to Government revenues, and has led to a larger than expected increase in the PSBR.
  This is not a Budget for jobs, because it fails to invest in the sectors that will create work. Conservative Members have expressed concern about the proportion of jobs created in the public sector compared with the private sector. It does not matter where jobs are created, so long as we have a strong, wealth-creating economy.
  New technologies have resulted in a loss of jobs in those industries that have invested in that technology. However, if we have a strong research and development technology base that generates wealth-creating industries, it does not matter whether the jobs are in the public sector or the private. Japan has shown that a strong manufacturing base and an efficient wealth-creating sector can support many jobs in the service sector.
  It would be the same in this country if all of our industries were as effective as the pharmaceutical industry. That is the only industry with world-class British companies—Glaxo Wellcome is the No. 1 pharmaceutical company in the world. The industry is successful because of the symbiotic relationship between the public and the private sectors. The pharmaceutical industry has felt able to invest in research and development because it knows that there is a market for its products—mainly through the NHS.
  Britain's other very successful industry, aerospace, also depends upon military contracts that are procured by the public sector. It is a pity that we do not see similar investment in civil engineering and technology, but perhaps we should look at what the public sector could do in that area.
  When I visited GEC a couple of years ago, it proudly showed us a firefighter's helmet that it had developed as a spin-off from military technology. It was selling them to the New York fire service. Why cannot the public sector procure such development projects? Why are we not asking companies to produce better equipment for our firefighters in the public sector? I bet that we would create far more jobs in civil development than with the military procurement budget of £8.5 billion. Each job created for the European fighter aircraft costs £1 million. Such spending in other areas would create far more jobs.
  Mr. Bill Walker: If the objective of buying the Eurofighter were to create jobs, the hon. Lady would be right. But the reason for buying it is to deter anyone from aggression against us. That is less expensive than fighting wars.
  Dr. Jones: Which aggressors will such equipment deter?
  Certain elements of the defence procurement budget are necessary. I mention Nimrod in particular: it is obvious that a maritime nation should have a coastal surveillance capability. Such expenditure can be supported, but an analysis of the expenditure on the fighter aircraft would show that we could probably do the same job much more cheaply by buying much of the military equipment that was left over after the demise of the USSR.
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  I am using this example to show the importance of Government spending for the wealth-creating sectors. It is wrong to suggest that Government spending is necessarily a bad thing: it can be very important for our industries, and for research and development.
  As well as encouraging firms to invest, the public sector plays a crucial role in the creation of our science base. I read in yesterday's Financial Times that the leaders of the pharmaceutical industry have made representations to the Government about their deep concern about the rundown of the science base.
  The £20 million so-called additional capital expenditure for science in the universities is merely a token gesture, because capital spending overall in the universities is still set on a downward trend. Coming after last year's massive 30 per cent. cut in capital spending on universities, £20 million is neither here nor there. There is still a steady decline in our science base, and that is not good for future investment.
  The Chancellor says that the trade gap is pretty even, but I note that he declined to give the actual figure, which shows that we are still in deficit. We have a manufacturing deficit, and our manufacturing production is still only 2 per cent. above what it was before the recession. Those figures show the underlying problems of our economy, which the Budget fails to address. We should be introducing measures to increase research and development.
  The Select Committee on Science and Technology, on which I serve, and the Select Committee on Trade and Industry have suggested tax incentives to increase business investment in research and development. I should also like to see more Government investment in research and development.
  The Chancellor proposed the concept of "spend to save". I like that concept: it can be applied to the investments to which I have referred, and to much public spending. It is right that we should be looking to reduce the public sector borrowing requirement for Government spending on consumption, which should be paid for out of tax revenues.
  Certain elements of public spending and public borrowing, however, are for investment, which pays for itself in terms of job creation and income revenue stream. I am thinking particularly of investment in public transport infrastructure and housing. A boost to Government spending in those areas would have paid for itself in a very short time, and would also have created jobs and increased demand in the economy. That would indeed have been spending to save, but we have been given the reverse. I have not had a chance to examine the figures, but it is widely predicted that the transport and housing programmes will continue to be slashed in the run-up to the election.
  There is also the question of the growing inequalities in our society. A paper produced recently by Cambridge university showed that a penny reduction in income tax largely benefited the better-off: 89 per cent. of the benefit of a cut in the standard rate goes to those on the upper half of the income scale, while a mere 3 per cent. goes to the 10 per cent. who are on the lowest incomes. Cuts of that kind do nothing to deal with the growing inequality in society, or with the poverty in which so many people live.
  A third of our children are growing up in poverty, and our pensioners are struggling to make ends meet following the consistent withering on the vine of the state

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  pension. As my hon. Friend the Member for Hammersmith (Mr. Soley) said, instead of reducing income tax, the Government should have targeted families, and the best way of helping them would have been to increase child benefit.
  It is disgraceful that, rather than doing that, the Government are penalising children in one-parent families by cutting benefits. Last year, the Chancellor ruled out such a measure, on the basis that it would deter members of one-parent families from working. It is disgraceful that so few adult members of one-parent families in this country go out to work. This measure does nothing to provide incentives to work, or to deal with growing inequalities and poverty in society.
  Despite what the Chancellor says, this Budget looks no further than the next general election. He has scrabbled around to try to find bits of extra money in an attempt to justify income tax cuts. There has been the sale of Ministry of Defence married quarters, we have heard today about the sale of the student loans debt, and the private finance initiative will ultimately cost the taxpayer far more: the debt charges will be higher, because the private sector will pay more to borrow than the public sector would.
  These chickens will come home to roost after the next election, but the Government do not care about that. They have set their sights on winning the election. Unfortunately, like so many people, they are trying to fight the last election.
  The public, however, have seen through a party that argues that the tax-cutting agenda is the way in which to establish a vibrant economy. They realise that that is not the case, and that what we need is a Budget that addresses the lack of investment in our economy, the lack of investment in our public services and the lack of investment in our infrastructure, along with growing inequalities that need to be reversed. That is what should be in the Budget, and I look forward to the implementation of such measures by a Labour Government.
  9.13 pm
  Mr. Hugh Bayley: I will speak briefly about one line in the Red Book: the control total for the Department for Education and Employment. The reason I rise to speak is that, at the end of last week, there was a serious and terrifying assault on a young girl in a York local education authority junior school. It was terrifying, obviously, for the girl who was attacked, for the other pupils and for parents, and I speak as a parent with junior school-age children in York.
  Fortunately, a man has been arrested and charged with the assault, but that does not undo the damage. After Dunblane and the murder of Philip Lawrence, schools throughout Britain need better security, for the sake of children's safety and for parents' peace of mind.
  Earlier this year, my local authority, City of York council, made a bid for closed circuit television for all York schools. It bid to a Home Office scheme—the CCTV challenge. After the murder of Philip Lawrence, the Department for Education and Employment and, I believe, the Welsh Office added funds to the scheme. Local education authorities were specifically encouraged to bid to the scheme for school security measures.
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  In June, the Government responded to my local education authority. Their letter said:
  "I am afraid that your bid has not been successful in this round of the competition … The value of the bids—at almost £45 million—was three times the amount of money we had available.
  However, the Government has made it clear that it will provide a total of £45 million over the next 3 years to support the extension of CCTV … Local partnerships will therefore have a further opportunity to bid in the near future."
  On the face of it, the letter sounded promising, but it now transpires that the money that is available for those future rounds of CCTV bidding is not available to schools. The current round is seeking bids for CCTV to monitor "open spaces". Local education authorities have been told that money for school security should come from GEST, grants for education support and training.
  A Department for Education and Employment press release, issued today as part of the Budget pack, says that an additional £60 million of GEST money will be earmarked for school security, but the line in the Red Book that concerns me is that on the control total for education and employment. It shows that Government spending, excluding standard spending assessment expenditure borne by local authorities, will fall from this year's forecast outturn of £14.81 billion to £13.95 billion next year. The difference must be made up by local authorities in their council tax bills.
  Will the local authorities be able to make up the money? Other hon. Members have already mentioned the fact that the taxation burden is being switched from central to local government. The simple answer is no. Political pressures stop huge increases in council tax, so they will not be able to make up the money in that way, but, even if they wish to brave the political pressures for funding a need such as school security, council tax capping will stop them doing so.
  My local authority will have to reduce its expenditure next year by about 5 per cent. overall. It will protect the education budget, but the opportunity for increased spending out of the money available to the local authority from the combination of central grant and the council tax will simply not allow it to increase education spending.
  The Government should therefore not be playing political games with children's safety in schools. They should not be requiring LEAs to make a choice between spending money on teachers, books, reducing class sizes and improving the quality of education, and spending it on the security and safety of children in schools.
  The same Department for Education press release, in the Budget pack, stated that the Government intend to make £22 million of extra money available to expand the assisted places scheme. I urge Ministers to put the safety and quality of education for all children in all schools above their decision to buy a few more places for a small minority of children in selective schools. Ministers will make the wrong decision if they proceed with their policy of expanding the assisted places scheme for a few children at the expense of safety for all schoolchildren. I urge them to think again.
  Debate adjourned.—[Mr. Knapman.]
  Debate to be resumed tomorrow.

PETITIONS

  Toxic Waste Disposal (Worcestershire)
  9.20 pm
  Mr. Peter Luff: It is my privilege to present a petition of 3,738 signatures of the people of Worcestershire—largely from the Warndon villages area of Worcester city—compiled by an organisation known as Warchem, which is short for Warndon Residents Against Chemicals. The petition addresses one of the most pressing issues in my constituency. My constituents express grave concern about the grant of planning permission and the imminent grant of a waste management licence to Norchem Environmental Services—at its site at Shire business park, Warndon, Worcester—for a toxic waste transfer and oil recyling facility.
  The petitioners believe that serious questions need to be asked about how we have reached the current situation with the application. They acknowledge that planning permission from the county and city councils has been granted, subject to certain conditions, and they are very fearful of the imminent grant of a waste management licence from the Environment Agency. They state:
  "We believe that in granting these applications insufficient consideration has been given to the effects on and dangers to local residents whose homes are adjacent to this site (effected are approximately 4,000 homes).
  The petitioners therefore request the House of Commons to urge the Government to investigate the procedures and decisions that have been undertaken in granting these permissions and very strongly urge that they be overturned."
  To lie upon the Table.

  Bourne Hospital, Lincolnshire
  9.22 pm
  Mr. Quentin Davies: I beg to present a petition signed by more than 8,000 of my constituents, urging the Secretary of State to save Bourne hospital.
  Bourne hospital is almost the ideal type of local hospital, each year providing about 8,000 bed days and 3,500 to 4,000 out-patient appointments for a population of about 15,000 people. As more than 8,000 people in my constituency and in the area served by Bourne hospital have signed the petition, Mr. Deputy Speaker, you will realise that it is supported by an overwhelming majority of the adult population in the area.
  Lincolnshire health authority proposed the closure of the hospital on clinical grounds, but the hospital's survival is supported by every general practitioner in the area, and by their patients. I believe that Bourne hospital is exactly the type of cottage hospital to which the Prime Minister recently paid very warm tribute. It is an absolutely essential part of the health care of the local community in a rural area such as Lancashire. The nearest general hospitals are 20 miles or more away, and it would be a major blow for the health of the people in my constituency if Bourne hospital were to close.
  The health authority has made no financial arguments for closing the hospital that stand up to scrutiny. If it were closed, there would be considerable additional expenditure on ambulances, and the beds currently occupied by patients in the hospital would have to be purchased from acute hospitals elsewhere, most of which are a good deal more expensive. I urge the Secretary of State to do everything possible to preserve Bourne hospital.
  To lie upon the Table.

Scottish Ambulance Service (Mrs. Susan MacKenzie)
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Knapman.]
9.24 pm
Mr. Bill Walker: I thank Madam Speaker for giving me the opportunity to have this Adjournment debate.
My constituent, Mrs. Susan MacKenzie, of Aspen, Fonah, Pitlochry, was an employee of the Scottish ambulance service. I have written to my right hon. Friend the Minister many times about the problems that Mrs. MacKenzie faced in her employment. She believes that her dismissal from the Scottish ambulance service was the result of a false picture of her as an employee, created by the shop steward and possibly others in the way in which they destroyed records.
Mrs. MacKenzie believes that several factors caused the problem. The first was that she would not become a member of the relevant trade union for the ambulance service. She also refused to take an ambulance on shopping trips—not shopping trips to pick up just a roll or a sandwich, but trips to buy five or six bags full of weekly shopping. The ambulance that she was responsible for was removed from the station and used for such trips. Written regulations in her contract of employment forbade that practice.
My constituent's refusal to accept such practices led to difficulties over injections to protect her against hepatitis B. She claims that some employees of the Scottish ambulance service criminally destroyed prescribed drugs that were sent to the ambulance station at Pitlochry for use by Mrs. MacKenzie to protect her against hepatitis B. She further claims that an employee of the Scottish ambulance service criminally altered or falsified the record and log books that were required to be kept in connection with immunisation records.
Mrs. MacKenzie also claims that an employee of the Scottish ambulance service criminally destroyed faxes, sent to the head office of the service, in which she repeatedly requested that the prescribed drugs held in her name should be released from the refrigerator so that she could take them to her GP for immunisation. She stresses that the Scottish ambulance service is a record-keeping organisation. It now admits that the second and third doses were sent to Pitlochry ambulance station. As they were not returned to the occupational health service, it was presumed that she had been in receipt—in other words, that she had had the injections. Presumption, as she says, is not in accordance with its status as a record-keeping organisation.
My constituent claims to have evidence that the logs and records were falsified to make her appear to be a bad timekeeper. She holds copies of faxes disproving that allegation. Mr. Duffy, an ambulance man at Pitlochry of 21 years' service, also confirms that that is not correct. He gave evidence at a disciplinary hearing at the Scottish ambulance service headquarters in Edinburgh. When asked if there was a troublemaker at Pitlochry station, Mr. Duffy replied that he thought that there was—someone who he felt held too much influence in the station. He thought that the wrong person had been dismissed.
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He went on to say that the individual in question was a shop steward at the station. Mr. Alan Jamieson, who seemed to have a great deal of influence in that other staff would follow his lead. When asked whether he had been threatened before the tribunal, Mr. Duffy said that he had not, but when he was asked whether he had been told to be careful about what he said at the hearing, he said that Mr. Delpippo, the senior officer in Perth, had told him to watch what he said.
Mrs. MacKenzie says that the whole matter is being swept under the carpet by the Scottish ambulance service and that the Health and Safety Executive has been passing incorrect information to Ministers, who have therefore been misled. Mrs. MacKenzie sets out her concerns in her letters to me, as her Member of Parliament, of 4 February 1996, 28 March 1996, 8 April 1996, 1 May 1996 and 2 June 1996, copies of which have been sent to my right hon. Friend the Minister. She states that there are known to be 350,000,000 carriers of hepatitis B in the world, that it is spread not only through blood, but can be contracted through saliva and other body fluids, and that hepatitis B is more dangerous than hepatitis A.
Mrs. MacKenzie maintains that the Health and Safety Executive states in a letter to me, as her Member of Parliament, that it found no evidence that she was required to undertake work that would have necessitated immunisation against hepatitis B—emergency 999 calls. She asserts that that is not true and that the Health and Safety Executive never asked her what evidence she could provide. She claims that the evidence is recorded and that the ambulance man of 21 years' service would verify that.
Mrs. MacKenzie claims that the Health and Safety Executive refused to implement proceedings where she could prove breaches of the Health and Safety at Work etc. Act 1974. She claims that they included falsifying records and criminal malicious intent. She suggests that the Health and Safety Executive could question the long-serving ambulance man or investigate the trail of injectable material and find out where and how it disappeared, bearing in mind that she was in the service for 15 months after the material was sent to the station. I remind my right hon. Friend that Mrs. MacKenzie received her first injection during her training course.
The Health and Safety Executive has made more of an issue of the changed rules that the Scottish ambulance service has implemented since her problems arose than the events and circumstances involved in her case. Mrs. MacKenzie states that changes to procedures are of no interest to her and bear no relevance to what she calls "a previous criminal act". She asks why the Health and Safety Executive is satisfied with changes that have now been made, when she believes that she can prove criminal, malicious intent that exposed herself, her husband and her two children to hepatitis B.
Mrs. MacKenzie believes that the Scottish ambulance service purposely misinformed Ministers. For example, the chief executive of the Scottish ambulance service stated that Mrs. MacKenzie was employed as a patient transport ambulance care assistant and that immunisation against hepatitis B was not required for such staff, but that it was offered as it saved time when staff moved to emergency duties where such immunisation was required. Mrs. MacKenzie claims that that is simply not true, and that when she first joined the ambulance service she was given the first of three injections against hepatitis B during her first week at training school. She states that it

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was also her personal desire to be immunised, and claims that the Scottish ambulance service had a duty of care to ensure completion of her course of injections and to act on her verbal, written and faxed communications stating that she had not received her last injection.
Mrs. MacKenzie was sent on 999 emergency cases, and records at Pitlochry and the local hospital on her attendance are there for anyone to see. In the course of those duties, she received staining of blood on her skin and clothes, which is, of course, the reason why staff are immunised against hepatitis B. She attended those 999 calls because emergency personnel were not available.
Mrs. MacKenzie says that my right hon. Friend the Minister was told that the Scottish ambulance service records show that immunisation is given in three (loses over a period, that subsequent treatments were sent to the local ambulance station and that the Scottish ambulance service "presumed" that the procedure had been followed. She says that that is a blatant lie. The Scottish ambulance service was in receipt of a fax from her—she has a record of it from her fax machine—saying that she had not received her third immunisation dose despite her repeated requests. The fax was sent 15 months prior to the end of her service with the Scottish ambulance service and within the allocated time given for the completion of the three-part course of injections. She claims that the Scottish ambulance service has not told the Minister the truth by using the word "presumed".
Mrs. MacKenzie says that my right hon. Friend the Minister was told by the chief executive of the ambulance service that the settlement that she accepted at the industrial tribunal was the end of the matter and included aspects of her hepatitis B injections. She says that that is another lie. She provided me with a copy of the letter from her solicitor that clearly states that the industrial tribunal settlement is only connected to wrongful dismissal with regard to her contract of employment.
The letter, of which my right hon. Friend the Minister has had a copy, clearly states that the Scottish ambulance service's omission to provide her hepatitis B injection is a matter of "duty of care" owed to her by the service, and is based on "delict". She says that the matter settled at the tribunal is one of contract, which is entirely separate. She also says that the discharged papers that she signed at the tribunal did not prejudice her in any way with regard to matters concerning hepatitis B. She says that the letter that my right hon. Friend sent to me on 8 May states that she was not involved in any 999 calls, but that that is obviously a lie because the records show that she was. She says that he has not been told the truth and has been misled.
Mrs. MacKenzie says that my right hon. Friend the Minister should know that changed procedures bear no relevance to the criminal, malicious intent that was in force against her at the time. She says that he should also know that the destruction of prescribed drugs named for an individual is a criminal act, as is the refusal to provide prescribed drugs named for an individual. She claims that he has misled me by stating in his letter that the matter was settled at the industrial tribunal and that she accepted full and final settlement in respect of all claims under statute or common law arising out of her contract of employment and its termination. She says that that is simply not true. I repeat that Mrs. MacKenzie claims that her solicitor's letter clearly states that she settled only matters applicable to the contract of employment.
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She says further that the discharge she signed over the tribunal does not prejudice her in any way on the matters concerning the hepatitis B injections.
Mrs. MacKenzie says that my right hon. Friend has refused to acknowledge serious wrongdoings by the Scottish ambulance service and that attempts have been made to cover up and to mislead my right hon. Friend, and that the Scottish ambulance service is responsible for that. She asks that her claim, that proven criminal intent and incorrect procedures have resulted in a serious breach of the health and safety at work Acts, be acknowledged.
She also asks that an independent inquiry should be set up to examine and determine the evidence, which she claims is all there, and that the Health and Safety Executive question and investigate all the parties. It is not suitable or correct that the matter should rest with the explanations that have been provided by the Scottish ambulance service. She says that the Health and Safety Executive has now accepted that changed procedures are the answer, but she says that it is sweeping everything under the carpet; the solution to her complaints about criminal and malicious intent in the matter of her hepatitis B injections must be examined.
Mrs. MacKenzie claims that she is able to prove a clear breach of the health and safety at work Acts and criminal and malicious intent in those responsible for the matters. She asks that my right hon. Friend initiate an independent inquiry and that the Health and Safety Executive bring matters forward for prosecution. She further says that there should be a police or criminal inquiry.
In conclusion, I have in my possession a reference received from the Pitlochry festival theatre on behalf of Mrs. MacKenzie and I will give a copy to my right hon. Friend after I have finished speaking. The reference shows that she was employed by the theatre and that the managers think highly of her. It says:
"I would strongly recommend her for any job she would wish to choose".
That is only part of what is said in the recommendation from the Pitlochry festival theatre. I know the theatre managers well and I know that they would not write that if they did not believe it.
The allegations and charges being made by Mrs. MacKenzie are serious. The only way to resolve the matter is by having it thoroughly investigated by someone independent so that the truth can come out.
9.42 pm
The Minister of State, Scottish Office (Lord James Douglas-Hamilton): I congratulate my hon. Friend the Member for North Tayside (Mr. Walker) on his success in obtaining the debate. In response to his call for an inquiry, I may say that the Health and Safety Executive has investigated the matters fully on the basis of the evidence made available to it. The Health and Safety Executive can act only on the information it has and if Mrs. MacKenzie has further evidence that she has not yet made available, I respectfully suggest that she does so. My hon. Friend referred to the allegations of criminal activity, and again, if Mrs. MacKenzie has not already submitted all the relevant information to the procurator fiscal, I recommend that she does so.
I know that my hon. Friend has been exercised about this matter and we corresponded earlier in the year. I intend to take a few minutes to explain the role and

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function of the Scottish Ambulance Service NHS trust and how it goes about discharging its responsibilities and to demonstrate its treatment of Mrs. MacKenzie's case.
Established on 1 April 1995, the Scottish Ambulance Service NHS trust provides a 24-hour national accident and emergency service for the people of Scotland. It also provides an essential non-emergency patient transport service conveying patients to and from NHS trust hospitals, clinics and day centres across the length and breadth of the country. Consuming more than £74 million of revenue per year, the trust employs around 2,900 staff, of whom about 2,500 are operational ambulance staff, officers and control personnel. Collectively, those staff will respond to nearly 500,000 emergency and urgent calls each year and make 2.5 million non-emergency patient journeys. In more than 90 per cent. of emergency cases, the ambulance will be in attendance within the appropriate target response time.
The role of accident and emergency crews has developed dramatically in recent years. In the past, their prime function was to "scoop and run", the priority being to transport the patient to a hospital as quickly as possible. For some patients the time taken to reach the hospital was simply not quick enough, and it was recognised that what was essential to the chain of survival of a patient was how long it took the first response to reach the scene of the accident or emergency. For many, that first response was not a doctor or other clinician, but an ambulance man, and it was, as a result, acknowledged that the skills and capabilities of ambulance men and women needed to be developed.
The Royal College of Surgeons and the Royal College of Physicians, along with senior consultants in accident and emergency and in other specialties, were engaged in determining what range of skills and training should be given to ambulance personnel. Representatives of the colleges and of the key specialities involved with accidents and emergencies continue to play a significant role to this day as members of the services professional advisory group, routinely influencing the scope and content of the professional training given to front-line personnel. While the speed of transfer to hospital remains of course a priority, the product of that commitment is that, nowadays, ambulance men and women are highly skilled professionals who are capable of dealing with a wide variety of medical and traumatic emergencies on which they may be called to attend.
Despite the demanding and often very stressful nature of the work, each year sees many thousands of men and women applying for a small number of positions. However, the vast majority of entrants into the ambulance service will start initially as ambulance care assistants and will, following basic training, work on non-accident and emergency services. Even at that level there are more than 100 applicants for every vacancy. The trust is generally regarded as a good employer. Within 18 months of having achieved trust status, more than 85 per cent. of staff opted voluntarily for the locally negotiated trust terms and conditions of service, which are uniquely supported by all the major trade unions involved.
The trust's newly opened national training college provides a consistently high standard of instruction for staff at all levels, from ambulance care assistants through to ambulance technicians and paramedics, up to and
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including tutor training of instructors for ambulance training centres in England and Wales. Of course, being a good employer goes beyond induction and training and kitting out—it involves looking after employees on an on-going basis, being alert to the stresses and dangers facing ambulance personnel and taking action to eliminate those risks, or at least to minimise them, wherever possible.
That action can often be taken at what may be described as the "macro" level. For example, my hon. Friend may care to know that the ambulance service is actively involved in a working group that I set up to investigate and report into the risks and dangers to front-line emergency personnel and how these might best be mitigated across all the emergency services so as to safeguard personnel against assault. Such action can also take the form of the counselling services that the trust provides for personnel who have had to attend on major incidents and who have themselves perhaps been traumatised as a result; or it can be in the very specific and tangible measures taken to immunise personnel against the risk of infection from patients with whom they come into contact.
It is as a good employer and in recognition of the fact that emergency ambulance crews are at risk of coming into contact with members of the public who carry infectious diseases that the trust's policy is to insist upon the mandatory vaccination of all accident and emergency ambulance staff. I would, at this point, make it absolutely clear to my hon. Friend that, because medical advice is that there is no identifiable risk, hepatitis B immunisation is not required for non-emergency patient transport staff, including ambulance care assistants. Nevertheless, as a good employer, the trust provides immunisation to all those non-emergency personnel who wish to avail themselves of the opportunity to be immunised.
My hon. Friend's constituent, Mrs. Susan MacKenzie, joined the Scottish ambulance service as a trainee part-time ambulance care assistant in February 1993. Before leaving the ambulance service training school, she elected to receive the first of a series of three injections for immunisation against hepatitis B.
Mrs. MacKenzie was subsequently employed as a part-time ambulance care assistant located at the Pitlochry ambulance station. In accordance with the protocols that existed at that time, the second and third doses were sent by the Scottish Ambulance Service occupational health service to Pitlochry ambulance station for Mrs. MacKenzie to have administered by her local general practitioner.
There is no question about the matter of the second dose, which Mrs. MacKenzie had administered to her by her local GP. Nor at any time has the Scottish Ambulance Service NHS trust taken issue with the claim made by Mrs. Mackenzie that the third dose of the vaccine was not passed on to her. Indeed, following her subsequent departure from the service, under the full and final settlement that she and her legal advisers accepted and signed, all issues raised by Mrs. Mackenzie were considered closed. As a result, there was no requirement to hold the planned industrial tribunal.
Nevertheless, notwithstanding the settlement, the chief executive of the Scottish ambulance service acknowledged that there was a deficiency in the rigour with which the occupational health service procedures had

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been operated at Pitlochry ambulance station, and he has, in co-operation and consultation with the Health and Safety Executive, taken steps to prevent any future recurrence of such a situation, while at the same time re-emphasising the lack of any identifiable risk of hepatitis B to non-emergency patient transport staff such as Mrs. MacKenzie.
Indeed, it was only subsequent to Mrs. MacKenzie's dismissal that the matter of her having failed to receive the third dose of vaccine was pursued by her in a manner that enabled the claims to be properly investigated by the senior management of the trust.
In case there remains any doubt about the clinical basis for the Scottish ambulance service's policy of mandatory immunisation against hepatitis B for accident and emergency ambulance staff, and the fact that immunisation for non-emergency personnel is optional, I shall quote from the established guidance on the matter, the book "Immunisation against Infectious Diseases", published jointly by all United Kingdom Health Departments. It states:
"The incidence of infection is not apparently greater than in the population as a whole for members of the police, ambulance, fire and rescue services. Nevertheless, there may be individuals within these occupations who are at higher risk and who should be considered for immunisation. Such a selection has to be decided locally by the Occupational Health Service or as a result of appropriate medical advice following the necessary risk assessment."
As we have heard, it is the policy of the ambulance service that immunisation against hepatitis B is mandatory for all staff on accident and emergency service duties. There is a theoretical risk that such staff may be exposed to the virus through cuts or abrasions that they could sustain when dealing, for example, with a patient bleeding heavily in a difficult environment such as a car crash. The use of gloves and safe working practices keep such risks to a minimum, but immunisation is considered an appropriate further safeguard.
I would also suggest that the particular incident should be kept in perspective. I mention to my hon. Friend the fact that there was and is no requirement for the service to provide immunisation against hepatitis B for personnel involved in the provision of patient transport services. That reflects a clinical recognition of the reality that the risks to such personnel of contracting the hepatitis B virus are considered to be so small as to be incalculable.
None the less, the ambulance service takes the most cautious view possible, and goes far beyond reasonable minimum precautions in offering non-emergency staff immunisation. I am very much aware of the fact that it is the view of my hon. Friend's constituent that the failure to provide her with the third injection was in effect a criminal act, and one which warranted the consideration of the procurator fiscal.
However, I remind my hon. Friend that that point was considered carefully by the Health and Safety Executive. Indeed, as the director general of the Health and Safety Executive stated clearly in the letter that my hon. Friend sent to me on 29 April:
"there is no evidence to support the assertion that the Scottish Ambulance Service failed to meet its responsibilities under Health and Safety Legislation in respect of Mrs. Mackenzie and therefore no case which could be put to the Procurator Fiscal."
The Scottish Ambulance Service NHS trust has accepted that, for whatever reason, Mrs. MacKenzie did not receive the third and final dose of vaccine to enable
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her to complete her course of immunisation against hepatitis B. Following consultation with the Health and Safety Executive, the trust has improved its recording procedures to prevent any future recurrence of such a situation. On the matter of all claims arising out of her contract of employment, I would remind my hon. Friend the Member for North Tayside that, following her departure from the service and her subsequent action against the trust, she and her legal advisers agreed to accept a sum of £2,500 in full and final settlement.
On Mrs. MacKenzie's claims regarding the course of hepatitis B immunisation, this matter was fully investigated by the Health and Safety Executive—the competent authority—which found that the Scottish ambulance service had not breached its duty of care. The Health and Safety Executive can, of course, only act on the evidence available. If Mrs. MacKenzie has evidence to support her assertions which she has not previously made available to the Health and Safety Executive, I strongly recommend that she does so.
Mr. Walker: The basis of Mrs. MacKenzie's case—which I probably did not put well enough—is first, that she disputes that she agreed to a full and final settlement and, secondly, that she attended emergencies, as the records at Pitlochry show. It is all very well to say that people in her job should not attend emergencies, but she did attend them and was exposed to the risks of hepatitis B. The service was not protecting her against that because she did not receive the third injection.
Lord James Douglas-Hamilton: It is standard practice in the ambulance service that, if no accident and emergency ambulance is available to respond to a 999 call, any non-emergency crew available will attend, pending the arrival of an accident and emergency unit. Training for non-emergency patient transport staff includes basic first aid and resuscitation. Such skills—whether provided by an ambulance care assistant or a member of the general public—can obviously save lives. On that basis, it would not be acceptable for the service to withhold any help that it could make available as soon as possible.
I understand that Mrs. MacKenzie was not required to perform any duties or procedures for which she was not suitably trained and equipped. I note what my hon. Friend the Member for North Tayside says about the final settlement. The information that I have received is different, but this is a legal matter and Mrs. MacKenzie is free to consult her lawyer on that point.
In concluding, I would like to take the opportunity to inform my hon. Friend the Member for North Tayside about the nature of the services provided by the Scottish Ambulance Service NHS trust. The trust provides three main services to the people of Scotland—the accident and emergency service, the non-emergency patient transport service and the patient air transport service, referred to as the air ambulance service.
The accident and emergency ambulance service is the one we see in action every day on the streets of our cities, towns and villages. This is the service which responds to 999 calls made by the public. It also responds to calls made where a doctor, dentist or midwife is already attending a patient and requests an ambulance to take them to hospital within an agreed time. These calls—

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known as urgent calls—form a major part of the demand on the accident and emergency service, although many people are not aware of this activity.
The accident and emergency service consumes by far the largest share of the considerable resources devoted to the service. By its very nature, demand for the service is largely unpredictable and a number of strategies have been adopted to optimise the use of resources. These include sector ranging, whereby ambulances, rather than operating from fixed ambulance stations as in the past, take up position at predetermined locations.
The changing demography of our towns and cities, as well as the development of the roads, can sometimes mean that ambulance stations which were ideally situated 20 years ago are now further than desirable from the populations they serve. Sector ranging is one solution to this, while another, of course, is the construction of new ambulance stations. There is currently an on-going programme of upgrading and replacing ambulance stations in Scotland and I shall, incidentally, be travelling to Glasgow tomorrow morning to open a new station at Clydebank on the west side of the city.
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The special difficulties in urban areas also call for innovative solutions. In Glasgow, paramedics on motor cycles bring emergency help when a conventional ambulance cannot reach the patient. In other cities, paramedic response units also operate. They are designed to provide an emergency response as quickly as possible. We are determined to have the best ambulance service in the world.
Scotland has the only fully integrated air ambulance service in the United Kingdom and by far the largest, operating four fixed-wing aircraft and two helicopters in addition to the back-up provided by the Ministry of Defence and Coastguard services.
I congratulate my hon. Friend the Member for North Tayside once more on securing this debate. I hope that I have managed to address his concerns and to reassure him that these matters have been dealt with in a proper and professional manner by the Scottish Ambulance Service NHS trust.
If my hon. Friend's constituent has further evidence, it should be made available to the Health and Safety Executive, and if she has evidence of criminal activity, it should be reported to the procurator fiscal. With that, I hope that I have fully covered the subject.
Question put and agreed to.
Adjourned accordingly at Ten o'clock.

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

The Lord Bishop of Truro
Michael Thomas, Lord Bishop of Truro—Was (in the usual manner) introduced between the Lord Bishop of Newcastle and the Lord Bishop of Norwich.

Monetary Union: Convergence Criteria
2.45 p.m.
Lord Pearson of Rannoch Lord Pearson of Rannoch asked Her Majesty's Government:
Whether they believe that Germany, France and the other signatories to the Treaty of Rome will be able to meet the convergence criteria for monetary union and whether, if not, they will only withhold their veto of the whole project in return for a substantial repatriation of powers to the United Kingdom.
The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish: My Lords, decisions on which member states meet the conditions for adopting the single currency will be made by heads of government in 1998. Until then considerable uncertainties remain. There will be no opportunity for any single member state to veto the whole project even if it wished to. A separate decision, under qualified majority voting, will be taken for each member state on whether or not it meets the conditions to participate.
Lord Pearson of Rannoch: My Lords, I am grateful to my noble friend for that reply. Does he agree that however capable of dishonest manipulation the convergence criteria for monetary union may be, the criterion contained in Article 109j(4) of the treaty is couched in terms which not even the Luxembourg Court could misinterpret? This states that the third stage of monetary union must start at the latest on 1st January 1999. Does my noble friend agree that if the other countries need to delay beyond that date, it would require a change in the treaty's wording and thus give us the opportunity of the veto, which is the object of this Question?
Lord Mackay of Ardbrecknish: My Lords, I suggest to my noble friend that he might like to put down a specific Question about that particular part of the Maastricht Treaty. I am afraid that I do not have the treaty with me and I cannot give him an answer right now. If, for any reason, it was decided to delay the introduction of the
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single currency for those wishing and able to join it, I do not think there would be anything in the treaty to prevent that delay.
Lord Bruce of Donington: My Lords, does the Minister agree that the Council of Ministers and individual member states may be in some difficulty about determining the true degree of convergence in view of the fact that the convergence criteria will be based upon statistics provided by the Commission itself? Under the treaty it has the exclusive responsibility of providing the figures, and the Commission directorate responsible has so far shown a degree of flexibility in determining what the convergence criteria may be. One expects that, artistically, because its head is a Frenchman.
Lord Mackay of Ardbrecknish: My Lords, the convergence criteria are clearly set down. The statistics are collected from the member states. We all send various measures of statistics to the Commission. Obviously, it has the duty to make sure that all the statistics are collected and presented on the same basis. As an accountant the noble Lord will know that that is often quite a difficult and skilful operation but that it is absolutely essential if one is to compare like with like.
Lord Tebbit: My Lords, is my noble friend aware that I am greatly encouraged to learn that he does not have with him a copy of the Maastricht Treaty? That suggests perhaps that the Treasury's copy is being read by the Chancellor before the ECOFIN meeting. Can my noble friend tell me, in the event that it is clear that the criteria are not being observed, whether that would be just a matter for a little bit of QMV and that these things can be slurred over and not call for any action by Her Majesty's Government?
Lord Mackay of Ardbrecknish: My Lords, the criteria are clearly laid out, as indeed are a number of other aspects of factors that will be looked at when it is decided whether a country can join EMU. It is perfectly clear. I may not have a copy of the treaty, but I do have with me some of the pages relevant to questions I am asked. I can assure my noble friend that the convergence criteria are clearly laid out: fiscal deficit, debt percentage GDP, inflation and so on. All those things are clearly laid out. Of course, it is not just a matter of meeting them on the day; it is whether or not one is moving towards them and, more importantly, as yesterday's discussions made clear, whether one will stick with them after a member state joins, which is why the stability pact is so important.
Lord Stoddart of Swindon: My Lords, irrespective of EMU, would it be to the benefit of the United Kingdom if a substantial part—if not all—of the powers ceded to Brussels were repatriated to the United Kingdom? Does the Minister agree that the crooked deals which apparently have been made to allow certain countries such as France to meet the criteria, although they do not do so, will not be helpful at all to the EU or indeed this country? Finally, does he agree that the

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people in the real world who will decide whether or not these projects go ahead are the lorry drivers of France and other workers who will be extremely disadvantaged by the criteria agreed at Maastricht for EMU?
Lord Mackay of Ardbrecknish: My Lords, the question goes a little wider than even I usually manage to predict. Whatever countries may be doing now, the decision on whether or not they meet the convergence criteria will not be made, as I said in my original Answer to my noble friend, until 1998. Countries are taking steps to try to meet the convergence criteria right now, partly because many of them want to meet them and also because the criteria themselves are a sensible guideline to running a successful economy.
Lord Brabazon of Tara: My Lords, can my noble friend clarify a point that arose during the Statement yesterday regarding our own opt-out of Article 104c?
Lord Mackay of Ardbrecknish: My Lords, I am grateful to my noble friend for asking that question. There was some uncertainty yesterday after the noble Lord, Lord Bruce of Donington, intervened during my repeating of the Chancellor's Statement. It is perfectly clear, as I indicated yesterday, in paragraph 5 of Protocol Number 11, that Article 104c(1), (9) and (11) of the treaty,
"shall not apply to the United Kingdom".
That is perfectly clear and is at variance with some of the suggestions made by the noble Lord, Lord Bruce of Donington, yesterday.
Lord Eatwell: My Lords, is it the Government's view that the convergence criteria should be enforced under all economic circumstances? If not, under what economic circumstances would a breach of the criteria be desirable?
Lord Mackay of Ardbrecknish: My Lords, as I mentioned, the decision will not need to be made until 1998, but my right honourable friends the Chancellor and the Prime Minister have made clear on a number of occasions that it is important that the criteria are observed. If an EMU has to come about, it is important that it is soundly and firmly based. To have that sound base we believe that all the countries joining ought to meet the convergence criteria.
Lord Willoughby de Broke: My Lords, can my noble friend confirm that one of the criteria written into the Maastricht Treaty for entrance into the EMU is membership of an exchange rate mechanism? This country has not been a member of the exchange rate mechanism for the required two years. Is it the case therefore that we cannot be members of an economic monetary union?
Lord Mackay of Ardbrecknish: My Lords, I have answered this question on a number of occasions before. The position has not changed. The original position, which envisaged being a member of the ERM before
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one joined the EMU, was based on narrow bands. The narrow bands no longer exist, and it is unclear what weight will be put on the need to be a member of the ERM. This Government and this party made it perfectly clear that we have no intention of rejoining the ERM.

Freight: Modes of Transport
2.54 p.m.
Baroness Turner of Camden Baroness Turner of Camden asked Her Majesty's Government:
What action they have taken and propose to take to secure transfers of freight from road to other modes of transport.
The Parliamentary Under-Secretary of State, Department of Transport (Viscount Goschen): My Lords, the privatisation of the railways has created an environment in which the transfer of freight from road to rail can take place. In addition, for many years we have made freight facilities grants available to encourage the transfer of freight from road to rail and inland waterways.
Baroness Turner of Camden: My Lords, I thank the Minister for that reply. Is he aware that the overloading of our road system is due to heavy commercial vehicles rather than the much maligned motorist, of which I happen to be one? The sooner there can be a transfer to other means of carriage, the better it will be.
Viscount Goschen: My Lords, the Government support the movement of freight from the road to the rail network. We believe that the new freight companies, the new management that has taken over the companies and the new investment that we have seen will result in more incentives to do exactly that.
Lord Taylor of Gryfe: My Lords, is it the case that the freight services of British Rail were sold to an American company now registered in the UK with limited experience in this country and in this field? The profits of Railtrack publicised last week were substantial. Would not a reduction in the access charge for freight using Railtrack be a positive measure in helping to develop freight transport and the environment?
Viscount Goschen: My Lords, we certainly want to see as many companies as possible competing to purchase the rail businesses. The fact that there has been considerable international interest in the railways in the UK is a good thing because we want to attract investment into this country. The track access charges are regulated by the independent rail regulator. In addition, we have a track access grant scheme where there is a potential transfer from road to rail.
Lord Clinton-Davis: My Lords, does the Minister recall assertions that were made by Mr. Malcolm Rifkind when he was Secretary of State for Transport

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and successive Secretaries of State since then, that they were determined to secure a substantial shift of freight from road to rail? What measurable progress has been made since those days? Is the Minister aware—he was not yesterday—that operators dealing with ports, wagon manufacturers and freight operators (25 of them) have expressed great concern that the main emphasis being given by Railtrack is to passenger services with hardly any emphasis being given to freight?
Viscount Goschen: My Lords, the noble Lord asks about the changes that have occurred between road and rail in terms of transporting freight. It is clear that for a long time there has been a tendency for freight to be moved increasingly by road. We are now seeing new management companies involved in the railfreight businesses. They have clear financial incentives to move freight onto the railways, to attract more customers and to put on new services. For example, EWS announced an expansion of its enterprise wagonload services; new services to link the ports of Immingham, Goole and Avonmouth with the enterprise network will start in January; coal trains have operations in Castle Cement's Padeswood Works in North Wales for the first time in 30 years. I could continue. We are seeing new services and new customers being attracted to the railways. That has to be a good thing.
Lord Clinton-Davis: My Lords, I asked the Minister to give an adequate explanation of the measurable improvement that has been achieved. What percentage of freight transport is covered by rail today as compared with, say, three years ago?
Viscount Goschen: My Lords, the noble Lord may be aware, as he contributed to the rail privatisation debate, that this is a young process; it is not yet fully complete. But already we have seen improvements in services and new services being introduced.
Noble Lords: Answer!
Viscount Goschen: My Lords, I have answered. Not only have I answered the question, but I have given concrete examples. The Opposition cannot stand the fact that new services have been introduced since the privatisation.
Lady Kinloss: My Lords, does the Minister see any reason why waterways should not be used, and our canals?
Viscount Goschen: No, my Lords. They should be used but those are commercial decisions for operators. Often the appropriate inland waterways infrastructure does not exist. Where the waterways infrastructure exists and a capital grant might make a difference in transferring freight from the road to the waterways, there is a freight facilities grant available from the Department of Transport. I witnessed one such scheme
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whereby a large chemical company was using the Manchester Ship Canal, saving thousands of road journeys a year.
Baroness Young: My Lords, does my noble friend agree that those of us who regularly travel by rail are already beginning to see improvements on the privatised rail network?
Noble Lords: Oh!
Baroness Young: My Lords, noble Lords opposite may laugh, but I wonder how often they use the train. We have every reason to expect that after a reasonable length of time—privatisation is a recent development—the privatised rail network will attract freight. What has happened in the past is that the railways have been unable to meet the needs of private enterprise to transfer its goods.
Viscount Goschen: My Lords, my noble friend has made exactly the right point. The Opposition find it amusing that more people are enjoying the railway service, more investment is going into the railways, new services are being provided and new customers are being found. The Opposition are quietly forgetting their opposition to rail privatisation as they did before with the airlines, as they did before with airports and as they did before with British telecommunications. The Opposition's arguments are ones of dogma; ours are ones of practicality.
Lord Richard: My Lords, oh dear! Can the noble Viscount answer the specific questions put to him by my noble friend? What percentage of freight is now carried by rail compared with three years ago? Either he has the figures or he does not have the figures. If he has the figures, he ought to tell us; if he does not have the figures, he ought to get them.
Viscount Goschen: My Lords, I shall be delighted to write to the noble Lord with every figure I can find to illustrate what I described to the House as the historic decline we have seen in the railways, including under-investment in the railways when the noble Lord's party regrettably was in power. What we see now is the new investment and the new services. Noble Lords opposite do not like it. One recalls remarks about British Airways being a pantomime horse of privatisation. Similar things were said about railways. Now we are seeing success.
Lord Dixon-Smith: My Lords, does my noble friend agree that there are so many potential sources from which freight emanates and so many potential destinations to which it has to go that the idea of massive transfers of large volumes of freight to systems such as rail is a little impractical without some involvement with road transport along the way?
Viscount Goschen: My Lords, my noble friend recognises the success of the road transport industry in the UK. The fact that the typical haulage distance in this

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country is only some 60 miles puts a strong physical constraint on the total practicalities of what freight can be moved by rail and what freight can be moved by road. Of course there are issues concerning double handling. But what we want to do is to put in place a climate where rail is as attractive as possible to movers of freight.
Baroness Farrington of Ribbleton: My Lords, can the Minister explain how the Government can fulfil their stated commitment to improving the environment, particularly with regard to the health of children, and how they can assist local authorities to which they will give the responsibility for controlling road traffic in their areas when the air pollution level is dangerous for children living in that locality, when the Minister cannot even tell us what percentage change there has been from road to rail over the past three years?
Viscount Goschen: My Lords, I totally reject the supposition behind the noble Baroness's question. I have made it clear that there has been an historic decline in the use of the railways for transporting freight. I have also made it clear that new services have been put on. We find that encouraging and we do not seek to draw attention away from that fact.
Lord Taylor of Gryfe: My Lords, is the Minister aware that the only part of rail freight which is now in the hands of British Rail is the connecting line with the Channel Tunnel? If he is making future comparisons about performance, perhaps he will keep in mind that that stretch of railway line which is still in British Rail hands has been seriously affected by the difficulties in the tunnel.
Viscount Goschen: My Lords, the noble Lord's point is very true indeed.

Africa: Air Traffic Control Standards
3.5 p.m.
Lord Haskel Lord Haskel asked Her Majesty's Government:
What steps they have taken in the International Civil Aviation Organisation (ICAO) to address the inadequacy of air traffic control over much of Africa, and what progress has been made.
Viscount Goschen: My Lords, under the Chicago Convention the International Civil Aviation Organisation sets minimum standards and recommended practices for all aspects of international civil aviation. It is for contracting states to implement those standards or notify any differences from the standards to ICAO. The United Kingdom's representative at ICAO raised the issue of reported inadequacies in African air traffic control at a meeting of the ICAO Council and the council has asked the air navigation commission to
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investigate the position. The African Regional Air Navigation meeting early next year will also address these issues.
Lord Haskel: My Lords, I thank the Minister for that rather worrying reply. Is he not aware of the report by the International Airline Pilots Association of the dangers of flying over Africa? Does he not agree that, in view of the fact that little can be done at the moment, the Government ought perhaps to be warning passengers of the minimum standards of safety when flying over Africa?
Viscount Goschen: My Lords, I certainly do not accept that my reply was worrying. Indeed, it described the appropriate procedures. There is an international body involved in this field—the International Civil Aviation Organisation—and it is entirely appropriate that it should co-ordinate the setting of standards. We believe that it is entirely right to support the ICAO in this matter. Clearly, standards of air traffic control provision vary considerably around the world and it is for operators to recognise the circumstances into which they are flying and for their commanders to follow the procedures accordingly.
Lord Gisborough: My Lords, is my noble friend aware that Africa is notorious for dangers and that there are accidents waiting to happen unless something is done?
Viscount Goschen: My Lords, there are many countries in Africa. Some have very little infrastructure, never mind an air traffic control infrastructure. What is important is that operators who go to that part of the world are aware of the situation in each individual country over which they fly and adapt their procedures accordingly.
Lord Clinton-Davis: My Lords, is it not obvious that the inadequacy of air traffic control infrastructure over Africa, the virtual non-existence of radar control facilities, the lack of adequate training and competence among air traffic controllers, in so far as they exist at all, and failures of communication links are due to the fact that those countries do not have the wherewithal to be able to support the necessary infrastructure which would reasonably guarantee a much safer standard? Simply referring the matter to ICAO, which of course is desirable, will not resolve the matter unless the developed world understands the nature of the economic problem confronting these countries and, for the sake of their own citizens, aircraft crew are prepared to take action together to try to ensure that standards are improved.
Viscount Goschen: My Lords, the noble Lord is right to draw attention to the perilous economic circumstances of many of the countries involved. That is often the reason why they do not have sophisticated air traffic control equipment or infrastructure. That is why ICAO has a problem of technical assistance and why the United Kingdom, through the ODA, has

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previously funded a number of development projects in Africa which have involved improvements to ATC and other aviation facilities. The international community can do a certain amount through this type of action, but we must all support ICAO in the action it is seeking as well.
Lord Brabazon of Tara: My Lords, bearing in mind that one of the busiest air routes in the whole world is the North Atlantic route, where of course there is no radar cover—it is very effectively controlled by oceanic control at Prestwick and by counterparts in the United States and Canada—would it not be desirable to set up a similar system to cover the African continent with perhaps a control centre in southern Europe run by Europe Control and another one in South Africa run by the South Africans?
Viscount Goschen: My Lords, my noble friend makes an important point about the way in which transatlantic traffic is catered for. But that is rather different because there is crossing traffic in Africa, whereas essentially on the transatlantic routes aircraft depart at one end and are received at the other, and travel in a linear fashion. That is very effective indeed and, without radar, it is possible to organise air traffic control along those lines.
Lord Tebbit: My Lords, can my noble friend ensure that if extra help is given—as it probably should be—for the creation and operation of air traffic control facilities in Africa, that it is very specific; that it remains under the control of the donor nations and that it does not go down the same sink of iniquity, corruption and violence down which most aid goes in Africa?
Viscount Goschen: My Lords, on the wider point of aid, it is clearly the Government's policy that moneys which are given in aid are used as effectively as possible for the benefit of local people. That is very much what has underpinned our aid policy. We want to see the best value for the money that we put in.
Lord Clinton-Davis: My Lords, in the discussions with ICAO we must look for a firm timetable for action because mere talk is not sufficient. I am sure that the House is gratified by the support that has been given, albeit that it is not on an adequate scale, by a number of western countries. Bearing in mind the criteria for support which the Minister has mentioned, will he seek to obtain a timetable for action during the course of the ICAO discussions?
Viscount Goschen: My Lords, I support the sentiment behind what the noble Lord is trying to achieve through his question, but I believe that he underestimates the difficulties involved here. There are very many countries involved and they have widely differing economic circumstances. It is simply not possible to impose on a sovereign nation one's own views about air traffic control systems and then to have them paid for. Clearly, there are improvements that can
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be made here. We want to play our part, but the international community as well needs to be involved and that is what is happening.

Town and Country Planning (Scotland) Bill [H.L.]
3.12 p.m.
The Lord Advocate (Lord Mackay of Drumadoon): My Lords, I beg to introduce a Bill to consolidate certain enactments relating to town and country planning in Scotland with amendments to give effect to recommendations of the Scottish Law Commission. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read a first time.—(Lord Mackay of Drumadoon.)
On Question, Bill read a first time, and to be printed.

Planning (Listed Buildings and Conservation Areas) (Scotland) Bill [H.L.]
Lord Mackay of Drumadoon: My Lords, I beg to introduce a Bill to consolidate certain enactments relating to special controls in respect of buildings and areas of special architectural or historic interest with amendments to give effect to recommendations of the Scottish Law Commission. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read a first time.—(Lord Mackay of Drumadoon.)
On Question, Bill read a first time, and to be printed.

Planning (Hazardous Substances) (Scotland) Bill [H.L.]
Lord Mackay of Drumadoon: My Lords, I beg to introduce a Bill to consolidate certain enactments relating to special controls in respect of hazardous substances with amendments to give effect to recommendations of the Scottish Law Commission. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read a first time.—(Lord Mackay of Drumadoon.)
On Question, Bill read a first time, and to be printed.

Planning (Consequential Provisions) (Scotland) Bill [H.L.]
Lord Mackay of Drumadoon: My Lords, I beg to introduce a Bill to make provision for repeals, consequential amendments, transitional matters and savings in connection with the consolidation of enactments in the Town and Country Planning (Scotland) Act 1997, the Planning (Listed Buildings and Conservation Areas) (Scotland) Act and the Planning

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(Hazardous Substances) (Scotland) Act 1997 (including provisions to give effect to recommendations of the Scottish Law Commission). I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read a first time.—(Lord Mackay of Drumadoon.)
On Question, Bill read a first time, and to be printed.

Police Bill [H.L.]
3.14 p.m.
The Minister of State, Home Office (Baroness Blatch): My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(Baroness Blotch.)
On Question, Motion agreed to.
House in Committee accordingly.
[The CHAIRMAN OF COMMITTEES in the Chair.] Clauses 1 and 46 agreed to.
Schedule 1 [Appointment of Members of the Service Authorities]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 1:
Page 50, line 9, leave out ("Three") and insert ("Two").
The noble Lord said: Before starting on the substantive business and in order to allow noble Lords to leave quietly, perhaps I may apologise to the Committee for my incorrect grouping of the amendments. When I was sorting out the chairmanship from the membership of the core authority I should have separated Amendments Nos. 2, 3 and 6 from the rest rather than Amendment No. 6 alone. On this occasion, therefore, I am moving Amendment No. 1 and speaking also to Amendments Nos. 4 and 5.
The Committee will perhaps be surprised that, in the consideration of this Bill, we have allowed Clauses 1 and 46 to go through without amendments. That is most unusual in the consideration of a complicated Bill, but there are good reasons for it. I believe that those good reasons were made clear at Second Reading when the Opposition gave their support to the establishment of the statutory National Criminal Intelligence Service and the National Crime Squad. These are not matters of political controversy between us and Clauses 1 and 46, which set up those bodies on a statutory basis, have received our entire approval.
Where we differ from the Government is in the constitution in particular of the core authority which is to direct the operations of these two organisations. When I speak to these amendments I am reminded of the amendments that we made to the Police and Magistrates' Courts Bill only a few years ago. I am disappointed that the noble Viscount, Lord Whitelaw, and the noble Lord, Lord Carr of Hadley, who were in their seats only a minute ago, are not in their places now. They played such a valiant part in persuading the
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Government that their original proposals were wrong. The issue that is before us is very similar; that is, whether the Secretary of State should have an effective majority in the core steering authority for these two organisations.
As is made clear in the schedule, what is proposed by the Government is that the so-called independent members, who are in fact members appointed by the Secretary of State, should form half of the core membership of the two bodies and that the chairman who is to be appointed by the Secretary of State should have a second and casting vote. In effect, therefore, that is giving the Secretary of State a majority of the effective voting membership of the core authority. It was exactly those proposals which the House, with support from all sides, resisted so strongly when we considered the Police and Magistrates' Courts Bill.
What we are proposing in Amendments Nos. 1, 4 and 5 is that, instead of three so-called independent members appointed by the Secretary of State, there should be only two; that the civil servant member to be appointed by the Secretary of State should be removed from the core membership and that the two resulting vacancies in the core membership of 10 should be filled by local authority members of police authorities.
It is not as though there were any shortage of effective controls for the Secretary of State in respect of either of these two organisations. For the sake of simplicity I shall concentrate on the National Criminal Intelligence Service, although similar provisions apply for the National Crime Squad. When we look at the clauses in Part I of the Bill which deal with the National Criminal Intelligence Service we find that Clause 25 provides that the Secretary of State has the responsibility for ensuring the efficiency and effectiveness of NCIS. In Clause 26 it is the Secretary of State who sets objectives for NCIS. In Clause 27 it is the Secretary of State who sets performance targets for NCIS. In Clause 29 it is the Secretary of State who has power to remove the director general if necessary. In Clause 30 it is the Secretary of State who has power to order inspections of the NCIS and to give directions to the service in the case of an adverse inspection report.
In Clause 31 it is the Secretary of State who has power to require from the authority reports on any subject he chooses. In Clause 32 he has power to require reports from the director general on any subject that he chooses. In Clause 34 it is the Secretary of State who has power to order inquiries into the operations of NCIS. In Clause 35 he has the right to impose standardised equipment on NCIS. In Clause 36 the Secretary of State has the right to impose the requirement that standardised common services should be used by NCIS. Clause 37 gives him power by regulation to lay down disciplinary procedures. In Clause 38 he has the right by regulation to lay down complaints procedures. There can be no doubt that the Secretary of State has the National Criminal Intelligence Service tied hand and foot to his own wishes and to the wishes of central government.
If that were all, perhaps the argument that he should then appoint an effective voting majority of the members of the core authority would have some

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validity. But there is one element that I have not yet described: the funding of the NCIS. The Minister gave a long and helpful but still very difficult explanation of the funding system in her admirable speech at Second Reading. Since 1992 when NCIS was founded under executive arrangements—that is, without statutory authority—the service has been funded by central government. It is now proposed that NCIS should be funded by top-slicing from the funds of police authorities. As we shall discuss when considering subsequent amendments, there is no particular provision to ensure that the activities of NCIS are not to the financial detriment of other police services. Therefore, the funding of the NCIS, which is so comprehensively directed in detail by the Secretary of State, falls on local authorities, local police authorities and ultimately, after grant, on council taxpayers. In those circumstances, it is wrong that the Secretary of State should have such a majority in the core authority. Surely, it is right that local authority members should have the majority of the places in the authority that directs the ways in which their money, not central government's, is spent. I beg to move Amendment No. 1.
Baroness O'Cathain: I was a little concerned when the noble Lord, Lord McIntosh, described certain members of the NCIS as so-called independent members. First, one would hope that those appointed to this body would be independent. Secondly, the inclusion of a civil servant in the NCIS is most valuable. Noble Lords opposite have said on many occasions, not least in the debates on the privatisation of Recruitment and Assessment Services, that civil servants are different. They have a special ethos; they are objective; they are rigorous in analysis, and they have integrity. All of that would be exceedingly important in the new authority. Thirdly, if one reduces the number of independent members, not so-called independent members, from three plus a civil servant to two—from four to two—it will be difficult for those independent members to be strong enough to counterbalance the overwhelming influence on the other side, as it were. It is important for independent members of any body to have solidarity. That is based on my experience as a non-executive director of several companies. When the balance of the board is tipped too far in the direction of executive directors, independent non-executive directors find it exceedingly difficult to maintain the balance. Perhaps one should think about this two or three times before deciding to support the amendment.
Lord Dixon-Smith: I listened to the noble Lord, Lord McIntosh, with great interest. He referred to so many clauses and other aspects of the Bill that for a moment I had the vain hope that the Committee would not hear about them any further. However, I assume that such an optimistic wish will not be part of this afternoon's discussion.
I should like to make two points. First, NCIS and the National Crime Squad will be above all national services. Therefore, it is not unreasonable to suppose that national representation is at least as appropriate as local representation. I do not want to go into the detail
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of the financial arrangements now. Local members sitting at this level are in one sense answerable to no one. In this instance independent members who are appointed by the Secretary of State—my instinct is not to like such appointees—are likely to be independent because the Secretary of State is himself answerable to Parliament. The other place will quite rightly call him to account if he appoints anyone who is seen to be "not independent".
Lord Harris of Greenwich: I believe that the noble Lord, Lord Dixon-Smith, expresses a very optimistic view. Let us go back to the Police and Magistrates' Courts Act. On that occasion we talked about independent members and there was a great to-do in this House. Eventually, the Government realised that they were about to be defeated and sued for peace. A number of us—the noble Lord, Lord McIntosh, myself and others—went into a committee room to discuss what would be a satisfactory formula.
The idea that the other House would pursue the Minister vigorously if he appointed the wrong independent members was very soon disproved. Under the very complicated formula which was eventually announced by the noble Earl, Lord Ferrers, we were told that there was a new system to appoint these so-called independent members to police authorities, as a result of which a number of names came before the Home Secretary. The Home Secretary then sent his own abbreviated list of so-called independent members to the police authority. That authority then chose a number from that list. Following a Question for Written Answer tabled by the noble Baroness, Lady Hilton of Eggardon, it became clear that every one of those names had been checked with the Home Office Whip in the House of Commons. So much for independent members! They were all checked to ensure that they had the right political views, or at least not unacceptable political views. I believe that that is what "independent members" means so long as Mr. Michael Howard is Home Secretary. I hope that the situation will change if there is a change of government.
The noble Baroness, Lady O'Cathain, drew a comparison between the independent members of the new authorities and executive directors or non-executive directors of companies. With great respect to the noble Baroness, I cannot understand the analogy. Local authority members put forward by the local authorities are in no sense executive directors; they are merely elected representatives of the people. That seems to me to be a simple and desirable way of making such a decision. They are accountable to their own police authorities, if I may say so to the noble Lord, Lord Dixon-Smith. They represent someone, whereas the so-called independent members will represent only Mr. Howard if he is still Home Secretary at the time the Bill reaches the statute book.
Baroness O'Cathain: Before the noble Lord sits down, perhaps I may make the point that I was not saying that it was a direct analogy, but that it reminded me of the situation. The people who will be appointed by the local authority will have the same relationship

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with one another as an executive on a board would have. The point I was making was that we need to have a balance, because if we have too few of either—say there were only three or four local authority members while the rest were independent, and I refuse to call them "so-called independents", because they are independent—there would be a difficulty. The balance according to the Bill is about right. I drew on my own experience just to show that it can become difficult. Just one or two can result in a situation where one loses that sense of balance.
3.30 p.m.
Lord Campbell of Alloway: I shall leave aside for a moment the question of independents about which the Committee has heard serious argument. On this I agree with the question of balance put forward by my noble friend Lady O'Cathain. The short points which I wish to make concern the logic of the speech of the noble Lord, Lord McIntosh, to which I attended with the utmost care. First, he took the point, and took it well—he took all his points well, if I may say so—that the Secretary of State has effective power. He referred to most, if not all, of the relevant clauses in the Bill. Then he conceded, as I understood it, that because of that it should have and would have a majority of voting power but for the question of funding.
Then one comes to the question of funding. The noble Lord took the point that because there was a distinction between what was funding by central government and is now funding by the police authority, there was some effective and realistic distinction. With respect to the noble Lord, I cannot see why there should be. This is a totally different structure of Bill from the Bill to which the noble Lord referred during which my noble friend Lord Carr of Hadley made a notable contribution which I think I supported. On the presentation of this argument by the noble Lord, Lord McIntosh, I cannot see the substance of the justification for this amendment.
Baroness Blatch: While I accept fully the noble Lord's apology over the amendments, I must say that it makes it rather difficult. It was not until mid-day that I knew that we were going to discuss Amendments Nos. 1 to 5 with Amendment No. 6 separately. Two hours later I was told that Amendment No. 2 would come out and join Amendment No. 6. Only when the noble Lord was on his feet did I know that Amendment No. 3 was being decoupled. I say that as a preface, because there may be some overlap between me responding to this set of amendments and the next set which, as I understand it now, is to be Amendments Nos. 2, 3, and 6.
There is no doubt that the membership of the two new service authorities to maintain important new national services was bound to be the subject of close scrutiny by the Committee. It would be astonishing if that were not so. The Government's approach has been to try to strike a careful balance. We need to preserve our tripartite and essentially local system of policing, and yet ensure that national and multi-agency interests are adequately reflected in these new arrangements. That is
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not an easy balance to strike and I entirely accept that there is room for more than one view on precisely how it should be achieved.
Turning to the detail of these amendments, they propose that the number of independent members should be reduced from three to two. First, perhaps I may remind the Committee that there are three members on one service authority of 19 and three members on another service authority of 17. The introduction of independent members into local police authorities has proved to be an enormous success. They have introduced new ideas and brought new skills and experience to the work of police authorities. I have no doubt that the role of independent members in the new service authorities will prove to be equally valuable, as my noble friend Lady O'Cathain said. Reducing their number from three to two will be a vital opportunity lost. It will not be possible to achieve the wider spread of experience and skills which would be possible with three independent members, and it will be that much harder for the independent members, as my noble friend said, to make an impact on the business of the service authorities. We do not believe that it is unreasonable on bodies with a membership of 19 in the case of the National Criminal Intelligence Service and 17 in the case of the National Crime Squad for each to have three independent members. Indeed, we believe that three is really a minimum requirement if there is to be a meaningful independent element to the arrangements.
Nor is it clear what other practical advantage is to be gained by reducing the number of independent members in this way. The amendments propose that the vacancy created by reducing the number of independent members should be filled by a local authority representative. But representatives of police authorities, including those for the metropolitan police district, Scotland and Northern Ireland, will comprise half the 16 voting members on the service authority for the National Criminal Intelligence Service. When it comes to voting on the levy, they will comprise two-thirds of the nine members eligible to vote. We believe that this strikes the right balance for an authority, which needs to reflect UK and multi-agency interests. It is by no means obvious, when seeking to reconcile all these various interests and keep the overall size of the authority to manageable proportions, why the number of local authority representatives from England and Wales, who already form the largest single block, should have even more representatives.
When one looks at the service authority for the National Crime Squad, the effect of the amendments is even more difficult to defend. Representatives of police authorities already have an overwhelming majority of the voting membership both generally and in relation to decisions on the levy. There really is no justification for extending this majority still further.
I accept that these issues are complex. But it is wrong to focus on the constitution of the "core" membership as if it were somehow a separate body, or that "core" members had some extra powers or functions. They do not. The purpose of the core membership is simply to bring a common sense of purpose and direction to services which will need to work very closely together.

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We believe that such core membership is preferable to having a single service authority for both services, or having two totally separate authorities. We need to look at the overall membership of the two authorities. On that basis, we believe that the balance of independent and local police authority members is right and that these amendments would not achieve a better balance.
I turn now to the question of the role of Crown servants on the service authorities. These amendments would exclude Crown servants from the core membership of the service authorities. The result would be that it would not be possible for all three home departments to be represented on the service authority for the National Criminal Intelligence Service and the Secretary of State would not be represented at all on the service authority for the National Crime Squad. I know that it has been argued that the Secretary of State is represented in other ways, but that is to misunderstand the role of those other members. The independent members, although appointed by the Secretary of State, will most definitely not represent him. They will be utterly independent, able to deal with all issues exactly as they, as individuals, see them. Their purpose is to bring their skills and their experience to the work of the service authorities, not to represent the views of the Secretary of State.
I say in passing to the noble Lord who is enjoying a little scoff on the sidelines on the Front Bench of the Liberal Party that he does a great disservice to the many people appointed to authorities up and down this land who perform magnificently and independently, even though, from time to time, their appointee is the Secretary of State or a Secretary of State.
Lord Harris of Greenwich: We are playing around with this word "independent". Similar guarantees were given by the noble Earl, Lord Ferrers, on the last occasion we discussed the matter. Can I ask a simple question? If the Government are striving for genuinely independent people, why, on the last occasion, was every name checked by the Government Whips' Office in the House of Commons.
Baroness Blatch: The noble Lord cites one particular instance which has been properly answered in another place. There are thousands of people who are appointed by Ministers from all parties. That was done under the party opposite just as it is under this party. I say to the noble Lord, as he sits there enjoying his moment of ridicule, that he does a disservice to many people who, I believe, give valiantly and generously of their time, their expertise and their judgment as independent members of many bodies throughout the land.
Lord Harris of Greenwich: The noble Baroness has been good enough to say that the question was answered in another place. I am, frankly, not aware of the answer in another place. On the basis of the noble Baroness's statement that these people on this occasion, as on the last, are to be genuinely independent, receiving no form of direction, advice, or anything from the Home Secretary, why, as far as the independent members of the Police Authority were concerned, was every name
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checked by the Government Whips' Office in the House of Commons? The noble Baroness says that the question was answered in another place. I do not know the answer. Can she tell us?
Baroness Blatch: I shall bring this altercation to an end by simply saying to the noble Lord, and I hope the House will accept it, that we now have Nolan's procedures in place. These are points that will be made entirely consistent with Nolan procedures. If the noble Lord wishes to take issue with that, the noble Lord may do so. I certainly wish to put on record my admiration of the people who give of their expertise, their time and their judgment in public service up and down the land as a result of being appointed by members of various departments of government.
Similarly, the person appointed to represent the Secretary of State in his capacity as police authority for the Metropolitan Police district will not be able to represent the Secretary of State's interests more widely. That person will be expected to speak in the interests of the Metropolitan Police district and that may well not be consistent with, or take account of, wider considerations. In short, the only way in which the wider responsibilities of the Secretary of State can be properly represented on both service authorities is by the presence of a Crown servant. May I, at once, associate myself with the comments made by my noble friend Lady O'Cathain when she described the civil servants and their role in such committees. That is why the Bill proposes that one Crown servant—one Crown servant—should serve on both authorities, with two additional places on the service authority for the National Criminal Intelligence Service to represent the interests of the Secretaries of State for Scotland and for Northern Ireland. We believe that such representation is reasonable, although we recognise that the role of Crown servants should be to contribute to the deliberations of the service authorities and should not extend to the power to vote.
These are important issues which rightly deserve close scrutiny. I have sought to explain why we believe that the proposals in the Bill fairly reflect the interests of all the parties who will need to he involved in maintaining and supporting the new services if they are to be effective. There is always room for argument about whether arrangements of this kind strike the right balance. We believe that we have done so and, for the reasons I have explained, we are not persuaded that the amendments represent an improvement.
References have been made to the local police authorities. That point makes itself. They were local police authorities. There was a genuine debate in this House and the Government eventually reconciled differences between the views of this House and the Secretary of State. This is a national body with plenty of local representation on it, but it is right that there should be some people representing the wider national view as well.
There are many disadvantages, and in those circumstances I hope that the noble Lord will feel able to withdraw the amendment. If not, I hope that noble Lords will support me in the Division Lobbies.
3.45 p.m.
Lord McIntosh of Haringey: The Minister was not, of course, in the Home Office team at the time of the Police and Magistrates' Courts Bill. If the noble Baroness had been she would have recognised some of her arguments as being those which the noble Earl, Lord Ferrers, put forward on behalf of the Government and the Home Office at that time and about which the House expressed such scepticism that the Government were persuaded they were not going to get their proposals through and had to make very welcome concessions.
Incidentally, if I may add to what the noble Lord, Lord Harris, said, my understanding is that the solution we came up with, which we persuaded the Government to adopt, is working rather well. The appointment of the third independent member and of the chairman is actually working, so perhaps our efforts were not entirely in vain.
However, there is an element of unreality in the arguments, in particular of the noble Baroness, Lady O'Cathain, and also of the Minister, about the use of the word "independent" and objections to the use of the phrase, "so-called independent". These people are appointed by the Secretary of State. We know perfectly well what that means in practice, as the noble Lord, Lord Harris, pointed out. We know perfectly well that the names in the end go through the Government Whips' Office in the House of Commons just as we know that when local appointments are being made a list is posted up behind the bar in the local Conservative Club. There is no doubt about these things. We do not have to pretend. We do not have to have mock innocence about it. When the Secretary of State makes an appointment he makes an appointment with his own objectives in mind. Those objectives are political as well as administrative.
Baroness O'Cathain: I am most grateful to the noble Lord for giving way. I find this difficult because I have worked on three separate government organisations or government sponsored organisations. One was the Design Council; another was the Engineering Council; and another was a marketing thing for the Ministry of Agriculture. I have to say that on each occasion I was very independent. In fact, at one stage I was told I was a bit of a loose cannon, which I rather enjoyed. But although I got my letter from the Secretary of State for each of those three appointments I never thought that my non-pay and rations, so to speak, or my job with them, or my position with each of the three, depended on my kowtowing to the Secretary of State. Far from it. I felt independent, and I operated independently.
I am sure there are people sitting on the other side of the House who have accepted government positions from this Government who are acting in precisely the same way on health authorities and so on.
Lord McIntosh of Haringey: The noble Baroness has chosen to personalise it, which I certainly did not wish to do. I recall that she came to this House on a Conservative working list and then found that she could not sit on the Conservative Benches because she was a local government employee earning more than £19,000
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a year, and I hope a lot more. Therefore, she sat on the Cross Benches. I do not suppose that she gave up her membership of the Conservative Party at that time, and I do not suppose she changed her opinions. I am sure she was as independent then as she is now. I have no doubts about her independence at any time.
Baroness O'Cathain: I must ask to be heard again. I was not a member of the Conservative Party when I joined this House. I was not.
Baroness Blatch: I was about to say that noble Lords opposite started this one, so I make no apology for intervening. I want simply to defend my noble friend. I believe she has acted properly on all occasions. I can even say as a Front Bencher that I have been on the Front Bench when my noble friend has taken issue with the Government. Therefore, she is a very independent lady indeed.
A feeling is emerging from the remarks of noble Lords opposite that I do not wish to be taken seriously; namely, that if somebody who happens to be a Conservative is appointed to a body, that person is incapable of being independent. To personalise the matter, there is a noble Lord on the Liberal Democrat Front Bench who, as I understand it. was an appointee of this Government. I suspect that Liberal Democrat and Labour appointees, many of them on health authorities, are doing a good job. Because—
Lord Harris of Greenwich: May I ask to whom the noble Baroness refers? Will she be good enough to give a name?
Baroness Blatch: My understanding is that the noble Lord, Lord Thomas, was appointed to the Criminal Injuries Compensation Board.
Lord Thomas of Gresford: The Minister is absolutely right. I resigned because of Mr. Michael Howard's change to the criminal injuries compensation scheme, a matter to which I referred when I made my maiden speech.
Baroness Blatch: The noble Lord makes my point for me. That confirms the noble Lord's independence. I am simply saying that being of Liberal Democrat, Labour or Conservative persuasion in terms of the vote does not inhibit people from being independent and taking issues as they see them, on their merit, and making their own judgment. That is important.
Lord McIntosh of Haringey: The Minister does not need to defend her noble friend Lady O'Cathain; she was not being attacked. Had she listened to my remarks she would have heard me praising the noble Baroness's independence at all times.
Personal issues apart, there is a profound difficulty. To accuse those of us who attack the expanding use of quangos in this country and attack the use of quangos to replace bodies elected by local people of doing a disservice to the individuals who serve on those quangos is not to elevate public debate on the issue. There is no

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way in which we can express a general opinion regarding the use of nomination, as opposed to the election of members of the many local authorities, if we are to be ruled out of order and told that we are doing a disservice to the individuals concerned. We oppose quangos because we are opposed to a system of nomination as opposed to election; and we are opposed to the effect of that on subsidiarity and democracy in this country. We do not do so out of personal antagonism towards any of the individuals appointed to the quangos.
Lord Dixon-Smith: Perhaps the noble Lord might agree that in this particular instance we are not dealing with the replacement of some local democratic body by a quango. If any body is involved at all in this matter it is the Home Office, which at present has control of NCIS. There is of course at the present time no National Crime Squad.
Lord McIntosh of Haringey: Exactly, the noble Lord makes my point. What we see here is the creation of a new quango. We are seeing the creation of a new core membership which does not exist now and in which the Secretary of State will have an effective voting majority, as the Minister recognised. That is not a criticism of any of the individuals who are likely to be appointed to that body.
Lord Dixon-Smith: The noble Lord might concede that that is perhaps preferable to control by the Home Secretary himself, which seems to be the alternative.
Lord McIntosh of Haringey: It is control by the Home Secretary himself. The nominations are made by the Home Secretary. The alternative that we propose is that it should not be the Home Secretary, but that a majority should be appointed by local authorities, the police and chief officers of police. The Minister and her friends have made our case very effectively for us. They made clear that their objection to this degree of democratic control—over something that will be paid for not by central government but by local authorities—is political. They appear to have made the case for these amendments more effectively than I was able to do. I wish to take the opinion of the Committee on Amendment No. 1.
3.55 p.m.
On Question, Whether the said amendment (No. 1) shall be agreed to?
Their Lordships divided: Contents, 96; Not-Contents, 172.

Division No. 1

CONTENTS

Addington, L.

Blease, L.

Allen of Abbeydale, L.

Bonie, L.

Barnett, L.

Carmichael of Kelvingrove, L.

Beaumont of Whitley, L.

Carter, L.

Berkeley, L.

Cledwyn of Penrhos, L.

Blackstone, B.

Clinton-Davis, L.

134

Dahrendorf, L

McIntosh of Haringey, L.

David, B.

McNally, L.

Dean of Beswick, L. [Teller.]

Mallalieu, B.

Dean of Thornton-le-Fylde, B.

Mar and Kellie, E.

Donaldson of Kingsbridge, L.

Mason of Bamsley, L.

Donoughue, L.

Merlyn-Rees, L.

Dortnand of Easington, L.

Milner of Leeds, L.

Dubs, L.

Molloy, L.

Elis-Thomas, L.

Monkswell, L.

Exmouth, V.

Morris of Castle Morris, L.

Falkland, V.

Nicol, B.

Farrington of Ribbleton, B.

Party, L.

Fisher of Rednal, B.

Paul, L.

Fitt, L.

Peston, L.

Gallacher, L.

Plant of Highfield, L.

Geraint, L.

Prys-Davies, L.

Gladwin of Clee, L.

Ramsay of Cartvale, B.

Gould of Pottemewton, B.

Rea, L.

Graham of Edmonton, L. [Teller.]

Richard, L.

Grenfell, L.

Ritchie of Dundee, L.

Grey, E.

Robson of Kiddington, B.

Harris of Greenwich, L

Rodgers of Quarry Bank, L.

Haskel, L.

Sainsbury, L.

Hayman, B.

Scanlon, L.

Hayter, L.

Serota, B.

Henderson of Brampton, L.

Sewel, L.

Hilton of Eggardon, B.

Shannon, E.

Hollis of Heigham, B.

Shaughnessy, L.

Hooson, L.

Shepherd, L.

Howie of Troon, L.

Simon, V.

Hughes, L.

Stallard, L.

Hutchinson of Lullington, L.

Stoddart of Swindon, L.

Hylton, L.

Strabolgi, L.

Jeger, B.

Tenby, V.

Jenkins of Hillhead, L.

Thomas of Gresford, L.

Jenkins of Putney, L.

Tordoff, L

Judd, L.

Turner of Camden, B.

Kilbracken, L.

White, B.

Kilpatrick of Kinctaig, L.

Whitty, L.

Kirkhill, L.

Wigoder, L.

Lytton, E.

Williams of Elvel, L.

McConnell, L.

Winston, L.

NOT-CONTENTS

Aberdare, L.

Charteris of Amisfield, L.

Addison, V.

Chesham, L. [Teller.]

Ailesbury, M.

Courtown, E.

Ailsa, M.

Cox, B.

Aldington, L.

Craig of Radley, L.

Allenby of Megiddo, V.

Cranbome, V. [Lord Privy Seal.]

Anelay of St. Johns, B.

Crathome, L.

Annan, L.

Cockney, L.

Ashboume, L.

Cullen of Ashboume, L.

Astor of Hever, L.

Cumberlege, B.

Barber of Tewkesbury, L.

Dacre of Glanton, L.

Belhaven and Stenton, L.

Davidson, V.

Bemers, B.

Dean of Harptree, L.

Blaker, L.

Denham. L.

Blatch, B.

Denton of Wakefield, B.

Bledisloe, V.

Devonport, V.

Blyth, L.

Dixon-Smith, L.

Brabazon of Tara, L.

Downshire, M.

Braine of Wheatley, L.

Elibank, L.

Brookes, L.

Ellenborough, L.

Brougham and Vaux, L.

Elles, B.

Burnham, L.

Elliott of Morpeth, L.

Butterworth, L.

Elton, L.

Byford, B.

Eme, E.

Cadman, L.

Fairfax of Cameron, L.

Caithness, E.

Feldman, L.

Campbell of Alloway, L.

Ferrers, E.

Campbell of Cray, L.

Fraser of Cannyllie, L.

Camegy of Lour, B.

Gainford, L.

Chadlington, L.

Geddes, L.

Chalker of Wallasey, B.

Gisborough, L.

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Gormanston, V.

Napier and Ettrick, L.

Goschen, V.

Nelson, E.

Griffiths of Fforestfach, L.

Northesk, E.

Hailsham of Saint Marylebone, L.

O'Cathain, B.

Halsbury, E.

Onslow, E.

Harding of Petherton, L.

Oppenheim-Bames, B.

Hardinge of Penshurst, L.

Orkney, E.

Harris of Peckham, L.

Palmer, L.

Hastings, L.

Palumbo, L.

Hemphill, L.

Park of Monmouth, B.

Henley, L.

Pender, L.

Hogg, B.

Perry of Southwark, B.

Holdemess, L.

Peyton of Yeovil, L.

HolmPatrick, L.

Pilkington of Oxenford, L.

Hothfield, L.

Pym, L.

Howe, E.

Quinton, L.

Hylton-Foster, B.

Rankeillour, L.

Ilchester, E.

Rathcavan, L.

Inchcape, E.

Reay, L.

Inglewood, L.

Rees, L.

Jellicoe, E.

Renfrew of Kaimsthorn, L.

Jenkin of Roding, L.

Rennell, L.

Johnston of Rockport, L.

Renton, L.

Kinloss, Ly.

Richardson, L.

Knights, L.

Rotherwick, L

Lauderdale, E.

Saatchi, L.

Layton, L.

St. Davids, V.

Lindsay, E.

Saltoun of Abernethy, Ly.

Liverpool, E.

Sanderson of Bowden, L.

Lloyd-George of Dwyfor, E.

Sandford, L.

Long, V.

Seccombe, B.

Lucas, L.

Sharpies, B.

Lucas of Chilworth, L.

Shaw of Northstead, L.

Lyell, L.

Shrewsbury, E.

McAlpine of West Green, L.

Skelmersdale, L.

McColl of Dulwich, L.

Soulsby of Swaffham Prior, L.

Mackay of Ardbrecknish, L.

Stewartby, L.

Mackay of Clashfem, L. (Lord Chancellor.)

Stodart of Leaston, L.

Mackay of Drumadoon, L.

Strange, B.

Macleod of Borve, B.

Strathcarron, L.

Malmesbury, E.

Strathclyde, L. [Teller.]

Marlesford, L.

Sudeley, L.

Masham of Ilton, B.

Swansea, L.

Merrivale, L.

Swinfen, L.

Mersey, V.

Terrington, L.

Middleton, L.

Teviot, L.

Miller of Hendon, B.

Thomas of Gwydir, L.

Mills, V.

Trumpington, B.

Milverton, L.

Ullswater, V.

Monk Bretton, L.

Vivian, L.

Montgomery of Alamein, V.

Wade of Chorlton, L.

Mountevans, L.

Walton of Detchant, L.

Moyne, L.

Westbury, L.

Munster, E.

Whitelaw, V.

Wilcox, B.

Young, B.

Resolved in the negative, and amendment disagreed to accordingly.
4.05 p.m.
The Deputy Chairman of Committees (Baroness Cox): The next amendment is Amendment No. 2, in the name of the Lord McIntosh of Haringey. I should point out that if Amendment No. 2 is agreed to I cannot call Amendment No. 3 because of pre-emption.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 2:
Page 50, leave out lines 18 to 20.
The noble Lord said: In moving Amendment No. 2 I should like also to speak to Amendment No. 6. I have left out Amendment No. 3 not merely because of
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pre-emption, of which the Deputy Chairman has reminded us, but also because Amendment No. 3 is a fall back to Amendment No. 2.
Both of these amendments refer to an issue which took a great deal of debate at the time of the passage of the Police and Magistrates' Courts Bill, in which this House distinguished itself by winning the principle of the right of a body to elect its own chairman against the imposition of a chairman by a Secretary of State. That was done for local police authorities, but the argument is as strong for the National Criminal Intelligence Service and for the National Crime Squad.
The fundamental argument in all of this is that the chairman of a body of this kind has to command the confidence of the members of the authority of which he is the chair. That is the purpose of these amendments. Amendment No. 2 proposes that the section which states that the Secretary of State shall appoint the chair shall be removed and be replaced by a new provision which states that the chairman of both the NCS authority and the NCIS authority shall be appointed by the core members appointed under this schedule from among their number.
It will be noted that this is a modest amendment. It does not include the additional members—who are largely local authority members—of the two separate authorities. It includes only those members who are the core members of the two authorities. It does not follow, the Committee having expressed its view in the Division on the last amendment, that the chairman will be elected from among 10 people, five of whom—and let us not get back to the word "independent"—are appointed by the Secretary of State, however independent they may turn out to be in practice.
The discussions that we had at the time of the Police and Magistrates' Courts Bill were generally thought—not only by Members of this House but also by the outside world—to be an issue of considerable constitutional importance. The Government wanted the right to appoint the chairmen of all police authorities. I accused the Secretary of State at that time of wanting the ability to sit his chairmen around his table in his Home Office and to tell them what to do, which would have resulted, via the back door, in a national police force.
The Government disclaim the desire to create a national police force through the provisions of the Bill, and I believe them. I agree with the Government that the Bill does not create a national police force comparable to the FBI. I accept what the Government say: that there is no equivalent here of federal crimes and that the only activity of these two organisations is to be in support of the operations of individual police forces. There is nothing comparable in the way in which they operate to the operations of the national police forces of the United States, France, and many other countries in the developed world. But, at the same time, the recognition which is implicit in that understanding of the importance of the tripartite system in the control of our police needs to be preserved and enhanced as we consider the Bill's provisions.
What we have had for many years in the control of our police force has been a tripartite system between local authorities and police authorities, which has sometimes been more complicated because of the existence of magistrates on police authorities, and the Home Secretary. That has been the tried and tested method of control of police forces. Remarkably few scandals and intolerable disagreements have resulted from what appear on the face of it in "management theory"—if I may appeal to the noble Baroness, Lady O'Cathain, in the matter—to be a recipe for self destruct. It does not actually happen that way.
Whatever management theory may be, all of these people—and they are all non-executive directors, by the way—have managed to work together and to control police forces. They have managed to pursue coherent and yet flexible and responsive policing in all parts of this country. Surely we can do the same today for the NCIS and for the National Crime Squad. Surely we can do so by upholding the tripartite system and saying that those core members, wherever they come from and whether they are appointed by the Secretary of State, by chief officers of police or by local authorities, can be trusted to get together and to agree on the best person to act as their chairman; and then to elect that person to act as chairman. That does not need the heavy hand of the Home Secretary; it is a continuation of a well-established and well-proven system of the control of policing in this country. I commend the amendment to the Committee. I beg to move.
Lord Renton: With great respect to the noble Lord, I think, on reflection, that he should not have made the speech that he has. The noble Lord introduced the concept of local democracy, referring, quite rightly, to the way in which police authorities have been chosen mainly by local authorities since the Police Act 1964. Here, on the other hand, we have two national bodies which are largely of an advisory character. In order to ensure better democratic control over them, we have to engage the responsibility of the Home Secretary. That is what the schedule and the clauses which introduce it aim to achieve.
The Home Secretary's responsibility is surely much more closely and more strongly engaged if he is to appoint the chairman. I believe it will cause a little confusion if we start borrowing the concept of local democracy and try to apply it to these two national bodies. It just does not follow.
Lord Knights: At one time the concept of a national criminal intelligence service would probably have been regarded with extreme suspicion—suspicion based on the perceived activities of organisations of that kind in other parts of the world. I suggest that it is a measure of the trust and confidence with which the police service of this country is held that, so far as I am aware, anyway, no hint of criticism has ever been raised at the system which was set up some four and a half years ago as, I understood, a common police service by mutual agreement of chief constables, local police authorities and the Home Office. I repeat, no hint of criticism has ever been levelled at it during that period. Indeed, the
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Home Affairs Committee of another place last year welcomed the start that NCIS had made towards improving the response to serious, organised and international crime. Those words come from paragraph 95 of that committee's Third Report in Session 1994–95. Indeed, Members of the Committee have already agreed this afternoon that such a system should be set up as a corporate body.
However, if that trust and confidence is to be maintained, I believe that it is essential that there should be no breath of political influence about its activities and that the NCIS service authority should be clearly seen as a true partnership of the three tripartite bodies which are responsible for the totality of policing in this country at present. I do not believe that that will be possible if the chairman is to be appointed by the Home Secretary and from one of his three appointees to that authority.
Given the power which is vested in the authority to call upon the director general to resign in the interests of efficiency and/or effectiveness contained in Clause 7, I believe that it is imperative to ensure that there can be no suggestion of undue influence being brought to bear on the authority by way of the Home Secretary's appointment of the chairman. There may well never be any such influence, but the possibility of alleging it should be removed. I shall support the amendment.
Baroness Blatch: When speaking on the previous amendment, I made clear that our approach to the membership and to the chairmanship of the service authorities has been to strike a balance between our tripartite system of policing and the need to reflect national and multi-agency interests in these new arrangements. I entirely accept that the question of the chairmanship is of particular importance in that context. The amendments do not challenge the proposal that there should be a single chairman for both authorities. I welcome that measure of agreement. Such an arrangement will be of crucial importance in building the shared strategic vision and close working relationship which will help to achieve the best from both services. But the amendments will have two other results which I am unable to welcome so warmly.
First, and I believe most importantly, they will mean that the chairman will not necessarily be one of the independent members. It could be one of the police authority representatives or it could—although perhaps less likely—be one of the police service representatives. I would not wish in any way to undervalue the particular skills and experience that such members will bring to the service authorities, but I do not believe that it would be right for either of them to be the joint chairman of both service authorities. That is particularly true in the case of the National Criminal Intelligence Service. I have already mentioned its United Kingdom and multi-agency remit. A chairman drawn from representatives of police authorities alone or police forces in England and Wales could not, in my view, properly reflect that wider remit. An independent member is best placed to do so and to provide the impartial leadership which these new authorities will clearly need.

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Secondly, the amendments would mean that the core membership rather than the Secretary of State would appoint the joint chairman. This place has in recent years taken a close and influential interest in the arrangements for the appointment of police authority chairmen. But service authorities for national and multi-agency services raise rather different issues. I have already explained why the Government believe that those differences constitute strong arguments for the joint chairman being an independent member. We also believe that the Secretary of State, in consultation with the Secretaries of State for Scotland and Northern Ireland, is best placed to take account of those national and multi-agency interests by appointing the chairman from among the independent members. If the appointment was not to be made by the Secretary of State, it would be necessary to give further careful thought to the question of whether the appointment should instead be made by the other core members or the wider membership of both authorities. We believe that this would create unnecessary complications and that the best approach, and a reasonable one given the nature of the bodies involved, is for the appointment of chairman to be made by the Secretary of State.
Reference has been made to the powers that the Secretary of State would take. First, the Bill has been before the Delegated Power Scrutiny Committee. We shall be responding positively to the recommendations of the scrutiny committee. However, it did not query the numbers of powers in the Bill for the Secretary of State. Secondly, all the powers are similar to those for the police authorities. The service authorities will also have many of the powers; for example, to set objectives.
The noble Lord, Lord Knights, clearly is concerned. First, he gave examples of the kind of malevolent activity of a chairman which could go undetected if undue influence were brought to bear either on the director general or on members of the board. I should like to think that there are safeguards set out in the Bill. I refer to the rather exposed way in which the service authorities will work and the accountability through Parliament by the Secretary of State for appointments that he makes. Clearly if appointments go wrong those are public issues and at least one can hold a Secretary of State accountable for them. Therefore, I do not believe that some of the noble Lord's concerns will be borne out in practice. Nevertheless, I take them seriously.
For the reasons that I gave, we are not persuaded that these amendments would make better provision for the appointment of a joint chairman. They would leave open the possibility that the service authority could be chaired by one of the police representatives. I do not think that that would be appropriate. Alternatively, one of the police authority representatives might be appointed but he would be representative of police authorities in England and Wales only. We do not believe that this is the best approach given the United Kingdom and multi-agency remit of the National Criminal Intelligence Service. In the circumstances, although I recognise again that
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there is more than one view on this sensitive matter, I hope that having heard what I and my noble friend Lord Renton said the noble Lord will not press the amendment to a vote.
Lord McIntosh of Haringey: Let me remove one, I think, marginal issue. The Minister prayed in aid the fact that the Delegated Powers Scrutiny Committee made no comment about the authority or chairmanship of the authority.
Baroness Blatch: I should correct that. It is not what I said. I said that it did not query the numbers of powers taken in the Bill by the Secretary of State.
Lord McIntosh of Haringey: The Delegated Powers Scrutiny Committee has to be concerned with the powers delegated by Parliament. It cannot consider the powers taken by the Secretary of State in that way since those are powers which have been created and not taken from Parliament. If the Minister will look again at the scrutiny committee's report, in particular in reference to Clause 89, she will see that although it expresses concern at the fact that intrusive surveillance is to be authorised by chief officers of police, it feels debarred from making any formal comment on it because it does not involve any use of delegated powers. I do not believe that the powers referred to by the Minister are delegated powers from Parliament. They are not within the remit, therefore, of the Delegated Powers Scrutiny Committee, and could never have been considered by it. The silence of that committee should not be seen as assent to the Government's proposals.
The noble Lord, Lord Renton, attacked my speech rather comprehensively. He said that on reflection I would wish that I had not made it. I shall disappoint him. I do not agree with him that these are simply advisory committees. If the noble Lord reads the Bill carefully, as he usually does, he will see that those committees have extensive powers, although, as I made clear, there are also extensive reserve powers for the Secretary of State. I do not follow his argument that the Home Secretary's responsibility is more closely engaged if he has the power to appoint the chairman from among the core membership. The Secretary of State is closely engaged; it is spelt out in great detail in the Bill, as I made clear. That engagement will not be increased by his ability to impose a member on those 10 people who are the joint core members of the authority.
The Minister raised worries about whether the chairman might be a local authority member or even a police service member. I do not care whether the chairman is a member appointed by the Secretary of State, a police member or a local authority member. I simply care that the chairman should be the best person for the job and should have the confidence of the core membership of the authorities. That is the recipe for effective management and effective steering authorities. What is not a recipe for effective management is that the Secretary of State should have the power to impose a chairman on this body and, quite possibly, someone who would not have commanded the confidence of most members of the body.

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The reality of the situation is that the Secretary of State and the Government are politicising the appointment of the chairman of the two bodies. I regret that very much. I do not do so on the grounds that I want someone of a different political party to be the chairman. I do so because I believe that the chairman should be independently chosen, should be seen to be independently chosen, and should have the confidence of the body of which he is to take the chair. I believe that the matter is of such importance that I should take the opinion of the Committee on it.
4.26 p.m.
On Question, Whether the said amendment (No. 2) shall be agreed to?
Their Lordships divided: Contents, 93; Not-Contents, 158.

Division No. 2

CONTENTS

Addington, L.

Kilbracken, L.

Barnett, L.

Kilpatrick of Kincraig, L.

Beaumont of Whitley, L.

Kirkhill, L.

Berkeley, L.

Knights, L.

Blackstone, B.

McIntosh of Haringey, L.

Blease, L.

McNair, L.

Borrie, L.

McNally, L.

Brooks of Tremorfa, L.

Mallalieu, B.

Bruce of Donington, L.

Mar and Kellie, E.

Carmichael of Kelvingrove, L.

Mason of Barnsley, L.

Carter, L.

Merlyn-Rees, L.

Clinton-Davis, L.

Milner of Leeds, L.

Cocks of Hartcliffe, L.

Molloy, L.

Dahrendorf, L

Monkswell, L.

David, B.

Morris of Castle Morris, L. [Teller.]

Dean of Beswick. L.

Napier and Ettrick, L.

Dean of Thornton-le-Fylde, B.

Nelson, E.

Donaldson of Kingsbridge, L.

Nicol, B.

Dormand of Easington, L.

Palmer, L.

Dubs, L.

Paul, L.

Elis-Thomas, L.

Peston, L.

Falkland, V.

Prys-Davies, L.

Farrington of Ribbleton, B.

Ramsay, B.

Fisher of Rednal, B.

Redesdale, L.

Fitt, L.

Richard, L.

Gallacher, L.

Ritchie of Dundee, L.

Geraint, L.

Robson of Kiddington, B.

Gladwin of Clee, L.

Rodgers of Quarry Bank, L.

Gould of Potternewton, B.

Sainsbury, L.

Graham of Edmonton, L.

Serota, B.

Grenfell, L.

Sewel, L.

Grey, E.

Shepherd, L.

Harris of Greenwich, L.

Simon, V.

Haskel, L. [Teller.]

Stallard, L.

Hayman, B.

Stoddart of Swindon, L.

Henderson of Brompton, L.

Strabolgi, L.

Hilton of Eggardon, B.

Strafford, E.

Hollis of Heigham, B.

Tenby, V.

Hughes, L.

Thomas of Gresford, L.

Hutchinson of Lullington, L.

Tope, L.

Hylton, L.

Turner of Camden, B.

Inchyra, L.

Weatherill, L.

Jeger, B.

White, B.

Jenkins of Hillhead, L.

Whitty, L.

Jenkins of Putney, L.

Williams of Elvel, L.

Judd, L.

Winston, L.

Kennet, L.

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NOT-CONTENTS

Aberdare, L.

Jenkin of Roding, L.

Addison, V.

Johnston of Rockport, L.

Ailesbury, M.

Keyes, L.

Ailsa, M.

Kimball, L.

Aldington, L.

Kingsland, L.

Allenby of Megiddo, V.

Kinnoull, E.

Anelay of St. Johns, B.

Leigh, L.

Astor of Hever, L.

Lindsay, E.

Barber of Tewkesbury, L.

Liverpool, E.

Belhaven and Stenton, L.

Long, V.

Blaker, L.

Lucas, L.

Blatch, B.

Lucas of Chilworth, L.

Bledisloe, V.

Lyell, L.

Blyth, L.

McAlpine of West Green, L.

Bowness, L.

McColl of Dulwich, L.

Brabazon of Tara, L.

Mackay of Ardbrecknish, L.

Braine of Wheatley, L.

Mackay of Clashfern, L. [Lord Chancellor.]

Brookes, L.

Mackay of Drumadoon, L.

Brougham and Vaux, L.

Malmesbury, E.

Burnham, L.

Marlesford, L.

Butterworth, L.

Merrivale, L.

Byford, B.

Mersey, V.

Cadman, L.

Middleton, L.

Caithness, E.

Miller of Hendon, B.

Campbell of Alloway, L.

Mills, V.

Campbell of Croy, L.

Milverton, L.

Carnegy of Lour, B.

Monk Bretton, L.

Carnock, L.

Montgomery of Alamein, V.

Chadlington, L.

Mottistone, L.

Chalker of Wallasey, B.

Mountevans, L.

Charteris of Amisfield, L.

Mowbray and Stourton, L.

Chesham, L. [Teller.]

Munster, E.

Courtown, E. [Teller.]

Norfolk, D.

Cox, B.

Northesk, E.

Cranborne, V. [Lord Privy Seal.]

O'Cathain, B.

Crathorne, L.

Oppenheim-Barnes, B.

Cuckney, L.

Orkney, E.

Cumberlege, B.

Palumbo, L.

Dacre of Glanton, L.

Park of Monmouth, B.

Davidson, V.

Pender, L.

Dean of Harptree, L.

Perry of Southwark, B.

Denham, L.

Peyton of Yeovil, L.

Denton of Wakefield, B.

Pilkington of Oxenford, L.

Devonport, V.

Pym, L.

Dixon-Smith, L.

Quinton, L.

Downshire, M.

Rankeillour, L.

Ellenborough, L.

Rathcavan, L.

Elks, B.

Reay, L.

Elliott of Morpeth, L.

Rees, L.

Elton, L.

Renfrew of Kaimsthom, L.

Erne, E.

Rennell, L.

Fairfax of Cameron, L.

Renton, L.

Feldman, L.

Rotherwick, L.

Ferrets, E.

Saatchi, L.

Fraser of Carmyllie, L.

St. Davids, V.

Geddes, L.

Saltoun of Abernethy, Ly.

Gisborough, L.

Sanderson of Bowden, L.

Goschen, V.

Sandford, L.

Hailsham of Saint Marylebone, L.

Seccombe, B.

Halsbury, E.

Sharples, B.

Harding of Petherton, L.

Shaw of Northstead, L.

Hardwicke, E.

Shrewsbury, E.

Harmar-Nicholls, L.

Skelmersdale, L.

Hams of Peckham. L.

Soulsby of Swaftham Prior, L.

Hemphill, L.

Stewartby, L.

Henley, L.

Stodart of Leaston, L.

Hogg, B.

Strange, B.

Holderness, L.

Strathcarron, L.

HolmPatrick, L.

Strathclyde. L.

Home, E.

Swinfen, L.

Hothfield, L.

Tebbit, L.

Howe, E.

Teviot, L.

Hylton-Foster, B.

Thomas of Gwydir, L.

Inchcape, E.

Trumpington, B.

Inglewood, L.

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Ullswater, V.

Wilcox, B.

Vivian, L.

Willoughby de Broke, L.

Wade of Chorlton, L.

Wise, L.

Whitelaw, V.

Wynford, L.

Young, B.

Resolved in the negative, and amendment disagreed to accordingly.
4.36 p.m.
[Amendments Nos. 3, 4, 5 and 6 not moved.]
Schedule 1 agreed to.
Schedule 2 [Other provisions about Members of the Service Authorities]:
On Question, Whether Schedule 2 shall stand part of the Bill?
Lord McIntosh of Haringey: I have indicated notice of my intention to oppose the Question only in order to speak on a relatively minor issue and to try to elicit the Government's thinking. I have been approached by the head of one of the regional crime squads who recognises that the regional crime squads will no longer exist. He is concerned about whether they are going to have any say in the appointment of police authority members of the National Crime Squad in particular. I am simply asking whether the Government have given any thought to the issue, which is not covered in the Bill as it is.
It seems to us that there are two possible ways of appointing the individual members, the local authority members of the steering authorities. One would be for it to be done by the local authority associations; the other would be, at any rate in the first instance, for the six members to come from the six regional crime squads. They know each other and may be in a position to make an effective nomination. I take no view on the issue. I recognise in retrospect that I should have given the Minister some warning of the concern which has been expressed to me in case it has not been expressed to her from any other source. However, if she were able to say something about it or, failing that, if she were able to write to me about it, that would be most helpful.
Baroness Blatch: I was about to say that it was an extraordinary proposition to take Schedule 2 out of the Bill, but I shall not have to do that now. On the point raised by the noble Lord, I am sorry that he did not write to me about it because I think we could have dealt with the matter by correspondence, and I shall certainly do that. My understanding is that local authority members of police authorities will be elected from those bodies representing local police authorities and that local authority police authority members will not be appointed by regional crime squads, whatever they are and whoever they are as a collective. However, I shall certainly think about the question the noble Lord has raised today and will come back to him in correspondence.
Lord McIntosh of Haringey: I am most grateful. I could not have asked for more without having given notice. I am sure the noble Baroness will get correspondence from those who are more closely
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involved with the issue. She may prefer to wait, before responding to me, until she has seen what other people have to say. This is not in any sense a party political matter and I shall not be pressing my opposition.
Schedule 2 agreed to.
Clause 2 [General functions of the NCIS Service Authority and NCIS.]:
Baroness Hilton of Eggardon Baroness Hilton of Eggardon moved Amendment No. 7:
Page 2, line 17, leave out ("criminal intelligence") and insert ("intelligence necessary for the prevention and detection of serious crime").
The noble Baroness said: In moving Amendment No. 7, I shall speak also to Amendments Nos. 8 and 9. This series of amendments addresses the specific functions of NCIS and the definition of the matters in relation to crime that they deal with. The intention of these amendments is to define more narrowly the areas of crime dealt with by NCIS and limit them to serious crime rather than the broad, vague definition of "criminal intelligence".
There are three very specific reasons why I feel it is important to define more narrowly the functions of NCIS. First, there is a wide variety of interpretations in the Bill as currently drafted and therefore the functions of NCIS could be subject to individual interpretations and distortions. Because of the powers that NCIS officers will have and the position of NCIS at the top of the hierarchy of law enforcement agencies, it is important that it should have a very precisely defined function.
Secondly, if the function were specifically defined so as to deal with serious crime, it would assist NCIS in its relationship with European police forces under the Convention on the European Information System, which is specifically related to serious crime. Its functions would thus be brought into line with, for instance, Article 2(1) of the Europol Convention and other European conventions referring to extremely serious offences. The present rather loose and vague definition of the functions of NCIS would be brought much more into line with what is required by our European partners.
Thirdly, the explicit mention of "serious crime" in relation to NCIS would put it on parallel grounds with the National Crime Squad, the aims of which are to prevent and detect serious crime. Since these two parallel organisations will be set up under the same administrative structure, it seems appropriate that they should deal with exactly the same range of offences. I beg to move.
Lord Renton: This is primarily a drafting matter. I believe the noble Baroness has made a point that deserves further consideration. The word "intelligence" has a number of different meanings in our language, depending on the context. It may mean "very clever" or it may just mean "information". On page 2, in lines 17 and 18, we find the words "information" and "intelligence" appearing in the same sentence. It reads:
"to gather, store and analyse information in order to provide criminal intelligence".

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If "criminal intelligence" is itself a statutory term of art which by cross-reference one could find a meaning of, this would be a correct way to use the expression; but I believe it could very well read, on the lines suggested by the noble Baroness:
"information necessary for the prevention and detection of serious crime".
instead of:
"information to provide criminal intelligence".
I believe the matter is worth looking at again purely from a drafting point of view.
Baroness Seccombe: It would be helpful if we could define "serious crime" more specifically. One of the problems is that those involved in serious and organised crime are often surrounded by people who are caught up in petty crime, too. If this is a gathering-of-information service, the term "serious crime" may be too narrow a definition.
4.45 p.m.
Baroness Blatch: There is no doubt that the main function of NCIS both now and in the future is to provide intelligence about serious crime. That is what police forces and other law enforcement agencies want, and NCIS exists to provide them with the criminal intelligence support which they need. But the fight against crime must be conducted flexibly and with all the weapons at our disposal. These amendments would restrict that flexibility. We do not think that such a restriction is helpful or desirable. Anything which thwarts the success of tracking down serious crime must be resisted and flexibility will be needed. I shall explain that in a moment.
Although, as my noble friend Lady Seccombe has said, the amendments do not provide a definition of serious crime, I have to assume, in the absence of a definition, that it is intended to apply the definition used in Clause 89(5) of the Bill. The effect of applying this definition to the work of NCIS would be to remove any possibility of its undertaking wider criminal intelligence activities. It would severely limit the support which NCIS could give to local police forces. For example, a group of police forces might be investigating a series of organised crimes which fall outside the definition but where some national co-ordination or analysis of criminal intelligence would be helpful. Intelligence support from NCIS might help to solve these crimes but these amendments would prevent that assistance being given. That cannot possibly be in the public interest.
There is another disadvantage. Under Clause 2(2)(c) of the Bill as presently drafted, NCIS will be able to support police forces and other law enforcement agencies in carrying out their own criminal intelligence activities. The intention is that NCIS will be able to promote common standards for intelligence activities by local forces against any level of crime—that is important—in addition to its specific role in tackling serious crime. This will help to make intelligence activities more effective. These amendments would restrict the role of NCIS and so obstruct this objective.
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The noble Baroness, Lady Hilton, referred to the National Crime Squad. Of course, the National Crime Squad will deal with serious crime; but the Bill as presently drafted enables NCIS to deal with serious crime and—this is the important point—other intelligence which requires national analysis and co-ordination. The amendment will reduce that flexibility. We believe that that is important work for NCIS and we would not wish to inhibit it in any way.
Lord Renton: I should be grateful if my noble friend could help me on this because it is important. It seems to me that the words "information" and "intelligence" are used synonymously here and therefore we do not need to use both. One or other of the words would do—preferably "information".
Baroness O'Cathain: Perhaps I can help on this point. Information can surely be made up of many bits of information which, as a composite, give global intelligence on a matter. For example, it can be the building blocks of a specific problem which will give information about how many people were in a place, what they were doing, and all the rest of it. It will give the overall composite picture; namely, the intelligence. That is how I see the difference. I do see a difference between the two terms and I should be grateful if my noble friend the Minister would tell us whether that is the way it is intended.
Baroness Blatch: That was a helpful intervention from my noble friend, because that is the case. There will be a great deal of information which may be nothing more than strict database which, when put together with other pieces of information, will provide intelligence which may be handed over to a police force to help them in their criminal inquiries or provide parts of a jigsaw which, when put together, will provide intelligence on which to take serious crime into the courts and which will then become part of the evidence. But my noble friend raises a point about the meaning of words. I shall certainly look at it between now and the next stage of the Bill.
Lord Rodgers of Quarry Bank: I put my name to this amendment because I thought it was totally consistent with the spirit in which the Minister moved the Second Reading of the Bill. On Second Reading she spoke very particularly about the new organisations dealing with organised crime. Let me remind her of what she said:
"This Bill represents a further major step forward in the fight against organised crime. It will give the police, working together with other enforcement agencies, the national structures which they need to tackle serious and organised crime"—[Official Report, 11/11/96; col. 789.]
A little later she referred to the police having to deal with "organised and violent criminals". Again, she said,
"But we need to strengthen our capacity to tackle organised crime".
I do not dissent from anything she said then. But it is fair to say that the more we look at this Bill we see that it is a complex, major and important Bill which extends police powers and embodies them in statute in a way

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that has not been done before. It is therefore very important to look very closely at what the Minister said then and what she is saying now. I understand, notwithstanding what she said at Second Reading, that she envisages that the two new agencies will look into all kinds of crime and will not be limited mainly to organised and serious crime, as previously described by her at Second Reading.
Lord Knights: One of my worries over the creation of NCIS and the National Crime Squad is the extent to which local police forces will lose the support that they currently receive from the regional crime squads, which includes intelligence as much as it does investigation. I support the Minister when she says that we must not take away the flexibility that the present drafting gives to the National Criminal Intelligence Service. If it is to be able to say to a local police force, "What you are seeking that we should look into is not serious crime and therefore nothing to do with us", then the local police force has nothing—unless it is to serve its own full-scale criminal intelligence system as well.
This will be the only criminal intelligence system in the country. There will be no regional intelligence systems. Indeed, I understand that they have already gone. It will mean that each police force will have to rely on its own activities, if serious crime is the only thing that the national organisation is prepared to deal with. I believe that it should remain flexible, as the Minister said.
Baroness Blatch: I am grateful for that intervention. The noble Lord speaks with a great deal of experience. But the important point that was then made was about the lacuna which would be left if the operations of the NCIS were restricted in the way that this amendment suggests and we lose the crime squads as well. That kind of collating of information and providing intelligence to local forces to do the local job and pursue crime in their areas, which may or may not include serious crime but crime across boundaries, whether they are force boundaries or regional boundaries, seems to me to be very important.
In reply to the noble Lord, Lord Rodgers, it does not preclude anything that I said at Second Reading. It is an additional function. Flexibility and the additional function of being able to support the work of local police forces would be inhibited if we were to restrict it as the consequence of this amendment.
Lord Thomas of Gresford: I notice that in Clause 102—enhanced criminal record certificates—there is a reference to applications for the issue of certificates for gaming machines, for licences and for societies' lotteries. Are we to assume that that information, as broadly stated as it is in the proposed wording, is to be gathered by a National Criminal Intelligence Service for such purposes as that? Is that a
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proper use of resources? Or is not it proper so to limit the functions of the NCIS to the kind of serious matters to which my noble friend referred?
Baroness Blatch: It is almost impossible to see any crime in a particular category. It is possible that crime involving lotteries may be either very serious—a network of crime—or very localised, in which case it would be a matter for local police forces. It may be that something is going on in various parts of the country which to a local police force may be an isolated incident, but intelligence gathered nationally will provide evidence that there is a network of people operating in that particular activity. So I do not believe that it is right to restrict both the flexibility and the important primary purpose of those bodies, which is to pursue serious crime.
The last constraint, which will be extremely effective, on those bodies will be when they produce their annual reports which spell out what they have been doing in the course of the year. They will not waste their time chasing trivial criminality. They will want to use their time and expertise in helping the police forces when it is appropriate to do so but also in pursuit of serious crime. But with flexibility and their ability to work in support of local police authorities, I believe that the balance is right in the Bill. I believe that this amendment would restrict that flexibility.
Baroness Hilton of Eggardon: I take the point made by the Minister about flexibility but I do not think that this amendment would in any way restrict the flexibility of the NCIS, which will be a scarce resource. Although I take very much to heart the view of the noble Lord, Lord Knights, that it is important to provide support to local police forces, it is a matter of what one sees as serious crime. For instance, I should certainly include burglaries as serious crime and I imagine that that would be the kind of area in which local forces might wish to combine to catch a persistent group of burglars or whatever.
On the other hand, I should want to exclude offences of shoplifting or motoring offences, for instance, which also count as crimes. It might be that some chief constables would want the NCIS to analyse data on such crimes. I should have thought that it was a good thing to protect a scarce resource, which the NCIS will be, from pressure from local forces and that some local concerns should be dealt with by something which is a sophisticated analytical machine.
It was on those grounds that I tabled these amendments. I do not in fact take the point that they would restrict enormously the flexibility of the NCIS in responding to urgent local needs or serious organised criminal activity. I regret that the Minister is herself inflexible on this point, but in the circumstances I withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 8 and 9 not moved.]
Clause 2 agreed to.
5 p.m.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 10:
After Clause 2, insert the following new clause—
THE COMMISSIONER OF NCIS

(".—(1) The Prime Minister shall appoint a Commissioner who shall keep under review the performance of functions under section 2(2), and who shall in particular review the following—

(a) the quality, accuracy and content of criminal intelligence information gathered or stored by NCIS;

(b) the disclosure of such information by members or employees of NCIS; and

(c) the need for the retention of such information by NCIS.

(2) The person appointed under subsection (I) shall be a person who holds or has held high judicial office within the meaning of the Appellate Jurisdiction Act 1876.

(3) The Commissioner shall hold office in accordance with the terms of his appointment.

(4) The Secretary of State shall pay to the Commissioner such allowances as the Secretary of State considers appropriate.

(5) The Secretary of State may, after consultation with the Commissioner, provide the Commissioner with such staff as the Secretary of State thinks necessary for the discharge of his functions.").

The noble Lord said: The wording of this amendment will be readily recognised because it comes directly from the proposals for the commission on intrusive surveillance which are included in Clauses 93, 94 and 95 of the Bill. The reason for taking the precedent of a commissioner (to be appointed by the Prime Minister) who is of high judicial office within the meaning of the Appellate Jurisdiction Act 1876 and all the rest of the provisions in the amendment is because of our concern about the five words in the amendment to which I draw the Committee's attention. The commissioner is intended to be concerned with:
"the quality, accuracy and content of criminal intelligence information … the disclosure of such information by members or employees of NCIS; and … the need for the retention of such information by NCIS".
All the duties and responsibilities of the NCIS are very widely drawn indeed. They are:
"to gather, store and analyse information in order to provide criminal intelligence [and] to provide criminal intelligence"—
information—we will not go back on the question of the wording—
"to police forces … law enforcement agencies".
and government departments. We recognise that is necessary. We recognise that the powers have to be widely drawn if the National Criminal Intelligence Service is to have the flexibility necessary in order to combat the growing threat of serious and organised crime. It is to have powers to gather information about suspects as well as powers to pursue specific lines of investigation leading directly to arrest and conviction. But there must be concerns about the way in which those powers are used. Without in any way taking from the breadth of the powers, the amendment proposes that there should be a commissioner who should have the responsibility of providing an independent review of the issues to which I have referred.
In 1990 the House of Commons home affairs committee carried out an inquiry into the national criminal records system. It heard evidence that criminal records provided to the courts and other agencies were all too often incomplete, inaccurate, out of date or contained material which was not strictly relevant. When we talk of "intelligence information", there must be an even greater risk of inaccuracies and errors because there is no clear definition—as there is in the rules of evidence—about what is and what is not acceptable evidence.
The Data Protection Act 1984 does not cover the point. It exempts the police from complying with the first data protection principle—that is, the principle which requires data users to obtain and process information fairly and lawfully—because the registrar does not have the power to enforce compliance where to do so would be likely to prejudice the prevention or detection of crime.
We are concerned in subsection (1)(a) with the quality and content of criminal information. There are no controls in the Bill on the quality or content of information. It could include, under a malign administration—I do not accuse this administration of being malign in this respect—information about somebody's perceived subversive political activities, their sexual orientation, allegations which have not been tested in court or even information which follows acquittal in court. The Bill just provides for NCIS to process any information which it believes might be useful in preventing or detecting crime. There are no regulations to prevent wholly unreliable speculation or rumour about people who could be innocent or information which, if properly assessed, simply should not be on police files at all.
It is important to ensure that controls are in place; that the intelligence held by NCIS is accurate, complete and up to date; and, as we say in subsection 1(c), that it should be retained for no longer than is absolutely necessary. In all other parts of the criminal justice system there are elaborate rules covering disclosure and retention of information. There are rules in this Bill—for example, Clause 102—in relation to the nature of disclosure for enhanced criminal record certificates. There are conditions under which information can be disclosed from police files which are properly defined, and there is some degree of protection, though I shall return to this point later, as regards the proper application of those powers.
The Home Office circular of 1993 on the protection of children and the disclosure of the criminal background of those with access to children, talked of the conditions under which other relevant factual information could be retained and disclosed. There is no such protection in regard to the intelligence information collected by the National Criminal Intelligence Service. We believe that there should be, as proposed in the amendment, an independent view; that is, the view of a commissioner who must be of high judicial office and appointed by the Prime Minister. He can take a view on the quality, accuracy

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and content of criminal intelligence information, the rules for disclosure and the rules for the retention of such information.
Introducing such a commissioner will not in any way handicap the proper conduct of the work of the National Criminal Intelligence Service. It will simply counteract the possibility of inaccuracy by the National Criminal Intelligence Service or abuse of its powers. I am much more concerned with failure of accuracy than with intentional abuse of powers. In every other part of our criminal justice system and elsewhere in the Bill there is provision for an independent view to be taken. We consider it to be no less than reasonable to provide the same independent review as would be provided by a commissioner under this amendment. I beg to move.
Lord Renton: I am puzzled. I do not see why we need a commissioner as well as the director general referred to in Clause 6, to which I did not hear the noble Lord, Lord McIntosh, refer. If we look at Clause 6 we find in subsection (1),
"NCIS shall have a Director General appointed by the NCIS Service Authority on such terms and conditions as the Authority considers appropriate".
In subsection (2) it says that,
"The Director General shall be chosen by a panel of members of the Authority from a list of persons eligible for appointment which has been prepared by that panel and approved by the Secretary of State".
The noble Lord, Lord McIntosh of Haringey, now wants to drag the Prime Minister into this and say that the Prime Minister shall appoint a commissioner. I am sure that we cannot have both solutions and I should have thought that the one in the Bill was the right one.
Perhaps I may be greatly daring and refer back to the discussion on drafting that we had on a previous amendment. In his new clause the noble Lord used the expression,
"the quality, accuracy and content of criminal intelligence information".
There we have tautology if ever we had it. The noble Lord said "any information"; he wants information. I should have thought therefore that if the new clause is to be introduced it should read, "the content of criminal information gathered or stored by NCIS".
Lord McIntosh of Haringey: I cannot believe that the Minister will want to follow the noble Lord, Lord Renton, down either of those culs-de-sac and perhaps it is appropriate for me to respond straight away.
Clearly an independent commissioner appointed by the Prime Minister is nothing to do with the appointment by the Home Secretary or by the steering authority of a director general. The director general is in managerial, administrative charge of the organisation. The proposed commissioner is an independent check on the quality and accuracy of the information collected and would be responsible also for laying down rules in regard to disclosure and retention.
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In relation to the use of the phrase "criminal intelligence information", if the noble Lord, Lord Renton, reads with his usual assiduity he will discover that we have taken that phrase from other parts of the Bill, in the same way as we have taken all of the references to the appointment and responsibilities of the commissioner from Clauses 93 to 95 of the Bill.
Lord Hylton: Before the Minister replies on this amendment, can he say what are the Government's plans to ensure that information gained by NCIS remains there and is only used for bona fide police purposes? I ask that question because it seems to me that much of the information will be highly sensitive and possibly damaging to people's reputations.
We have all heard of "cheque book journalism". There may be pressures from the media to obtain information when they should not be obtaining it; equally, there could be pressures from commercial organisations which want to find out what information is held. I hope therefore that we can hear what the safeguards are to be so that the information is not improperly disclosed.
Baroness Seccombe: I see the appointment of a commissioner as an extra layer of bureaucracy. When we have important and sensitive information, the fewer people involved the better. There is machinery to ensure that the NCIS is working properly. We must never forget that the thrust of the Bill is to fight sophisticated organised crime. Very often no crime has been committed. Therefore, it is to try to stop crimes being committed that we need a body such as the NCIS.
Lord Thomas of Gresford: I support the amendment. I come back to the point I made earlier concerning the enhanced criminal record certificates. A chief officer of a police force may provide any information which in the chief officer's opinion might be relevant for the purposes described in the statement. Any information in the possession of the chief constable may find its way onto an enhanced criminal record certificate which can be used for employment purposes. With respect, this is not an additional layer of bureaucracy. This is an important safeguard. The amendment seeks to introduce an independent person—independent of the Home Secretary and independent even of the NCIS itself—to deal with.
"the quality, accuracy and content of criminal intelligence information".
My experience is that the accuracy of information that is kept in files may not be guaranteed. I recall a colleague of mine who discovered that in a file concerning him kept not very far away from your Lordships' House he was described as a married man with four children, which did not disturb him, and a Liberal, which did. He had clearly been confused with me. That may have affected his employment prospects and his career. It was just by accident that he discovered this inaccuracy. With the appointment of a commissioner who can act independently, the accuracy of such criminal intelligence information as my life could be checked.
5.15 p.m.
Baroness Blotch: I shall reject the advice of the noble Lord, Lord McIntosh of Haringey, and go down the road of one of the points raised by my noble friend Lord Renton. My noble friend Lord Renton said that the effect of the amendment would be to drag the Prime Minister and yet another layer of bureaucracy into the system. I shall come back to safeguards. I have been drawn by a number of Members of the Committee on to the issue of safeguards and I shall refer to them.
I believe that the arrangements proposed in the amendment would be impractical to operate and would impose a further layer of bureaucracy which could hinder the NCIS's vital contribution to the fight against organised crime. Any new arrangements would be in addition to procedures that already exist in the NCIS. Those include induction procedures for new staff covering duty to use and handle information responsibly and an internal inspection process which reports to the director-general. It is an obligation on the director general—this point was made by my noble friend—to operate in accordance with the provisions of the Act. He will have no alternative. Not only that; the director general will be responsible to the service authority, so there is that layer too. I shall come back to even greater safeguards in a moment.
In considering the amendment, it is important to understand the role of the NCIS. It is not itself an investigating body. The role of investigating will remain with the police, Customs and Excise and other law enforcement agencies. Together they will provide much of the information and intelligence collated and developed by the NCIS. They must be responsible in the first place for the quality, for the accuracy and for the content of the information that they pass to the NCIS. That is where the importance of accuracy of content is concerned. In turn, the NCIS must do all it can to verify the information. It already carefully grades information to take account of its source and its likely accuracy. For example, information provided by a police officer about an event witnessed by the officer would be graded A 1. On the other hand, hearsay information supported by a less reliable source would receive a lower grading. I see no practical way in which the proposed commissioner could check the quality, accuracy and content of the information gathered and stored by the NCIS without going back to the source of the information or the subject of the intelligence report. In addition to the logistical difficulties, there is the risk that in some cases sensitive police investigations against some of the world's worst criminals operating in this country would be jeopardised.
The NCIS is a policing body and provisions in the Bill place it firmly within the controls that apply to the police. That is one safeguard. The Bill extends the role of Her Majesty's Inspectorate of Constabulary to cover the NCIS and envisages a formal complaints procedure for staff in the NCIS based on the current police complaints regime. That regime is open, it contains an independent element in the shape of the Police Complaints Authority and it works well. Any member of the public who has concerns about the way the NCIS has or may have dealt with him will be able to use the
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complaints procedure to address his concerns. Equally, any member of the NCIS who disclosed information when he should not would be dealt with as appropriate through the discipline procedures or the courts. The complaints and disciplinary regime in the NCIS will be established by regulations made by the Secretary of State under Clauses 37 and 38 of the Bill. Those regulations will be laid before Parliament, which is a partial answer to the point raised by the noble Lord, Lord Hylton.
As to legal proceedings, the NCIS is subject to the Data Protection Act, although I take the caveat mentioned by the noble Lord, Lord McIntosh. Some of the Data Protection Act will bite. But where the exemption applies when the NCIS is in pursuit of a serious crime I hope Members of the Committee opposite will support us—that the exemption is important. If there is an exemption which allows it to pursue crime and to carry out its role we should be on the side of the NCIS. Nevertheless, there is the Data Protection Act. An officer gaining unauthorised access to computer material could be prosecuted under the Computer Misuse Act 1990. Its staff could also find themselves liable for prosecution under the Rehabilitation of Offenders Act if they improperly disclose information from which the recipient could impute that someone had had a spent conviction. There is also the possibility that a member of the NCIS using information improperly could be the subject of an action for breach of confidence. A commissioner would not strengthen or improve any of these arrangements.
The need to retain information must be informed by the other information available—for example, about the associates of a person and their activities—and judgments about the relevance of that information at the time or the likely relevance of the information in the future. These are operational decisions which quite rightly rest, as my noble friend said, with the director-general of the NCIS. They are matters which the director-general takes very seriously. The NCIS has a strict weeding policy to ensure that unnecessary information is not stored needlessly. This weeding policy also serves the practical purpose of ensuring that the NCIS is not swamped by information which is being held needlessly. These are not matters for a commissioner.
In opposing the amendment, I am mindful that the Bill makes provision for a commissioner to oversee the authorisation of intrusive surveillance operations and that Security Service activity of this kind is subject to oversight by a commissioner. Comparisons with these other commissioners is not valid. The sole purpose of a surveillance commissioner is to ensure that the proper procedures for authorisation are followed. Similarly, the Security Service Commissioner exists to investigate that warrants permitting the Security Service to enter on or interfere with property have been properly authorised.
The amendment would provide an extra layer of bureaucracy. We certainly believe that it would be impractical. The idea of a commissioner with oversight, delving around within the NCIS for the accuracy of the content when the accuracy of the content is way down

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with the Customs officer, the police officer or the person gathering information and carrying out the investigation is wholly impractical.
The bodies are subject to the National Audit Office, the Rehabilitation of Offenders Act and the Computer Misuse Act. As I have said, they have induction programmes for internal purposes. There are internal inspections and Her Majesty's Inspectorate would externally inspect. There is a formal complaints procedure and the bodies will be governed by the improper disclosure of information regulations. That could result in internal disciplinary measures being taken or legal remedy in the courts.
There are so many safeguards built into the Bill and if one more layer were to be added it would not add to the security of the way in which these bodies carry out their work. We have to strike the right balance. These are very sensitive matters for which oversight by a commissioner provides the best way to ensure that powers may be used properly, but that is not necessary in the case of the NCIS given its role and the other means of ensuring its accountability. In fulfilling the role intended by this amendment, the commissioner would also be duplicating the existing effective and open oversight arrangements that apply to the police and which the Bill would extend to the NCIS. In my view the proposals in this amendment would hinder rather than help the fight against crime.
Lord McIntosh of Haringey: I have made it an assumption all my life that if I am misunderstood in what I say or do it is my fault, but that assumption is being sorely tested today. The misunderstanding of this amendment, including that of the Minister, is so profound that I cannot really believe that it is entirely my fault that I am being misunderstood. Of course it is not an extra layer of bureaucracy. We are simply pointing out the fact that in every other part of the criminal justice system there are proper rules to ensure that evidence, information or intelligence, as the case may be, is properly collected and recorded and that it is accurate and of high quality. There are rules to ensure that information of this kind is only disclosed to those to whom it may be properly disclosed and retained only for the purposes and for the period of time for which it may be properly retained.
It is only in respect of the National Criminal Intelligence Service which, as the Minister said, is not an investigative body, but an intelligence-gathering body, that we have no such rules and no such independent review.
The Minister and the noble Lord, Lord Renton, talked about the role of the director general. It is of course in the interests of the director general, as it is of the Home Secretary, that the National Criminal Intelligence Service should concentrate on information which is of high quality and accurate and its content should be relevant to the purpose. I did not use the word "relevant". The Minister is quite right to say that the relevance of information to an investigation is an operational matter and not a matter for review by a commissioner.
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But the analogy of the commissioner as used for the security service and as proposed for intrusive surveillance, is a very good one and appropriate in this case. It is no good the Minister telling us that the Police Complaints Authority has responsibilities in this area. The problem with the role of the National Criminal Intelligence Service is that it is collecting intelligence which may never come out in evidence. It may never be known to a potential complainant and therefore it may never be available for somebody to take to the Police Complaints Authority. It is behind-the-scenes information.
We are not calling for the general distribution of behind-the-scenes or secret information. We are saying that at the highest level a senior judge appointed by the Prime Minister should have the responsibility for independent review of these highly sensitive activities. It may be that the amendment is defective in the sense that it says that he should,
"keep under review … the quality, accuracy and content of criminal intelligence … disclosure [and] retention".
Perhaps it would be better for the amendment to say, "that he should keep under review the arrangements for ensuring that there is high quality, accuracy and content; that there are proper rules for disclosure and retention and that those rules are adhered to". On that basis I shall certainly not be pressing this amendment because I believe that I can draft it more appropriately at a later stage.
It may be some time since the Minister has been involved with further education. I can assure her that the thrust of the Further Education Funding Council in England and Wales is heavily towards what it calls "quality assurance". By that it does not just mean that inspectors go in and look at the quality of the teaching; it means that there is an independent quality committee of each governing body which takes on itself the responsibility of ensuring that there are proper rules to protect the quality of educational provision and the proper fulfilment of promises made to students and ensuring that they are kept. That is what a commissioner would do and that is why he would not be an additional layer of bureaucracy, but a real help for the operations and responsiveness of the National Criminal Intelligence Service. In view of the possibility that we might come up with better drafting—
Baroness Blatch: I am grateful to the noble Lord for giving way. Before he withdraws the amendment perhaps I may make two points. The noble Lord might care to look up Clause 28. That clause provides for a code of practice which will govern the functions. It seems to me that that is an appropriate place to set out the ways in which those functions should be carried out to which the director general and the NCIS will be held. The noble Lord may like to reflect on that when he considers redrafting the amendment.
Perhaps I may also say to the noble Lord, Lord Thomas, that Clause 104 provides a safeguard for inaccurate information held on certificates, which I know has been a particular concern of his. It reads,

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"Where an applicant for a certificate under any of the Sections 100 to 103 believes that the information contained in the certificate is inaccurate he may make an application in writing"
and a new certificate can be issued. That is an important safeguard and a particular concern expressed by the noble Lord, Lord Thomas.
Lord McIntosh of Haringey: Perhaps I may respond to that part of the intervention which was addressed to me. I was aware of the code of practice. But the point about a commissioner is for ensuring not only that there is the equivalent of a code of practice, but that there is also an independent view as to whether the code of practice is being adhered to. That is the addition which a commissioner provides as the Government recognise in other comparable circumstances. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clauses 3 and 4 agreed to.
Clause 5 [Annual reports]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 11:
Page 4, line 22, at end insert
("(4) The Secretary of State shall lay before both Houses of Parliament a copy of the report.").
The noble Lord said: In moving this amendment I wish to speak also to Amendment No. 42, which is the comparable amendment for the National Crime Squad. These are very simple amendments indeed and follow a well-trodden route in your Lordships' consideration of legislation.
What we are seeking to do by adding the provision that,
"The Secretary of State shall lay before both Houses of Parliament a copy of the report"
is to enable Parliament properly to exercise its important function as the ultimate democratic body to which the NCIS can be held responsible. The Bill makes clear that the Secretary of State will receive a copy of the report, but it does not make clear what will happen to it. There are provisions for publication,
"in such manner as appears…appropriate"
to the service authority. As regards the director general's report, there is provision for publication in such a manner as appears appropriate to him.
I do not know exactly what "such manner" means. It could mean restricted, summarised or selective publication. It could mean publication to a relatively small number of people. Surely, the proper protection is that a report which has been received by the Secretary of State, the police authorities and all other interested parties listed in Clause 5(3) should also be laid before Parliament. I beg to move.
5.30 p.m.
Baroness Blatch: The noble Lord, Lord McIntosh, said that it was not known what would happen to it. Clause 5 spells out in considerable detail what happens. I believe that the noble Lord refers to the nature of the report as opposed to what happens to it. Copies of the report go to the Secretary of State, each police authority
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for an area in Great Britain, each police board within the meaning of the Police (Scotland) Act 1967 and the Police Authority for Northern Ireland. Copies also go to the chief officer of police of each police force in England and Wales, the chief constable of each police force in Scotland, the Chief Constable of the Royal Ulster Constabulary, the National Crime Squad Service Authority, the Director General of the National Crime Squad and the Commissioners of Customs and Excise. That can be reversed. The National Crime Squad is also required to send copies of its reports to the same list of persons. They send copies of reports to each other.
Clauses 5 and 50 as drafted mirror the arrangements for the publication of annual reports by police authorities, except that they also require service authorities to send copies of their annual reports to police authorities, chief officers of police, each other and the director general of each other's services. Police authorities are required to send their annual reports only to the Home Secretary. There is no requirement for the Home Secretary to lay those authorities' reports before Parliament. The amendments would require the Home Secretary to lay the annual reports of both service authorities before Parliament. That would imply that he was accountable to Parliament for the service authorities in a way different from his position in respect of police authorities. As we have been debating in another context, that is simply not the case. The Secretary of State has a legitimate interest in the work of both authorities, but he is not accountable for their reports. This would be inconsistent with the Government's intention that the regime governing service authorities should, so far as is consistent with their national status, be the same as the regime governing police authorities.
That said, I should make it absolutely clear that the reports will be published and that copies will be placed in the Libraries of both Houses of Parliament. We believe that this is the right approach and is consistent with the independent status of the service authorities and the regime governing police authorities generally. I have given an assurance that they will be widely available, and I hope the noble Lord accepts that the particular route that he chooses is inappropriate.
Lord Rodgers of Quarry Bank: I listened carefully to what the Minister said. She drew a precise parallel with the police authorities. I do not believe that that parallel is sustained by the very nature of the two organisations that we are discussing. In order to reflect further on what she has said, I should like to ask the Minister a question. The Minister said that these two bodies were not accountable to the Home Secretary. Did she mean that it would be improper for this place and another place to debate these reports? These reports are to be placed in the Library and will receive wide distribution. Does she imply that it would be wrong for Parliament to debate them? If it is right that Parliament should debate them, surely in saying that these documents have the same status as the reports of police authorities she draws a parallel which is not precise.
Baroness Blatch: To my knowledge, I do not believe that there is any restriction on what is debated in this

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place. If anyone wants to initiate a debate it is for the usual channels to decide how it can be fitted into the programme. The proposition in the amendment is that there should be a formal laying of these reports before Parliament. The important principle is that they should be publicly available documents, and I have given an assurance that that will be the case.
Lord McIntosh of Haringey: I believe that we are pretty close. If I accept the assurances of the Minister, as I do, that they will be publicly available, they can hardly avoid being publicly available if they are to be sent to all of the people set out in the clause, and that they will be published in full without excisions (the Minister nods her assent) there is not much difference between laying them before Parliament and placing them in the Library. As the Minister has rightly said, what is debated is up to Parliament. It is not for the Home Secretary to choose what is debated. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 5 agreed to.
Clause 6 [Appointment of Director General]:
Baroness Hilton of Eggardon Baroness Hilton of Eggardon moved Amendment No. 12:
Page 5. line 5, leave out subsection (5).
The noble Baroness said: In moving Amendment No. 12 I should like to speak also to Amendment No. 44. These are intended as probing amendments which pick up a question that I raised at the end of my winding up speech on Second Reading. I seek clarification of an assurance by the Minister that it is not the intention to appoint non-professional, non-career police officers as directors general of either the NCIS or the National Crime Squad. The subsection that is sought to be deleted is that which allows for the director general to take an oath as a constable. That implies that the director general of the NCIS may not be a serving police officer but may be a former member of MI5, or the director general of the National Crime Squad may be a retired Army officer. That would take us back to the bad old days of chief constables being drawn from the ranks of the military, or even the Navy on occasion. I formally seek an assurance from the Minister that it is not intended to appoint as Director General of either NCIS or the National Crime Squad someone who is not a professional, career police officer within the civilian Police Service. I beg to move.
Baroness Blatch: I understand that the purpose of the amendments is to ensure that only a serving chief constable can be appointed director general of the National Criminal Intelligence Service or the National Crime Squad. If that is the only point at issue here I believe that the amendments are unnecessary.
I am a little disturbed by what I have heard. Certainly, I will remedy the position if necessary. I wrote to the noble Lord on 19th November. I intended that that should be for the benefit of all Members of the House. I placed copies of my letter in the Library. I said:
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"Lady Hilton also asked whether Clauses 6(5) and 51(5) would enable someone other than a police officer to become the Director General of NCIS or the new National Crime Squad. Let me assure you that the legislation as drafted does not permit this and it is not the Government's intention to appoint someone other than a police officer to either role.
Clauses 6(3) and 51(3) restrict eligibility for appointment as the Director General of either service to a person who must be:

(i) a chief officer of police in a police force in England and Wales. That is the chief constable of a police force outside London; the Commissioner, an Assistant Commissioner or a Deputy Assistant Commissioner in the Metropolitan Police; or the Commissioner of the City of London Police;

(ii) a chief constable of a Scottish police force or the chief constable of the RUC;

(iii) eligible for promotion to one of these posts or ranks".

The Bill makes clear that a person will be eligible for appointment as director general only if he holds the rank of chief constable in a police force in Great Britain or in the Royal Ulster Constabulary.
Even with those amendments, the provisions of Clauses 6(5) and 51(5) are still necessary. In order to take up an appointment as director general, a chief officer will have left his previous force. Therefore, the particular clause which will be removed if the amendment is accepted is important, because he or she will not have the powers of a constable unless the Bill specifically provides them. To take another example, a chief officer from a Scottish police force or the Royal Ulster Constabulary would not have the powers and privileges of a constable in England and Wales unless the Bill made specific provision for that to happen. Both directors general would require such powers in order to perform their full duties and manage the services for which they were responsible. If the noble Baroness does not have the letter I will ensure that immediately after this session she is provided with a copy.
Baroness Hilton of Eggardon: I am grateful to the Minister for that assurance. When I joined the Metropolitan Police—if I may reminisce for just a second—we took an oath which meant that we were constables within our police force only and within five miles of any royal palace, which included Scottish royal palaces. I believe that the Police Act 1964 changed that so that we became constables throughout England and Wales. I wonder what is the situation for a director general appointed from a force in England and Wales in relation to Scotland. Presumably, as serving officers in England and Wales, such a person can carry out his duties throughout England and Wales. Will he take an oath in order that he can perform his duties in Scotland and Northern Ireland so that the situation is now reciprocal? I am asking this merely as a matter of complication. Perhaps they would all have to take an oath to operate in both areas.
Lord Knights: I am not sure whether I should intervene, but on my reading of the Bill if a chief officer of a police force within England or Wales seeks to become the director general, he will have to retire or resign from his force. He is therefore no longer a constable. He will take up the appointment without

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being a constable. Unless he is appointed a constable, he cannot be given the rank of chief constable, which is also provided for in the Bill.
Baroness Blatch: The noble Lord is spot on. We have subsection (5) to vest in that person the rank necessary to do the job.
Baroness Hilton of Eggardon: I am still slightly puzzled, because if one moves from one force to another one does not have to retake an oath as a constable. That is surely the situation if one is moving from a force in England and Wales to become director general which, as I understand it, is effectively to become a chief constable. I am still slightly puzzled about the matter of the oath, but I am grateful to the Minister for her assurance which I wanted to flesh out by putting down the amendments. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Blatch Baroness Blatch moved Amendment No. 13:
Page 5, line 12, at end insert—
("( ) The Director General shall hold the rank of chief constable.").
The noble Baroness said: I shall speak also to Amendments Nos. 14 to 18; 20 to 23; 45 to 49; 51, 53, 55 to 58; 144 and 145.
This large group of amendments seeks to achieve a very simple purpose. They ensure that senior police officers who are permanently appointed to the National Criminal Intelligence Service or National Crime Squad will retain a specific police rank. In this way they put beyond any doubt the original intention of the Bill that the directors general will hold the rank of chief constable and that only assistant chief constables, or those eligible to be appointed to that rank, will be permanently appointed to other senior police posts in the two services.
The vast majority of the police officers serving in the National Criminal Intelligence Service and the National Crime Squad will be officers engaged on a period of temporary service away from their force. They retain all the powers and privileges of a constable as if they remained a member of their force and they have a right of return to their home force.
This arrangement will generally not be possible for senior police officers. It is impracticable for a chief constable to have a right of return to his previous force—the point made by the noble Lord, Lord Knights. His former post will have been filled. The same is generally true for other senior police officers where there are a limited number of assistant chief constable posts—perhaps only one—and it would be impracticable for officers to have a right of return. That is why the Bill makes provision for them to be permanently appointed to either service.
But because they break their ties with their previous force, it is essential to make clear in the Bill that they continue to hold a specific police rank. The directors general of each service and their senior colleagues are responsible for the overall direction and control of all the
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staff, including the police officers on temporary service. It must be clear for the good management of both services that the permanent senior police officers have a specific rank. It will also be important for some operational purposes, such as authorisations under PACE, that the rank of senior police officers is beyond doubt.
Amendments Nos. 13 and 45 provide that the director general of each service shall hold the rank of chief constable. Amendments Nos. 14, 15, 47 and 48 provide that the only other permanent police appointments will be senior officers of assistant chief constable, or equivalent rank, or eligible for appointment to that rank. Officers appointed in such circumstances will hold the rank of assistant chief constable.
I should mention that one effect of the draftsman's approach to these amendments is that officers on temporary service who were covered by Clause 9(2)(a) in the Bill are now covered by Clause 9(2)(b). Permanent police members who were covered by Clause 9(2)(b) are now dealt with in Clause 9(2)(a). The same applies in Clause 54. Amendments Nos. 17, 20, 22, 46, 51, 55, 57, 144 and 145 are all necessary to reflect this change in the order of Clauses 9 and 54. The other amendments are consequential upon these changes. For example, subsection (10) of both Clause 9 and Clause 54 which clarifies the position of senior officers in the Metropolitan and City of London forces, is no longer necessary as a result of these amendments.
These amendments will ensure that senior police officers within both services will have the rank and authority which they need to perform their duties.
I commend them to the Committee. I beg to move.
5.45 p.m.
Baroness Hilton of Eggardon: I thank the Minister for that explanation. I welcome the fact that the problem of their return to their forces of officers appointed to central duties has been recognised at last, because for many years there have been problems with officers seconded to the Home Office who have had no home base to which to return. I therefore welcome this series of amendments.
On Question, amendment agreed to.
Clause 6, as amended, agreed to.
Clauses 7 and 8 agreed to.
Clause 9 [Other members of NOS]:
Baroness Blatch Baroness Blatch moved Amendments Nos. 14 to 18:
Page 6, line 8, at beginning insert ("he is appointed to the rank of assistant chief constable in NCIS and he met the requirements of subsection (2A) immediately prior to his being appointed, or
(b)")
Page 6, line I I, leave out from ("applies") to the end of line 14 and insert—

("(2A) A person meets the requirements of this subsection if—

(a) he holds the rank of assistant chief constable or a higher rank in a police force in Great Britain or in the Royal Ulster Constabulary,

(b) he holds the rank of commander or a higher rank in the metropolitan police force or in the City of London police force, or

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(c) he is, in accordance with regulations under section 50 of the Police Act 1996, section 26 of the Police (Scotland) Act 1967 or section 25 of the Police Act (Northern Ireland) 1970. a constable eligible for appointment to the rank of assistant chief constable or commander in any of the police forces, or in the Constabulary, mentioned in paragraph (a) or (b).").

Page 6, line 15, leave out ("to (7)") and insert (", (6) and (7)").
Page 6, line 16, leave out ("(2)(b)") and insert ("(2)(a)").
Page 6, line 18, leave out from "("(c)") to ("shall") in line 19.
On Question, amendments agreed to
Baroness Hilton of Eggardon Baroness Hilton of Eggardon moved Amendment No. 19:
Page 6, line 24, at end insert—
("( Before determining any terms and conditions of an appointment under subsection (1)(b) which do not relate to any matters mentioned in subsection (I) of section 61 of this Act, the NCIS Service Authority shall consult persons whom the NCIS Service Authority considers to represent the interests of police members or prospective police members of the NCIS.").
The noble Baroness said: The amendment's intention is to provide for consultation with the various police representative organisations, such as the federation, on the particular conditions of service of NCIS officers on matters such as hours, leave and their personal equipment, clothing and so on. The intention is that they should be subject to the PNB before they are determined. As currently drafted, the Bill makes no provision for consultation with the police staff associations on their various terms and conditions, such as length of probation, job descriptions, appraisal, grievance procedures, and so on. Since police officers cannot of course take industrial action, it is all the more essential that there should be a statutory obligation to consult before conditions are drawn up. I beg to move.
Baroness Blatch: The Government recognise the importance of consulting the police staff associations about the terms and conditions on which police officers are employed by NCIS and the National Crime Squad. For that reason paragraphs 73 to 75 of Schedule 9 extend the remits of the Police Negotiating Board and the police advisory boards to NCIS. The Government believe that this provides adequately for consultation with the police staff associations. It also means that police officers in NCIS are in the same position as their colleagues in police forces when it comes to collective consideration of their terms and conditions.
This amendment would extend consultation beyond the areas already covered by the remit of the Police Negotiating Board. Section 61 of the Police Act 1996 defines this as the consideration of hours of duty; leave; pay and allowances; pensions; and the issue and return of police clothing, personal equipment and accoutrements. This remit is adequate for the police service and is, in the Government's view, adequate for NCIS. We see no reason to make a special case of NCIS.
There is no need to put NCIS in a different position from the police service by placing a duty on the service authority to consult the staff associations on
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other terms and conditions such as probation, job descriptions and grievance procedures. The Bill already provides for police members of NCIS to be members of staff associations. This would be pointless if we did not intend the police staff associations to be fully involved in representing their members' interests. And, in practice, NCIS will have no option but to consult the police staff associations. They are the collective voice of potential police members of NCIS, all of whom will need to be satisfied that the terms and conditions on which they are to be employed are satisfactory. I would remind the Committee that NCIS will rely on seconded police staff who will be volunteers. If the terms and conditions that NCIS wishes to impose are unsatisfactory, then these officers will not volunteer.
In addition to questioning the need for this amendment, I am concerned that, as drafted, it would have the undesirable and inappropriate effect of requiring the NCIS service authority to consult the relevant police staff association about the terms and conditions of each individual, not just the generality of the terms and conditions applying in NCIS. Individuals' salary or job description are properly matters for their employer to determine not for the police staff associations to decide or negotiate.
The Bill already makes appropriate provision for consultation, which we regard as important, with the police staff associations. As a result this amendment is unnecessary. I hope the noble Baroness will agree not to pursue it.
The Bill already provides for police members of the NCIS to be members of staff associations. This would be pointless if it did not intend the police staff associations to be fully involved in representing their members' interests and, in practice, NCIS will have no option but to consult the police staff associations. The police staff associations are the collective voice of potential police members of the NCIS, all of whom will need to be satisfied that the terms and conditions on which they are to be employed are satisfactory.
I would remind the Committee that the NCIS will rely on seconded police staff who will be volunteers. If the terms and conditions that the NCIS wishes to impose are unsatisfactory, then these officers certainly will not volunteer.
In addition to questioning the need for this amendment, I am concerned that as drafted it would have the undesirable and, I believe, inappropriate effect of requiring the NCIS service authority to consult the relevant police staff association about the terms and conditions of each individual, and not just the generality of the terms and conditions applying in the NCIS. Individuals' salaries or job descriptions are properly matters for the employer to determine and not for the police staff associations to decide or negotiate.

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The Bill already makes appropriate provision for consultation, which we regard as very important, with the police staff associations. As a result, I believe that the amendment is unnecessary and I hope that the noble Baroness will not press it.
Baroness Hilton of Eggardon: I am grateful to the Minister for that exposition. It certainly was not intended that it would apply to the conditions of individual officers. I take that on board, although there might have been some scope for some additional provision for consultation. In the circumstances, I withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Blatch Baroness Blatch moved Amendments Nos. 20 to 23:
Page 6, line 25, leave out from beginning to ("at") in line 26 and insert—
("(6) A police member to whom subsection (2)(b) applies shall cease to he a member of NCIS").
Page 6, line 33, leave out from ("NCIS") to end.
Page 6, line 35, leave out ("within subsection (2)(b)") and insert ("to whom subsection (2)(a) applies").
Page 6, line 43, leave out subsection (10).
On Question, amendments agreed to.
Clause 9, as amended, agreed to.
Clause 10 agreed to.
Clause 11 [Reports by Director General to the Authority]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 24:
Page 7, line 7, leave out ("general").
The noble Lord said: This amendment, together with the relevant amendment in Part II, which is Amendment No. 59, is intended to probe the meaning of the word "general" in the sentence,
"The Director General of NCIS shall … submit to the NCIS Service Authority a general report on the activities of NCIS".
The word "general" is not used in Clause 5 when the service authority, after the end of each financial year, issues a report on the carrying out of its functions during that year. My puzzlement, I suppose, is a puzzlement about the English language. Is the word "general" supposed to be widening the scope of the report so that it covers everything, or is it restricting the scope of the report so that it cannot cover particular matters? It is unclear to me. I dare not tempt the noble Lord, Lord Renton, but perhaps he knows in which of these senses "general" has been used in the past in legislation. I simply do not understand it.
Lord Renton: As the noble Lord mentions it, I have always regarded it as leaving out unnecessary detail.
Baroness Blatch: That may come in very handy for me to use in a moment. Clauses 11 and 56 were drafted to ensure that the directors general of NCIS and the National Crime Squad were subject to the same duty to report annually on the activities of the services they manage as chief constables after a report on the policing of areas covered by their forces.
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Section 22 of the Police Act 1996 requires chief constables to prepare a general report. The Government's intention is that the two directors general should have to prepare the same kind of report as chief constables and that is why Clauses 11 and 56 also refer to a general report. The approach is consistent with the Government's wish to ensure that the regime governing NCIS and the National Crime Squad is the same regime as that governing police forces wherever this is possible, given the national nature of NCIS and the National Crime Squad.
The intention of the word "general" also helps to clarify the meaning of the provision. A report should be general in the sense that it covers the full range of activities of the force or service in question. It could also be general in the sense that it does not deal with individual cases or matters that are operationally sensitive. I now invoke the phrase that my noble friend has just used and that is "unnecessary detail" because that can come in other forms. Particular reports can be commissioned on specific aspects of a body's work.
It seems to me that the intention of the legislation is clearer if the word "general" is retained. I see no reason to require the directors general of NCIS and the National Crime Squad to report in a different way from their chief constable counterparts. In the interests of clarity and consistency, therefore, I hope that the noble Lord will not wish to press the amendment.
Lord McIntosh of Haringey: It may be that that reply is caviar to the general in the sense that some of it may be wasted on me. I accept the point that it is clearly desirable to be consistent with the consolidated Police Act of 1996, but it still does not make very good sense. If the Minister wants to say, as the noble Lord, Lord Renton, wants to say, that it excludes unnecessary material, then I think the noble Baroness should say so. If it is intended that it should exclude, for example, information about ongoing investigations or matters whose inclusion would damage the operations of the organisation, then I think that should be made clear. The advantage of being more precise would be that it would then be possible to say that unless these reports referred to ongoing investigations, or unless they referred to matters which should in the interests of security be withheld, they should be comprehensive reports. That conclusion would also apply, I imagine, to the Police Act of 1996, but I am not prepared to fight about that at this time. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Blatch Baroness Blatch moved Amendment No. 25:
Page 7, line 8, at end insert ("during that year").
The noble Baroness said: In speaking to Amendment No. 25, I shall also speak to Amendments Nos. 28, 40, 41, 43, 50, 60, 64, 86, 138 to 141. In speaking to this list of technical amendments in Clause 11, I also speak to, as I have said, the other raft of amendments. With the exception of Amendments Nos. 40, 50 and 141, they are required to ensure clarity and consistency of drafting throughout the Bill, which I hope will please my noble friend Lord Renton. Amendments Nos. 40 and 50 are

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necessary to correct references to other clauses in the Bill. Amendment No. 141 extends Section 65(a) of the Local Government Finance Act 1988, inserted by Clause 3 of the Local Government Ratings Bill at present before Parliament, to the NCIS and National Crime Squad service authorities. Reference to Section 65(a) is necessary to ensure that NCIS and the National Crime Squad service authorities are liable for non-domestic rates. I beg to move.
On Question, amendments agreed to.
Clause 11, as amended, agreed to.
Clause 12 agreed to.
Clause 13 [Officers and employees]:
Baroness Hilton of Eggardon Baroness Hilton of Eggardon moved Amendment No. 26:
Page 7, line 34, at end insert—
("( ) Where the Authority seeks to appoint persons under this section or section 14 below, it shall so far as practicable appoint persons who are at the time of their appointment employees of police authorities where such persons fulfil the requirements for the post.").
The noble Baroness said: This is urging, one hopes, good management practice on these new organisations rather than perhaps something that is appropriate to go on the face of the Bill. There are many people currently employed by regional crime squads and the forerunner of NCIS, as it currently exists, who are employees of local police authorities or employees of the Metropolitan Police civil staff. It is hoped that some expression of good intentions might arise as a result of that, in that those who have great expertise in the field of crime analysis, crime intelligence and converting crime information into crime intelligence could be appointed to the new authorities by some more expeditious route than might be arrived at by advertising all the posts and doing a general trawl in the first place, as is normal Civil Service practice. The amendment is therefore intended to assist by protecting the experience, knowledge and expertise of a particular group of people who will be most profoundly affected by the changes that will be brought about by these clauses of the Bill. I beg to move.
6 p.m.
Lord Renton: Although there is nothing in the Bill to prevent the appointment of such people, I believe it would be dangerous to insert this amendment. There might be civil servants in the Police Division of the Home Office who could be very useful doing this work. Indeed, there might be people who have had police experience in the Commonwealth or elsewhere abroad who might be able to make a special contribution. If we narrow the measure in this way, we may be restricting the talent that will be required.
Baroness Blatch: The proposed amendments to Clause 13 and Clause 57 seek to restrict the service authorities for the two services to recruiting officers, employees and clerks from among the employees of police authorities where practicable and where they meet the requirements of the post. I should also point out that the proposed amendment to Clause 57 is defective because the National Crime Squad will
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appoint its clerk under Clause 58, not Clause 14. However, I do not use that as an argument against the amendment.
The Government believe that it would be totally unacceptable, as my noble friend said, to impose such an artificial restriction on the service authorities in deciding whom to employ. The service authorities will be subject to a number of local government enactments which already apply to the police authorities. Section 7 of the Local Government and Housing Act 1989 requires authorities to appoint their staff on merit. That section will be applied to NCIS and to the National Crime Squad Service authorities through the application of Section 21 of the Local Government and Housing Act 1989.
There may indeed be occasions when candidates from police authorities will demonstrate that they are the best person for the job and will bring valuable experience to the post. I expect that to happen more often than not. However, equally, a candidate with no police authority experience may be able to demonstrate skills and experience that the service authority considers make that person the most suitable candidate for the job. The service authorities must be able to select the best candidates. That is consistent with the statutory requirement to appoint on merit. There can be no possible justification for attempting to restrict the pool of potential recruits in the way proposed. That is not to say that we are not sympathetic to the point that the noble Baroness makes; namely, that there is a pool of expertise, which I believe will certainly be drawn upon by the service authorities.
Baroness Hilton of Eggardon: I am grateful to the Minister for that final assurance, which was all that we sought to achieve through the suggested amendments. I believe that they were not appropriate to appear on the face of the Bill in any case. We were attempting to cover the immediate short-term bridging between the current set-up and the future set-up and provide some crumb of comfort to those who will be greatly disrupted by the new measures. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 13 agreed to.
Clauses 14 to 16 agreed to.
Clause 17 [Power to issue levies]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 27:
Page 8, line 20, at end insert—
("( ) The Secretary of State shall, in respect of each financial year in which an order under subsection (2) above applies, satisfy himself that the resources available to each police authority are adequate wholly to meet the amount of the levy without adversely affecting the level at which other police services are provided by that police authority.").
The noble Lord said: In moving this amendment, I shall speak also to Amendment No. 63, which is the comparable amendment in Part II of the Bill. I have not checked to see whether it cross-references correctly to the other clauses.
This is a matter of very great importance, although I shall try not to detain the Committee any longer than I have to. The current budget of NCIS, set up since

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1992 on executive arrangements—the polite way of saying, "without statutory authority"—is approximately £25 million a year. So it is a great deal of money. That comes from a Home Office Vote different from that which supports the activities of local police authorities, an arrangement which has been in place since the new police authorities were set up following the 1995 Act.
It is now proposed that, from April 1988, NCIS will be funded through a levy on police authorities. The Committee will recall that this was one of the reasons why we were dissatisfied, and still are, with the balance of membership of the service authority for the National Criminal Intelligence Service.
There is no assurance that the resources that are necessary for the National Criminal Intelligence Service or the National Crime Squad, in the former case provided from a separate Home Office Vote, will not be in competition for funding with other police responsibilities. The current jargon phrase used is "top slicing". We understand that the expenditure required for NCIS and the national crime squad will be top sliced from the funding provided by the Home Office to local police authorities.
It is very difficult to decide how the problem should be addressed. There can be no doubt that it has to be addressed. We have to be sure somehow that there is no threat to other policing activities as a result of this change in the funding of these two national bodies. Some people would argue that they should continue to be financed by central government. A rational case can be made for that. It would be a more straightforward funding route than the one proposed in the Bill and which the Minister explained in her opening remarks at Second Reading. However, these amendments do not go that far. We may be wrong and we may have to return to the matter, but all we are saying is that the Secretary of State has to satisfy himself—not even satisfy Parliament; that is how modest we are—that the resources available to each police authority are adequate wholly to meet the amount of the levy without adversely affecting the level at which other police services are provided by that police authority.
Under Schedule 3 the Secretary of State's approval is required before the total amount of the levies is agreed. So the Home Secretary has the ultimate power to control the size of the levy. It is not the local authorities which have that power. But, for example, if the Secretary of State decides that, for whatever reason, good or bad, there should be growth in real terms in the expenditure of NCIS or the National Crime Squad, then, unless other provision is made, it is the council tax payers who will have to meet that cost, not the Secretary of State—although it is the Secretary of State who will have to make the decision. Therefore we must resolve the issue of funding if we are to have a proper division of responsibility between the Secretary of State and the local police authorities.
There could be considerable differences. There are considerable problems which need to be resolved. What will be the approximate size of the respective budgets of NCIS and the National Crime Squad? Will they be 10 per cent. of the present police budget? Will they be
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5 per cent. of it; or 1 per cent? It is very difficult to work that out on present information. What will be the basis of the levy? Will it be on a population basis, a council tax basis or on some calculation of the level of crime? Will the transitional grant cover all the additional costs set out in the financial memorandum? It is set out as being £1.65 million. How will those estimates be arrived at, and what will be the effect on local police authority finances?
This is partly a probing amendment to get the answers to the questions that I have posed, and partly far more than a probing amendment: it is a demand to government that they should properly resolve the issue of resources for these important and welcome new bodies. At the moment the transfer of financial responsibility from the Home Office to local police authorities is not adequately explained in the legislation. The safeguards which are necessary to protect other police activities have not been provided in the Bill. I beg to move.
Lord Dixon-Smith: I have some sympathy with the questions that the noble Lord, Lord McIntosh of Haringey, asks. That said, I am not sure that I have a great deal of sympathy with the solution that he expounds.
I have always assumed—and I hope my noble friend the Minister will assure me of this—that the current funding for NCIS will be transferred initially to the normal Home Office police grant. To that extent the existing funding will not affect the present situation with regard to funding for current police authorities. The regional crime squads are already funded through the central police grant, so to that extent what is happening here is that the funding is being clawed back from the police authorities and going to what will be a national crime squad instead of to a regional crime squad. So the actual changes in service funding levels probably will be very small at the operational police authority level.
If this is the way it is to be done, it is effectively top slicing. Even if the police authority is required to send its levy back it is effectively top sliced off it. Given that that is happening, to expect that that money can be taken back without any impact on the services provided by a particular police authority at all times is an unreasonable expectation.
I have some experience in dealing with police authorities from time to time, and there are, as the saying goes, police authorities and police authorities. They all try extremely hard—and I defer to none in my admiration for them—but some are better than others. It may well be that from time to time an individual authority could find itself marginally embarrassed by its levy in one particular year. It should be noted that the levy is subject to a great deal of consultation with the police authorities before it is finally agreed, but an individual authority could well find itself marginally embarrassed. We are not talking about a vast sum of money in relation to the totality of the budget, but it may find itself marginally embarrassed at some point as a result of the particular way it chooses to allocate its resources. We should not deny the police authorities that right.

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I agree that the whole question of funding needs further definition and tightening, but I do not accept that this amendment is at all appropriate as a way of taking the matter forward.
6.15 p.m.
Baroness Blatch: I am grateful to my noble friend who again speaks with enormous experience, not only at local government level but as having been chairman of one of the local authority associations.
I can see that the intended purpose of Amendments Nos. 27 and 63 to Clauses 17 and 61 is to protect police authorities from excessive increases in the costs of NCIS and providing the services of the current regional crime squads.
I recognise that police authorities in England and Wales are justifiably concerned that they may face levies for these services which reduce their ability to fund necessary local policing. But the Government are not persuaded that these amendments are necessary for the purpose and indeed they could have undesirable effects.
The Bill already safeguards the interests of police authorities and makes provision for an informed decision about the split between funding for local policing and these two national services. First, paragraph 1 of Schedule 3 gives the police authority members of the two service authorities the dominant voice in determining the levies. Secondly, paragraph 2 requires the Secretary of State to consult representatives of the police authorities before deciding whether to approve the proposed levies. In practice, the provision in paragraph 2 will be implemented by creating a tripartite body to advise the Home Secretary on what level of levy is appropriate.
In view of this I believe that the proposed amendments are unnecessary. Not only are they unnecessary but they are impractical and they have undesirable consequences. The amendments to Clauses 17 and 61 would require the Home Secretary to reach a judgment on whether or not a single police authority could fund the policing services it intends to provide out of the resources it had left after the levies for NCIS and the National Crime Squad had been deducted—a point made very well by my noble friend, Lord Dixon-Smith. This means detailed central examination of the policing plans for the 43 police authorities in England and Wales. Not only is this impractical—the result would be immensely bureaucratic—it also usurps the role of police authorities and would result in direct intervention in local policing by the Home Secretary. This attacks the very foundations of the local policing structure in this country. It is potentially a move in the direction of a national police force.
The amendment to Clause 61 would have a further undesirable effect. It would tie the level of funding of the National Crime Squad for all time to the current level of funding. It would also mean that the costs of the National Crime Squad would have to be distributed to police authorities as they are now. Under this amendment the police authorities in an area served by
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an existing regional crime squad would be charged the same proportion of the National Crime Squad's costs as they currently pay for their regional crime squad. This cannot be right. For instance, what happens if crime patterns change over time or the tasks the police service ask the National Crime Squad to undertake within the remit we give them develop or alter? Under this amendment to Clause 61 the service authority would be unable to respond.
It is clearly right that the process of deciding on the levies for NCIS and the National Crime Squad should take account of local policing needs—that is absolutely fundamental. The Bill already provides for the interests of local chief officers of police and their police authorities to be taken into account. That is consistent with our tripartite system of policing. These amendments would create more bureaucracy and affect the role of police authorities in a way which we do not believe would be helpful or feasible.
The noble Lord, Lord McIntosh, asked a number of questions, first about the size of NCIS and the National Crime Squad, the size of the budget, and would it be the same as is currently spent on those services. The NCIS and the National Crime Squad budgets will be based on the current levels of expenditure on these services. That also answers the question that my noble friend Lord Dixon-Smith posed.
The provisions in the Bill are not for top slicing, as the noble Lord, knows, and I would like to write to him on the other points of detail that he raised in speaking to this amendment.
There are arguments both for and against top slicing. I will not rehearse them. We have set our face against top slicing. We believe that the levying principle avoids the direct principal control that flows from top slicing. It means that the recipients of the National Criminal Intelligence Service and the National Crime Squad services pay directly for the services they use. We believe that is a good discipline. The levy is more transparent than top slicing and will appear on council tax bills.
Lord Knights: To clarify things in my own mind, will the Minister say if I am right in thinking that the costs of the regional crime squads at the moment are met by the police forces of the regions which they serve, and that those expenses will no longer be payable because the regional crime squads will have gone? Presumably that is roughly the same amount of money as they will be called upon to pay for the central squad?
As to NCIS, I was under the impression—perhaps wrongly—that that was funded as a common police service. That means that each force is already paying a common police service contribution and, therefore, that money will equate roughly with what they will pay under the new arrangements?
Baroness Blatch: The best way for me to answer the noble Lord, Lord Knights, is to say that the money that is in the system, both for NCIS and the regional crime squads, will remain and be available through a levying process which will be heavily influenced by

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consultations and negotiations between the local authority members of the two service authorities. That money will not disappear; it will remain available. As I said, in the early stages—and as my noble friend Lord Dixon-Smith observed—the levels of payment to those bodies will be based very much on the costs that apply at present. The situation may develop differently over time.
Lord Knights: I thank the Minister for that response; but, unfortunately, I must persist in the matter. Am I right in thinking that police authorities already make a contribution to NCIS and that they do not get it for free?
Baroness Blatch: Yes.
Lord McIntosh of Haringey: Can the Minister clarify her answer of "Yes"? Does it mean that they get it for free? All the £25 million comes out of the Home Office Vote, does it not?
Baroness Blatch: I am told that it does not come off the Home Office Vote. I shall write to the noble Lord on the matter. The important fundamental point here is that the money that local police authorities will be expected to pay for both NCIS and the National Crime Squad will be made available to them from the moneys that are in the system at the moment for NCIS and the NCS.
Lord McIntosh of Haringey: I shall turn to another subject so that the Minister will be able to avoid writing to us and may, therefore, be able to give an answer now. Of course the noble Lord, Lord Dixon-Smith, is right to say that the regional crime squads are at present funded by police authorities and that will continue. However, I hope that the cost of the NCS will be greater than the combined cost of the regional crime squads. After all, the whole intention of the exercise is that the NCS will be able to fight crime more effectively and do more than the regional crime squads have been able to do. To me, that means that the new system may well cost more money. If it provides better crime busting, I do not believe that we will begrudge the money involved.
There is a combination of money at present paid by local authorities for the regional crime squads and money which is at least largely paid by the Home Office for the NCIS. We shall no doubt receive more precision in that respect in just a moment. If the Minister thinks, as she clearly does, that my amendments are technically defective, clearly I cannot pursue them to a Division. However, I was fascinated and enormously impressed by what the noble Baroness said regarding the need to leave the decisions about expenditure to the local police authorities and for the Government not to get involved. Indeed, that seems to apply not just to expenditure but also to "needs".
The Minister may have been out of local government for some time, but my understanding is that every local authority has its standard spending assessment determined by government who presume to decide what is the proper amount for each local authority to spend not only on its police services but on all its services;
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and that government grant to local authorities is based on that SSA. Therefore, all the criticisms that the Minister is making of the intervention of central government in local government expenditure as it affects the police should also apply to the use of the SSA and universal capping which is the practice in the rest of local government. I shall treasure the Minister's words. I shall probably have them picked out in needlepoint and make sure that they are used effectively when we come to the next local government spending round. The analogy will be of great help.
If the amendments are defective, we may well be driven back to saying, as some people would wish us to say, that the costs of the National Crime Squad and NCIS should be paid for by central government and not by local police authorities. I hope that is not the case because I do not wish it to be so. However, we shall have to find a way to protect the rest of police expenditure if we are to travel the route proposed in the Bill; namely, a levy. I understand the point that the Minister is making regarding the difference between a levy and top-slicing. I am sure that the Minister is right to say that the transparency of the levy has certain advantages, but there are still profound difficulties about the proposals and we shall have to return to the matter at a later stage.
Baroness Blatch: Before the noble Lord picks up his needle and thread and starts sewing my words into a piece of material for perpetuity, perhaps I may convey to him that, as I read the amendment, it seems that the Secretary of State would be expected to measure the impact of the levy on each individual authority. I believe that my noble friend Lord Dixon-Smith made that very point. Each local authority will have decided how it will spend the sum of money allocated to it from the grant for police authorities. Some will have different priorities from others. The impact of paying the levy may be different for different authorities. Once they have received their sum of money, it is not for the Secretary of State to second guess how they will deploy it operationally. That is the point I was trying to make.
The sum of money that is made available for NCIS comes in fact from the Police Vote money. That is taken into account in the share of money which is given to each local police authority. I do not know about the actual mechanics of whether the police authority takes the money and gives it back to the Government, or the other way round. However, it is part of that Vote and properly reflected in the allocation to each police authority.
Lord Dixon-Smith: I shall not detain Members of the Committee any longer because I understand that the noble Lord has already indicated that he will withdraw the amendment for further consideration. The noble Lord has revealed to me the fact that he has been out of local government rather longer than I have. However, I will say this for him: there is a difference between what actually happens and what is supposed to happen.
Lord McIntosh of Haringey: We shall, indeed, enjoy discussing the next local authority expenditure

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round. The amendments may not be adequate to the purpose, but the problem will not go away. I do not believe that it has been resolved by the Minister's response, and it certainly was not resolved by the intervention of the noble Lord, Lord Dixon-Smith. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Blatch Baroness Blatch moved Amendment No. 28:
Page 8, line 36, leave out ("by") and insert ("in pursuance of").
On Question, amendment agreed to.
Clause 17, as amended, agreed to.
Schedule 3 agreed to.
Clauses 18 to 27 agreed to.
Clause 28 [Codes of practice]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 29:
Page 12, line 27, leave out subsections (2) and (3) and insert—

("(2) Where the Secretary of State proposes to issue a code of practice under subsection (I), he shall prepare and publish a draft of that code, shall consider any representations made to him about the draft and may modify the draft accordingly.

(3) The Secretary of State shall lay before both Houses of Parliament a draft of the code of practice prepared under this section.

(4) When the Secretary of State has laid the draft of the code before Parliament, he may bring the code into operation by order made by statutory instrument.

(5) No order under subsection (4) shall have effect until approved by a resolution of each House of Parliament.

(6) An order bringing the code into operation may contain such transitional provisions or savings as appear to the Secretary of State to be necessary or expedient in connection with the bringing into force of that code.

(7) The Secretary of State may from time to time revise the whole or any part of a code to which this section applies and issue that revised code; and the foregoing provisions of this section shall apply (with appropriate modifications) to such a revised code as they apply to the first issue of the code.").

The noble Lord said: In moving the above amendment, I shall, with the leave of the Committee, speak also to Amendments Nos. 30 and 31. All three amendments are designed to ensure that the general public as well as Parliament are consulted in the preparation of a code of practice. I pause for a moment because I gather from the Minister's face that I have done something wrong? Is that correct?
Baroness Blatch: I am sorry to interrupt the noble Lord, but I should like to clarify one point. I understood this grouping to include Amendments Nos. 29, 30, 31 and 65 to 67.
Lord McIntosh of Haringey: I beg the Minister's pardon; of course this grouping also applies to Part II of the Bill, and Amendments Nos. 65 to 67 are the comparable amendments relating to the National Crime Squad.
The codes of practice which are promised in this part of the Bill are welcome and we look forward to an opportunity to debate them in due course. However, it is important that the process of consultation should be clearly laid down in the Bill as is the case for other
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codes of practice for different purposes. We have been increasingly concerned with this issue in legislation over the past few years. Indeed, one of the most important innovations in legislation in recent years has been the increasing use of codes of practice and the problem of how far they can be flexible and, at the same time, how far Parliament can maintain its responsibility for dealing with the detail of legislative provisions.
Amendment No. 29 and the comparable amendment for Part II of the Bill propose that there should be a draft laid before both Houses of Parliament and that the affirmative resolution procedure should be adhered to. Amendment No. 30 proposes that other people outside Parliament should have regard to the code. In other words, there should be proper provision for observance of the code of practice. We suggest a number of enactments which will need to be covered by the code. Amendment No. 31 and the comparable amendment in Part II provide for the use of the code of practice where relevant in evidence in criminal proceedings.
What we are doing is not new; it is an extension of the authority underlying codes of practice, ensuring that they are properly drafted and properly observed and that they have the same effect in criminal proceedings as the conditions set out in detail in the Police and Criminal Evidence Act. There should be no obstacles to the introduction of consultation proceedings for the drafting. There should be no argument that it is unnecessary. NCIS is holding extremely sensitive criminal intelligence. It is an important, indeed vital part in the fight against serious and organised crime. Under those circumstances the control of the detailed operation of NCIS should not be left to the Secretary of State. Provisions subject to consultation and to conditions on observance should apply to the code of practice. It is vital that the code of practice has the authority necessary to ensure that everyone in NCIS and those who deal with NCIS in any way are assured that the code of practice is in place, has been properly drafted, and is being observed. I beg to move.
6.30 p.m.
Lord Renton: I hope that my noble friend will resist the amendments. I greatly understand the noble Lord's desire to ensure that codes of practice are properly drafted, approved and observed. But, quite frankly, if one considers it very closely indeed, Amendment No. 29, which is intended to replace subsections (2) and (3) of Clause 28, adds practically nothing. It contains a tremendous amount of verbiage but has no further effect that I can understand. The noble Lord said that there must be consultation. Consultation is not mentioned in Amendment No. 29. I am open to correction, but I understand that the provisions of Clause 28 are now common form; there are a number of precedents. The essence of the matter is that a copy of the code shall be laid before Parliament, as set out in subsection (3) and in the noble Lord's amendment. The noble Lord's suggestion that there needs to be a draft code of practice and that that constitutes something fresh is somewhat mistaken. In a sense, every code that requires the consent of Parliament is a draft. If Parliament does not approve it, it is not approved.
Subsection (4) of Amendment No. 29 provides that,
"When the Secretary of State has laid the draft of the code before Parliament, he may bring the code into operation by order".
Therefore his suggestion of a draft adds nothing to what is already in the Bill.
Amendment No. 30 puzzles me. It begins with the word "persons". It does not state which persons. But we all know that the code of practice will affect people concerned with police affairs who would be bound by the code of practice. But it states that,
"Persons, other than persons required to have regard to any code of practice issued … by virtue of regulations under any of the enactments",
—and they are specified; they are police statutes—
"shall by virtue of this subsection have regard to any such code in the performance of their functions".
A code is a code and obliges people anyway. It seems to me that the amendment adds nothing in effect.
Amendment No. 31 states that,
"In all criminal and civil proceedings a code issued under this section shall be admissible in evidence".
Codes of practice have never had to be regarded as evidence on which there can be cross-examination. A code of practice is almost part of the law. Some of us wish that we had never invented this phrase. It is just like a statutory instrument. But let us make an exception in our minds and say that it is different from other statutory instruments. The point is that it has only to be presented to a court as having had the authority of Parliament. It should not be regarded as evidence.
For those various reasons, I hope that my noble friend will resist the amendments. They add great length and confusion to the Bill.
Lord Thomas of Gresford: I strongly support Amendments Nos. 29 to 31, and 65 to 67, and in particular Amendments Nos. 31 and 67.
If there is a code, it is not enough to rely upon the assurance given by the noble Lord, Lord Renton, that the people concerned will be bound by the codes of practice. What happens when the people concerned do not bind themselves by the codes of practice but breach them? If evidence is produced in a criminal or civil court as a result of the breach of the codes, what is to be the result? Surely there has to be some sanction. The sanction under the codes introduced under the Police and Criminal Evidence Act which are concerned with the interrogation of suspects is provided in Section 78 of the Act, whereby the judge can rule evidence to be inadmissible on the grounds of unfairness.
Lord Renton: If the noble Lord will allow me to intervene, perhaps I may say with deep respect that he is confused. As regards the codes of practice and evidence of breaches of the codes of practice, we do not need to have it written in the Bill, as does Amendment No. 31, that a code issued shall be admissible. It is admissible whether or not it is produced in evidence. It
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is the breaches, as the noble Lord rightly states, which are the subject of evidence; but that is a different matter. Amendment No. 31 does not refer to the breaches.
Lord Thomas of Gresford: I am grateful to the noble Lord for his help and assistance. I do not contest that a code is admissible, or that a court can have regard to the contents of a code. However, I place the greatest emphasis on the words,
"if any provision of such a code appears to the court or tribunal conducting the proceedings to be relevant to any question arising in the proceedings it shall be taken into account in determining that question".
Surely the question to which this amendment refers is the question of the admissibility of evidence that has been obtained in breach of these codes. Of course the code in relation to Clause 28 may perhaps be less relevant, since it deals with the NCIS, than the code in relation to the National Crime Squad, because the National Crime Squad is concerned and its principal function is stated to be:
"the prevention and detection of crime relevant to more than one police area in England and Wales".
One can readily envisage, certainly so far as Clause 67 is concerned, that there could well be breaches of the code that is promulgated and that those are matters which could be of very considerable concern to a court. An hour or so ago the Minister spoke against the concept of having a commissioner to oversee the implementation, the fairness and accuracy of the work of the NCIS. He or she having gone, the phrase that comes to my mind to be adapted is "Quis custodiet codices ipsos?" Somebody has got to ensure that these codes are maintained and obeyed.
Baroness Blatch: Amendments Nos. 29, 30 and 31 to Clause 28 and Amendments Nos. 65, 66 and 67 to Clause 72 all relate to the provisions in the Bill which enable the Secretary of State to issue codes of practice about the way in which the service authorities discharge their function. Clause 28 relates to the NCIS service authority while Clause 72 deals with the National Crime Squad, as the noble Lord has already pointed out. I emphasise that it is the service authorities to whom any such codes of practice would apply, not the services themselves. That is a crucial point to bear in mind when considering these amendments.
The amendments seek to achieve three main purposes. First, they require any codes of practice to be subject to formal consultation requirements and the affirmative resolution procedure before they can come into effect. Secondly, they seek to require that persons performing functions under Clauses 89 and 91 of the Bill, which deal with the authorisation of intrusive surveillance, should have regard to these codes of practice. Finally, they provide that the provisions of these codes of practice are admissible in evidence in civil and criminal proceedings. Clauses 28 and 72 of the Bill are identical to Section 39 of the Police Act 1996, which enables the Secretary of State to issue codes of practice about the way in which police authorities discharge their functions. The purpose of the power is to allow the Secretary of State to issue binding guidance

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to service authorities about administrative procedures and about the way they discharge their duties. The only code of practice—
Lord Thomas of Gresford: Would the noble Baroness agree that there is a marked distinction between ensuring that administrative matters are carried out by police authorities under codes of practice and a situation that is envisaged in this Bill, where we are dealing with the collection of evidence one way or the other, whether through the NCIS or the crime squad provisions?
Baroness Blatch: I am just coming to the distinction, because the distinction is a very important one and I hope that the noble Lord, Lord Thomas, will see the point. The only code of practice issued to police authorities was published in 1994 and covered financial management by police authorities. Where a code was issued to a service authority, it would be subject to precisely the same consultation and precisely the same parliamentary procedures as a code issued to police authorities.
As I say, Clauses 28 and 72 of the Bill are identical to Section 39 of the Police Act. The distinction is between that and the moving on to the codes of practice which will cover the intrusive surveillance part of the Bill. I will come to that in a moment. All of that is perfectly reasonable, given that the codes will be concerned with matters of detail about the discharge of functions which have been subject to thorough parliamentary scrutiny. We can see no possible justification for dealing with codes of practice relating to the service authorities any differently from those of police authorities. The Select Committee on Delegated Powers and Deregulation of this House is also satisfied that there is an appropriate degree of parliamentary control over these powers. Although we have no present plans to issue codes of practice under these provisions of the Bill, we cannot in these circumstances accept that these amendments are necessary.
Turning to the second element of the amendments, this seems to be based on a misunderstanding of the nature of the codes of practice envisaged. Any codes will be concerned with how the service authorities discharge their functions. The service authorities and police authorities generally have no role whatsoever in the authorisation of intrusive surveillance—this is the distinction I make—to which Clauses 89 and 91 relate. That will be a matter, under the Bill as presently drafted, for chief constables and will be one for which a specific code of practice will be issued. It would be totally inappropriate and indeed unnecessary for chief constables performing those functions to have regard not only to their own specific code of practice but, as these amendments require, to codes of practice issued under these very different provisions in the Bill.
Finally, as I have already mentioned, the codes of practice will be concerned with matters of detail about how the service authorities discharge their functions. As such, they will not be relevant as evidence in criminal or civil proceedings, which was the point made by my
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noble friend Lord Renton. There is no provision for codes of practice relating to police authorities to be admissible in evidence in this way, and there is no need for such a provision in relation to service authorities. However, there is a provision in relation to intrusive surveillance and the way in which that code of practice will work. That code of practice and the way in which it is adhered to by people involved in intrusive surveillance activities will, I understand, be admissible in evidence.
We believe that the Bill makes perfectly adequate provision based on the arrangements for police authorities for these codes of practice to be prepared and to be laid before Parliament. These amendments are unnecessary and in some respects inappropriate, and therefore we cannot support them.
6.45 p.m.
Lord McIntosh of Haringey: I did not actually expect the Government to support the amendments and I do not think it was only the pleading of the noble Lord, Lord Renton, that persuaded them not to. I have to say to the noble Lord that, unusually for him, his observations were almost entirely misconceived. Codes of practice are treated in this way in particular in the Police and Criminal Evidence Act and codes of practice, which form such a large part of the Police and Criminal Evidence Act, and therefore of our criminal procedures, are subject to exactly these constraints on consultation, on parliamentary approval, on observance and on use in evidence.
I suspect that I am wrong, not so much in the wording of these amendments but in where they have been placed. I accept that the Minister is right in that to some extent the wording I have used is more appropriate to police activities than to the activities of the service authorities. I also think that my amendments are wrong in their references to Clauses 89 and 91. I think they should be dealt with separately when we come to Part III of the Bill. Indeed, as the noble Baroness will know, we have a number of amendments down about the code of practice which she has so kindly supplied to us in draft.
These are clearly not amendments which I can pursue, but the point which I tried to make at the beginning and which was powerfully backed up by the noble Lord, Lord Thomas of Gresford, is still true. In other words, if you have codes of practice—and they are referred to in Clause 28—then they have got to be properly enforced. The provisions of subsections (2) and (3) of Clause 28 and the comparable provisions of Part II of the Bill simply do not provide adequate enforcement procedures; nor do they provide for adequate consultation. To that extent, the analogy of the codes of practice in the Police and Criminal Evidence Act is very relevant, and this is a matter which I shall have to come back to at a later stage.
I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 30 and 31 not moved.]
Clause 28 agreed to.
Clauses 29 to 35 agreed to.
Clause 36 [Common services]:
[Amendments Nos. 32 to 35 not moved.]
Clause 36 agreed to.
Clause 37 [Discipline regulations]:
Baroness Hilton of Eggardon Baroness Hilton of Eggardon moved Amendment No. 36:
Page 15, line 38, leave out ("members") and insert ("employees").
The noble Baroness said: In moving Amendment No. 36 I shall also speak to Amendments Nos. 52, 54, 68 and 143. These amendments relate to the procedures for the disciplining of officers attached to the central organisations.
I have considerable experience in working in mixed squads of police officers and civilian staff and understand that it might seem attractive to have a common procedure for disciplining all members of NCIS and the National Crime Squad. However, I think that such a common procedure will cause greater confusion not only to police officers themselves, who find that they are not subject to the normal discipline code they have been used to when members of their own forces, but also, and perhaps more importantly, it will cause confusion to members of the public if they find that the officers attached to the central organisations are not subject to similar discipline codes as apply within their own forces. This is particularly the case in relation to the National Crime Squad whose officers will presumably be engaged on joint operational exercises with officers from local forces in various parts of the country.
This point will relate to further amendments with regard to complaints about the police. If the public find that some of the officers concerned are subject to one set of disciplinary regulations because they belong to the ordinary police forces throughout the country while other police officers, because they are attached to either NCIS or the National Crime Squad, are subject to a different discipline code, it could be extremely disruptive to public confidence in the behaviour of these officers.
I ask the Minister to consider whether it is appropriate that these organisations should have a separate form of discipline to that which the police service throughout the rest of the country enjoys. I beg to move.
Baroness Blatch: Seconded police officers will form the majority of the police officers working in both services. The Police Federation wants those officers to remain subject to the discipline regulations which apply to all forces and do not want there to be any possibility of a separate set of regulations being applied.
I understand those concerns. The existing discipline arrangements for officers on temporary service under Section 97 of the Police Act 1996 have worked well. It is likely that in many respects they will continue to operate as they do now. It is our intention that the discipline arrangements for police officers in the two services should be entirely consistent with those for police officers generally. In practice, they will have to
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be. Officers coming to work in both services will be volunteers and it would not be possible to attract them if they felt that they were being disadvantaged in any way.
It is also the Government's intention that the discipline arrangements will apply as far as is reasonable to all staff, including the civilians. At NCIS, for example, there may be police, Customs and Immigration officers all working on the same operation. The Government believe that staff working in the services should be subject to a consistent complaints and discipline regime as far as possible. It would be difficult to justify treating the various groups of staff in different ways. It could lead to confusion for members of the public as well. It is vital that, if members of the public wish to complain, there are clear and consistent procedures for doing so. Alternatively, a person making a complaint might have to make several complaints simultaneously: one through a police procedure, one through a procedure governing Customs officers and another through a system for civilian staff. This would be confusing for the complainant and could be unjust for staff working side by side in the same organisation.
To turn now to the amendments to Clauses 37 and 80, there will be some police members permanently appointed to the services to whom general discipline regulations cannot apply. They are defined in the Bill as members, not employees, and so these amendments would mean that there could not be discipline regulations which applied to them. It is also important that the position of the director general and his senior officers in relation to disciplinary matters is clear. This may mean that they should in some matters have the same disciplinary powers as their senior colleagues in police forces and that those powers should be consistent in relation to all members of their services. This would require regulations to be made which were appropriate to the needs of the two services and which could be applied to all staff.
I am happy to repeat the assurance which I gave at Second Reading that there will be full consultation with the police staff associations and others before any regulations are made on these matters. But regulations may be needed and the Bill as presently drafted correctly refers to such regulations applying to the conduct of members, not just employees, of the National Criminal Intelligence Service and the National Crime Squad. For that reason, we are unable to accept these amendments to Clauses 37 and 80.
The amendments to Clause 54 go even further than those to Clauses 37 and 80. They seek to provide that police members of the National Crime Squad will continue to be subject to all the terms and conditions of service set out in police regulations rather than terms and conditions determined by the service authority for the National Crime Squad.
At present, police officers in the regional crime squads are seconded from their forces and so remain subject to police regulations. Under the provisions of the Bill such officers will, as is already the case for the National Criminal Intelligence Service, be seconded on a period of temporary service, to which Section 97 of the Police Act 1996 applies. Police regulations do not

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apply to such officers, but virtually identical terms and conditions are applied administratively. This has worked well because, as will be the case with the National Crime Squad, officers working in such central services are volunteers and would not join unless the terms and conditions very largely reflected those in forces.
As with the current arrangements for central service, we do not believe that police regulations should apply directly to the National Criminal Intelligence Service or the National Crime Squad. They are national bodies and may wish to develop terms and conditions which better meet their specific needs. That is why the Bill provides for the terms and conditions to be determined by the service authorities. But we recognise the concerns of staff that there should be consultation with their representative bodies before such wider terms and conditions are determined. Paragraphs 73 and 74 of Schedule 9 to the Bill specifically provide for consultation with the Police Negotiating Board before the terms and conditions for police members are decided. We believe that this will provide adequate and appropriate machinery for consultation on these important matters.
We do not believe that it is right to leave police members of the National Crime Squad directly subject to police regulations. These matters should be dealt with in the same way as for police members of the National Criminal Intelligence Service and in line with the arrangements which already work perfectly well for officers on central service. There will in future be specific provision for consultation with the Police Negotiating Board, which we believe adequately protects the interests of police officers working in both services. Unless the terms and conditions are as good as those in forces, the National Crime Squad will simply not attract the volunteers which it will need. In those circumstances, we believe that the Bill adopts the right approach and therefore we cannot accept these amendments.
Baroness Hilton of Eggardon: I am grateful for that response from the Minister, which I shall study in due course. It is nothing to do with the amendment, but I am surprised that she thinks people will not volunteer for these exciting new squads unless the conditions are right. People often volunteer to do jobs because they think they will be interesting and it is possible that they will be willing to put up with conditions that could be thought inappropriate. Nevertheless, I accept the tone of what the Minister said. I will study her answer carefully.
I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 37 agreed to.
7 p.m.
Baroness Blatch Baroness Blatch moved Amendment No. 37:
After Clause 37, insert the following new clause—
APPEALS: PART 1
(".—(i) A police member of NCIS to whom section 9(2)(a) applies and who is dismissed or required to resign by a decision taken under or by virtue of regulations made under section 37 may
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appeal to an appeals tribunal against the decision except where he has a right of appeal to some other person; and in that case he may appeal to an appeals tribunal from any decision of that other person as a result of which he is dismissed or required to resign.
(2) The Secretary of State shall, by order, make provision in relation to appeals tribunals and appeals under subsection (1) corresponding (with or without modification) to that which is or may be made in relation to police appeals tribunals and appeals under section 85(1) of the Police Act 1996 by, or by virtue of, section 85(2) to (4) of and Schedule 6 to that Act.
(3) A statutory instrument containing an order under this section shall be subject to annulment in pursuance of a resolution of either House of Parliament.").
The noble Baroness said: In moving this amendment I shall speak also to Amendments Nos. 69 and 142. Amendments Nos. 37, 69 and 142 to Clauses 37 and 80 and Schedule 9 respectively are necessary to ensure that senior police officers who are appointed as permanent police members of the National Criminal Intelligence Service and the National Crime Squad will have access to the same appeals tribunal machinery as their senior colleagues in police forces.
Section 85 and Schedule 6 to the Police Act 1996 make provision for senior police officers to have a right of appeal to a police appeals tribunal before they are dismissed or required to resign from police service. That machinery will not be available to senior police officers permanently appointed to the two services unless this Bill makes specific provision for it to do so. These amendments make such provision and so give senior permanent police members of the two services the same protection as their senior colleagues in police forces. This is not something which could be done by means of the regulation-making powers which the Bill already provides. The provisions for senior officers in police forces are on the face of the Police Act 1996 and so should be on the face of this Bill.
Amendment No. 38 provides, in relation to the National Criminal Intelligence Service, for the Secretary of State to make regulations governing the conduct of appeals tribunals which will correspond to those made under the equivalent provisions of the Police Act 1996. This is necessary because the National Criminal Intelligence Service is a United Kingdom body and so the regulations cannot be applied directly as they are in Amendment No. 69 for the National Crime Squad. But there will be no difference in practice between the arrangements for the two services. As with the appeals tribunals under the Police Act 1996, Amendment No. 142 to Schedule 9 ensures that the arrangements established by this Bill are covered by the Tribunals and Inquiries Act 1992 and will be subject to the oversight of the Council of Tribunals.
Finally, I wish to emphasise that specific provision of this kind does not need to be made for the vast majority of police officers working in the National Criminal Intelligence Service and the National Crime Squad. They will be on temporary service under Section 97 of the Police Act 1996. If there were any prospect of officers seconded in this way being dismissed, required to resign or reduced in rank, they would be returned to their home force. They would then automatically have access to the usual police appeals machinery. Their position is fully protected without the need for specific

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provision to be made in the Bill. I hope that the Committee will accept these amendments. I beg to move.
Lord Harris of Greenwich: Perhaps I may ask the noble Baroness a question on this matter, which she may prefer to deal with by correspondence. What are the arrangements now for someone who is the equivalent of a chief officer—that is, after all, the rank of the officer who will be commanding the National Criminal Intelligence Service—in the unlikely event of any disciplinary proceedings being initiated? I should be grateful if she would let me know what the procedures are now in relation to officers of that rank.
Baroness Blatch: I can give the noble Lord an assurance that I shall contact him on that matter.
On Question, amendment agreed to.
Clause 38 [Application of police complaints regime to NCIS]:
Baroness Hilton of Eggardon Baroness Hilton of Eggardon moved Amendment No. 38:
Page 16, line 7, leave out from ("shall") to ("make") in line 8 and insert ("to the extent that they relate to police members, so far as is practicable").
The noble Baroness said: This amendment covers very much the same ground as before in relation to discipline codes. The Bill appears, on the face of it, to make provision for a totally different police complaints procedure to be set up. We seek assurance that in relation to Amendments Nos. 38 and 70 it is not intended to have a totally different regime for complaints about officers in these squads.
Let me again make the point in relation to the National Crime Squad that officers who are engaged in practical operations on the street with officers from local forces should not expect to find that there is a different system of complaints in relation to them. Even more important perhaps is that members of the public should have a single avenue for complaining about the actions of officers who are acting jointly in operational situations and should not be required to make complaints through two separate channels or two separate authorities.
I therefore seek a similar assurance as on the discipline code that the police complaints procedure set-up particularly for the National Crime Squad will be the same as that for local police forces, so that neither the police nor members of the public will be confused or have difficulty in dealing with the procedures. I beg to move.
Baroness Blatch: I hope that I am able to reassure the noble Baroness. As with the discipline arrangements we have just debated, the Government understand the concerns which have prompted these amendments. We do not intend to make any regulations which would disadvantage police officers in any way. Indeed, we expect the complaints procedures to be modelled very closely on existing police procedures. That is clear from the Bill. But we also believe that it is important that we should, as far as possible, ensure that all staff working
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in the two services should be subject to consistent complaints systems. That will be particularly important in the case of the National Criminal Intelligence Service, where members will be drawn from the police, Customs, immigration and security services and where there will be many civilian staff as well. And, as I said in debate on Clauses 37 and 80, a member of the public may, as the noble Baroness said, find himself in the confusing position of lodging complaints under very different systems if his complaint involved more than one person from different parent organisations. We want to do what we can to smooth that process for complainants.
The provisions of the Bill will enable the Secretary of State to make regulations for such procedures so far as he thinks desirable. As the noble Baroness knows, this is a complex matter on which a great deal of further work will be needed before any regulations can be made. Again, I assure the Committee that there will be full consultation with the staff associations and others before final decisions are made. Careful consideration will need to be given to the circumstances of all staff. But we do not think that it is right to try on the face of the Bill to put police members in some special or different position. There will be other staff who are equally vulnerable to malicious complaints and whose position also needs to be considered.
I take the point made by the noble Baroness. We need to be as fair to the complainant as we are to protecting the rights of those who work in the authorities.
Baroness Hilton of Eggardon: I am grateful to the Minister for that assurance. I hope that when the complaints procedure emerges it will be very much on all fours with the complaints procedure in relation to other police officers from the home forces. In the circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 38 agreed to.
Clauses 39 and 40 agreed to.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 39:
After Clause 40, insert the following new clause—
LIAISON BY DATA PROTECTION REGISTRAR WITH EUROPOL
(". The Secretary of State shall by regulations provide the designated national supervisory authority responsible for personal data protection with the necessary powers to supervise and monitor the functions of NCIS in acting as the national unit liaising with the European Police Office (known as Europol) in relation to personal data as provided by the Convention on the Establishment of a European Police Office (the Europol Convention).").
The noble Lord said: This amendment is not critical of any provisions in the Bill as drafted. It seeks to deal with a problem which arises out of the role of the data protection registrar in relation to the files of the NCIS.
Under Article 23 of the Europol Convention, every member state of the European Union has to designate a national supervisory body with the task of independently monitoring the functions of the national liaison unit in relation to the gathering and distribution of personal

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data. At the moment, the likely body, when the convention is ratified, will be the data protection registrar.
The data protection registrar has already anticipated that possibility. In her recent response about the implementation of the data protection directive of the European Union, she points out that she does not have sufficient powers under the Data Protection Act 1984 to carry out that role. What she would need in order to carry out the role would be audit powers to enable her to pursue compliance, particularly in relation to those holding sensitive data. That includes for the purpose of this Bill the National Criminal Intelligence Service.
I understand that at present there are administrative or executive actions—in other words, non-statutory actions—being developed, so that the Europol Convention can replace without legislation the powers which are missing and which she lacks in this area. Her powers at the moment are rather passive. She receives and investigates complaints and she has the responsibility of promoting observance of the data protection principles which her office has produced and of disseminating information to the general public. The audit powers which would be required by ratification of the Europol Convention would require her to have those additional powers to which I referred. It would seem desirable, at a time when we are considering the constitution and the responsibilities of NCIS, to provide, as in other European member states, for those powers to be on a statutory basis. I beg to move.
Baroness Blatch: I hope I can be helpful to the noble Lord on this point.
There is no need to provide the data protection registrar, as the intended national supervisory body under the Europol Convention, with additional statutory powers to perform that role. The Europol Convention provides that the national supervisory body shall have access at the national unit (in the UK, the National Criminal Intelligence Service) for the purposes of monitoring data sent to, and received from, Europol. We believe that that role can be fully performed through NCIS providing access voluntarily to the registrar, which it is willing to do. A written agreement is currently being pursued between the registrar's office and NCIS to set out precisely how that access would be exercised in practice. Full consideration should be given to how that approach fares in practice before considering alternatives.
There is nothing inherent in the proposed change of status of NCIS that would alter either the willingness of NCIS to grant access voluntarily or the registrar's ability to monitor this data. But the matter is in hand between the registrar and NCIS.
Lord McIntosh of Haringey: I understood that and that is what I indicated in moving the amendment. I understand that what I call "administrative arrangements" and the Minister referred to as a "voluntary" agreement are in hand. But what happens if they go wrong?
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It seems to me that the opportunity arises, when we are considering the statutory basis of NCIS, to put the matter on a proper footing. I do not doubt the good will of both NCIS and the data protection registrar in seeking to provide the access which will be necessary. The Minister recognises that access will be necessary but for some reason is insisting on relying on voluntary arrangements rather than the firmer basis that would be provided by the new clause.
I understand what the Minister says, but I am puzzled by her resistance to this modest change. I shall need to think about the matter and perhaps talk to her about it before the next stage. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 41 [Liability for wrongful acts of constables etc.]:
Baroness Blatch Baroness Blatch moved Amendment No. 40:
Page 18, line 23, leave out ("(4)(b)") and insert ("(4)(a)").
On Question, amendment agreed to.
Clause 41, as amended, agreed to.
Clause 42 agreed to.
Clause 43 [Orders governing NCIS Service Authority]:
Baroness Blatch Baroness Blatch moved Amendment No. 41:
Page 18, line 45, leave out ("by") and insert ("in pursuance of").
On Question, amendment agreed to.
Clause 43, as amended, agreed to.
Schedule 4 agreed to.
Clauses 44 to 49 agreed to.
Clause 50 [Annual reports]:
[Amendment No. 42 not moved.]
Clause 50 agreed to.
Clause 51 [Appointment of Director General]:
Baroness Blatch Baroness Blatch moved Amendment No. 43
Page 22, line 22, after ("in") insert ("paragraph 14 of").
On Question, amendment agreed to.
[Amendment No. 44 not moved.]
Baroness Blatch Baroness Blatch moved Amendment No. 45:
Page 22, line 30, at end insert—
("( ) The Director General shall hold the rank of chief constable.").
On Question, amendment agreed to.
Clause 51, as amended, agreed to.
Clause 52 agreed to.
7.15 p.m.
Clause 53 [Deputy Director General]:
Baroness Blatch Baroness Blatch moved Amendment No. 46:
Page 23, line 6, leave out (" 54(2)(b)") and insert (" 54(2)(a)").
On Question, amendment agreed to.
Clause 53, as amended, agreed to.
Clause 54 [Other members of the National Crime Squad]:
Baroness Blatch Baroness Blatch moved Amendments Nos. 47, 48, and 49:
Page 23, line 27, at beginning insert ("he is appointed to the rank of assistant chief constable in the National Crime Squad and he met the requirements of subsection (2A) immediately prior to his being appointed, or
(b)")
Page 23, line 29, leave out from ("applies") to end of line 32 and insert—

("(2A) A person meets the requirements of this subsection if

(a) he holds the rank of assistant chief constable or a higher rank in a police force in Great Britain or in the Royal Ulster Constabulary,

(b) he holds the rank of commander or a higher rank in the metropolitan police force or in the City of London police force, or

(c) he is, in accordance with regulations under section 50 of the Police Act 1996, section 26 of the Police (Scotland) Act 1967 or section 25 of the Police Act (Northern Ireland) 1970, a constable eligible for appointment to the rank of assistant chief constable or commander in any of the police forces, or in the Constabulary, mentioned in paragraph (a) or (b).").

Page 23, line 33, leave out ("to (7)") and insert (6) and (7)").
The noble Baroness said: I have already spoken to these amendments. With the leave of the Committee I shall move them en bloc. I beg to move.
On Question, amendments agreed to.
Baroness Blatch Baroness Blatch moved Amendment No. 50:
Page 23, line 33, leave out ("person") and insert ("a police member").
On Question, amendment agreed to.
Baroness Blatch Baroness Blatch moved Amendment No. 51:
Page 23, line 34, leave out ("(2)(b)") and insert ("(2)(a)").
On Question, amendment agreed to.
[Amendment No. 52 not moved.]
Baroness Blatch Baroness Blatch moved Amendment No. 53:
Page 23, line 36, leave out from ("(c)") to ("shall") in line 37.
On Question, amendment agreed to.
[Amendment No. 54 not moved.]
Baroness Blatch Baroness Blatch moved Amendments Nos. 55 to 58:
Page 23, line 43, leave out from beginning to ("at") in line 45 and insert ("(6) A police member to whom subsection (2)(b) applies shall cease to be a member of the National Crime Squad").
Page 24, line 5, leave out from ("Squad") to end of line 6.
Page 24, line 8, leave out ("within subsection (2)(b)") and insert ("to whom subsection (2)(a) applies").
Page 24, line 16, leave out subsection (10).
The noble Baroness said: These amendments have already been spoken to. With the leave of the Committee I shall move them en bloc. I beg to move.
On Question, amendments agreed to.
Clause 54, as amended, agreed to.
Clause 55 agreed to.
Clause 56 [Reports by Director General to the Authority]:
[Amendment No. 59 not moved.]
Baroness Blatch Baroness Blatch moved Amendment No. 60:
Page 24, line 28. at end insert ("during that year").
On Question, amendment agreed to.
Clause 56, as amended, agreed to.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 61:
After Clause 56, insert the following new clause—
ACCOUNTABILITY OF NCS SERVICE AUTHORITY

(".—(1) Where a police authority in England or Wales notifies the NCS Service Authority of a request that it investigate a matter of concern to which this section applies, the Director General of the NCS shall investigate and report to the NCS Service Authority as soon as reasonably practicable.

(2) A matter of concern to which this section applies is an exceptional matter of concern arising from an incident or series of incidents which have occurred within the police authority's area and relating to the conduct, efficiency or effectiveness of the NCS.

(3) The NCS Service Authority shall, after considering a report made by the Director General of the NCS under this section, notify the police authority concerned as soon as practicable and shall make available to that authority a statement as to its conclusions and any action which it proposes to take.").

The noble Lord said: Amendment No. 61 takes the form of a new clause to be inserted after Clause 56. It would provide a mechanism for a police authority to raise issues of serious concern with the director general through the service authority for the National Crime Squad.
This is an analogy with the provision under Section 22 of the consolidated Police Act 1996. That Act provides, and earlier legislation provided before it, that a chief constable must, when required to do so by the police authority, submit a report to the authority on such matters as may be specified in the requirements which are related to the policing of the area.
There are comparable powers to require reports in this legislation and we have passed through them without debate and without difficulty. In fact, so many reports are flying between the service authorities, the Secretary of State and the criminal intelligence service and the National Crime Squad that a few more forests will need to be created to provide the paper for them. The analogy for the provision under Section 22 of the 1996 Act does not exist in the present Bill. We are suggesting that it should.
The power under Section 22 is not used very often but it is a useful safeguard. It allows a police authority to ask for a report when there is some disquiet about the operation of the force. There is a get-out provision which allows the chief constable to refer the requirement to the Secretary of State if he believes that the disclosure of the information is not in the public interest or is not needed for the discharge of the police authority's function. In those circumstances, the Secretary of State can put aside the requirement which the police authority has made. There are analogies in this Bill to that get-out provision.
I am not suggesting that there will be problems, but with a new national crime squad investigating crime in many areas, there is bound to be the possibility of conflict of some kind between a local police force and the National Crime Squad. They are intended to work hand in glove. I accept that the intention of the legislation is in that direction and I accept that a great deal of effort has been put in to ensuring that there is no conflict between the National Crime Squad and the local police force. However, if anything goes wrong with the liaison, not through any lack of good will but through simple human error, it is possible that a serious crime could be committed in the area of a local force, there could be loss of life and it could be that the local police force and the local police authority are called to account by the people living in the area. In this amendment we provide that there should be the possibility of a police authority raising the issue with the director general of the National Crime Squad through the service authority. It would give some assurance to the local police authority that matters were being properly investigated and that a full explanation of the circumstances would be given.
Clause 76 of the Bill allows the Secretary of State to require reports of this kind. The Secretary of State, being accountable to Parliament, is able to answer questions in Parliament about the operation of the national crime squad and has to be sure that he can get the information. What we are proposing here is a similar power for a local authority which is also responsible to people in a local area. We do not want this to be widely used. If it were to be widely used it would be the result of a more general failure in liaison between the National Crime Squad and the local police force. I hope that would not happen; and if it did happen, it probably would be a matter of national concern. A comparable power to that provided in Clause 76 is appropriate. This seems to be the appropriate place to insert it. I beg to move.
Baroness Blatch: The Government recognise that police authorities in England and Wales will have a legitimate interest in the way the National Crime Squad performs the role set out for it in the Bill. That is why the Bill provides for nine police authority members, plus a representative of the police authority for the Metropolitan Police, to sit as members of the National Crime Squad service authority. It is also why the Bill provides no fewer than five separate requirements for police authorities in England and Wales to be consulted about important matters relating to the service authority and the National Crime Squad itself.
Clause 46 requires the Secretary of State to consult persons whom he considers to represent the interests of police authorities before making an order to vary the size of the National Crime Squad service authority. Clause 48 requires the service authority to consult with representatives of police authorities before determining its objectives for the National Crime Squad. Clause 70 places the same duty on the Secretary of State before he sets objectives for the National Crime Squad. Clause 83 places a general duty on the service authority to make
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arrangements to obtain the views of police authorities. There is a similar duty on the director general of the National Crime Squad to consult chief officers of police. There is a duty in paragraph 2 of Schedule 5 for the Secretary of State to consult police authorities before deciding whether or not to approve the levies proposed by the NCS service authority. This is in addition to the provisions at paragraph 1 of that schedule which ensure that police authority members sitting on the service authority are in the majority when any decision is taken about the levies to be charged to police authorities in England and Wales.
As well as these specific requirements for the Secretary of State or the service authority itself to consult police authorities in England and Wales about matters relating to the service authority, the Bill also requires the service authority to provide all police authorities in England and Wales with a copy of its service plan and annual report. Clause 71 allows the Secretary of State to set performance targets for the National Crime Squad. These measures will assist individual police authorities in judging the extent to which the National Crime Squad is efficient and effective.
There are other measures in the Bill which ensure that the performance of the National Crime Squad is closely scrutinised. Principal among these is the role for Her Majesty's Inspectorate of Constabulary and the Secretary of State's power to require the service authority to take remedial action in the light of an adverse report.
I hope the Committee will agree with me when I say that together these measures ensure that police authorities in England and Wales are fully consulted about matters relating to the National Crime Squad and its service authority in a manner which is consistent with the existing tripartite structure of policing in this country.
But it is not for this reason alone that I must oppose the amendment. The amendment cuts across the primary role of the National Crime Squad service authority. It is its duty to ensure that the National Crime Squad is an efficient and effective service. I doubt that any police authority in England and Wales would be prepared to accept being second guessed in the way this amendment would lead to the National Crime Squad service authority being second guessed. It is also at odds with one of the basic tenets of policing in this country: the operational independence of chief constables. Under this clause, police authorities would be able to question operational decisions taken by chief constables.
The Bill already contains adequate and extensive measures to ensure police authority involvement with the National Crime Squad. In view of this and given the way the measures in this clause would interfere with the operational independence of the director general of the national crime squad and cut across the primary duty of the squad's service authority I hope that the Committee will agree that the proposed new clause should not be included in the Bill.
Lord McIntosh of Haringey: As I predicted, the Minister has given an impressive list of reports which fly backwards and forwards and consultations which

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take place, although the Committee will have observed that most of them involve the Secretary of State requiring reports. It is mostly top-down consultation rather than bottom-up consultation.
The purpose of the amendment was rather different. We sought to require the people who are accountable to local people on the ground in individual police authority areas to do something comparable to that which the Secretary of State in other circumstances quite properly is authorised to do. I emphasise again that it is not intended that the power should be used frequently. Subsection (2) of the new clause provides:
"A matter of concern to which this section applies is an exceptional matter of concern".
The word "exceptional", as the Minister will recognise, has legal significance, as we shall no doubt hear again when we come to the Crime (Sentences) Bill. I also emphasise that it is not a report being made by the director general to an individual police authority. What we are asking for is a report being made by the director general to the service authority.
The service authority shall consider that report and make such conclusions as it thinks proper and notify the police authority about those conclusions. That is what is provided for in subsection (3). So there is no question here of what the Minister calls "second guessing". We are not saying that the police authority has the right to go to the director general and say, "Provide me with a report about this". It is only the service authority which has that power in many other respects to require reports from the director general. All that happens here is that there is an additional trigger for a report which reflects the proper concerns of a police authority.
I understand the Minister's concerns, although I do not accept that what is proposed runs counter to good policing principles. I shall think again about how these provisions fit in with the many other complex provisions which are in this part of the Bill. In the meantime I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 57 [Officers and employees]:
[Amendment No. 62 not moved.]
Clause 57 agreed to.
Clauses 58 to 60 agreed to.
Clause 61 [Power to issue levies]:
[Amendment No. 63 not moved.]
Baroness Blatch Baroness Blatch moved Amendment No. 64:
Page 26, line 6, leave out ("by") and insert ("in pursuance of').
On Question, amendment agreed to.
Clause 61, as amended, agreed to.
Schedule 5 agreed to.
Clauses 62 to 71 agreed to.
Clause 72 [Codes of practice]:
[Amendments Nos. 65 to 67 not moved.]
Clause 72 agreed to.
Clauses 73 to 79 agreed to.
Clause 80 [Discipline regulations]:
[Amendment No. 68 not moved.]
Clause 80 agreed to.
Baroness Blatch Baroness Blatch moved Amendment No. 69:
After Clause 80, insert the following new clause—
APPEALS: PART II

(".—(1) A police member of the National Crime Squad to whom section 54(2)(a) applies and who is dismissed or required to resign by a decision taken under or by virtue of regulations made under section 80 may appeal to an appeals tribunal against the decision except where he has a right of appeal to some other person; and in that case he may appeal to an appeals tribunal from any decision of that other person as a result of which he is dismissed or required to resign.

(2) Section 85(2) to (5) of, and Schedule 6 to, the Police Act 1996 (police appeals tribunals) shall apply, subject to such modifications as the Secretary of State may by order prescribe, in relation to an appeals tribunal and an appeal under subsection (1) above as they apply in relation to a police appeals tribunal and an appeal under section 85(1) of that Act.

(3) A statutory instrument containing an order under this section shall be subject to annulment in pursuance of a resolution of either House of Parliament.").

On Question, amendment agreed to.
Clause 81 [Application of police complaints regime to National Crime Squad]:
[Amendment No. 70 not moved.]
Clause 81 agreed to.
Clauses 82 to 86 agreed to.
Schedule 6 agreed to.
Clauses 87 and 88 agreed to.
The Earl of Courtown: I beg to move that the House do now resume. In moving this Motion, I suggest that the Committee stage begins again not before 8.35 p.m.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Health and Safety (Repeals and Revocations) Regulations 1996
7.34 p.m.
The Minister of State, Department of the Environment (Earl Ferrers)The Minister of State, Department of the Environment (Earl Ferrers) rose to move, That the draft regulations laid before the House on 23rd October be approved [1st Report from the Joint Committee].
The noble Earl said: My Lords, these regulations are being made under Section 37 of the Deregulation and Contracting Out Act 1994, which allows the removal without replacement of certain health and safety statutory provisions which have been shown to be outdated and to have no practical effect. They will remove 16 pieces of redundant legislation which relate specifically to the textile and agricultural industries.
First, the textiles provisions: some of these have reached their 90th birthday and are long overdue for retirement, if not burial. They cover three subjects: artificial humidification; kiers; and cotton shuttles. It is

195
an historical fact of life that, in the early part of the century, textile workers were exposed to some pretty unpleasant—and sometimes dangerous—working conditions which were caused by a combination of high temperatures and humidity.
Steam injection systems were used to humidify workrooms, and were controlled by hand. Steam is no longer used as a means of humidification and modern monitoring and control systems are automated. The related legislation is, therefore, simply redundant.
Then we have the provisions relating to kiers. Some of your Lordships may think that "kier" is a delectable drink which should not be made redundant. But in this case a kier is a big vat, possibly one which might be suitable for boiling Members of the Opposition, but which is more usually used for boiling textiles and which allows water to percolate through the textiles. The regulations apply to kiers in print works, bleaching and dyeing works, or works where cotton or cotton waste is bleached. There are few, if any, kiers still in use. Even if some still survive, the specific requirements, which are set out in the Kiers Regulations, are now superseded by up-to-date health and safety legislation.
Then we have the regulations on cotton shuttles. They prohibit the use of shuttles which are threaded by mouth suction in cotton cloth factories—not a very delicate method of threading shuttles. The regulations were necessary because of the risk of contracting a serious disease like tuberculosis. Fortunately, technology has advanced a little by now, and shuttles are not threaded by mouth. This means that these regulations are obsolete.
The agricultural provisions cover four subjects: field machinery (which includes stationary threshing machines and balers); ladders; workplaces; and poisonous substances. From 1st January 1997, the regulations on field machinery and on stationary threshing machines and balers will be duplicated by the Provision and Use of Work Equipment Regulations 1992 and the Supply of Machinery (Safety) Regulations 1992. They are, therefore, simply not needed.
The regulations on ladders place a specific obligation on agricultural employers to ensure that their ladders are properly constructed and that they are safe to be used. The construction and use of ladders in all sectors of business is now covered by up-to-date legislation and modern manufacturing standards. So these regulations are redundant.
In a similar way, the requirements in the regulations which cover the safety of agricultural workplaces are now superseded by the regulations which cover all places of work. Those regulations are the Workplace (Health, Safety and Welfare) Regulations 1992.
Most of the Agriculture (Poisonous Substances) Act 1952 has already been repealed. Only those sections remain which refer to the taking of samples of those substances to which the Act still applies. These powers in relation to sampling procedures are no longer used by health and safety inspectors because they have ether powers to take samples under the Health and Safety at Work etc. Act 1974.
The Health and Safety Commission has consulted widely with industry on all these proposals. The responses have shown that there was no objection either from those organisations which represent employers or from those which represent employees to the repeal and revocation of these Acts and regulations. I hope that your Lordships will be of the same opinion.
The Health and Safety Commission has therefore recommended that the legislation which is referred to in the draft regulations can be removed without replacement and without endangering health and safety standards.
The removal will have the advantage of simplifying the present legislation, and of making it easier to understand. And in the words of 1066 and All That, that must be a Good Thing. I commend the regulations to your Lordships. I beg to move.
Moved, That the draft regulations laid before the House on 23rd October be approved [1st Report from the Joint Committee].—(Earl Ferrers.)
Lord Dubs: My Lords, I thank the Minister for his clear explanation of what is at stake in these regulations. It is right to get rid of obsolete and redundant legislation, and obviously we welcome these regulations. However, I wonder how many more pieces of redundant legislation remain on the statute book and whether these particular regulations are the tip of the iceberg. Are there many more to come or are these just about it for the time being?
I was puzzled by the title of the regulations, which refers to repeals and revocations. I had to discover the difference between repeals and revocations. I am sure that all noble Lords are aware of it but I was not. The noble Lord, Lord Mackay of Ardbrecknish, indicates that his understanding is not clear. Although he should not tempt me, for the record I understand that repeals get rid of legislation and revocations get rid of regulations. I learnt something in the course of doing my homework for the purpose of this short debate.
I note that there has been a cut in the number of inspectors who carry out inspections on behalf of the Health and Safety Executive. There has also been a reduction in the total number of inspections. I hope that that is not because all available staff are so busy scouring the statute book for obsolete and redundant measures that they do not have time to get on with that work. I should like an assurance that that is not so. It must take a good deal of time to go through the statute book to discover what is no longer needed.
I have looked through these matters in detail. I raise only one specific point, other than the noble Earl's reference to boiling the Opposition in oil. Of course, that would be an interesting point to debate following June of next year. We should not allow ourselves to be provoked by the Minister, who usually rises to make such points only if we start something. Tonight, he got his retaliation in first, as it were. My question relates to ladders. I raise this matter possibly because ladders are the only items that I understand, or the only items in the regulations with which I have had something to do in a personal sense. No doubt many of your Lordships have similar experience.

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Having listened carefully to what the Minister said, I understand that there is an obligation on agricultural employers to ensure that ladders which are provided for use by their employees are properly constructed and used in a safe manner. I understand that that matter is covered by across-the-board legislation and manufacturing standards. But what about the thousands of old ladders that are still in use? Is there a need to protect agricultural workers who may be asked to use them? I understand that the way in which ladders are used—the angle at which they are leant against walls and so forth—is covered by the new measures, but do agricultural workers who may be using old ladders have proper protection?
Having said that, I welcome the fact that we are getting rid of obsolete measures, particularly in view of the assurance that there has been adequate consultation and all those concerned are in favour of these repeals and revocations.
Earl Ferrers: My Lords, I am grateful to the noble Lord, Lord Dubs, for welcoming this measure and the intention of the Government to introduce measures to remove obsolete legislation. He asked whether this was the tip of the iceberg. Of course, we are looking at all legislation right across the board. It is a considerable programme of work and we are about half way through it. I cannot guarantee that there will be no further regulations of this nature coming before the House. Indeed, I would have hoped that he would be glad if more such regulations came along because it would mean that we were doing what we were supposed to be doing and making life easier for everyone.
The noble Lord referred to the decline in the number of inspections. There is a decline in the number of planned inspections due to the changing nature of the enforcement strategy of the Health and Safety Executive. It is not because its staff are sitting at home crawling over the papers to see whether there are any bits and pieces that can be removed from the legislation, although that activity also takes place. Enforcement action is targeted at activities which present the greatest risk. There are fewer planned inspections this year but they are better targeted and are conducted in greater depth. There are about 364 inspections per staff year. The noble Lord was worried about ladders. Existing ladders, even if they are very old, are covered by the new legislation. I do not believe that he needs to be concerned about that.
If the noble Lord believes that I baited him I apologise. I could not resist the idea of baiting him. I assure the noble Lord that I did not intend to say that the Opposition would be boiled in oil. I merely thought that the vats would be suitable for that purpose, if there were a wish so to do. I can assure the noble Lord that I do not wish to do anything of the kind.
I am grateful to the noble Lord, Lord Dubs, for his courteous acceptance of the regulations, and I hope the House will approve them.
On Question, Motion agreed to.

Deregulation (Bills of Exchange) Order 1996
7.45 p.m.
Lord Mackay of Ardbrecknish Lord Mackay of Ardbrecknish rose to move, That the draft order laid before the House on 28th October be approved [3rd Report from the Deregulation Committee].
The noble Lord said: My Lords, this order removes unnecessary and outdated restrictions on banks which go back to the last century. It will enable them to get the full benefit of the latest computer technology and save them millions of pounds in processing costs. Under the Bills of Exchange Act 1882, the bank at which a cheque is paid in—the collecting bank—has to send it back to the branch on which it was drawn to get payment for its customer. That was the established system when the 1882 Act was passed, and it is still the system today, even though modern technology offers quicker and cheaper alternatives. Today, the essential details of a cheque are recorded electronically at the collecting bank and transmitted to the paying bank. But the law still requires the paper cheque to be sent back to the paying branch, even though this is no longer necessary for clearing.
The core provision of the order, Article 4, amends the 1882 Act to allow notification of the essential features of a cheque by electronic data to be sufficient to obtain payment. This will allow banks and building societies to retain cheques at an earlier point in the clearing cycle instead of having to send them to the paying branch.
There are two ancillary provisions. The first, in Article 3, allows banks or building societies which still want to have customers' cheques returned to opt for them to be sent to a central office instead of the individual branches. The second, in Article 5, amends the 1957 Cheques Act to allow an authenticated copy of a paid cheque the status of a receipt. All these reforms were recommended by the 1989 Jack Committee on Banking Services and accepted by the Government in the 1990 White Paper. Use of the Deregulation and Contracting Out Act allows us to give them effect.
The reforms covered by this order will relieve banks and building societies of a significant burden of cumbersome paper work and enable them to offer a more cost-effective and efficient service to their customers. At the same time, the necessary protections for the banking public will be maintained. Banks will continue to scrutinise cheques in cases of suspected fraud. Bank customers will continue to be able to stop cheques, to have them returned on a regular basis, or to see a specific cheque should a dispute arise. There will be no change in customers' legal rights of redress if banks fail in their duties towards them.
The Government are determined to cut red tape and help businesses to prosper. This deregulation order is an important measure in pursuit of that policy, and I commend it to your Lordships.
Moved, That the draft Order laid before the House on 28th October be approved [3rd Report from the Deregulation Committee.]—(Lord Mackay of Ardbrecknish.)
Viscount Chandos: My Lords, I thank the noble Lord for his clear explanation of this short order. Although it seems that he and his colleagues have been on the Benches opposite for a very long time, even those on these Benches cannot blame them for any of the shortcomings in the Bills of Exchange Act 1882. We welcome the proposals contained in the order. We were pleased to note that the Deregulation Committee had strengthened the protection of consumers in relation to notices dishonouring cheques. We feel that the position has been strengthened compared with the original draft.
I should like to ask the Minister one question relating to the principle of the attachment of funds, which was raised by the Deregulation Committee. The report says that the Treasury has concluded that the funds-attached rule cannot be amended by an order under the 1994 Act. Is the Minister confident that the position in Scotland in terms of cheque truncation is as secure and safe as he would like and as secure and safe as the position in England?
The Minister referred to the fact that these provisions were recommended by the Jack Committee in 1989. Seven years seems a long period that the banks have had to wait before an efficient and electronic system could be introduced. I wonder whether the Minister can give any indication as to why it has taken so long. Subject to those two small caveats, we commend the order to the House.
Lord Mackay of Ardbrecknish: My Lords, I am grateful to the noble Viscount for his welcome for this order. It is high time that the 1882 Banking Act was reformed. The idea of lorryloads of cheques traversing the country throughout the night from one set of banks to another in this modern day is long past its sell-by date. I suspect that the reason why it has taken some time is that we had to wait for the deregulation legislation to come in. Then of course we had to go through all the processes laid down in that Act before we reached what I might describe as the final phase this evening.
The noble Viscount asked me about the legal principle known as attachment of funds, which he suggested might complicate cheque truncation in Scotland. The Scottish Office has informed us that after an exhaustive legal analysis it concluded that fund-attached rules cannot be amended by an order under the 1994 Act. We are advised that the source of the problem is that it relates to Scots common law and not statute. But the powers available under the 1994 Act extend only to the amendment of statutory provisions and not common law provisions.
Any reform will require primary legislation, and so obviously a suitable Bill will have to be found. That of course presents some difficulties. My understanding is that being unable to tidy up that aspect will not cause a
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great problem to Scottish legislation. The noble Viscount's concern will not be justified. Perhaps I may thank him for not blaming me for the 1882 Act. After the past two days at this Dispatch Box, I feel that I am being blamed for almost everything else. I am extremely grateful to him for his support. This is a sensible measure which allows the banks to move with the times and has to be in the interests of all of us who are customers of the banks as well as the banks themselves.
On Question, Motion agreed to.

Licensing (Northern Ireland) Order 1997
7.54 p.m.
The Parliamentary Under-Secretary of State, Northern Ireland Office (Baroness Denton of Wakefield)The Parliamentary Under-Secretary of State, Northern Ireland Office (Baroness Denton of Wakefield) rose to move, That the draft order laid before the House on 30th October be approved.
The noble Baroness said: My Lords, in moving the Licensing (Northern Ireland) Order I would also like to speak to the Registration of Clubs (Northern Ireland) Order. Taken together, these two orders form a package of reforms. One deals with the licensing of premises such as public houses, hotels and restaurants, the other with the registration of private clubs in Northern Ireland to permit them to supply alcohol to members.
These orders consolidate, with amendments, existing Northern Ireland law which is contained in the Licensing (Northern Ireland) Order 1990 and the Registration of Clubs (Northern Ireland) Order 1987—by this evening's standards quite recent legislation. A wide ranging review of the laws on alcohol began in December 1992 with a review of the laws on registered clubs. A review of the licensing laws was instigated in February 1994 after it became clear that much common ground existed between clubs and licensing laws.
The orders seek to strike a balance between the need to control and regulate the sale of alcohol in a way which is effective, enforceable and equitable with the need to have full regard to the wider public attitudes. The Government consider that the main changes represent a balanced relaxation of the law while preserving the safeguards necessary to sustain sensible attitudes to drinking and prevent alcohol abuse.
I will explain first the provisions common to both orders and then those unique to each.
Articles 13 and 21 of the licensing order and Article 24 of the clubs order provide that liquor licences and club registrations, currently granted or renewed for a maximum of one year, may now be valid for up to five years at the discretion of the courts. This will free up valuable court time and is common sense.
Article 42 of the licensing order and Article 24 of the clubs order will abolish the Sunday afternoon break and allow the supply of alcohol between the hours of 12.30 p.m. and 10 p.m. on that day. The proposal brings the law in Northern Ireland into line with that of England and Wales and recognises the widespread demand from people to set their own Sunday timetables.
There is no evidence that the change to the law in England and Wales has led to an increase in alcohol consumption.
Article 59 of the licensing order and Article 33 of the clubs order again bring the law in Northern Ireland more closely into line with England and Wales by the introduction of children's certificates which will enable young people under 18 to be in licensed premises and registered clubs up to 9 p.m. provided that they are accompanied by an adult. Children have been allowed into the bars of sporting clubs in the province for many years.
I turn now to proposals unique to licensing law. Article 5 creates three new categories of premises which may be licensed, these being guest houses, conference centres and higher education institutions. There has been a considerable demand from the public to have a drink with a meal in guest houses, and the Government, with the strong support of the Northern Ireland Tourist Board, believe that this limited extension will assist Northern Ireland's tourism industry. In addition, one of the fastest growing businesses in Northern Ireland is the conference industry and the Government believe that this industry should be given every opportunity to compete for its share of the market. The Province's two universities host a number of events and conferences and this proposal will provide them with a greater degree of flexibility.
Article 5 also provides the powers under which regulations may be made specifying the conditions under which shops and supermarkets in Northern Ireland may sell alcohol alongside other goods. Regulations will be put in place to ensure that, amongst other things, stores set aside a designated area for the sale of alcohol.
Article 45 deals with small public houses which cannot supply food or entertainment and, under the present law, cannot have late licences. It is therefore proposed that such pubs will be allowed up to 20 late licences a year, and the Government are confident that this small concession will be warmly welcomed.
Article 51 deals principally with the conditions as to the sale of intoxicating liquor in restaurants where the Government are bringing forward a number of changes. The sale of alcohol will continue to be ancillary to the purchase of a main table meal. To curb the possibility of premises masquerading as restaurants when they are really discos and the like, it has been decided to introduce a provision prohibiting the charging of an entrance fee.
Articles 67 and 68 seek to strengthen the law in relation to the presence of alcohol at unlicensed entertainments or unregistered clubs. The new provisions prohibit alcohol at any entertainment outside of licensed premises or registered clubs and place the onus on the organiser to prove that it is not being held for private gain. Rights of entry have been provided to the police to investigate suspected breaches of the law.
Many of the proposed changes in licensing legislation should help make Northern Ireland a more attractive holiday destination and benefit the economy.
I will now detail proposals unique to clubs law. Articles 3 and 15 are related. Article 3 tightens the existing restrictions on the sale of alcohol in clubs which
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have ceased to be registered. This provision outlaws the presence of alcohol in such premises and introduces an automatic five-year disqualification for clubs convicted of this offence.
Article 4 strengthens the existing laws by providing that, during the waiting period prior to a court hearing of an application for registration, clubs must have in place certain rules designed to demonstrate their ability to operate within the law. This is coupled with a relaxation of the existing laws, whereby the waiting period to be served by clubs before their applications for registration can be dealt with by the courts will be reduced from two years to one.
Article 26 contains an amendment which will increase, from 20 to 52 times in any year, the number of special occasions on which a club may supply alcohol to 1 a.m. The figure of 20 was fixed in 1987 and it now seems reasonable to permit clubs to enjoy an average of one late night each week throughout the year, subject to police approval.
Article 40 contains significant changes to the existing law by enabling the manner in which accounts are to be kept and presented to be prescribed. The 1987 Clubs Order contained among other things provisions to combat racketeering in the affairs of some clubs. The Government believe that it is vital that all registered clubs should manage their financial affairs in a responsible manner.
Article 42 gives the RUC wider powers of entry and inspection so that clubs can be policed more effectively.
Article 43 will introduce a penalty points provision under which points will be attributed for certain offences relating to the keeping and presenting of accounts. It is aimed at clubs that commit serious or persistent breaches of the law in relation to their accounts. Well run clubs have nothing to fear from this proposal.
I hope that your Lordships will accept that the proposals which I have dealt with tonight comprise sensible relaxations in the law while maintaining essential safeguards. I beg to move.
Moved, That the draft order laid before the House on 30th October be approved.—(Baroness Denton of Wakefield.)
8 p.m.
Lord Williams of Mostyn: My Lords, I am grateful for the Minister's clear introduction. Both these Orders appear to offer workmanlike legislation, particularly set in the context, which I thoroughly endorse, of the importance of tourism in all its aspects to the economy of Northern Ireland.
I was listening carefully when the Minister said that the Clubs Order would provide not more than one late night each week. If only we were so lucky in your Lordships' House.
Baroness Denton of Wakefield: My Lords, I suspect that those of us who work on Northern Ireland business experience even more late nights than others, but I thank the noble Lord for his support.
On Question, Motion agreed to.

Registration of Clubs (Northern Ireland) Order 1997
Baroness Denton of Wakefield: My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That the draft order laid before the House on 30th October be approved.—(Baroness Denton of Wakefield.)
On Question, Motion agreed to.
Viscount Long: My Lords, I beg to move that the House do now adjourn during pleasure until 8.35 p.m.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 8.4 to 8.35 p.m.]

Police Bill [H.L.]
House again in Committee.
Clause 89 [Authorisations to interfere with property etc.]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 71:
Page 33, line 4, at beginning insert ("Subject to subsection (1A),").
The noble Lord said: In moving this amendment, I shall also speak to the substantive amendment, Amendment No. 72. Amendment No. 71 is simply a paving amendment to provide for the amendment that states:
"This section shall not … apply where information or evidence obtained through the use of wireless telegraphy, if it were in documentary form"—
that is, telephone tapping—
"would be subject to legal privilege; or … permit a police officer to interfere with any property which may be subject to legal privilege"—
namely, bugging—
"unless and until a production order under the Police and Criminal Evidence Act 1984 has been obtained, or any other necessary requirement under that Act has been complied with in relation to such material".
The amendment goes on to state that legal professional privilege,
"has the same meaning as that given to it in section 10 of the Police and Criminal Evidence Act 1984".
I do not think that I can over-emphasise the importance for our legal system of legal professional privilege. I am not much of a one for professions, and I am not much of a one for privilege. But the basis that a client's legal professional privilege—in other words, his communications with his lawyer—are confidential and shall remain confidential is quite fundamental to the administration of justice in this country. That was confirmed as recently as 25th October 1995 by the Judicial Committee of this House under the then Lord Chief Justice, the noble and learned Lord, Lord Taylor of Gosforth. He emphasised that it was a fundamental condition that legal professional privilege exists, and upon that the administration of justice as a whole rests.
Once a document is protected by legal professional privilege, this continues to be protected so long as the privilege is not waived by the clients. The maxim, "once privileged, always privileged", has been re-emphasised, which is of importance to the administration of justice, the solicitor's client and the solicitor's profession.
The Lord Chief Justice said on that occasion:
"Legal professional privilege is thus much more than an ordinary rule for evidence, limited in its application to the facts of a particular case. It is a fundamental condition on which the administration of justice as a whole rests.
"It is in the wider interest of all those hereafter who might otherwise be deterred from telling the whole truth to their solicitors. For this reason I am of the opinion that no exception should be allowed to the absolute nature of legal professional privilege, once established".
In the Police and Criminal Evidence Act 1984 there are specific safeguards for this material. Items subject to legal privilege or excluded material, or special procedure material, are defined in Sections 10 to 14 of the Police and Criminal Evidence Act. What that provides is very comparable to that provided in our Amendment No. 72—in other words, none of the bugging procedures or telephone interception procedures which are now provided for in this Bill, and which were not subject to statutory control under the 1984 Act, can override the conditions of the Police and Criminal Evidence Act.
This amendment is very narrowly drawn. It refers only to legal professional privilege. It does not, as it might have done, refer to the issue of journalists who may have a need to protect their sources. It may be that we will have to return to that matter in due course but, for the present, the protection of professional legal privilege—which is provided under the Police and Criminal Evidence Act—ought to be provided under this Act. I beg to move.
Lord Taylor of Warwick: I have two points to make about this proposed amendment. Most lawyers are professionals and care passionately about the reputation of their profession. Speaking as a barrister, the legal profession would welcome the fact that it would not be exempt from the provisions of this Bill so as to ensure so far as possible that no lawyer would be tempted to abuse the privileged position in relation to a client.
Imagine for a moment if lawyers did have the protection in terms of the exemption. A vulnerable lawyer—and there are vulnerable lawyers for all sorts of reasons—could be the target of the organised crime world. So this exemption, if it pertained to lawyers, could become a Trojan horse for criminals to hide inside. I am against the proposed amendment.
Lord Thomas of Gresford: I fundamentally disagree with the noble Lord, Lord Taylor of Warwick. I have been in a jurisdiction where I have known what it is like to have to go outside into the open air to talk to my client. I have known what it is like to fear that the room where I am staying is bugged and that every telephone conversation that I make is recorded. We are very fortunate in this country that we do not have these restrictions placed upon us.

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I fully support the proposal in the amendment that legal professional privilege should be extended—notwithstanding the powers that are granted in this Bill.
Although we face a wave of serious and organised crime, nevertheless there is a price which must be paid for the loss of fundamental freedoms. One of those freedoms is the ability to consult with one's client freely and fully and, from that consultation, so to advise him as to what he should do, to work together and bring about justice. Because one is acting in a criminal case for a defendant does not mean that one ever loses sight of the fact that justice is the ultimate goal and what we are seeking to achieve. Legal professional privilege permits frank discussion and frank advice.
8.45 p.m.
Lord Ackner: The noble Lord, Lord Thomas, reminds me that it was little more than a quarter of a century ago that I appeared in a case in Uganda. The president was then Mr. Obote. I and my junior—who is now a senior judge in the Court of Appeal—reckoned that the only safe place to carry on any conversation was in the swimming pool, which we did frequently.
The former Lord Chief Justice, Lord Taylor, has been quoted from the case of the Derby Magistrates. Lord Taylor was not making any law, he was merely following what had been laid down many, many decades earlier. I shall give your Lordships a flavour of this. He quoted a number of cases but there are three in which former Lord Chancellors gave the speech. Go back more than 150 years to Bolton v. Corporation of Liverpool. The defendant in civil proceedings sought inspection of the plaintiff's case to counsel to advise, though not apparently the advice itself, and filed a bill of discovery in equity for that purpose. He failed, and the Lord Chancellor, Lord Brougham, said:
"It seems plain that the course of justice must stop if such a right exists. No man will dare to consult a professional adviser with a view to his defence or to the enforcement of his rights. The very case which he lays before his counsel, to advise upon the evidence. may, and often does, contain the whole of his evidence, and may be, and frequently is, the brief with which that or some other counsel conducts his cause. The principle contended for, that inspection of cases, though not of the opinions, may always be obtained as a right, would produce this effect, and neither more nor less, that a party would go into court to try the cause, and there would be the original of his brief in his own counsel's bag, and a copy of it in the bag of his adversary's counsel."
And then the Lord Chief Justice refers to numerous cases throughout the nineteenth century, repeating the same theme, and refers to Holmes v. Baddeley, where the Lord Chancellor, Lord Lyndhurst, said this:
"The principle upon which this rule is established is that communications between a party and his professional advisers, with a view to legal proceedings, should be unfettered; and they should not be restrained by any apprehension of such communications being afterwards divulged and made use of to his prejudice. To give full effect to this principle it is obvious that they ought to be privileged, not merely in the cause then contemplated or depending, but that the privilege ought to extend to any subsequent litigation with the same or any other party or parties … The necessary confidence will be destroyed if it be known that the communication can be revealed at any time."
And then in the third case, a very senior judge, Sir George Jessel, Master of the Rolls, said:
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"The object and meaning of the rule is this: that as, by reason of the complexity and difficulty of our law, litigation can only be properly conducted by professional men, it is absolutely necessary that a man, in order to prosecute his rights or defend himself from an improper claim, should have recourse to the assistance of professional lawyers, and it being so absolutely necessary, it is equally necessary, to use a vulgar phrase, that he should be able to make a clean breast of it to the gentleman whom he consults with a view to the prosecution of his claim, or the substantiating of his defence against the claim of others; that he should be able to place unrestricted and unbounded confidence in the professional agent, and that the communications he so makes to him, should be kept secret, unless with his consent … that he should be enabled properly to conclude his litigation."
There are more in that vein but I think those are sufficient to show how well established the rule is.
Lord Lester of Herne Hill: I had not intended to speak on this amendment but, having heard several noble Lords testify from their personal experience, perhaps I may simply say that I have had the misfortune, like my noble friend Lord Thomas, to have argued cases in two common law jurisdictions (both describing themselves as democracies under the rule of law) where it became apparent that electronic surveillance devices had been planted throughout my hotel rooms on one occasion and, on the other occasion, in the prison and detention centre. Both cases involved serious constitutional issues. I only discovered that fact by employing the services of a secret police officer from another jurisdiction who swept my hotel rooms and discovered what was happening. I can only say that it had quite a catastrophic effect on my client in one of those cases in sapping her will in circumstances which I do not wish to go into at present.
I regard the retention of professional privilege against electronic surveillance in the circumstances described by the noble Lord, Lord McIntosh, as fundamental to the effective protection of basic rights and freedoms. I would deplore it if this Committee were not to take that view.
Lord Mackay of Drumadoon: There is no doubt that we are discussing significant amendments. If they were acceptable to the Committee, they would seek to change and restrict the powers contained in Clause 89. Picking up as they do the definition of items subject to "legal privilege" in the Police and Criminal Evidence Act 1984—which, in passing, I observe does not apply to Scotland, which of course this Bill is designed to do—they seek to introduce into the Bill a protection in all circumstances against any infringement of legal privilege.
The way in which the Bill is framed is quite deliberate. There are no statutory exemptions to the provisions as set out in Part III. That was a decision taken by government in the light of provisions such as are to be found in the 1984 Act and in the Prevention of Terrorism Act. The Bill is designed to deal with those who engage in serious crime. As the noble Lords, Lord Lester and Lord Thomas—and, indeed, my noble friend Lord Taylor of Warwick—will be well aware, those who run serious crime tend not to get their hands dirty. They are not the ones who handle the drugs, who possess the guns, who physically rob banks or who

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engage in substantial drugs transactions. They act as businessmen and frequently set up front companies to assist them in their illegal operations. In the course of doing so they make extensive use of lawyers, the vast majority of whom are perfectly respectable members of the legal profession. Many of these criminals are such important clients of their lawyers that the lawyers will visit their homes and offices. It is not uncommon for a lawyer who has an important client to go to his client's home or to his office.
If the amendments were passed, in a situation where one was seeking to investigate a criminal whose lawyer went anywhere near his home, his office or any other place he frequented (other than the lawyer's office), it would be impossible to invoke the provisions set out in Clause 89 and onwards in the Bill. There would be a risk of conversations being overhead between lawyer and client and of communications which would fall within the definition of Section 10 of the 1984 Act coming into the possession of those carrying out the intrusive surveillance. I stress that that is a risk even when one is not dealing with a lawyer who has passed from the straight and narrow. However, as my noble friend Lord Taylor very properly reminded the Committee, lawyers do, for a variety of reasons, depart from the rules of the profession. I give way to the noble Lord.
Lord Thomas of Gresford: Can the noble and learned Lord indicate whether there is an exemption within the Bill for lawyers' offices and chambers?
Lord Mackay of Drumadoon: There is no such exemption in the Bill, for the obvious reason that, if there were to be one, it would alert criminals to consult there and there alone for the sole purpose of furthering their illegal activities and frustrating the purpose of the Bill.
The noble Lord, Lord Thomas, says that when a man is charged with a criminal offence and is due to stand trial he has a right to consult his lawyer in private, without the cell or the chambers—or, indeed, wherever—being bugged. I do not depart from that at all in saying that that is a very important principle to be borne in mind. But, equally, those who engage in serious criminal activity do so year in and year out as a business. Experienced lawyers like the noble Lords, Lord Thomas and Lord Lester, will be well aware that major criminals frequently go for years without having to consult their lawyers for the purposes of defending a criminal charge. They are not the ones who are caught: it is the lesser individuals who do the work for them who are caught. They are running their businesses along the lines of legitimate businesses. They stay in the posher parts of town, they occupy offices and they behave as if they were as respectable as any Member of this place. That is the evil which the Bill is designed to attack. That is why it would be impossible to frame an exemption which protected—
Lord Lester of Herne Hill: I apologise to the noble and learned Lord for interrupting him, but I am puzzled
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by parts of his response. I thought that it was common ground in this place—and, indeed, in this country—that part of our ancient freedoms involved the presumption of innocence and the protection against self incrimination, together with the notion that a man is not to be condemned until proved guilty by his peers.
The noble and learned Lord has been using words like "criminals" and referring to people who are guilty of criminal wrongdoing. I agree with him that there is a serious mischief which needs to be tackled with effective powers. However, does the Minister agree that the amendment now before the Committee seeks to ensure that someone accused of a serious crime will, nonetheless, be protected according to the presumption of innocence? Does he also agree that the police will not be able to invade the confidentiality of professional privilege in a way that will enable the prosecution to take an unfair advantage in breach of ancient common law freedoms? What protection will there be against violation of the presumption of innocence and the privilege against self-incrimination, as well as legal professional privilege, if the amendment is not introduced?
Lord Mackay of Drumadoon: There is nothing in the Bill designed to attack the presumption of innocence; indeed, that is a fundamental principle of any criminal proceedings in this country and will remain so. The judges are there to ensure that it remains. As regards the privilege against self-incrimination, if the suggestion is that what defendants or accused persons say prior to being arrested and standing trial can in no circumstances be admissible against them in evidence, then I demur. If in casual conversation, whether with lay members of the public or lawyers, something comes out, then, in certain instances, it may be admissible in evidence. The real protection is that, when the case comes to trial, it is for the trial judge to decide whether there has been anything unfair about the circumstances in which the evidence was collected. If there has, then, as the 1984 Act makes clear in England—and as the common law makes clear in Scotland—it would be perfectly open to the judge to exclude that evidence as having been unfairly and improperly obtained.
9 p.m.
Lord Thomas of Gresford: Are we now to understand that the Bill provides for the bugging of the cell, the interview room, the solicitor's office, and the barrister's chambers? Never mind about what happens in court; that would be the greatest invasion of the liberty of the subject that one can recall in the criminal practice and procedure of this country.
Lord Mackay of Drumadoon: As the noble Lord knows perfectly well, the Bill makes no such provision.
Lord Thomas of Gresford: Does it prevent it?
Lord Mackay of Drumadoon: Clause 89(3) provides that, where the authorising officer, who is a police officer of the highest rank, thinks it necessary for certain action to be taken and is satisfied that that action

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seeks to achieve what cannot reasonably be achieved by other means, then and then alone he can authorise intrusive surveillance. His actions are to be subject to the supervision of a commissioner who will have held or is holding office in a most senior judicial position.
That chief officers of police in this country will bug the cells of people who are awaiting trial and do so with the co-operation of the Prison Service is, with the greatest respect to the noble Lord, a fanciful suggestion.
Lord Browne-Wilkinson: Will the Minister confirm that if they did so, it would be lawful under the Bill?
Lord Mackay of Drumadoon: It would not be illegal in the sense that it is explicitly prohibited. I submit that it would be entirely contrary to a proper discharge of the duties of the senior officer concerned. In order to take such action he would have to satisfy himself that it could not reasonably be achieved by other means.
Lord Browne-Wilkinson: It being lawful, would the commissioner have any jurisdiction to entertain a successful complaint?
Lord Mackay of Drumadoon: As the noble and learned Lord will know, the commissioner's powers are in Clause 94 and in Schedule 7 to the Bill. His duty is to keep under review the performance of functions under Clauses 89 and 91. I find it impossible to understand the circumstances which would justify a chief constable taking the action suggested by the noble Lord, Lord Thomas. For that reason, I find it perfectly easy to understand that the commissioner would intervene in such a situation if a complaint were made. Furthermore—again, I find it impossible to contemplate—if chief constables were going to do that, I have little doubt that the commissioner, who will have held or be holding high judicial office, would immediately report that to the Prime Minister as being a use of the Bill which was never intended by the Government.
It is easy, I submit, to imagine all kinds of circumstances in which the spirit of this legislation could be got round. However, let us turn the argument round the other way, and consider the practical example that I give the Committee. Those engaged in carrying out serious criminal activities are regularly in touch with their lawyers. Without any difficulty a situation could be brought about whereby this whole part of the Act would be virtually if not completely useless. That is a practical problem with which the Government have had to cope; and, I respectfully suggest, it is a practical problem with which the Committee has to cope. Unfortunately there can be little doubt that if the amendments were to be passed by the Committee in the present form it would frustrate immediately intrusive surveillance of people who might be of considerable interest to chief constables when they exercise these powers. And it would ignore the fundamental principle of our criminal system of justice: that it is for the trial judge to decide what evidence is admissible, not the police or anyone else.
Lord Thomas of Gresford: The noble and learned Lord has said that it would be an abuse of the Bill as
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proposed for the authority—the authorising person—to bug the cell, interview room, solicitor's office or barrister's chambers. Will he give an undertaking that that will be made perfectly clear in the Bill, and in the code, and that proper guidance will be given to those who have to take those decisions?
Lord Mackay of Drumadoon: The noble Lord will be well aware that I cannot give any guarantee on behalf of those upon whom it will fall to implement the provisions. However, perhaps I may remind the noble Lord of Section 10(2) of the Police and Criminal Evidence Act 1984. It states:
"Items held with the intention of furthering a criminal purpose are not items subject to legal privilege".
Even if the amendments were passed, if there were clear evidence that criminal activity was being carried out in a prison cell, between a lawyer on the one hand and an accused on the other, the amendment would not catch that. That begs the question whether a chief constable would be minded to exercise those powers in view of the hurdles that he has to overcome.
With respect to the noble Lord, he cannot have it both ways. If we go to what the English law sets out as legal privilege, the amendments would not protect the situation. On the other hand, if one approaches it in the way that I invite the Committee to approach it—on the basis that we are dealing with very serious criminal activities, we are entrusting the responsibility to highly experienced and trained lawyers, and leaving it to the trial judge to decide whether or not the evidence is admissible—I submit that there is a perfectly fair balance between dealing with the purports of legal privilege on the one hand and (I understand the Committee to be united on this) the importance of trying to do something about serious crime on the other.
Lord Thomas of Gresford: The noble Lord must know that legal professional privilege does not cover iniquity. There is no legal professional privilege if a conspiracy exists between the lawyer and the client. What we are talking about is the ordinary situation where perfectly proper legal advice has been given, on many occasions advice to a client to plead guilty having regard to the instructions which he has given. Is this all to be subject to bugging?
Lord Mackay of Drumadoon: The answer to that question posed by the noble Lord is no, because in my submission it would be impossible to bring that within the provisions of Clause 89(3)(a), which talks about the prevention or detection of a serious crime. If the crime has been committed and the accused is in custody, it is difficult to see how bugging would achieve either of these objectives.
Lord Ackner: Before the noble and learned Lord sits down, I wonder if he can help me as to how he envisages the functions of the trial judge. Is the trial judge to carry out a sort of balancing exercise, the interest of the client in non-disclosure being balanced against the public interest in seeing that justice is done?
Lord Mackay of Drumadoon: As a humble Scots lawyer, I would enter with a measure of trepidation into

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the question of how judges in England should apply the provisions of Section 78 of the Police and Criminal Evidence Act of 1984. What it provides, as will be well known to many Members of your Lordships' Committee, is a means of dealing with the admission of evidence which would have such an adverse effect on the fairness of the proceedings that the court ought not to admit it. That, put in statutory form, is similar to the test in Scotland and I have no doubt whatsoever that judges faced with this new legislation will apply the existing principles to any new provisions that Parliament has enacted. Fairness of the proceedings has always involved, as I have understood it, fairness to the accused or the defendant on the one hand, and fairness to the prosecutor and the public for whom he presents a case on the other. I have little doubt that the judges will be able to cope with that, as no doubt they would have had no difficulty in coping with Section 78 when it was first enacted.
Lord Ackner: Can my noble and learned friend indicate how one assesses fairness to the accused where you are contemplating disclosing documents which are the subject of legal professional privilege?
Lord Mackay of Drumadoon: At this stage we are dealing with intrusive surveillance and the question of admitting evidence, as I understand it, which has been listened to by some means that has involved bugging of one sort or another. As the code will make clear and as indeed is implicit in Clause 89(3)(b) of the Bill, if one were dealing with documents they would fall to be dealt with by search warrants, which would come under the 1984 Act. I think that the practical example posed by my noble and learned friend is one which would be solved by another route.
As I think was made clear by my noble friend Lady Blatch during the Second Reading, a draft code relating to intrusive surveillance has been lodged in the Library and I may make mention of it later on in speaking to the amendments which follow. At this stage I am certainly prepared to give a quite unequivocal undertaking that, it being only a draft code, practical problems such as that raised by my noble and learned friend will be looked at to see whether any addition or amendment to the code would be appropriate. Perhaps at this stage, to forestall any further questions that may arise, I could draw the attention of your Lordships to Amendment No. 137 on the Marshalled List, which makes it clear that this part of the Bill will not come into force until a day falling upon the day on which the code of practice issued under Section 92 of the Act comes into operation.
Lord Lester of Herne Hill: Before the noble and learned Lord sits down, I wonder whether he would be kind enough to clarify one point that is still perplexing me. In answer to the question put by the noble and learned Lord, Lord Browne-Wilkinson, the noble and learned Lord indicated that were intrusive electronic surveillance to take place, for example, in a barrister's chambers, that would be lawful under the Bill as it stands, though, as he said, it would be an abuse.
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What I do not understand is what remedy the victim of a breach of personal privacy or the abuse of electronic surveillance would have. Am I right in thinking that the code, in whatever form, is not to be a code that gives rise to an effective legal remedy? I think that is made clear. If that is correct, does the Bill contain any right to an effective remedy for damages or any other remedy for the victim of abusive, intrusive electronic surveillance, breaching legal professional privilege in the way that has been indicated?
9.15 p.m.
Lord Mackay of Drumadoon: The short answer is no, in so far as one is dealing with rights to damages, and so on. The individual has a remedy in that his rights at his trial will be protected. Whether he has suffered any breach of his rights under the European convention and whether any remedy lies there is not for this House to determine in any capacity; it is a matter for the European Court. The Government are satisfied that the Bill as drafted meets their obligations under the convention. Were somebody to challenge that view at a later date, any such proceedings would be defended.
Lord McIntosh of Haringey: The noble and learned Lord the Lord Advocate is a fair-minded and rational man, but he is in an impossible position. It does not do any good for him to say that he is a humble Scots lawyer. He represents the Government; he expresses the collective views of the Government; he has no let-out in that respect. I am the only non-lawyer taking part in this debate and I do not seek to make any excuses on those grounds.
Lord Mackay of Drumadoon: I appear here on behalf of the Government. I do not offer the fact that I am a Scots lawyer as an excuse. However, I defer to other Members of the Committee, particularly the noble and learned Lords on the Cross-Bench, in their knowledge of English law. Were I not to do so, I do not think I would be described as a fair-minded man in the way the noble Lord kindly mentioned a moment ago.
Lord McIntosh of Haringey: I accept that, We are not concerned with personalities or background; we are concerned with arguments. That is the only thing we are concerned with today.
The noble and learned Lord the Lord Advocate has sought to justify a position in which, as he admits, it will be legal under this Bill—and this is a new statutory power—to bug any premises, to tap any conversation, provided that a chief officer of police has given permission for it. He described the provisions in the drafting of this part of the Bill as deliberate. It is indeed deliberate. Let us look at Clause 89(1):
"No entry on or interference with property or with wireless telegraphy shall be unlawful if it is authorised under this section".
The double negative is clearly deliberate. It is designed to make the possibilities of telephone tapping and wire bugging as wide as possible by ensuring that the only illegality arises in circumstances that are spelt out in detail in this part of the Bill. That is a deliberate way of ensuring that the fail-safe position for legislation is that

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telephone tapping and bugging are legal under every conceivable circumstance except those circumstances which are specifically provided for in this Bill. I suggest that that is fundamentally opposed to the constitutional principles of this country.
Even in his practical examples the noble and learned Lord the Lord Advocate finds himself in contradiction with his own arguments. He described, quite rightly, the extent to which serious and organised crime is conducted by people he described as businessmen, people who do not dirty their own hands with the details, who do not carry the guns, who do not transport the drugs, who do not consult their lawyers. Those people leave it to their henchmen to deal with lawyers because it is their henchmen who are likely to come before the courts. Those businessmen will not be affected by this amendment; they will not be talking in barristers' chambers, solicitors' offices or prison cells. They are exempt because of their own separation from the dirty end of the crimes that they inspire.
The noble and learned Lord the Lord Advocate said that the principle of legal professional privilege was "an important principle to be borne in mind". The only possible construction one can put on that phrase is that it is an important principle to be borne in mind and then discarded, because the noble Lord the Lord Advocate has discarded it. He has specifically admitted that it is legally possible under this part of the Bill as drafted for bugging to take place, if authorised by a chief officer of police, in barristers' chambers, solicitors' rooms or prison cells. He described it as inconceivable that it would actually happen, but I suggest to the Committee that it is our responsibility to see that the law says that it should not happen.
It is not up to us to depend on the goodwill of anybody after the legislation has been passed. Because the contradictions of his arguments are so severe he went so far as to argue at the end that, if these amendments were carried, the whole fight against crime—again I quote him—would be "virtually if not completely useless". Ministers do not go over the top in that way unless there is something profoundly wrong with their arguments.
The noble and learned Lord the Lord Advocate knows perfectly well, and he has been reminded of it by distinguished lawyers in the course of the debate, that the professional privilege of the crooked lawyers about whom he spoke is not protected because of the doctrine of iniquity. He knows that perfectly well. Yet he chose to put before the Committee the argument about crooked lawyers misusing the system.
There are two parts to Amendment No. 72. I admit that the first part is capable of improvement, in the sense that it talks about telephone tapping and does not sufficiently say that the telephone tapping which should be unlawful is telephone tapping in conditions of legal privilege; in other words, in a solicitor's office, a cell or barrister's chambers. Furthermore, it does not sufficiently recognise the only valid point which could be raised against the amendment; namely, that inadvertent tapping of the other side—the client's side—
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of a legally privileged conversation would be difficult to avoid. To that extent the first part of my amendment is defective.
Lord Mackay of Drumadoon: Do I correctly understand the noble Lord to be accepting that if someone engaged in serious crime was on the telephone to his lawyer, using an audio phone so that everyone in the room could listen, and a bug picked up what was being said not only by the person engaged in the serious crime but by the lawyer at the other end, there would be nothing wrong with that, but that if the bug was at the other end of the phone there would be something wrong? If so, if there is any illogicality in the discussion that we have had on this amendment, I respectfully suggest that it lies in that observation.
Lord McIntosh of Haringey: I did not say that. I was talking about telephone tapping not about bugs in a room. I thought that I was being helpful to the noble and learned Lord. But I acknowledge that that part of the amendment needs further thought if it is to be adequately defined. To that extent I am satisfied that the amendment ought not to be pressed.
However, the other part of the amendment—paragraph (b)—which refers to interference with property, which is bugging and not telephone tapping, seems to me to have survived without any serious criticism from the noble and learned Lord or indeed from anybody else in this debate. It seems to me that the part of the argument concerning legal professional privilege, which is held in such high regard not only by the lawyers who have been quoted and the lawyers who have taken part in this debate but by all those who are concerned with the rule of law, has by no means been answered by the noble and learned Lord the Lord Advocate.
It is 9.25 p.m. and I do not suppose that enough Members of the Committee have had a full opportunity to consider the issues involved. I believe that there is further scope for discussion, and hope that the noble and learned Lord the Lord Advocate will be kind enough to agree to that between now and Report stage rather than that I should press this amendment at the present time. But I believe that on calm reflection he will realise that the position in which the Government put themselves is not only in conflict with everything that has been said by senior lawyers in the courts but in conflict with the provisions of the Police and Criminal Evidence Act 1984 and in conflict with much previous legislation which has recognised the responsibilities and rights of legal professional privilege.
I should like to talk to the noble and learned Lord about these issues between now and the next stage of the Bill. If he will agree to do that, I shall beg leave to withdraw the amendment.
Lord Mackay of Drumadoon: I am happy to discuss anything, particularly the detail of this matter, with the noble Lord. Whether on calmer reflection my views will alter remains to be seen. However, it is an important matter and I give a clear undertaking that I shall discuss

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it with him fully and, indeed, any other Member of the Committee who wishes to approach me or my noble and learned friend.
Lord McIntosh of Haringey: I am grateful to the noble and learned Lord. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 72 not moved.]
Lord Rodgers of Quarry Bank Lord Rodgers of Quarry Bank moved Amendment No. 73:
Page 33, line 6, leave out ("officer") and insert ("circuit judge").
The noble Lord said: The purpose of Amendments Nos. 73 and 74 is to substitute as the "authorising officer" a circuit judge for a chief constable or a similar person as defined in subsection (6) of Clause 89 of the Bill.
The Committee will be aware of the fifth report of the Select Committee on the scrutiny of delegated powers and I want to quote briefly from what it said about the provisions of Clause 89 and subsequent clauses. In its report the committee said,
"We do not doubt that these new powers will be the subject of intense scrutiny during the bill's passage through the House".
It went on to say,
"They affect the long-standing principle that the police cannot enter upon property without a judicial warrant."
It concluded,
"The breadth of these powers, which many would characterise as a constitutional change"—
it then goes on to refer to the code of practice. The phrase to which I wish to draw attention is,
"many would characterise as a constitutional change".
That is the nature, in the view of the committee on delegated legislation, of this and subsequent clauses, and that is why I feel it is appropriate that we discuss them even at this late hour tonight. I am speaking to these amendments to enable the Committee to debate the issues to which the Delegated Powers Scrutiny Committee drew attention. They reflect the extent to which we on these Benches have become deeply concerned about Clause 89, as drafted.
I reluctantly agree that powers similar to those in Part III are probably required to deal with serious and organised crime and also, subject to what further I may say, that if a case can be made out for them, they ought to be authorised by statute. But I do not agree, certainly on the arguments I heard on Second Reading, that such intrusive action should be a matter for the police and the police alone to authorise.
When I raised this matter on Second Reading the Minister replied,
"we considered the option of judicial warranting; that is, prior authorisation, but ruled it out. We do not believe that it is right to involve judges at the early intelligence gathering stage as regards the prevention of crime as well as the investigation of crimes that have taken place.".
The next sentence is the important one:
"There is the danger of the judiciary becoming too closely involved in the investigative process and of its impartiality being called into question".—[Official Report, 1 1 /11/96; col. 837.]
That is the argument that the Minister put forward at Second Reading—I appreciate that she did so—in response to a question that I asked her in relation to the alternative options for the authorisation to which the amendments relate. Perhaps we can look at the phrases briefly.
Is it the case that judges would become "too closely involved"? Whether or not that is the case, is it the case that their impartiality would be called into question? In so far as that might be true—I do not grant that it would be true—does the risk outweigh the safeguard that judicial authorisation would provide?
In regard to judges being involved too closely, all we would be asking for is a single act of judgment on the basis of a standard application form. The judge would have to review the lawfulness of the application against Clauses 89 and 91 of the Bill and Schedule 7. That would be the single act the judge would be involved in. I do not believe that on that basis, to quote the Minister, a judge would be too closely involved.
She also said that impartiality might be called into question. It seems to me—I stand to be corrected—that search warrants could be seen to be potentially far more threatening to the impartiality of judges than the proposals in the amendment. As the Minister said, warrants come at a later stage when,
"police can show to the judge evidence to suggest that crime has been committed".—[Official Report, 11/11/96; col. 837.]
Surely it could be far more involving because judges are acting upon the presumption or the possibility of crime. The safeguard I am proposing as an amendment to the Bill is a simple provision that the judge should authorise the intrusive operation well in advance of there being any presumption. That does not seem in any way to threaten the impartiality of the judges. If it were thought to do so, I cannot see why the answer would not be a simple one and that the authorising judge should not be the trial judge if it comes to that.
I am grateful to the Minister for the care with which she dealt with a number of points that were raised at Second Reading and those with which she did not deal on the day. She has written to several of us. One of those letters was to the noble and learned Lord, Lord Browne-Wilkinson. She used a phrase which can be contested or at least argued about. She said:
"our homes are, of course, much more likely to be violated by burglars than by the executive".
The Bill is not mainly or primarily concerned with burglars, as she described them, but with serious and organised crime. Even if that is the case, and even if at the present time our homes are less likely to be violated by the executive, we have to consider whether we are not opening the door for further developments which would make the executive increasingly intrusive.
The Minister also referred in her letter, which she placed in the Library, to the fact that the police and Customs had been successful in using these techniques, restricting their use to serious cases over the years.
Perhaps I ought already to know—I apologise to the Committee if the information is readily available—how many cases in a convenient period there have been of authorisation by chief constables of intrusive surveillance of this kind. In so far as one assumes that chief constables have not always authorised on the basis of the applications they have received, how many unsuccessful applications have there been because a chief constable refused to authorise?
If this has been the practice in the past but, as your Lordships' House acknowledges, it has been illegal, I do not believe one can argue from what may have been a successful use of these techniques that for that reason alone it should be incorporated into the Bill. There seems to be a good case for the intervention of the judiciary.
There is also the argument, which we heard at Second Reading and which we may hear again today, that these provisions have to be made in the present form because they are involved in the Security Service Act which passed through this House earlier in the year. Here we must be cautious about a circular argument. The argument when your Lordships discussed that Bill was that the powers had to be included in it because they were already being exercised by the police. It would be an insufficient argument today to say that because the powers were included in that Bill, they now have to be embodied in this legislation.
If the Bill remains unaltered its powers will be unusual in the western world. Among the countries requiring judicial authorisation for bugging are the United States, Germany, Canada, Australia, New Zealand, France and others. I believe that the Committee may reasonably ask the Minister why we should be the odd man out: what is it about our system of administration that makes it unnecessary for us to use a provision that is found to be desirable elsewhere?
There are no practical problems in making this change to the Bill. Its substance will remain the same. It is one of the three options which were considered by Ministers and it was rejected, on the evidence so far before the Committee, only on the basis given by the Minister in winding up our Second Reading debate. It is an amendment which is easily made and I hope that the Minister will say that he is willing to consider it with the prospect of bringing forward an amendment of his own were I not to press this matter to a Division tonight.
Lord Renton: Before the noble Lord sits down, will he be so good as to explain whether the circuit judge who is to give this authorisation will have to be approached in open court or will he be expected to give it privately either in his room at the courts or at his private residence, or where? That has a great bearing on the matter.
Lord Rodgers of Quarry Bank: I assume that he will be expected to give it privately in precisely the same way as a chief constable would give authorisation today.
Lord Browne-Wilkinson: At Second Reading I drew attention at length—probably at undue length—to the
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dangers which are inherent in this Bill in the sense that the Bill's powers trench on what are traditionally known as the freedoms of the Englishman—now the freedoms of the inhabitants of the United Kingdom—in particular on the sanctity of his house.
After Second Reading the noble Baroness, Lady Blatch, responded by sending me a letter setting out in detail the Government's response. I am very grateful to her for that letter. It has been deposited in the Library. I shall not risk wearying the Committee by going through the whole of what I said at Second Reading, but I shall, if I may, shortly remind the Committee of what I said. I am very anxious that this should not be seen as a lawyer's playtime because we are talking about constitutional freedom. I hope that all Members of the Committee will have regard to that, not as something which is a lawyer's matter or a political matter, but as something which it is the responsibility of this House and others to protect; namely, not to tolerate the erosion of freedom more than is necessary to meet an objective.
I said at Second Reading, and I repeat, that I am very much in favour of the police having powers to use modern methods of surveillance against serious, organised crime, such as drug dealing, money laundering and white collar fraud. There was some indication in the noble Baroness's letter that I really did not have that view. If that was thought it is wrong. I am not soft on crime, I am tough on crime, but I am steely on freedom. I pointed out at Second Reading that the powers conferred by this Bill go much wider than necessary for dealing with the evils which we are all agreed need to be dealt with.
Serious crime is defined in extraordinarily wide terms—much wider terms than the matters that your Lordships have been considering. I gave as an example a protestor against the Newbury by-pass who within the meaning of the Bill would be engaged in serious crime. As I read the letter from the noble Baroness, the Minister does not deny that within the meaning of the Bill he would be engaged in serious crime. The answer that has been given by the noble and learned Lord the Lord Advocate—it is an answer that recurs—is that it comes within the powers of the Bill, but in practice it will not happen.
I also drew attention to the fact that this was not simply a question of putting bugs in a villain's property. The Bill authorises the bugging, entry and search, and the doing of any other act not simply on the property of the suspected villain but on any property in the area of the particular police authority if in the view of the chief constable it is necessary for the prevention or detection of a crime. Therefore, an employer's premises are liable to be bugged, entered and searched. I gave the example of the investigative journalist who had a valuable lead, such as the laundering of drug money, but, in accordance with ordinary journalistic practice, refused to disclose his source. The police might reasonably think that if they could discover his source they would have a powerful weapon and that therefore they could bug the home of the journalist and the newspaper offices, enter those offices and so on. I suggest that no one in this Chamber believes it is right that that should be done. Why are we conferring powers to do it?

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That brings me to the fundamental point directly in issue in this amendment. I hope that the Committee will bear with me for a moment or two while I explain the point. Your Lordships' right and my right to home and property free from state interference and police invasion depends upon one principle only. That principle was established by Entick v. Carrington, although it was thought to exist before that date. The principle is that the state, its officers, the police—anybody—have no greater power to enter your Lordships' property or mine than has any other person. Officers of the Crown cannot invade our property. If they do the courts regard it as illegal. If the act can be detected in time it will be restrained by injunction; if not, it gives rise to damages. That is the only safeguard against state intervention in our privacy. In this Bill that safeguard is being eroded very substantially.
If it is necessary to take that step in order to achieve the desirable object of pursuing serious crime, so be it, but up until now, with the (to my mind) appalling aberration of the extension of the security services in a Bill passed earlier this year, the only right enjoyed by the state to invade property is under the warrant of a court. Why not the warrant of a court in this case? Why should there not be the protection of an independent person?
The noble Baroness in her letter states that the Government have considered that matter but have decided that the independence of the judiciary may be prejudiced by being seen to be involved in the detection of crime, not simply the trial of it. That is not an objection that has ever been put forward to prevent an ordinary search warrant being issued by the judiciary in the detection of crime. It is part of the judicial function.
I have also made inquiries at the highest level to see what inquiry has been made by the Minister of the judiciary as to whether it thought this was a gross prejudicing of its integrity. At the highest level that I could reach, which was fairly high, I am aware of no discussion between the Government and the judiciary as to whether it feels that it is prejudiced by it.
We have heard from the noble Lord, Lord Rodgers, that throughout the common law world, including New Zealand, before the state or its servants enter one's property covertly or openly, judicial warrants are required.
I have seen nothing that has so far been said which shows that that cannot be done in this case. I urge on the Committee that that independent check is preserved because, let us make no mistake, we are not simply legislating for the noble Baroness, the current Home Secretary, or present chief constables, this place is being asked to make a constitutional change. Every time this is raised—and I am afraid that I rudely interrupted the noble and learned Lord the Lord Advocate to ask whether it was unlawful, for which I apologise—we are told not that it is unlawful to do these things, but that in practice it will not happen.
That is no answer to a change of a constitutional kind which confers powers. We may have—I shall not say tomorrow because that it is too dangerous—in the
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foreseeable future a different Home Secretary, different chief constables and a different political set-up, where these powers will not be used in accordance with the noble Baroness's assurances. What is being done in this case is to remove the protection. The common law will be able to do nothing if the right to invade our property is conferred on the state, in the form of the police, with no prior approval from an independent party. I suggest that the amendment is essential.
9.45 p.m.
Lord Thomas of Gresford: I cannot improve upon the words that the noble and learned Lord, Lord Browne-Wilkinson, has just put forward. Perhaps I may echo one thing that he said: this is most certainly not a lawyer's playground. One feels that the Government fail to understand what they are doing. They fail to understand the constitutional principle which is being breached by their proposals.
Since the 17th century everyone's home has been regarded as inviolate; since the 18th century it has been the rule of the common law that no executive warrant should allow an officer to invade someone's privacy, and here we are, because we face this terrible flood of terrorism, drugs and so on, throwing away basic constitutional freedoms.
We are brought up to believe in an unwritten constitution. I am sure that on the Government side there will be many people who subscribe with pride to the concept that we have an unwritten constitution, because it is said to be flexible. But when that constitution is bent towards the executive, then those of us who, perhaps by our training but for no other reason, understand what is happening, protest. I join with the noble and learned Lord, Lord Browne-Wilkinson, in that protest. I support the amendments.
Lord Lester of Herne Hill: Having heard the noble Lord speak already I shall be brief, but I should like to echo what has been said by the noble and learned Lord, Lord Browne-Wilkinson, and my noble friend Lord Thomas of Gresford. We, in this country, unlike the rest of the Commonwealth and unlike the rest of Europe do not have written constitutional guarantees of our basic rights and freedoms. In the United States the Fourth Amendment to the American constitution provides that, "The right of the people to be secure in their persons, houses, papers and effects against unreasonable searches and seizures, shall not be violated". That safeguard against unreasonable searches and seizures in the American Bill of Rights drew on a rich theme of English common law experience.
As my noble friend, Lord Thomas of Gresford, has said, "Every man's house is his castle" is a maxim that has been celebrated in England since the beginning of the 17th century. One of the most forceful expressions of that maxim was that of a great Conservative statesman, regarded by Winston Churchill as one of the greatest, William Pitt the Elder, speaking in Parliament in 1763. He observed:

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"The poorest man may in his cottage bid defiance to all the force of the Crown. It may be frail, its roof may shake, the wind may blow through it, the storm may enter, the rain may enter, but the king of England cannot enter, all his force dares not cross the threshold of the ruined tenement".
As the noble and learned Lord, Lord Browne-Wilkinson, has said, the most famous of all our English common law cases on this topic is Entick v. Carrington. Perhaps I may say a little about the case to those of your Lordships who are not lawyers or judges and are not necessarily familiar with the great case in our constitutional history. Entick v. Carrington was decided in 1765 and was one of a series of civil actions for damages against state officers who, using general warrants, had raided many homes and other places in search of materials connected with John Wilkes' polemical pamphlets attacking King George III and the Government. Entick sued because agents had forcibly broken into his house and seized his pamphlets, and so on. The Court of Common Pleas, presided over by Lord Camden, the chief justice, gave a judgment which has been treated by successive generations of parliaments, governments and courts as stating a fundamental constitutional principle of personal freedom. Lord Camden declared that the warrant and the behaviour that it authorised was subversive "of all the comforts of society". The issuance of a warrant for the seizure of all a person's papers and not only those criminal in nature, was what he described as "contrary to the genius of the law of England".
Exactly a century ago the American Supreme Court described Entick v. Carrington as a great judgment, one of the landmarks of English liberty, one of the permanent monuments of the British constitution. It described it as a guide to what the framers had meant in writing the Fourth Amendment to the American Bill of Rights. More recently, the American Supreme Court has explained that the requirement that no warrant shall issue but on probable cause means that the police must, wherever practicable, obtain advance judicial approval through a warrant procedure.
The Supreme Court also held comparatively recently that because the protection is not only of property but of personal privacy, so the President of the United States was not able to authorise the warrantless electronic surveillance of persons thought to be endangering national security.
I submit that this House has a responsibility to do its best to preserve our ancient constitutional freedoms and to ensure, as far as we can, that we do not pass legislation that is likely to breach the guarantees of human rights contained in the European convention. Both Houses, like the executive, are bound by the obligations in the convention.
Briefly, the position in regard to the convention is this. The ancient common law right of the individual to respect for his home, personal privacy and private papers is guaranteed by Article 8. The scope of Article 8 has been held to include professional and business activities. In a recent case the European Court of Human Rights decided that, where a lawyer's offices were searched by the German police under a warrant issued by the court but not accompanied by sufficient
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procedural safeguards of independence, there was a violation of the lawyer's personal privacy and professional secrecy.
If the Bill is passed in its current form, it will almost certainly violate Article 8 of the convention. In my view it is likely to violate it in a number of different ways: in respect of personal privacy; the presumption of innocence; the privilege against self-incrimination; legal professional privilege; and the protection of journalists' confidential sources.
I wrote to the noble Baroness the Minister to express my concern about the absence of any effective remedy for breaches of personal privacy that may arise in the operation of the powers conferred by Clause 89 unless there is some judicial safeguard of the kind contemplated by this amendment. I look forward to the Minister's reply to those concerns. The trial judge's discretion to exclude illegally obtained evidence, referred to earlier by the noble and learned Lord the Lord Advocate, is no remedy for breaches of basic civil rights and liberties that occur before the pre-trial stage.
The safeguards proposed by these amendments tabled in the name of my noble friend Lord Rodgers of Quarry Bank are moderate and workable. They run with the grain of our constitutional heritage and come some way to meet the obligations imposed on Parliament, as well as on government and the courts, by the European convention. They would at least ensure that the draconian and necessary powers contained in the Bill would be authorised by an independent judge. That is the position elsewhere among the democratic nations of other European and Commonwealth states. Surely our Parliament should require no less protection of the rights and freedoms of the people of this country.
Lord McIntosh of Haringey: My noble friends and I have not felt it possible to put our names to this group of amendments. We strongly support the proposals of the Government for statutory control of what is regrettably necessary to combat serious crime; namely, telephone tapping and bugging—in other words, intrusive surveillance. We very much regret that necessity, but recognise it as a fact of life.
Our approach to this matter has not been through the issue of authorisation of the tapping, but, as we saw in previous amendments, to attempt to strengthen the statutory powers contained in the legislation by more closely defining the circumstances in which they are to be used. We believe that if the authorisation for intrusive surveillance is properly defined, if the code of practice is effective and if there is no temptation to misuse these statutory powers, then we shall provide both a more effective fight against serious crime and more effective protection for the rights of the individual. Therefore, the concentration of our amendments this evening and in the course of the Bill has been on those matters to which I referred rather than the issue of authorisation.
However, I ask the noble and learned Lord the Lord Advocate to consider in his reply the point referred to by the noble Lord, Lord Lester, and specifically made in the opinion given by Mr. Michael Beloff QC and two other lawyers, which referred to the relevance of the

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European Convention on Human Rights. I shall not take up the time of the Committee by reading out the full 18-page judgment. However, I shall read two paragraphs from it. I ask the noble and learned Lord, to respond to those paragraphs.
Paragraph 3(j) reads:
"If enacted without substantial modifications, the proposed executive warrant power looks certain to face challenge under the Convention and eventual condemnation by the court".
Paragraph 12 states:
"In our opinion, it is seriously contrary both to this country's unwritten constitutional traditions and to the law of the Convention to remove from judges the function of supervising and authorising when property and privacy should be intruded upon to prevent or detect crime".
That is the opinion of very senior counsel—and that opinion deserves a response from the Government.
10 p.m.
Lord Ackner: I wonder whether the noble Lord could explain why he is not in favour of advanced judicial approval as apparently occurs throughout the Commonwealth and other common law countries?
Lord McIntosh of Haringey: I can only repeat what I have said. Our approach to this matter is to seek to strengthen the provisions of this part of the Bill by limiting its application to those crimes which are really serious and to those requirements for authorisation which are really necessary. If we can achieve that, it is more important than considerations of procedure.
Lord Browne-Wilkinson: What if the noble Lord cannot achieve that? The fate of his limiting amendments as concerns legal privilege has not been happy. Assume that the Government remain adamant and do not produce any limiting, where are we going to get to?
Lord McIntosh of Haringey: The noble and learned Lord requires an answer from me now. I cannot give that answer. We shall listen carefully to what the Government say in the course of this debate—as we have listened carefully in all the debates so far—and we shall consider what position to take at that time.
Lord Renton: This has been a most interesting debate on a very difficult problem. There is one factor which has not so far been referred to and perhaps my noble and learned friend the Lord Advocate will consider it when he replies. The point concerns the time factor. If we are to have serious crime prevented and detected in the way that the public require—and which is very necessary—we must make sure that the police in their attempts to prevent and detect crime do not face delays imposed by Parliament. I hope that I am not exaggerating this delay factor, but if one had to find a circuit judge, either in his private room at the courts or in his home, might not that be sometimes a serious delay
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in detecting serious crime? That is the only other factor that we should invite my noble and learned friend to consider.
Lord Bowness: Perhaps I may ask the noble and learned Lord the Lord Advocate one further question to assist me as someone who is not an eminent lawyer, as other speakers have been tonight. It has been suggested that entry onto premises for these purposes would in some way be quite unprecedented. I understand the concern and the potential constitutional implications of that; but is that in fact so unprecedented? Is there a not a whole raft of legislation which enables officials of all kinds, from all sorts of undertakings and authorities, to enter into property and upon property without the consent of the owner or the occupier? Not necessarily in connection with crime, but in terms of the precedent of entry onto private property, will the noble and learned Lord the Lord Advocate tell the Committee how many other officials and Acts allow this to happen?
Lord Mackay of Drumadoon: Perhaps I may deal first with the point raised by my noble friend. As he correctly says, there are many instances where officials from all kinds of organisations—public utilities and others—have power to enter premises. They do so not for anything as serious as the investigation and prevention of serious crime but for the purpose, for example, of checking the meter when one has not paid one's electricity bill. Off the top of my head, I could not say how many such examples are to be found on the statute book. However, it is a good example of an instance where Parliament has decided that the greater public good deserves some infringement of the important principles upon which this most interesting and useful debate has focused.
In responding to the various contributions that have been made, it is important for Members of the Committee to be reminded that the police have been exercising powers of intrusive surveillance for some time. On Second Reading the noble and learned Lord, Lord Browne-Wilkinson, raised the question of the legality of such activity. Whether or not it has been legal in the past is, in one view, neither here nor there. The whole purpose of the Bill is to put intrusive surveillance on a statutory basis and to strengthen the public protection by making the police powers explicit and legally defined—and, importantly, by subjecting police action to review by the commissioner.
Despite the fact that such surveillance has been taking place since at least 1984 under non-statutory guidelines which have been lodged in the Library of this place from that time, it has not given rise to the practical problems, let alone the outrage against constitutional conventions, that some noble Lords very genuinely feel to be the case. Equally, while the Interception of Communications Act which has some parallels at least with this Bill (involving as it does the protection of a judicial commissioner but no judicial warranting) may not be the favourite type of legislation for every Member of this place, it has not attracted the criticism which some of the arguments tonight have suggested.

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All Members of the Committee who have spoken have been concerned about the protection of the public at large, on the one hand, against the activities of those who engage in serious crime and, on the other hand, against unwarranted intervention into their homes by police officers and others who would be entitled to act under this legislation. However, a balance undoubtedly must be struck. As I am sure the noble Lord, Lord McIntosh, would concede, the correct balance is being struck to a very large extent. The noble Lord would at least join me in acknowledging that the Government are somewhere towards achieving such a balance.
As my noble friend Lady Blatch made absolutely clear on Second Reading, judicial warranting was one of the options which was considered most carefully when the Bill was being brought forward. However, having looked at the matter carefully, the Government do not believe that it is appropriate to involve the judiciary in the procedures set out in Clause 89. With intrusive surveillance the primary focus is the gathering of intelligence. As Clause 89(3) makes clear, one has in mind necessary action when one is looking to obtain something of substantial value in the prevention or detection of serious crime.
There is therefore an important distinction between the authorisations which the Bill is designed to allow, and search warrants which can be applied for and issued under the Police and Criminal Evidence Act 1984 where the application follows upon the commission of an offence. Furthermore, search warrants are documents which are required to exist and required to be disclosed to the occupier or owner of premises being searched at the time the warrant is executed. Authorisations, on the other hand, will of necessity remain private and as they are being used are most unlikely to be disclosed to anyone other than the police on the one hand and the commissioner on the other. As I have already indicated, they will be used frequently for the prevention of crime long before any particular offence may have been committed.
In some instances that one can imagine, the authorisation having been used and some information obtained, evidence will then be recovered from other sources, the accused or defendant will stand trial, and he may be prosecuted and convicted in court without anyone being aware of the existence of the authorisation. Equally, there will be other investigations which may continue for some considerable time where again it would be of the utmost importance to keep the existence and use of the authorisation absolutely secret.
Recognising that this is a clause which introduces provisions of importance, the Bill also contains important safeguards. These are found in the provisions in Clause 93 onwards relating to the commissioner. As I have already observed, he must be someone who has held or presently holds high judicial office. He will have a most important role to play in reviewing whether those who are empowered to grant authorisations have acted properly in the exercise of the powers which are given to them under this Bill.
Perhaps I may respond further to a point raised earlier by the noble Lord, Lord Lester of Herne Hill, about remedies available under the Bill. At that stage I should
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have made it clear that paragraph 3 of Schedule 7 sets out certain remedies to quash the authorisation and order documents to be destroyed, and to pay compensation. I should properly have dealt with that in a little detail earlier.
I do not think that the role of the commissioner can be underestimated. He will have the opportunity of reviewing all the authorisations which have been granted and, on a nationwide basis, ensuring that the powers set out under the Bill are operated on a uniform basis.
The noble Lord, Lord Rodgers, asked how many authorisations we might be dealing with. I do not have a complete answer to the various questions he asked. I am more than happy to undertake to write to the noble Lord with full details. However, to give Members of the Committee some indication of what is involved, I understand that during the year 1995 in England and Wales chief officers of police approved a total of 1,300 authorisations. That figure is obviously a fraction of the number of search warrants granted throughout the country during that period. I do not have available to me tonight the number granted and refused in Scotland or Northern Ireland. However, I undertake that the point will be responded to.
The Government consider that there are other disadvantages with judicial warranting. That arises primarily when one considers the provisions of Clause 89(3)(b) which requires the authorising officer to be satisfied,
"that what the action seeks to achieve cannot reasonably be achieved by other means".
That undoubtedly would involve a consideration of what other investigative techniques and what other operations could be mounted by the police rather than the intrusive surveillance which is sought.
I would suggest that it would be extremely difficult indeed for a circuit court judge or a sheriff in Scotland to make an informed assessment of that without an in-depth knowledge of the particular police force, its resources, its personnel and whatever information it was getting from other agencies. It is peculiarly an operational matter, and were members of the judiciary to become involved in an assessment of that there is the concern that it would be perceived to be a threat to the traditional impartiality of judges, placing them too firmly in the law enforcement camp rather than in the role of presiding over trials which they have traditionally performed.
I accept that search warrants are frequently granted by members of the judiciary. Some of course are granted by justices of the peace who may not perform any judicial role as such but may, as I have sought to stress, have granted them after offences have been committed, when the applicant for a warrant can come before the circuit court judge or the sheriff and explain the offence that has been committed and whatever else requires to be explained. In such an application there is no need whatever to embark on an assessment of whether a search warrant is unnecessary and what it is sought to recover could be recovered by other operational means. I submit to your Lordships that that is what moves the

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position on from the one we have traditionally dealt with and that is why it is necessary if we are, in developing this quite justified attack on serious crime, to move the show on from what we have traditionally regarded as inviolate. I venture to suggest that, perhaps understandably, the noble Lord, Lord McIntosh, is reluctant to give too—
Lord Lester of Herne Hill: If I may interrupt the noble and learned Lord the Lord Advocate, he has responded to my question as to the remedy available for a misuse of these powers by referring to Schedule 7 dealing with the investigation of complaints by the commissioner. May I ask the noble and learned Lord whether I am right in saying that in place of the right to a remedy for damages for trespass or breach of personal privacy, which has been our law in one form or another since Entick v Carrington, there is to be instead a remedy by a commissioner not exercising judicial power, and not a judge, who will be treating the matter on judicial review principles and will award compensation, not damages, not exemplary or exaggerated damages. Am I right in saying that that is to be in place of the ancient right which has been part of our freedoms for two centuries? That is the only remedy for a misuse of these powers which otherwise we would be regarded as tortious.
Lord Mackay of Drumadoon: The remedy for the granting of an authorisation which the commissioner deems it appropriate to quash is to be found in paragraph 3 of Schedule 7 to the Bill. Whether the acts which justify the commissioner quashing the authorisation and granting some remedy may also give rise to some other remedies in law would be a matter which would have to be discussed having regard to the circumstances of the case. My understanding is that when the Appellate Committee of your Lordships' House recently looked at this issue in the case of Kahn, it specifically reserved the issue of whether there was a right to privacy, the breach of which would give rise to certain remedies, as an issue which it anticipated it would have to look at in the future, but until it came before that committee it was wrong for it to express any opinion. If that was a correct view, as I am sure it was, it would be wrong for me to go any further at the Dispatch Box this evening.
Lord Lester of Herne Hill: The advice of the noble Lord the Lord Advocate is the only advice that the Committee can take on the matter. If the Committee considers it important that we should not pass a Bill which is in breach of the European Convention on Human Rights, am I right in understanding his answer to be that, if the Appellate Committee were to develop the Khan principles into an enforceable right of personal privacy, we should be complying with the convention because that will provide a safeguard which is lacking in this Bill? If that is not what he is saying, then I am afraid I do not understand the relevance of what he has just said.
Lord Mackay of Drumadoon: I am not prepared to discuss at the Dispatch Box what may happen if the
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Appellate Committee forms a view of a case which has not yet come before it. I repeat that this Bill sets out certain remedies which apply when the commissioner quashes an authorisation. What other rights may flow to the affected home owner because of any intrusive surveillance of his house would be a matter to be decided on the facts. One could imagine all kinds of situations where physical damage or possibly even personal injury to some of the occupants was caused. Whether or not that was covered by the remedies available to the commission would have to be looked at as and when he had made his adjudication and no doubt the court would determine accordingly.
As I understand the draftsman's intention, while it is clear that the decisions of the commissioner should not be subject to appeal or liable to be questioned in any court, the fact that payment of compensation is ordered by the commissioner does not exclude any other remedies which an affected proprietor may have.
As far as the position under the European convention is concerned, as the noble Lord, Lord Lester, has informed the Committee, a letter was sent to my noble friend dealing with the issues which may arise under the convention. Perhaps I may inform the noble Lord, Lord McIntosh, that I have not seen the opinion of Mr. Michael Beloff and others, and I understand that neither have my officials. Understandably, therefore, I do not propose to respond in detail to the short passages that were read out to me. In general terms, as I hoped I had made clear earlier in the debate, the Government consider that the provisions of the Bill would comply with the convention in dealing not only with issues of personal privacy but also important principles such as the presumption of innocence, the privilege regarding self-incrimination, legal personal privilege and the protection of journalists' confidential sources.
As I understand it, Mr. Beloff s opinion indicates that, if this Bill passes in its present form, challenges before the European Court are inevitable. As I observed earlier, it would be for that court to decide whether or not there had been any breach of the convention. All I can do is to give the Committee an assurance that these issues have been looked at. Had they not been, mistakes might have been made which would have led to unfavourable decisions.
Moving on, I stress again that the experience gained from the use of the 1984 guidelines has been very useful in framing the draft code of practice which is available. I say again how useful it would be if noble Lords who had comments to make on that draft were minded to draw that fact to the Government's attention. The code will eventually have to come before this Chamber and we would rather hear your observations and criticisms sooner than later.
Having regard to the structure of Clause 89, the positive reason to which I invite the Committee to pay regard is that the officers who will be acting as authorised officers will be extremely senior. They will have been in the police or Customs service for many years; they will have had extensive training; and no doubt they will have passed various examinations and

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sat in front of selection boards. I suggest that they are uniquely qualified to deal with the organisational assessments which are an implicit part of subsection (3).
It is no criticism of circuit court judges or sheriffs to say that they have not had that practical experience. They are trained in other disciplines and have worked in the criminal justice system from a different perspective. The whole criminal justice system depends on people of different disciplines and different experience working together.
I recognise that Members of the Committee feel strongly about the issues which undoubtedly arise in this clause; but I hope that the Committee will be persuaded that the Government have got right the balance that has been struck in this part of the Bill. For that reason, I hope that it will be possible for the noble Lord, Lord Rodgers, to withdraw his amendment.
Lord Ackner: Before the noble and learned Lord sits down, I wonder whether he can help on one matter. He said that the Government decided that it was not appropriate to involve the judiciary and gave as his reason for the non-involvement of the judiciary that it would be perceived to be a threat to the impartiality of the judges.
Have the Government made any inquiries into the Commonwealth jurisdictions where the senior police officer makes his application in private to the particular member of the judiciary charged with considering the application to discover whether there has been any problem in relation to the perception of a threat to the impartiality of judges? If so, what has been the result of his inquiries?
Lord Mackay of Drumadoon: I cannot provide a detailed answer to the point raised by the noble and learned Lord at this juncture. I have certain information about the views that certain members of the judiciary may hold, but I would rather not say anything about them without being quite clear where they come from and on what basis, confidential or otherwise, they were passed. But I undertake to investigate the matter both in relation to the United Kingdom and further afield and I shall seek to satisfy the point that the noble and learned Lord raised.
However, I stress that, while there may be judicial warranting and other common law jurisdictions, it is perfectly possible for common law jurisdictions to go about things in different ways, seeking to achieve justice in the way they feel best and happiest with. It may be that while there is a lot to learn from other countries, one does not necessarily need to follow precisely the same route if, for other reasons, the view is taken that a different route might be preferable. That, I submit, is the situation that we are probably in in this case.
10.30 p.m.
Lord Rodgers of Quarry Bank: I say with great reluctance that I find the reply of the noble and learned Lord the Lord Advocate very disappointing and unconvincing, particularly in so far as he sought to deal with the question of impartiality, which has again just
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been raised by the noble and learned Lord, Lord Ackner. I agree that the debate has ranged very widely. But, as my noble friend Lord Lester made clear, these are moderate and workable proposals. I said in the course of my opening remarks—I share the view expressed by the noble Lord, Lord McIntosh of Haringey—that I reluctantly support statutory powers in this area.
My amendment was addressed simply to the question of judicial authorisation. As I understand it, though I must read the Official Report carefully, the Lord Advocate simply added to the argument on impartiality that we heard previously from the Minister two propositions which need to be examined. I hope I do not misrepresent him but at one stage he seemed to be implying that judicial authorisation might be more difficult to keep secret than an authorisation undertaken by a police officer.
He said also that it was extremely difficult for a circuit judge to make a decision on an operational matter. As far as I could judge from his remarks—they ranged very widely—those are the only two arguments which he brought forward to add to those we heard on Second Reading. They must be examined carefully because there has been a great deal of confusion in the debate and in the mind of the Lord Advocate in regard to the argument for powers of this kind and the much narrower question to which my amendments are addressed—that is, by whom those powers should be exercised.
For that reason we cannot put these matters to rest tonight and can expect a fuller and further debate during succeeding stages of the Bill. However, will the Lord Advocate address, if not by intervention now, later, the question raised by the noble and learned Lord, Lord Browne-Wilkinson, in relation to whether there had been discussion with the judiciary of the arguments put forward by Ministers to justify their choice of options? As I understood it, no such discussion had taken place. I shall be grateful if, perhaps by letter, the Lord Advocate will deal both with that point and a point raised at the end of our discussion by my noble friend Lord Lester about practice in the Commonwealth.
Apart from the disappointment at the reaction from the Government Benches I was disappointed beyond what I had already said by the response of the noble Lord, Lord McIntosh of Haringey. If we were not in Committee in your Lordship's Chamber, he might have used the phrase, "My hands are tied". I hope that before we next discuss this matter he will seek permission from his party's spokesman in another place, on the basis of the powerful arguments put forward today, to adopt a more liberal and generous attitude towards the substance of the amendment I placed before the Committee.
I ask of the Government Benches that there should be some response and that they should take time to think again or come forward with better arguments, and of the Opposition Benches a move in the direction of the case which has been made very strongly today, both from these Benches and from the Cross-Benches in your Lordship's Committee.
I am tempted, because I see a good assembly of Members present tonight, to seek the opinion of the Committee. But, in the hope that if we return to this

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matter on Report there may be a larger number who are disposed to agree with the powerful arguments put forward from these Benches and elsewhere, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 74 not moved.]
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 75:
Page 33, line 12, leave out ("thinks") and insert ("reasonably believes").
The noble Lord said: In rising to move Amendment No. 75, I shall speak also to Amendments Nos. 76 to 78. These amendments, as I indicated when I spoke to the last amendment, seek, by restricting its application to those cases which are absolutely necessary, to strengthen the effectiveness of statutory authorisation being given to bugging. It will be clear that the more frequently bugging is used indiscriminately, the less likely it is to provide an effective remedy against serious crime. We are deeply concerned about the provisions in Clause 89 which indicate the circumstances in which an authorising officer can authorise telephone tapping or bugging.
The phrase used in Clause 89(3)(a) is that the authorising officer,
"thinks it necessary for the action specified to be taken on the ground that it is likely to be of substantial value in the prevention or detection of serious crime".
The phrase "thinks it necessary" is deeply defective because it provides no objective test at all. It could never be tested in the courts or by the commissioner as to whether it was reasonable or not to authorise bugging. It is simply a matter that the authorising officer thinks so. That applies in line 12 and also in line 15, where the words used are "is satisfied", which again is a phrase without any objective test. Our alternative phrase "reasonably believes" in both cases adds an objective test.
I turn to Amendment No. 76. The phrase used in the Bill is,
"that it is likely to be of substantial value in the prevention or detection of serious crime".
The phrase,
"likely to be of substantial value",
is very vague indeed. Surely the correct phrase is that it is "necessary for". That is what bugging is for. It is only to be used when it is necessary, as has been confirmed by Ministers and by everyone who has sought to justify these statutory powers.
Finally, Amendment No. 78 seeks to extend the phrase,
"cannot reasonably be achieved by other means",
by adding,
"and that the action specified is proportionate to the aim sought to be achieved".
That again is a phrase which is used in legislation and has been used for many years. It provides some kind of control—perhaps not a very strong kind of control—on
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the extent of action which might be taken in relation to property. Instead of just saying that the authorising officer may authorise,
"the taking of such action…as he may specify",
the amendment would restrict it to that action which is actually necessary for the purposes concerned. It stops the possibility of the legislation making lawful, for example, criminal damage or other interference with property.
We believe that to define these matters more closely is not to weaken but to strengthen the provisions of the clause. I commend the amendments to the Committee. I beg to move.
Lord Mackay of Drumadoon: I accept that the amendments are put forward in the hope that they will be attractive to the Government and that they will be perceived as being helpful. I hope that my response in rejecting them will not come across as being dismissive. I accept the spirit in which they are advanced.
When one looks at what is proposed, it is clear that they do not alter the position at all. The first and third of the amendments are, on one view, fairly semantic. One definition of "think" in the dictionary is "believe", and obviously the converse is true. While some mention is made by the noble Lord of an objective test, what the clause requires is that the authorising officer be satisfied. If that judgment is to be scrutinised by the commissioner, it is difficult to see how any less information would require to be available for the officer to be satisfied than for him to reasonably believe a certain view. Indeed, the whole structure of the clause requires authorising officers to proceed on a reasonable basis. If they fail to do so and complaints are made, the commissioner will undoubtedly intervene; equally, in the absence of any complaint, he will deal with such a matter in the reports he is required to make.
Probably the clearest reason for the choice of words used in the provisions to which the first and third amendments are directed is that the Government have sought to mirror the terms which are already used in existing legislation in the Interception of Communications Act 1985 and in the Intelligence Services Act 1994. One finds use of the terms "think" and "is satisfied".
It is always sensible, when one is seeking to achieve the same purpose in legislation, to use similar if not identical words to those that have been used in the past. If a change is made, then courts and lawyers begin to enter the playground that we were discussing earlier and try to argue that Parliament intended something different. That is the reason why the passages to which Amendments Nos. 75 and 77 are directed are in the form that they are.
Turning to Amendment No. 76, again I am not persuaded that the term,
"likely to be of substantial value in",
should be replaced by "necessary for". For a start, there is already a "necessary for" test in the first part of the subsection and any further repetition might be thought to be tautologous. We must also remember that these are primarily intelligence-gathering operations against

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sometimes elusive and certainly very difficult criminals to track down and to get evidence against. It would be very difficult for an authorising officer to be sure that the action he is authorising will ultimately lead to the prevention or detection of serious crime. What he can be satisfied of, however—and again this will be subject to scrutiny—is that the action is likely to be of substantial value in the investigation process in which he is engaged.
Finally, as regards Amendment No. 78, I believe that the Government have made it clear in the Bill that authorisation should only be given, and probably only sought, in cases involving the most serious of crimes and where action cannot reasonably be achieved by any other means. The code of practice to which I have already made reference, deals with the issue of what is proportional. Paragraph 2.2 states that,
"A person giving an authorisation should satisfy themselves that the degree of intrusion into the privacy of those affected by the surveillance is commensurate with the seriousness of the offence. This is especially the case where the subject of the surveillance might reasonably assume a high degree of privacy, for instance, in their houses".
I suggest that it is better for such guidance to be set out in the code, which is subject to scrutiny in Parliament, rather than in the primary legislation itself. In the light of experience, it would be far easier to bring forward a new code and have that approved than to embark on detailed amendment of primary legislation. Having acknowledged that I appreciate the spirit of the amendments which have been brought forward, I hope that the noble Lord will find it possible to withdraw them.
Lord McIntosh of Haringey: I am not convinced by the semantic parts of the Lord Advocate's argument. I believe that he has unreasonably failed to recognise the importance of the word "reasonably" as providing an objective test which "thinks" and "satisfied" do not provide because those words are in the mind of the authorising officer whereas "reasonably" is capable of being tested in the courts. Subsection (3)(b) uses the word "reasonably", which confirms my view that the amendments are not tautologous or unnecessary. However, I recognise the desirability in most circumstances of legislation being compatible with previous legislation. I recognise the force of the point that the noble and learned Lord the Lord Advocate makes about the wording of the Interception of Communications Act even though I prefer my wording to his. On that basis I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 76 to 78 not moved.]
10.45 p.m.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No.79:
Page 33, line 20, at end insert—
("( ) An authorising officer shall not authorise action under subsections (1) to (3) if the sole purpose of the action is to overhear speech transmitted by the public telephone or where an application may be made under the Interception of Communications Act 1985.").
The noble Lord said: In moving Amendment No. 79, I should like to speak also to Amendments Nos. 81, 91 and 94. In response to the previous amendment, the noble and learned Lord referred to the code of practice which was subject to parliamentary scrutiny. I acknowledge the courtesy of the noble Baroness, Lady Blatch, in seeing to it that we received a copy of the code of practice in time for us to table amendments, as we had requested. These four amendments quote the code of practice and seek to make it available for discussion and—if I convince the Government of it—for inclusion in the Bill.
Amendment No. 79 provides that overheard speech transmitted by the public telephone shall not be the sole purpose of action under this part of the Bill, because that is perfectly well covered by the Interception of Communications Act 1985. The code of practice rightly says that it should be dealt with under that Act rather than this Bill. I cannot see that that will change. It seems to me that it is a stable part of the provision which the Government propose and therefore it ought to be on the face of the Bill rather than in the code of practice.
Amendment No. 81 refers to the detail to be specified by the authorising officer when he approves an application for intrusive surveillance under Clause 89(2). It provides that the authorisation should include the names where known of those to be targeted, the property, the nature of the case and the intrusive surveillance involved and how the authorisation criteria have been met. That also comes from the code of practice. It is the Government's stated intention that that should be included in the operation of this part of the Bill. I suggest to the Government that these matters are also pretty stable and are not likely to be changed. They do not require the flexibility of the code of practice and can perfectly well be included on the face of the Bill.
Amendment No. 91 is concerned with Clause 91 of the Bill. It provides for the review of authorisation:
"The relevant authorising officer shall review each authorisation at intervals of not more than a month from the day on which the authorisation was given, to assess the need for the intrusive surveillance operation to continue".
That is also the intention of the Government. We are not breaking new ground by raising it here and now. It appears to be one of those aspects of the code of practice that is hardly likely to change, certainly once it has gained the authority of government. There is no good reason why it should not be included on the face of the Bill.
Finally, Amendment No.94 is a much more practical element in the code of practice. It provides for an authorisation record to be created giving the date when authorisation is given, the fact that further intrusive surveillance has occurred and the state of play as regards periodic renewals and the results of those renewals. It also provides for a central record to be kept. That is also the intention of the Government. It is not likely to change, and it should be on the face of the Bill. I beg to move Amendment No. 79.
Lord Mackay of Drumadoon: As the night wears on, I am not sure that there is a great deal between the noble Lord and myself. When one looks at the

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chronology of events that precede the coming into force of Part III, it is possible to prefer the view that it is better to deal with conditions in the code of practice rather than on the face of the Bill.
Clause 92(5) provides that the code is required to be brought into operation by means of a statutory instrument approved by a resolution of each House of Parliament.
So Parliament will have an opportunity to debate the code.
I repeat what I said a moment ago, that it is possible that in the light of experience the code may have to be altered in one form or another. For example, time limits within which authorisations need to be reviewed—and there has to be an assessment of the need for the operation to be continued—are matters which may need to be altered once the system is up and running.
On the last four amendments, the answer is that these matters are currently dealt with in the draft code. Subject to refinement, they will be dealt with in the code which will be laid before Parliament.
The short answer to Amendment No. 79 is to be found in Clause 89(3)(b). The authorising officer has to be satisfied that the action which is sought to be covered by the authorisation cannot reasonably be achieved by any other means. If the sole purpose of the authorisation were to overhear speech transmitted by a public telephone, application may be made under the Interception of Communications Act 1985. Then, as a matter of law, that condition could not be met. Although the Bill does not deal with the matter in the way that the noble Lord might wish, as a matter of law it is dealt with in Clause 89(3)(b). I hope that with that explanation the amendment will be withdrawn.
Lord McIntosh of Haringey: I accept what the noble and learned Lord the Lord Advocate says about Amendment No. 79. As to the other amendments, he says that it is possible to argue that they are better dealt with in the code of practice. I agree that it is possible. Everything is possible, but it is not probable. Surely it is better to have these matters considered and debated, even at this hour of night, in this Chamber than to have them treated en bloc, as a code of practice would have to be treated. A code of practice can be debated, but it cannot be debated in its parts, and it cannot be amended. It is much better to do it this way when the issues are as stable as I have suggested. However, in the light of the Lord Advocate's remarks on Amendment No. 79, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 80 to 82 not moved.]
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 83:
Page 33, line 35, leave out ("or") and insert ("and").
The noble Lord said: The amendment addresses the issue of the definition of serious crime which is used in this part of the Bill. The issue is not new because the
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same definition of serious crime was used earlier this year in the Security Service Act. We proposed the same amendment then as we do now.
The issue is that the definition of serious crime is in two parts. First,
"it involves the use of violence, results in substantial financial gain or is conduct by a large number of persons in pursuit of a common purpose".
Secondly,
"the offence or one of the offences is an offence for which a person who has attained the age of twenty-one and has no previous convictions could reasonably be expected to be sentenced to imprisonment for a term or three years or more".
Those two parts of the definition, joined, as they are, by the word "or" result in a definition of serious crime which defies common language. The example has been given on many occasions—most recently today by the noble and learned Lord, Lord Browne-Wilkinson—of a large number of persons in pursuit of a common purpose who might be, as he suggested, protesters against the Newbury by-pass, or as I suggested, in the past protesters against the poll tax. Indeed, I hope that almost any political objective can be pursued by a large number of persons in pursuit of a common purpose. Harold Wilson used to call them "a tightly knit group of politically motivated people". Unless it is linked with a definition of serious crime which includes the provision of a reasonable expectation of a sentence of imprisonment of three years or more, it clearly extends the definition of serious crime beyond common language and beyond common sense.
This amendment is as relevant now as it was when we moved it on the Security Service Bill and I commend it to the Committee. I beg to move.
Lord Mackay of Drumadoon: The arguments advanced by the noble Lord obviously come as no surprise to me because I am aware of the views which were expressed in your Lordships' House during the debates on the Security Service Bill. It is right that I should place on record why, in this Bill, the draftsman continues to refer to serious crime in the terms that have been used before. The Government intend that the police and Customs officers will deploy techniques which require interference with property involved with organised crime and organised criminals. There is no statutory definition of what is organised crime and the Home Affairs Select Committee in another place recommended that efforts should not be wasted in trying to create one. I know that is a view which is shared in many jurisdictions. One can argue for months if not years on the topic and all the time serious crime is proceeding.
The approach followed has been, without any apology, to adopt the definition of serious crime which has been used in the interception of the Communications Act of 1985, an Act of Parliament which has been in place for more than a decade. The experience of that Act is that the definition has, in practice, worked well. Warrants issued under that Act are subject to scrutiny by an independent commissioner and none of the three distinguished members of your Lordships' House, the

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noble and learned Lords, Lord Lloyd, Lord Nolan or Lord Bingham, has ever found cause to complain about the definition of serious crime contained in that Act.
It was for that reason that, when the Intelligence Services Act 1994 was amended by the Security Service Act 1996, the same approach was followed, as the same approach is urged on the Committee tonight. When the House debated the Second Reading, the noble and learned Lord, Lord Browne-Wilkinson, came up with the very interesting example of the Newbury by-pass protestors and of how they might be brought within the definition of the clause as it is currently framed. Rising to the challenge, my officials have sought to work out a crime which could be legitimately described as a serious crime but which would only fall within one of the two branches of subsection (5). I put this example forward to support the view that the general approach is correct.
Perhaps one may imagine a disgruntled employee who threatens to contaminate a product of his former employer. The motivation of such an employee need not involve any use of violence, need not result in any substantial financial gain, and need not be conducted in association with anybody else. The intention might be to give ample warning that the product had been contaminated with a view to all the potential products affected being destroyed. On any view, that would be regarded as a serious crime. It would constitute the offence of blackmail under Section 21 of the Theft Act of 1968, an offence which carries a maximum penalty of 14 years' imprisonment. As I understand it, that would fall within one branch but not the other. One cannot say how likely it is to occur, but it certainly cannot be excluded as a possibility. That carefully thought out example illustrates that the approach followed since 1985 is correct. On that basis, I invite the noble Lord to withdraw the amendment.
11 p.m.
Lord McIntosh of Haringey: I am not convinced by the example. The only way in which it is a serious crime is if the result might be serious, in the sense that a lot of people might suffer from the contamination. It might therefore be said that throwing oneself off a roof into the middle of a crowd is a serious crime on the basis that a number of people on the ground might be injured. I do not think that a serious crime can be defined by judging the worst possible outcome of that crime. Nor do I believe that the noble and learned Lord the Lord Advocate would seriously argue that. My example of the Newbury by-pass is an actual example, to which he did not attempt to respond.
I am not satisfied with this provision. I did not like it in the Interception of Communications Act. However, I recognise that it has been in force for a number of years. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 84:
Page 33, line 39, at end insert—
("(5A) Any information or property obtained or retained in whatsoever form under the powers conferred by this section shall be treated for destruction purposes as if it were a fingerprint or sample in accordance with section 64 of the Police and Criminal Evidence Act 1984.").
The noble Lord said: This amendment offers an additional protection which does no harm whatever to the fight against crime. It provides that Section 64 of the Police and Criminal Evidence Act, which deals with fingerprints and samples, can be applied here to information or property obtained or retained using the powers in that section. We are saying: let the Government be consistent. If under the Police and Criminal Evidence Act they would order the destruction of that information or property, then they should order its destruction in the same circumstances under this part of the Bill. I beg to move.
Lord Mackay of Drumadoon: This amendment, if allowed, would do some harm to the structure of the Bill as it is laid out and the intention for which these clauses are being introduced.
Section 64 of the 1984 Act deals with the destruction of fingerprints and other samples taken after an offence has been committed and taken in connection either with the investigation of that offence or the prosecution of somebody for the offence.
In the case of this Bill, the situation is different. There is no need for a particular offence to have been committed before an authorisation can be sought. It can be sought, as Clause 89(3)(a) makes clear, for the purposes of the prevention of crime as well as the detection of crime. Therefore one cannot apply the Section 64 procedure simply, as is suggested.
These clauses are designed to build up criminal intelligence recovered by intrusive surveillance on serious criminals. They do not commit one-off crimes and then retire happily to the countryside. They engage in this activity year in, year out. It would frustrate one of the primary intentions of this legislation if information recovered had to be destroyed after a short period of time.
I am sure that the noble Lord, Lord McIntosh, will recognise a difference between the prosecution of individual offences and intrusive surveillance directed at ongoing serious criminal activity which may run year after year. Given that explanation, I hope it will be possible for the noble Lord to withdraw the amendment.
Lord McIntosh of Haringey: I wonder whether the noble and learned Lord has adequately instructed himself on Section 64 of the Police and Criminal Evidence Act. We are not talking about destruction after some arbitrary period of time; we are talking about destruction after, for example, a case has resulted in acquittal. That is what Section 64 is about. It would not in any way damage the effectiveness of the information or property which is being obtained. I really wonder whether the noble and learned Lord the Lord Advocate ought not to read again his brief and the original

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legislation and see whether my interpretation is not closer to reality than his. In anticipation that he might do so, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 85 not moved.]
Clause 89 agreed to.
Clause 90 [Authorisations given in absence of authorising officer]:
Baroness Blatch Baroness Blatch moved Amendment No. 86:
Page 35, line 18, after ("or") insert ("under or by virtue of').
On Question, amendment agreed to.
Clause 90, as amended, agreed to.
Clause 91 [Authorisations: procedure and duration etc.]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 87:
Page 35, line 41, leave out ("fifteen days") and insert ("seventy-two hours").
The noble Lord said: I rise to move Amendment No. 87 and to speak also to Amendments 88, 89 and 90. All of these amendments are concerned with the renewal of authorisation.
The Bill quite properly sets time limits for the renewal procedures under Clause 91. I suggest to the noble and learned Lord the Lord Advocate that these time limits are no more and no less permanent than the time limits in the code of practice which he suggests might require flexibility. Experience might show that these time limits are at least as vulnerable to change as the ones he defended in the code of practice earlier. However, I am not proposing that they should be taken out of the Bill and put into the code of practice. I am proposing that they should be tighter than they are at present.
It is proposed that an oral authorisation—in other words, an emergency authorisation given under Clause 91—should expire 72 hours after it is given, rather than after 15 days as is proposed in the Bill. If the authorities cannot get their act together within 72 hours to obtain a proper authorisation, then there is something very wrong with management.
We suggest as an additional criterion that the authorisation should expire at the end of the period for which it was given. That is to take account of the possibility that the period for which it was given should be shorter than the period of six months provided in subsection (2)(b).
In subsection (2)(b) we suggest that expiry should be three months, beginning on the day on which it was given, rather than the six months proposed. Again, an effective management would ensure that authorisations were given for a period in which they are likely to be used and useful, rather than having a number of authorisations in force, dragging on and clogging up the system, which would otherwise be the case.
Finally, Amendment No. 90 suggests that in a case when it is necessary for a renewal, the renewal by a person other than the original applicant should be for a
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period not exceeding three months rather than the period of six months proposed in subsection (3) which we would take out of the Bill. Again, these are not damaging amendments; they are designed to ensure that there is effective management.
I know that what I am saying seems to be very funny to the Government Front Bench. There is a constant state of laughter about all of this, but I think it is serious.
We are trying to increase effectiveness by removing the unnecessarily lax conditions under which authorisation can originally be achieved and renewed. I beg to move.
Lord Mackay of Drumadoon: I commend the noble Lord upon his ingenuity in deploying my own arguments against me. I have to say that we believe that the period stipulated in the amendments is far too short. Perhaps I should also explain that the slight hilarity just witnessed on the Government Front Bench was due to the fact that I was offered a glass of lemonade. I said that I would accept it provided that it was pure lemonade and did not have anything stronger in it.
Lord McIntosh of Haringey: You could not afford the tax!
Lord Mackay of Drumadoon: I am happy to hear that the tax on my favourite drink has gone down; but perhaps we should discuss that later.
At present, property warrants authorised by the Secretary of State under the Intelligence Services Act 1994 and the Security Service Act 1989 last for six months. We would not wish to disadvantage the police and Customs by restricting authorisations to half that period. Unlike the Interception of Communications legislation, where a warrant can be activated almost instantly, it may in some instances take many weeks to set up an intrusive surveillance operation and to gain access to the target's property. While that may not apply in every instance, it will certainly apply in some. Once the operation has been completed, it may take many weeks more for an intrusive surveillance device to be retrieved. For those very sound and practical reasons, we must give the law enforcement agencies a reasonable period within which to complete their operations.
It is important to remember that the provisions included in the Bill provide for the authorising officer to cancel an authorisation as soon as the intrusive surveillance is no longer necessary. The code of practice requires the authorising officer to carry out regular reviews, which should be at no greater interval than one month. We consider that this is the most effective and efficient way of keeping authorisations to the minimum period necessary at the same time as avoiding unnecessary bureaucracy and circumventing the practical problems which such surveillance operations will sometimes encounter.
We accept that the period of authorisation given orally and, in urgent cases, in the absence of the senior officer is greater than the period for dealing with urgent warrants under the two Acts. However, the circumstances of the authorising officers are different. It

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is always possible to obtain a warrant from a Secretary of State, whereas there is only one chief officer of each force. The nature of a chief officer's role often takes him away from his force, and chief officers, like the rest of us, are entitled to holidays or, indeed, may be absent for valid business reasons. We must seek to avoid the situation where a warrant is urgently needed in the chief officer's absence but the person permitted to authorise warrants in his absence can do so only for a very limited period. That is why we have stipulated that emergency warrants of this kind should run for 15 days.
We have not specified what rank of officer should make the application for authorisation (as opposed to the authorising officer, in regard to whom, as Members of the Committee will know, there are very strict criteria). We therefore see no reason why we should specify the rank of any officer making an application for renewal. The important aspect is to ensure that the information provided is sufficient to justify renewal by the authorising officer. All applications, whether original ones or ones for renewal must meet the provisions of Clause 89, and this does not need to be repeated "ad longam" in Clause 91. I hope again, therefore, that the noble Lord will feel able to withdraw the amendment.
Lord McIntosh of Haringey: Perhaps I may clear away one possible misunderstanding. Amendment No. 90 does not specify the rank of the authorising officer. It says that if it is necessary to renew the application and the officer who applied for the authorisation is not available, then the officer who replaces him and applies for the renewal should not be of a lower rank than the original officer. We do not believe that an application for renewal ought simply to be left to a junior person, given the fact that the chief officer is almost certainly going to authorise a renewal unless there is very good reason to the contrary.
I should be more convinced by the arguments of the noble and learned Lord the Lord Advocate about the periods necessary for the application to be in force, and for renewal, if I did not know that in other jurisdictions where similar questions arise it is possible to have shorter periods. For example, in the Netherlands, under Article 125 of their penal code the period is four weeks. In this legislation it is six months. In the United States the period is 30 days. We are being quite modest in suggesting a reduction from six to three months. Clearly these jurisdictions have not suffered the problems which the noble and learned Lord the Lord Advocate suggests would be the result.
A system of authorisation and of intrusive surveillance which restricts itself to those cases which are really necessary is more likely to be effective in the pursuit of serious crime than one which is relatively indiscriminate and takes up an excessive amount of the time of National Crime Squad officers who have many other things to do and for whom intrusive surveillance is only one of the weapons available to them in the fight against serious crime.
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The amendments genuinely seek to improve the efficacy of the fight against serious crime. It is disappointing to me that time after time the noble and learned Lord the Lord Advocate is unable to accept the reasoning underlying our approach to this part of the Bill. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
11.15 p.m.
[Amendments Nos. 88 to 92 not moved.]
Clause 91 agreed to.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 93:
After Clause 91, insert the following new clause—
REPORT TO COMMISSIONFR
(". Within thirty days after an authorisation under section 89 or section 90 of this Act, or each extension thereof authorised under section 91(3) of this Act, the issuing officer shall report to the Commissioner established under section 93 of this Act—

(a) the fact that an authorisation or extension was applied for;

(b) the kind of authorisation or extension applied for;

(c) the fact that the authorisation was authorised as applied for or was modified;

(d) the period of time for which the authorisation was given, and the number and duration of any extensions of the authorisation;

(e) the offence specified in the authorisation or application, or extension of the authorisation; and

(f) the nature of the facilities from which, or the place where, the action authorised was to be taken.").

The noble Lord said: Amendment No. 93 stands on its own. It relates to the provisions in Clauses 93 to 95 for the appointment of a commissioner. It is appropriate to be inserted after Clause 91 because the provisions deal with the authorisation and extension of applications for intrusive surveillance.
The amendment provides that if the commissioner is to fulfil his role effectively and to produce accurate annual reports to enable Parliament to review and assess the effectiveness of the actions authorised under this part of the Bill he should have available to him the necessary facts. The new clause provides for the necessary facts. It refers to,
"the fact that an authorisation or extension was applied for; the kind of authorisation or extension applied for",
and so on. I shall not read out the amendment. The point is not that the commissioner will necessarily be concerned with the detail of every single amendment but that this is raw material for a statistical analysis of the actual use not just of authorisations but of actual intrusive surveillance. That is the important point about the amendment.
I am sorry to record that the Liberal Democrat Benches are empty at this time when considering this most important Bill. However, in his response to the noble Lord, Lord Rodgers, the noble and learned Lord the Lord Advocate prayed in aid the existence of the commissioner and the provisions for the commissioner in Clauses 93 to 95. He is right. It is important that there should be a commissioner. Many of the provisions for the commissioner are right too. But the

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commissioner will be ineffective unless he has the information necessary for him to do his job. Our proposed new clause provides the necessary information for the commissioner. I beg to move.
Lord Mackay of Drumadoon: I think the short answer to this amendment is to be found in subsection (4) of Clause 95, which provides that:
"A person shall disclose or give to the Commissioner such documents or information as he may require for the purpose of enabling him to discharge his functions."
The approach being followed here is to leave it to the commissioner, who, I would remind your Lordships, will currently hold a high judicial office, to work out for himself what procedure he wishes to follow. It may be that he is satisfied, once he takes up office, that he wishes to have a report within 30 days or it may be that he thinks that is too long a period or too short a period. I suggest to the Committee that it would possibly be unwieldy or unnecessarily bureaucratic for the Committee to impose the requirement on the authorising officers and on the commissioner to take delivery of reports at that stage. He is given an unfettered power to ask for the information that he wants. I would suggest that, when that power has been given to a man with the qualifications and experience of a High Court judge, that should be sufficient to satisfy your Lordships that the amendment is unnecessary. In a gesture of goodwill, can I say that, if the noble Lord keeps pressing on, he may come to an amendment which I am happy to accept.
Lord McIntosh of Haringey: I do not know whether that is a stick or a carrot. The Lord Advocate of course is a distinguished lawyer and I am the only non-lawyer taking part in this debate on this part of the Bill, although my noble friend Lady Hilton will be taking over from me in a minute. Can I give him my experience as a survey researcher? If you are going to have effective statistics for analysis of the kind that will be necessary for the proper discharge of the commissioner's responsibilities, the only way in which you will secure that those statistics are properly collected is if you specify what is to be collected from the outset and make that very clear that that is the responsibility. If the commissioner, after the event, says to authorising officers, "Please give me details of all the authorisations you have given and the action taken upon them over the last 12 months", that is a recipe both for wasting the officers' time and for ensuring that the data available are inadequate, based on memory, liable to error and unsatisfactory for the purposes which the commissioner intends to fulfil.
I do assure the noble and learned Lord that, unless you plan it in advance, the commissioner will simply not get the information he wants and the most effective and economical way is to specify the information in advance. That is the thinking behind all survey work in the public sector from the census to the general household survey and behind all the work of the Research and Statistics Department of the Home Office. All those involved will tell the noble and learned Lord, the Lord Advocate, if he asks them, "If you want to collect statistics you must decide what you want and
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specify it from the beginning." As one professional to another, I do commend the noble and learned Lord to think carefully about this amendment before rejecting it finally, but, in the knowledge that he will do so honestly, I beg leave to withdraw the amendment at this stage.
Amendment, by leave, withdrawn.
[Amendment No. 94 not moved.]
Clause 92 [Code of practice]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 95:
Page 36, line 19, leave out ("may") and insert ("shall").
The noble Lord said: I put this amendment down before the Government put down Amendment No. 137 with the intention of ensuring that the Government would introduce a code of practice. They have introduced a draft code of practice but, with Amendment No. 137, they have gone further and recognised, and responded to, the concerns of the Delegated Powers Scrutiny Committee.
The Committee will recall that the Delegated Powers Scrutiny Committee said that it was not enough to say that there should be a higher level of parliamentary scrutiny of the code of practice because, if it were turned down, the result would be worse in that there would be no code of practice at all. The committee said that this part of the Bill should not be implemented until the code of practice had been agreed. I am happy to see that in Amendment No. 137, which is grouped with this amendment, the Government have recognised that point and conceded the fact that the code of practice will be approved before this part of the Bill is brought into force. I do not know whether that means that the noble and learned Lord the Lord Advocate proposes to accept my Amendment No. 95 and, frankly, I do not care. The important thing is Amendment No. 137, and I am grateful for that. I beg to move.
Lord Mackay of Drumadoon: I must begin by giving an unqualified apology to the noble Lord. I had thought this was the amendment that I was in a position to accept, but I am afraid that the first revision of my instructions is in slightly different terms.
We shall come to Amendment No. 137 on the second day of the Committee.
Lord McIntosh of Haringey: You are dealing with it now.
Lord Mackay of Drumadoon: I am sorry, I thought that technically it would not be moved until the second day. Perhaps we are both right: we are talking about it now and it will be moved in due course.
Amendment No. 137 should take care of any concern that any part of the Committee may have about the code of practice. It will be in force, having been approved by a resolution of both Houses, before this part of the Bill comes into force. I am advised that that makes Clause 92 unnecessary and that it may also be technically deficient. The rest of the clause as drafted is on the basis of the Secretary of State having a discretion

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with regard to the code of practice. Subsections (2) and (4) would need to be amended to bring them into line with subsection (1). That is a technical objection to the noble Lord's amendment, but I hope he will be satisfied by Amendment No. 137 and will find it unnecessary to bring this matter back.
Lord McIntosh of Haringey: The implication of what the noble and learned Lord the Lord Advocate is saying is not that I should withdraw my Amendment No. 95, but that he and I should sit down together afterwards and draft the consequential amendments to subsections (2) and (4) of this clause. Does he agree to that, so that we can include Amendment No. 95 in subsequent amendments?
Lord Mackay of Drumadoon: The second revision of my instructions makes it possible, provided it is over something stronger than a glass of lemonade!
Lord McIntosh of Haringey: Does that mean that the noble and learned Lord the Lord Advocate is prepared to agree to it now on the basis that I will gladly support the consequential amendments?
Lord Mackay of Drumadoon: No. What I would agree to now is to pay for the refreshments. I cannot, I regret to say, agree to the amendment.
Lord McIntosh of Haringey: It is now my understanding that we shall get this amendment and the consequential amendments at the next stage. On that basis, I beg leave to withdraw Amendment No. 95.
Amendment, by leave, withdrawn.
Clause 92 agreed to.
Clause 93 agreed to.
Clause 94 [Principal functions of Commissioner]:
Baroness Hilton of Eggardon Baroness Hilton of Eggardon moved Amendment No. 96:
Page 37, line 34, at end insert—
("(IA) The powers of the Commissioner to investigate a complaint shall not prevent a complainant from making a complaint under Part IX of the Police and Criminal Evidence Act 1984.").
The noble Baroness said: We now come to a series of amendments which deal with the role of the commissioner and the possible inadequacies of his role. This relates to the earlier discussion we had at some length about the applications for warrants. My preferred solution is to deal with things if they go wrong rather than to change the provisions in the Act about how one applies for warrants in the first place. Over the years police officers applying for warrants have made mistakes. Some of them have been honest mistakes. They have broken into the wrong people's houses or they have done a series of other things which clearly were undesirable. There may also be dishonest police officers applying for warrants.
The role of the commissioner is such that he looks purely at the administrative procedures, as within a judicial review, and says whether they are right or wrong. As I understand it, he has no role to investigate complaints made by the public where the administrative
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procedures have been correct. Therefore, this amendment seeks to ensure that a member of the public can still have recourse to the Police and Criminal Evidence Act and can make a complaint about having his house entered and electronic bugging devices placed in it incorrectly. He also has the normal recourse to the police complaints system and is not bound by the very limited role of the commissioner, as provided for under this Bill. I beg to move.
11.30 p.m.
Lord Mackay of Drumadoon: There is nothing in the provisions of Part III of the Bill which would restrict or limit the present power and functions of the Police Complaints Authority to carry out investigations in response to a complainant making a complaint under Part IX of the 1984 Act.
The commissioner's role will be to review the authorisations given under the provisions of Part III of the Bill and to investigate complaints that authorisations had been given improperly. He will be concerned with the operational decisions of the authorising officers. The Police Complaints Authority, on the other hand, does not investigate complaints about operational decisions. It is concerned with the behaviour or activities of police officers who may have acted in a rude manner or beyond the authority given to them by senior officers. On very rare occasions they may have acted against the criminal law.
If, in the course of his investigation of a complaint, the commissioner finds that there has been intrusive surveillance carried out without the authorisation of an officer, or that, for example, unnecessary force or damage has been caused, or indeed that criminal activity has taken place at the hand of police officers, it would remain a matter for the chief constable to investigate under the normal complaints procedure. That would involve the Police Complaints Authority if necessary and ultimately, in a very rare case, possibly the Crown Prosecution Service as well.
There is nothing in the Bill that would prevent the Police Complaints Authority procedures being invoked. With that assurance, I hope that it will be possible for this amendment to be withdrawn.
Baroness Hilton of Eggardon: I am greatly reassured by what has just been said, although my understanding was that the commissioner's role was purely to apply the principles of a judicial review. When we come to Amendment No. 98 I shall address that point. In that case it sounds as though the actions of police officers when applying for warrants can be investigated in the normal way and that this Bill does not preclude that. On that basis, I withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Hilton of Eggardon Baroness Hilton of Eggardon moved Amendment No. 97:
Page 37, line 42, leave out subsection (4).
The noble Baroness said: It would appear from what has just been said about the previous amendment that the commissioner's role is purely to investigate

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administrative matters. We feel that that is unsatisfactory. If he makes a decision on what on the surface may appear to be an administrative malfunction, our view is that it should be questioned in a court. For the statute to exclude the court's jurisdiction quite specifically in this way is, I think, unprecedented.
Similar exclusions have been made previously in relation to the security services, but surely this is not appropriate in relation to the investigation of crime. It is not suggested that issues relating to state security are being affected in relation to this Bill. Therefore, it seems quite wrong that the commissioner's decisions could not be questioned in a court. Therefore, I commend the amendment to the Committee.
Lord Mackay of Drumadoon: As the noble Baroness recognises, this amendment would allow the decisions of the commissioner to be questioned on appeal in open court and would quickly undermine the whole purpose and benefit of certain intrusive surveillance operations. Criminals would seek to exploit the provision to extract information about the nature of the operations directed against them, the equipment used and the techniques officers may deploy. Once that information became widely known—one can imagine the media taking an interest in such hearings—the value of the techniques would quickly diminish as criminals would take measures to avoid being trapped. One of the problems we always face in dealing with serious crime is that in many instances the criminals are one step ahead of law enforcement agencies.
It is unusual but not unique for a commissioner to act in a manner which would not be subject to appeal to a court. But that concern, if it be a concern, is met by the fact that the commissioner will he someone who is a member of the senior judiciary. I suggest that in those circumstances we can be sure without qualification that the commissioner can be trusted to act strictly in accordance with the law. The system has worked well with other interception and intelligence agency commissioners. It would be slightly unusual to have the activities of a commissioner of that senior rank open to review by another judge of similar rank. Such review would inevitably involve further publicity and destroy the element of secrecy which must apply to virtually all intrusive surveillance operations, not only of what actually happened but the fact that they occurred in the first place. Again, I hope it will be possible for the amendment to he withdrawn.
Baroness Hilton of Eggardon: My concern is not the protection of criminals; it is the protection of innocent people who have their houses intruded upon and bugs planted in them. In relation to surveillance devices, one can purchase them at Heathrow duty free shops. A vast range of surveillance and eavesdropping devices are available to the public. The idea that sophisticated criminals do not know about modern technology in this field is a rather naïve assumption that I have met with in police officers before now. Sophisticated criminals are inevitably up to date on these matters.
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I do not feel that it is satisfactory that the commissioner's decisions cannot be questioned and that other systems are assumed to have worked perfectly. No complaint has ever been upheld in relation to security services by the system appointed to investigate complaints, and that is not a satisfactory situation. It does not imply that no complaints have been justified; it merely implies that someone in the commissioner's position becomes part of the system.
I feel that the commissioner's decision should be subject to some external form of appeal. I shall return to this matter at Report but, in the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 94 agreed to.
Schedule 7 [Investigation of Complaints by Commissioner etc.]:
Baroness Hilton of Eggardon Baroness Hilton of Eggardon moved Amendment No. 98:
Page 67, line 15, leave out ("applying the principles applied by a court on an application for judicial review").
The noble Baroness said: I have already covered most of the points relating to the commissioner. Our feeling is that his role is far too narrow. Merely to review the administrative procedures as within a judicial review is insufficient and he should have a wider role. He should be able to review the motivation and malpractices that can go on when applying for warrants in these delicate situations. I beg to move.
Lord Mackay of Drumadoon: I regret that I do not fully understand what the amendment seeks to achieve. The amendment to Clause 94 seeks to allow the decisions of the commissioner to be subject to appeal or liable to be questioned in court. Yet in Amendment No. 98 the wish is to prevent the commissioner from applying the very principles that would have applied—
Baroness Hilton of Eggardon: The amendment seeks to remove the restriction on the commissioner merely to behave as though he was conducting a judicial review so that his role could be wider than purely looking at the administrative procedures. It follows the same line; that we feel the commissioner should be strengthened, that one should be able to appeal against his decisions and so on. In this instance, it is an attempt to widen his role beyond that of purely looking at the administrative arrangements for applying for warrants.
Lord Mackay of Drumadoon: As I understand the principles of judicial review, when there has been any suggestion of acting improperly, without any legal foundation for any ulterior motive which was not justified, that would be caught fairly and squarely by judicial review. I confess some difficulty in deciding what a wider power would involve. Indeed, if one takes out the reference to judicial review, one might have the impression that the commissioner would not approach it as a lawyer would but on some administrative basis.

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The fault may be entirely mine. Certainly, as presently advised, I do not find it possible to accept the amendment. However, if the noble Baroness wishes to discuss it with me or to write to me more fully about her concern, we can certainly look at it again.
Baroness Hilton of Eggardon: I intend to withdraw the amendment. My understanding is that a complaint is upheld on judicial review only where the decision is so unreasonable as to have been perverse. Those are the only circumstances in which a complaint is upheld. All the lower levels of administrative inefficiency, malpractice, mistake or whatever would not be upheld. I shall certainly withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Hilton of Eggardon Baroness Hilton of Eggardon moved Amendment No. 99:
Page 67, line 25, leave out ("not give any") and insert (", provided that to do so would not prejudice the prevention or detection of crime, give his").
The noble Baroness said: I continue to pursue the same theme. The role of the commissioner, as laid down in the Act, is extremely narrow. The amendment seeks to require the commissioner to give reasons for the occasions on which he has not upheld a particular complaint rather than having it specifically excluded by the Act. This has taken clauses which have been justified in relation to the Security Service on grounds of national security but I think we are treading on extremely dangerous ground when we extend beyond state security into the ordinary field of crime such a requirement that the commissioner does not have to provide a reason for his or her decisions. I beg to move.
Lord Mackay of Drumadoon: Once again the draftsman has relied on parallels with the provisions contained in other Acts where there is a commissioner. Whether one is dealing with them as questions of national security, the prevention of terrorism or so forth, they all, in the minds of many members of the public, and indeed in the minds of many Members of your Lordships' House, could be described as being very serious criminal activities.
I do not see any reason why the role of the surveillance commissioner under this statutory scheme should be any different from those in the other schemes where a commissioner has been appointed. It would be extremely difficult for the commissioner to give reasons for his determination to a complainant without at the same time revealing details of the activities of the police, and in particular which officer may or may not have been involved.
It may be that criminals have a considerable amount of knowledge about surveillance devices, but they may not have similar knowledge of the personnel who have been involved in seeking the applications or granting them. To reveal such information may be prejudicial to the activities of the particular force concerned. It would also tend to encourage unfounded complaints by criminals merely seeking to test the water to see what reasons will be given.
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In this field one has a right to rely on the integrity of the commissioner. He is going to be selected from the very senior judiciary. It may be that a measure of trust has to be placed in him, but a similar measure of trust has been placed in commissioners who have served under other legislation. So far as I am aware, their activities have gone without any criticism whatsoever.
11.45 p.m.
Baroness Hilton of Eggardon: As I have said, the commissioners who have served under other legislation have all been related to the security services. The fact that the public—and, regrettably, some Members of this House—cannot distinguish between crime and matters of state security does not bear on this particular amendment. There are quite clearly different principles involved in giving up aspects of one's liberty in relation to state security and state secrets, and giving up aspects of one's liberty in relation to matters of crime. I am disappointed that that distinction is not clear to the Bench opposite.
The fact that the commissioner may well be a distinguished judge does not absolve him from giving a reason for decisions. He is well used to giving reasons for decisions. It is done every day of the week in this House as well as in the courts of this land. It seems only reasonable that reasons can be given. It does not mean that individuals or details of particular operations have to be disclosed. If someone has complained to the commissioner it seems only reasonable that he should give reasons for dismissing that complaint. I do not see that that will jeopardise the practical pursuit of crime. However, at this late hour I shall withdraw the amendment and come back to it at Report stage.
Amendment, by leave, withdrawn.
Schedule 7 agreed to.
Clause 95 agreed to.
Baroness Hilton of Eggardon Baroness Hilton of Eggardon moved Amendment No. 100:
After Clause 95, insert the following new clause—
ARRANGEMENTS FOR DISCLOSURE
(".—(1) Where an action pursuant to sections 89 or 90 is authorised, the authorising officer shall, unless such arrangements have already been made, make such arrangements as he considers necessary for the purpose of securing that the requirements of subsection (2) below are satisfied in relation to the material obtained.
(2) The requirements of this subsection are satisfied in relation to any material obtained if each of the following, namely

(a) the extent to which the material is disclosed;

(b) the number of persons to whom any of the material is disclosed;

(c) the extent to which the material is copied; and

(d) the number of copies made of any material

is limited to the minimum that is necessary as mentioned in section 89(3) above.").
The noble Baroness said: This is a rather different amendment to the ones that we have been dealing with in relation to the commissioner. The intention of this amendment is to insert a new Clause 95A, which will

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ensure that material obtained through actions authorised under warrant should be retained no longer and disclosed to no more people than absolutely necessary.
Again, my concern is to protect the innocent. We keep talking about criminals and what they may do with information. This is a question of limiting the number of copies; the extent to which material is disclosed and the number of people to whom any such material is disclosed, and so on. I would have thought that that would appeal in view of the fact that we wish to keep these operations as secret as possible. In relation to some of the sensitive material that may be acquired by having bugs in people's houses, that is only right and proper. One can imagine the value of selling some of this material to the popular press, for example, about people's private lives and so on.
Therefore, this amendment seeks to protect the privacy of people's lives within their homes so far as possible. In the Interception of Communications Act 1985 there is a similar section which relates to the retention of material obtained through interceptions. It seems only appropriate that it should relate to material obtained by electronic means within people's houses. It is also necessary to ensure compliance with our treaty obligations under the Council of Europe recommendation on data protection, which requires that such data will be retained for only such time as it is required and to the extent that it is necessary for the detection and prevention of crime. This may well relate to material obtained from people who are wholly innocent of any crime, not simply material obtained from the homes of criminals. I beg to move.
Lord Mackay of Drumadoon: I fully accept that this amendment is based on a similar provision to be found in Section 6 of the 1985 Act. However, I suggest that there is a fundamental difference between the provisions of this Bill and the provisions of the Interception of Communications Act 1985. Unlike the provisions of the latter Act, there is no statutory bar in this Bill on the evidential use of surveillance material in court proceedings, nor is there any prohibition on its disclosure in accordance with the provisions of the recently enacted Criminal Procedure and Investigations Act 1996. This is an important factor to be borne in mind. It means that if material obtained by the police may be relevant to a criminal investigation it must be retained and made available to the prosecutor who will consider it for disclosure to the accused. That means that it would be wrong to place in the hands of an authorising officer a decision which may give rise to an argument on the part of an accused or a defendant that his rights at trial have been prejudiced.
Of course, in other instances the product of the surveillance will not be considered for evidential use but will be used purely for intelligence purposes. As I have indicated earlier this evening, those intelligence purposes may be relevant to a course of criminal activity extending over many months and years. The very nature and sensitivity of the material recovered, and the techniques used to acquire it, combine to ensure that police officers tend to keep its circulation as restricted
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as possible. It is hardly in their interests to circulate the material any wider than necessary. The results would jeopardise not only the particular operation in which they are involved but other operations that may be linked in one way or another to it.
The Government believe that the internal discipline of the police forces and Customs officers who recover the material is the correct way to protect the innocent individual who may be mentioned in passing in the course of intrusive surveillance operations.
I believe that the points that I have outlined combine to remove the need for inclusion in this Bill of a statutory provision similar to that found in the 1985 Act. I hope that with that explanation the noble Baroness will feel able to withdraw her amendment.
Baroness Hilton of Eggardon: The sotto voce comment of the Chief Whip reaches my ears! Given the hour, I will read carefully the reply that has been given. In the circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 96 agreed to.
Clause 97 agreed to.
Schedule 8 agreed to.
Clause 98 agreed to.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 101:
After Clause 98, insert the following new clause—
ARRANGEMENTS FOR CONSULTATION
(". The Organisation shall make arrangements for obtaining the views concerning the Organisation of—

(a) persons whom it considers represent the interests of chief officers of police of police forces in England and Wales, and

(b) persons whom it considers represent the interests of police authorities for areas in England and Wales.").

The noble Lord said: We are now dealing, rather briefly and rather late, with Part IV of the Bill which is concerned with the police information technology organisation. I am not sure that it was referred to on Second Reading, although I am sure that the Minister's briefing referred to it, and my noble friend Lady Hilton reminds me that she too referred to it, with her own knowledge of the subject. This part of the Bill starts with the statement:
"There shall be a body corporate to be known as the Police Information Technology Organisation".
There is of course a police information technology organisation. It is not a body corporate at the moment. It exists and it has a governing body which contains representatives of the police authority associations and ACPO.
What we propose with the amendment is that although there is no reference to them in the clauses which make up Part IV, there should be an obligation on the organisation to obtain the views of the chief officers of police and those representing the interests of police authorities concerning the organisation. Principally it is meant to cover the organisation's

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budget. It is funded partly by the Home Office Vote and partly by charging either directly, or in future under the PFI mechanism. Given the growth of information technology, we may well expect that PITO's expenditure will increase considerably. In so far as that money is well spent, then clearly such an increase in expenditure is desirable.
Since there is already a tripartite involvement in PITO this modest amendment simply allows for the possibility of consultation with the other partners in the tripartite organisation. I beg to move.
Baroness Blatch: To import the provisions in Parts I and II into Part IV is to overlook the fact that arrangements for PITO are different. That said, I can assure the Committee that PITO will have arrangements in place to consult both chief officers and police authorities. Indeed, our whole purpose in reforming the way police information technology services are provided is to place the strategic management of these services onto a proper tripartite footing.
Both the chief officer and police authority associations will be represented on PITO's executive board. As such, I would fully expect the chief officer and police authority members of PITO to bring the views of their associations to the deliberations of the board.
Furthermore, it is important to recognise that PITO does not operate in a vacuum. It prides itself on being a customer-focused organisation. All its main projects and services are guided by both steering and user committees on which there is tripartite representation.
Finally, tripartite consultation is also built into the arrangements for determining PITO's budget. I have previously explained that the arrangements for determining the levy for NCIS and the National Crime Squad, include consultation within a tripartite group established for this purpose. That same group will also consider the budget for PITO in the context of the proposed overall spending on the police and advise the Home Secretary on relative priorities.
In conclusion, PITO is founded on the tripartite principle, it will consult widely the chief officer and police authority representatives in much of what it does. In addition, the Home Secretary will consult the chief officer and police authority associations when considering the level of PITO's funding.
I see no need for this new clause and with that I hope helpful reply, I hope the noble Lord will feel able not to press the amendment.
Lord McIntosh of Haringey: The Minister has given all of the assurances for which I had hoped. The only thing I would say is that in contrast with Parts I and II, Part IV is notably terse. None of the things that she said about the governing body, consultation or the budget is contained on the face of the Bill. There is no provision for regulations to provide for them. The only possible clue to what the Minister has now said is found in Clause 98 which provides:
"The Organisation shall comply with any general or specific directions given in writing by the Secretary of State".
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However, the Minister has said them. They are on the record. They cannot be overturned without some embarrassment. I am grateful for that. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 102:
After Clause 98, insert the following new clause—
CLOSED-CIRCUIT TELEVISION BY LOCAL AUTHORITIES: CODE OF PRACTICE ON THE USE OF INFORMATION TECHNOLOGY
(".—(1) The Secretary of State shall, within two years of the coming into force of this Part, issue a code of practice relating to the information technology involving the use of any apparatus which is subject to the provisions of section 163 of the Criminal Justice and Public Order Act 1994.

(2) The Secretary of State may from time to time revise the whole or part of any code of practice issued under this section.

(3) The Secretary of State shall lay before Parliament a copy of any code of practice and of any revision of a code of practice issued by him under this section.").

The noble Lord said: Amendment No. 102 is something of a tidying up amendment. The Minister will know, even though it is not perhaps a matter of wide knowledge, that in Section 163 of the Criminal Justice and Public Order Act 1994 provision was made for local authorities to provide closed-circuit television in their areas in order to promote the prevention of crime or the welfare of the victims of crime. Local authorities in many parts of the country have enthusiastically taken up these powers, and the Minister will agree that many of these experiments in the use of closed-circuit television have been very productive. They have led to convictions, to identification of criminals and have provided not just actual protection for victims but a feeling of security among potential victims—for example, in deserted town centre streets or in shopping centres, particularly in the evening.
The local government information unit has drawn up a code of practice for the operation of closed-circuit television by local authorities. It looks to me, having no more than glanced through it, like a very comprehensive code of practice; but it is only a model code of practice which can only be recommended to local authorities.
What we are suggesting in this amendment is that, since the powers to use CCTV were created under the 1994 Act, and since they involve information technology, we should take advantage of this part of the Bill which is concerned with information technology to regularise the codes of practice. It is for the benefit of local authorities if they can be certain that they are not operating in a vacuum, and that the codes of practice they adopt are best practice—no more than that, and are not enforced regulations laid down by the Secretary of State—derived from experience in all parts of the country. I hope that even if the wording may be defective, the spirit of this amendment will commend itself to the Government. I beg to move.
Baroness Blatch: I have no difficult in saying we are with the spirit of the amendment. The link with PITO, I have to say, is ingenious, but somewhat artificial. PITO is concerned with the provision of computer and

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communication systems to police forces. Section 163 of the Criminal Justice and Public Order Act, to which the new clause refers, is concerned with the provision of CCTV systems by local authorities. PITO is neither concerned with CCTV systems, nor is it a provider of services to local authorities. I therefore fail to recognise the link which the noble Lord is making. As I say, we are with him in spirit.
Lord McIntosh of Haringey: If the noble Lady will allow me, of course the organisation is not specifically and positively providing services to local authorities. However, Clause 97(3)(b) says that,
"The Organisation may carry out activities … relating to information technology equipment and systems for the use of … such other bodies as the Secretary of State may determine by order made by statutory instrument."
So PITO could serve local authorities if the Secretary of State thought that desirable.
Baroness Blatch: I am not going to argue with the noble Lord at this late hour. That presumably is the link by which the noble Lord has sought to put this amendment down. If there are concerns about the use of CCTV material, and I shall come to that in a moment, Part IV of the Police Bill is not the place to tackle it. I readily join with the noble Lord in condemning the irresponsible use of CCTV material. The systems are a serious and a very successful method, as the noble Lord has said, of preventing and detecting crime and they are not some frivolous form of cheap entertainment, nor should they be.
The Government believe that CCTV has enormous potential to combat crime—and the fear of crime, again a point made by the noble Lord. We are supporting the use of this technology through the use of the CCTV Challenge competition. However, we have always recognised that, if it is to be successful, systems must be operated and managed in a way that commands the confidence of the local community. That is why we strongly recommend that every public space scheme should have a code of practice which stipulates the purposes for which the system can and cannot be used and governs such issues as the control, storage and
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disposal of tapes. We have made it clear that no scheme will be successful in the CCTV Challenge competition unless it has proposals for a code of practice.
It would not be sensible or practical for the Government to seek to impose a national code of practice on CCTV schemes through legislation. Schemes vary enormously in terms of size and technical sophistication. What may be appropriate for one multi-camera town centre scheme would be wholly inappropriate for, let us say, a small scheme covering a car park.
We believe that the development of codes of practice which are tailored to the specific operating environment and the needs of the local community is the best means of regulating CCTV. The vast majority of public CCTV systems are owned or operated by accountable bodies which have an interest in ensuring that their systems are operated with integrity and respect for the public.
A statutory code of practice is not the way forward. Therefore I hope that the noble Lord will accept that we need to give more time to what seem at present on the face of it to be successful voluntary codes of practice in place in most areas of the country.
Lord McIntosh of Haringey: I am glad that the Minister finally used the words "successful voluntary codes of practice". I hope that she will agree that the model code of practice produced by the Local Government Information Unit is indeed valuable. She indicates by gesture that she does agree, and I am sure that the unit will be pleased with that indication.
On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 99 agreed to.
The Earl of Courtown: I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.
House adjourned at seven minutes past midnight.

Official Report of theCommittee on the Merchant Shipping and MaritimeSecurity Bill [H.L.]
Tuesday, 26th November 1996.
The Committee met at half-past three of the clock.
[The Deputy Chairman of Committees (Lord Burnham) in the Chair.]
Lord Berkeley Lord Berkeley moved Amendment No. 58:
After Clause 11, insert the following new clause—
TRANS-SHIPMENT OF OTHER CARGOES
("The Secretary of State shall, no later than 1st November 1997, lay before both Houses of Parliament proposals for a Scheme setting out the requirements to be met by ships involved in the trans-shipment of cargoes, including oil cargoes, to which section 11 of this Act does not apply.").
The noble Lord said: I rise to speak to Amendment No. 58 set down in the name of my noble friend Lord Clinton-Davis and the noble Lord, Lord Beaumont of Whitley. This amendment is in the shape of a probing amendment, continuing what the Committee discussed yesterday about how the various clauses in the Bill will be moved into regulations. The Committee discussed this matter yesterday and the Minister was very helpful in giving us some information about how it might go forward, but I for one am left with a great deal of uncertainty about what will be in all these regulations, and when they may appear. We discussed the matter in relation to klondyking, in terms of moving ships to other locations or safety, and waste facilities.
I thought it might be helpful if I drew to the attention of the Committee something which arose in relation to the Housing Grants, Construction and Regeneration Bill in the last Session, which I took some part in. There were great complications in relation to adjudication procedures for sorting out construction contracts, and there was a provision for a scheme of construction contracts which explained how the provisions of the Act, as it became, would operate in practice. After some prodding the Government very kindly produced a draft scheme for consideration, I believe at the Committee stage in your Lordships' House. It was very much a draft, and the Minister dealing with it said so, but it helped us understand the thinking behind some of the clauses involved and it contributed to significant improvements in the text of the Bill during its passage in your Lordships' House.
We have heard a great deal about the consultation which the Government have had and propose to have with various authorities, but I wonder whether the Minister could help us with some kind of timescale as to when these various regulations might be brought in. Obviously we are very pleased that the Minister is so keen to have consultation, and he is even having two sets of consultation, which is very laudable, but it is
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important that these regulations come into force quite quickly. I for one would be pleased not only to hear a timetable, but also a timetable for some first drafts of what might be in some of the regulations. Although this amendment is directed to Clause 11 concerning klondyking, if the Minister was able to help us on a more general timetable and preliminary text it would be extremely helpful. I beg to move.
The Parliamentary Under-Secretary of State, Department of Transport (Viscount Goschen): I have listened very carefully to the explanation behind what the noble Lord, Lord Berkeley, was seeking. On the specific point of what his amendment seeks to achieve, I can be helpful and tell the Committee that the Secretary of State already has powers, under Section 130 of the Merchant Shipping Act 1995, to make regulations in relation to the transfer of cargo stores, bunker fuel or ballast between ships. That addresses the intention, I would say, behind this amendment.
In addition, I can go further and say that my department's Marine Safety Agency is preparing regulations to govern transfer operations between ships, and will consult soon with the shipping industry, local authorities and other interested parties. As we heard yesterday, there is clear justification for extensive consultation on these matters to get the regulations right and to make sure that they are not over-burdensome, but at the same time as effective as possible. That consultation will occur soon, as we are quite close to having the draft regulations on which consultation would occur. We are talking in terms of timescale of around two months, to give the noble Lord the answer to his question about the timetable.
Lord Berkeley: I am grateful to the Minister for that clarification. Did I understand him to say that the draft regulations would be available in two months for consideration, possibly at the Report stage of the Bill?
Viscount Goschen: What I indicated was that I hope that, within that timescale and possibly sooner, the Marine Safety Agency will be in a position to go out to consultation on regulations under Section 130 of the Merchant Shipping Act 1995. The noble Lord might be slightly confused in thinking that it has a direct relation to this Bill; this Bill amends the 1995 Act. However, even without this Bill, even if we were not considering it, there would still be regulation-making activity and the MSA would still he going to consultation on this issue. I cannot be any more specific in terms of timing. I hope that the timescale I have given to the noble Lord is at the outside limit and that the consultation with the industry will occur within that timescale.
Lord Simon of Glaisdale: It struck me that the noble Lord, Lord Berkeley, was less confused than optimistic expecting these regulations to be produced over Christmas.
Lord Berkeley: I am very grateful to the noble and learned Lord, Lord Simon, for pointing that out to me. I probably was being highly optimistic, and I accept that of course a consultation on the Merchant Shipping Act is a different thing. Bearing in mind the whole tenor

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of these discussions, it would be helpful if perhaps the Minister could reflect on the timescales for producing the regulations that we have been discussing so far in this Committee—when they would be produced and how long the consultation would be. I am sure the Minister shares my concern that time is running out, and we would certainly not wish to see anything happen of an accidental nature, or anything else, which could have been prevented by a more speedy process of producing the regulations and consultation.
Viscount Goschen: I believe that I have answered the noble Lord pretty fully. What he is talking about is a different Bill, in effect, for the consultation on the regulations governing the transfer of cargo stores, bunker fuel or ballast. With regard to the regulations that are contained within this Bill, clearly in some instances I have been able to say "as soon as possible" or "directly after Royal Assent"—those sort of words. There are other regulation-making powers and enabling powers, and we have said with some of those powers that we would not want to go forward with them before a certain event occurred. So the general answer to the noble Lord is, "in as timely a manner as the circumstances dictate".
Lord Berkeley: I will not detain the Committee any longer. I shall read very carefully what the Minister has said and reflect on it. On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 12 agreed to.
Schedule 2 [Funding of maritime services]:
Lord Beaumont of Whitley Lord Beaumont of Whitley moved Amendment No. 59:
Page 27, line 10, at end insert—
(" "counter-pollution capacity" means emergency standby towing capacity and essential clean-up equipment, including aerial spraying, ship spraying and aerial surveillance capability and routine aerial surveillance operations; dispersant stockpiles; beach cleaning and at-sea equipment stockpiles; and cargo-transfer and salvage equipment stockpiles;").
The noble Lord said: This amendment is grouped with Amendment No. 68. The purpose of these amendments is to implement Recommendations 95 to 98 of the Donaldson report and the Government's responses thereto in Command 2766.
Recommendations 95, 96 and 98 call for the establishment of two separate funds: one for port state control and the other for emergency response; and also the publication of clear, separate accounts. In Command 2766 the Government did not demur; in fact, there was support in principle for the publication of separate accounts.
In the debate on 7th November (col. 746 of Hansard) the noble and learned Lord, Lord Donaldson, emphasised that the point of having two funds was to ensure that, in so far as the industry does pay, its payments should be ring-fenced and should not be used by the Treasury as an additional source of taxation. The noble Earl, Lord Caithness, also supported this view (at col. 763). We also believe that there should be a
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requirement on the Secretary of State to consult industry periodically on the state of each fund and the levels of charges.
I have every hope that the Government, having made that reply in their responses to the Report, will indeed accept these amendments. I beg to move.
Lord Greenway: I have some sympathy with this amendment. It is important, when we are trying to work out this new system of charging, that we look very carefully at ring-fencing these charges. It might well also apply to the General Lighthouse Fund, which we shall discuss shortly. I understand that it is early days yet and there is still a good deal of discussion taking place about how to raise these charges. I hope the Minister and his department will consider carefully any ring-fencing proposals which are put forward.
Viscount Goschen: The specific amendments that the noble Lord, Lord Beaumont, has spoken to are Amendment No. 59 concerning definition and Amendment No.68 concerning the fund itself, as proposed in his amendment. Perhaps I could explain the Government's thinking behind these issues.
Amendment No. 59 would include in Schedule 2 an itemised definition of "counter-pollution capacity". We have broadened the definition of maritime services that may be charged for since we published our consultation draft. In our view, the definition used in that version of the Bill was not flexible enough to cover all the possible services we might wish to charge for. We need to cater for the scope of any international agreement which may be reached. The definition proposed in the amendment does indeed cover most of our present expenditure on counter-pollution activity, but it omits, for example, the staff costs of the Marine Pollution Control Unit, which might be a possible item to charge for.
It is also possible that there may be other items of counter-pollution expenditure which we cannot anticipate now but which may arise in the future. For these reasons, we believe that the more flexible definition in the Bill before the Committee today is the preferable approach. I can assure the Committee that we would consult interested parties before bringing forward any regulations. In particular, we would have to prepare a compliance cost assessment which would need to quantify the amount of expenditure for which we were seeking to charge.
With regard to the changes suggested by Amendment No. 68, I recognise that the proposal to establish funds, which the noble Lord, Lord Beaumont, spoke to, flows from the recommendations of the noble and learned Lord, Lord Donaldson. It is government policy to provide for the creation of separate funds only under prescribed circumstances. Appropriate levels of control and parliamentary scrutiny are ensured for other public revenue by their payment into the Consolidated Fund.
Broadly, the conditions which would both need to be met are that the revenue raised directly offsets the expenditure incurred directly and that there is a clear and demonstrable link between the payment of a specific charge by an individual and the receipt of a specific service by that individual. An example of this for

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comparison is the costs of inspecting vehicles. They are covered by separate specific fees which relate to the inspection and which are then used to fund the Vehicle Inspectorate. I provide that merely as an example to illustrate the case. That would not be the case for a marine pollution response. The standing costs of maintaining an adequate response capacity cannot be attributed to any particular individual, but any ship may need to call on them and may benefit from their availability. Where appropriate, the charging schedule would allow us to continue to recover some costs by direct fees, although we would never recover the same costs by more than one means; in other words, we certainly would not be double charging.
I also assure the Committee that, if charges were introduced, we would provide transparency by publishing accounts every year showing the amount raised and the expenditure incurred. We would thus ensure that the spirit of one of the recommendations of the noble and learned Lord, Lord Donaldson, was met: namely, that there should be full cost recovery, with charges sufficient but not more than is required to meet the costs, taking one year with another.
I also assure the Committee that we would consult the shipping industry on the level of charges; in particular, we would publish a compliance cost assessment which would take account of the industry's views on the structure of charges. Finally, I emphasise that any charges would apply to both UK and foreign ships.
I hope that I have been able to give the Committee the background to the Government's thinking behind the charging proposals, in particular with regard to the specific considerations concerning definition, counter-pollution response—the first of the noble Lord's amendments—and the issue of setting up a fund, which was the second one.
3.45 p.m.
Lord Clinton-Davis: I should like to ask the Minister a number of questions arising from the report of the noble and learned Lord, Lord Donaldson, and the Government's response to it in relation to Recommendations 95 to 97.
One of the points that was made in relation to Recommendation 95 was that there should be wide consultation. The Minister has referred to consultation with the industry, but consultation was recommended in the report with partners in the Paris Memorandum of Understanding as far as the system of charging to be adopted was concerned. It was also recommended that other partners in the Paris Memorandum of Understanding states should be encouraged to set up similar systems in the long term.
The progress report in the document issued by the Government on 7th November does not mention any of those points at all, nor has the Minister alluded to that in his comments. Perhaps he will elaborate on that point.
Recommendation 96 said that the Government should set up a second new fund to pay for an emergency response and it dealt with what the fund should cover. Whether we agree with it or not, the Minister has done his best to answer that point.
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On Recommendation 97, however, the Government are again encouraged to consult with their European partners on the general principles of charging, but this should not be allowed to delay the setting up of a UK fund. Has any discussion taken place with any of the parties mentioned in relation to Recommendations 95 and 97? So that we can look at this in the round, it is important to see what the Government have done in that respect.
Lord Simon of Glaisdale: May I say a word about Amendment No. 68 to which the noble Lord, Lord Beaumont, spoke. The first matter is the degree of parliamentary scrutiny. The Scrutiny Committee quite rightly, in my respectful submission, said that while there is a question of appropriation of money, if there is to be subordinate legislation the appropriate way of legislating is for the matter to be considered on affirmative resolution by the House of Commons. That entirely fits in with the concession since the 17th century, with a slight hiccup in 1909 and 1910 by your Lordships, that the other place has exclusive cognisance of those matters. That begs the question: should there be subordinate legislation at all on this matter?
The second thing is the Consolidated Fund, to which the noble Viscount referred. As your Lordships know well, the great revolution in public finance was the institution of the Consolidated Fund previously when some duty was imposed. When some act had to be performed which cost money, a charging provision providing for revenue was attached. In other words, revenue was hypothecated to the particular purpose. The great virtue of the Consolidated Fund was that all income—I mean not only revenue but capital—coming into the Exchequer was paid into the Consolidated Fund. The Government, with the assent of the House of Commons—in theory, at any rate—appropriated it according to their expenditure priorities.
What we have here is a proposal to allot capital to the Consolidated Fund. So far so good, but whose capital? It was generally agreed that the General Lighthouse Fund was the property of the shipowners. If the funds were to be wound up on every financial principle, the money should be returned to the owners and not transferred to the Consolidated Fund. That is a fundamental objection to the provisions which the noble Lord, Lord Beaumont, proposes to leave out in order to substitute his provision. I confess I am not entirely with him because if the funds, which are the shipowners' property, are to be wound up, it is almost as objectionable to transfer them to some new fund as to transfer them to the Consolidated Fund.
The final matter which I refer to without very much hope of anybody taking notice relates to the words in line 24, page 30,
"with the consent of the Treasury".
I have repeatedly objected to that phrase not because Treasury consent is not desirable, but because it is quite unnecessary to say so. The machinery of government takes care that Treasury consent is required and forthcoming on such occasions. I am sure the noble Viscount will bear me out when I say that he has a

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Treasury official almost as close to him as the officials of his own department. He shakes his head. If so, he is very lucky indeed.
I venture to support the proposal of the noble Lord, Lord Beaumont, that Amendment No. 68 is desirable—
[The Sitting was suspended for a Division in the House from 3.55 to 4.2 p.m.]
Lord Simon of Glaisdale: I was in the middle of a sentence when the noble Baroness, Lady Trumpington, not for the first and I fear not for the last time, shut me up. That was before the noble Lord in the Chair rose indignantly to adjourn the Committee. I have only a little more to say.
My objection was transferring what is the shipowners' money either to the Consolidated Fund or to the new fund which the noble Lord, Lord Beaumont, favours. It is wrong in principle. The money should be returned to the people who own it if it is no longer required for the specific purpose. Any new funds which require to be financed should be financed separately. One can argue about whether dues should be hypothecated at all to the new funds, but we should not transfer the shipowners' money to the new funds or to the Consolidated Fund.
I just want to add this. I could not help noticing that there crept into the tone of the noble Lord, Lord Beaumont, an all too frequent detestation of the Treasury. The word can hardly be said in this House without a hiss of hatred, but unless the Treasury kept the accounts we should be in a very sad mess. Having said that, I venture to support the noble Lord in his desire to excise those words, and I would like more consideration to be given to what should be substituted.
The Earl of Caithness: Contrary to what was said by the noble and learned Lord, Lord Simon of Glaisdale, I hope that my noble friend does have a Treasury official close by him. Having been a Minister in that department, I believe that it is extremely good that such officials are present because of the vital role that they play. I wonder whether, with due respect to the noble and learned Lord, Lord Simon of Glaisdale, we are not slightly treading into the next group of amendments. I know that this is a very important area that needs consideration.
Lord Simon of Glaisdale: If I may intervene, I believe the noble Earl is certainly right. It is rather confusing because the linkage is not simply numerical. We are discussing Amendment No 68. I believe that Amendment No. 67 is grouped with the next amendment. I am sorry if I confused noble Lords, but I believe the noble Earl is right in drawing attention to that.
The Earl of Caithness: I am grateful to the noble and learned Lord, because I, too, have found some difficulty in this and I did not want to digress too far away from the point of the amendment. Perhaps I may advise the noble Lord, Lord Beaumont of Whitley, that I agree with what my noble friend the Minister said with regard to Amendment No. 59. I believe that it is too
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restrictive. I hate the idea of listing counter-pollution capacity because this is such a variable issue. With modern technology going the way that it is, as soon as one has prepared a list and got it in print, as sure as anything something will come along that is not included on it. It may be exactly what we need and what the agency would like but we cannot use either because it is not in the regulations, or because the cost of it cannot be claimed back because it is not in the regulations. With regard to the other matters, I will wait until we come to the next group of amendments.
Viscount Goschen: I thank my noble friend Lord Caithness for showing us where exactly we are on the Marshalled List. The points to which the noble and learned Lord, Lord Simon, referred are pertinent, but there is probably likely to be a more wide-ranging debate on the issue of the General Lighthouse Fund, possibly with either the next group of amendments or the one after that.
Just for clarification—not that we in your Lordships' House refer to people other than your Lordships during our proceedings—perhaps I should point out that I am not aware of any Treasury official within shall we say 50 yards of where I am sitting. Nonetheless, I am sure I stand to be corrected.
The noble and learned Lord, Lord Simon, queries the "Treasury consent needed" phrase within the Bill. I believe I have heard the noble and learned Lord refer to that matter before; it is an ongoing campaign of his. I understand that the consent of the Treasury is now a standard provision in fees and charging regulations, so that particular dispute is ongoing and relates to all legislation.
The noble Lord, Lord Clinton-Davis, asked me a number of questions about consultation. The consultation to which I was referring was very specifically within—
Lord Clinton-Davis: Are we going back?
Viscount Goschen: I am addressing the amendment. We are still on Amendments Nos. 59 and 68 which we were debating before we broke off.
Lord Clinton-Davis: I did not speak to that amendment.
Viscount Goschen: The noble Lord, Lord Clinton-Davis, did speak to this amendment and he asked me a number of extremely pertinent questions which appear to have eluded him. I am not sure whether that means that I am not obliged to answer him, in which case he was obviously thinking that my reply would be so devastatingly accurate that it would not require him to listen to the point. Nonetheless, for the sake of other noble Lords present, and even with the noble Lord's reduced circumstances and his lowered lectern, perhaps I might answer them very briefly.
The consultation to which I referred was very much with regard to the industry and interested parties in the UK. However, I have made a number of references both at Second Reading and indeed here in Committee to our desire to see an international agreement on the charging

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issue. That, of course, raises the wider implication of consultation beyond the United Kingdom which was troubling the noble Lord, Lord Clinton-Davis. We have raised both these points with both our Paris MOU (Memorandum of Understanding) partners and our EU partners.
At the last Transport Council there was agreement that the Commission should consider the user pays principle for maritime services. The question of user pays now rests primarily with the European Union. Initiatives at the IMO are also being considered. That covers the questions about which doubt was expressed earlier.
The question raised by the noble and learned Lord, Lord Simon, concerned the ownership of the General Lighthouse Fund. As I have indicated, we shall have more detailed discussions about the issue later. The noble and learned Lord asserted that the fund was essentially owned by the shipowners, but it is not quite as clear-cut as that. It is a fund—the GLF has a clear statutory basis as a separate fund—but no ownership of it is specified in the legislation. Section 211, however, specifies that the fund shall be administered by the Secretary of State, which is what happens; that the accounts of the fund shall be examined each year by the Comptroller and Auditor General and certified by him; and that the Secretary of State shall lay copies of the accounts before each House.
There are a number of occasions when it is not possible to point the finger of ownership clearly at either funds or assets that essentially form part of a trust. I do not believe that it is quite as clear as the noble and learned Lord intimated. Nonetheless, I am sure we shall have a further discussion about the issues behind the General Lighthouse Fund, and I look forward to that discussion.
I hope I have answered the points raised with specific relevance to the two amendments tabled by the noble Lord, Lord Beaumont, one of which had regard to specific definitions of what should be included in counter-pollution capacity for charging purposes, and also to the question of the separate fund.
Lord Clinton-Davis: I apologise for the lapse of memory which arose as a result of the Division. When I was in South Africa recently—my memory is not what it was—I was installed as a member of a society called CRAFT (Can't Remember A Flipping Thing)!
As far as the location of the Treasury official is concerned, the Minister seems to be confident that there is nobody around from the Treasury, but it is possible that he could be bugged, and then the results could be leaked to all of us—as they were yesterday!
I find it strange—I suppose it might well have happened during a period of a Labour Government too—that the words "with the consent of the Treasury" should be imported into the legislation. I would have thought it was otiose, notwithstanding what the Minister has said, because one assumes that when the Secretary of State makes regulations he does so on behalf of the whole Government, including the Treasury. It does seem extraordinary. It was Winston Churchill who once
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described the Treasury as "an inverted Micawber, waiting for something to turn down". But I must not be rude about the Treasury because we may have a Labour Treasury in the not-too-distant future, and presumably it will do all the same things and incorporate these words into legislation in the future also.
I find it extraordinary that there should be this additional format. The mere fact that the Minister says that it has been done now because it is common form does not add to the logic of including those words. Perhaps he would like to look at it with his Treasury colleagues. They will turn it down, of course, but perhaps we should look at such things when we are scrutinising legislation because it seems to me to be absolutely absurd.
4.15 p.m.
Lord Beaumont of Whitley: I am grateful to the noble Viscount for the various assurances that he gave in his first speech on the amendment. I must take away some of the other things that he said, work them out on the back of an envelope and, if necessary, come back at a later stage. The same applies to the contributions from the noble and learned Lord, Lord Simon of Glaisdale, and the noble Earl, Lord Caithness.
Referring to what the noble and learned Lord, Lord Simon, said, I do not really have a hiss in my voice when I speak of the Treasury, at least not nearly as big a hiss as I have in my voice when I speak of the Home Office. But I have no hiss in my voice when I speak of the department which might be represented here if we were allowed to refer to it being represented here. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Beaumont of Whitley Lord Beaumont of Whitley moved Amendment No. 60:
Page 27, leave out lines 11 and 12.
The noble Lord said: I beg to move Amendment No. 60 and to speak to the other amendments to which your Lordships referred in the previous debate. The purpose of Amendments Nos. 60, 63 and 67 is to delete from the Bill the power of the Secretary of State to replace by statutory instrument the current system of light dues and direct charges and to wind up the General Lighthouse Fund. Those provisions were not proposed in either the February consultation paper on maritime charges or in the draft Bill published in July. No pre-warning of their inclusion was given to the Chamber of Shipping or the Lights Advisory Committee prior to publication of the Bill on 24th October 1996.
For about a century the provision of aids to navigation by the three GLAs—Trinity House, the Northern Lighthouse Board and the Commissioners of Irish Lights—has been funded by ships calling at British ports, with modest contributions from the Irish Government and the Royal Navy in more recent years. The GLF is, in effect, a private fund of shipowners' moneys existing in order to fund the GLAs' statutory responsibilities. This is treading on ground that we covered slightly on the previous amendment. The role of the Secretary of State is one of administration. He is effectively the trustee of the fund.
This private status was confirmed by the Government in evidence to the Public Accounts Committee in 1982. The Treasury saw the GLAs' services as,
"provided by the private sector for the private sector",
without recourse to public money and therefore not classified as "public expenditure". The then Department of Trade considered that their function was,
"something more akin to that of a trustee".
That is from the evidence to the Public Accounts Committee on 28th June 1982.
In addition to providing certainty for the funding of GLA expenditure, despite yearly variations, and to cover for various contingencies (thereby providing greater stability for light dues), the earnings of the GLF reserves provide an additional contribution—currently some £1.5 million to £2 million. A 2 per cent. rise in current rates would be needed to recoup this.
The LAC supports the principle of user pays—the LAC being the lighthouse group even though the UK's light dues system, which collects nothing from major classes of navaid users, particularly leisure craft, is a poor model. The Government have the power under existing legislation to widen the scope of light dues; the proposed new powers would not assist that process.
There is some discussion within the European Union of user pays principles regarding navigational aids. The UK Government in particular have sought endorsement of this principle from the Transport Council and have promoted a study within DG VII on potential European light dues. These initiatives are far from bearing fruit and the study remains unfinished. Should further progress be made there would undoubtedly be considerable time between the emergence of detailed proposals and their implementation by all member states, sufficient to prepare and consider any primary legislation required. In any case, the Department of Transport has admitted that further primary legislation would quite likely be required.
At this juncture it is difficult to imagine the type of internationally agreed proposals that would be incompatible with the continued rule of the GLF as a conduit for funding the GLAs.
In a substantial debate on November 7th, the Second Reading debate, the noble Lord, Lord Greenway, the noble and learned Lord, Lord Simon of Glaisdale, and the noble Lord, Lord Cooke of Islandreagh, expressed the above concerns forcibly, and the noble and learned Lord, Lord Donaldson, and the noble Earl, Lord Caithness, emphasised the importance of a ring-fenced fund approach. The noble Lord, Lord Berkeley, probed further in his winding-up speech. In his reply the Minister apologised for the lack of consultation and, while repeating his assertion that the new powers should be taken now, undertook to "read extremely carefully" what had been said before the next stage of the Bill.
Nothing that was said by the Minister has calmed the fears of the shipping industry. The right approach, therefore, is to seek withdrawal of the sections of Schedule 2 that refer to the GLF.
The main points for debate I have set out and, in addition, the following questions are pertinent. There is now apparently an evaluation by the Department of Transport of the relationship between the GLF and any fund to meet the costs of a marine emergency (see Hansard, col. 777). This has not been published or seen by the industry. Can it be released? Another question which is pertinent is: what are the characteristics of an international agreement that could be incompatible with the continued levying of light dues by the GLAs?
Finally, I would like to seek assurances about the fate of the pension fund. That is a matter which is always of great importance to your Lordships when passing legislation, and this particular pension fund will need to look at its position fairly carefully because the General Lighthouse Fund acts as the pension fund for the three general lighthouse authorities. I beg to move.
Lord Greenway: I certainly support the thrust behind this grouping of amendments because in many ways it echoes what I am trying to achieve in Amendment No. 69, which we shall come to later. As the noble Lord, Lord Beaumont of Whitley, has said, I spoke at Second Reading on the question of the General Lighthouse Fund and admitted my interest as a Younger Brother of Trinity House, which I do again willingly.
As the noble Lord said, the main problem here is that feathers were ruffled because somehow, somewhere there was a slip-up in the consultation process. The Minister apologised for that at Second Reading and I take that very much in the spirit in which it was offered. Nevertheless, there is still a considerable degree of upset among the general lighthouse authorities and indeed the Lights Advisory Committee. As I shall explain later when I come to move my amendment, we would prefer the whole schedule dealing with raising charges to be left as it was when it was discussed earlier this year. It is the additions to the schedule that have upset everyone, and included in that is the contingent proposal to move the General Lighthouse Fund, if need be, into the Consolidated Fund at a later date.
I remain to be convinced that these powers which the Government seek are necessary at the moment. They are looking for powers to cope with a different system of funding which may have to be introduced because a new method of funding may be created by our European partners. We are looking some considerable way into the future. I know discussions are going on, and the present Government are very keen to persuade our European colleagues that our system of user pays—the light dues system—is the best one, and I would be delighted if they could indeed persuade our continental friends to go down this line as quickly as possible.
However, we all know what happens in matters European. They tend to be very convoluted. They take an extremely long time, and we are looking at something here that may happen one day or may not happen, and I cannot see the necessity of including these contingent provisions in this Bill for something that may never happen. It was not something that the noble and learned Lord, Lord Donaldson, mentioned in his excellent report. This is going somewhat wider than his recommendations. I remain very much to be convinced

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on this, and I hope that the Minister will enlighten us more on the Government's thinking behind these provisions, which have been added since the consultation process took place earlier this year.
Lord Clinton-Davis: I want to raise one or two matters. I promise to remember that I have raised them when the Minister comes to reply. Incidentally, I say parenthetically that the reason I asked for a change as far as the Dispatch Box was concerned was that I could not see noble Lords opposite, and in particular my old sparring partner Lord Caithness, and I thought that was a disadvantage.
[The Sitting was suspended for a Division in the House from 4.26 to 4.36 p.m.]
Lord Clinton-Davis: As I was saying, the noble Lord, Lord Beaumont, said at the very beginning of his remarks that the provisions we are considering here were not included in the February consultation paper on maritime charges, nor in the draft Bill which was published in July. There was, indeed, a very short period of consultation of about four weeks as far as that was concerned. Whatever the merits of the argument may be, the Government did slip up by not providing for consultation on that matter with the Chamber of Shipping and indeed others who had a direct involvement in the issue. Included in that would be the LAC (Lights Advisory Committee). The Government therefore owe an explanation to the Committee as to why that occurred. It may well be that there were good reasons for it, although I cannot think of any. If there was a mistake, it would be as well to acknowledge it.
The noble Lord, Lord Beaumont, referred to discussion within the European Union about the user pays principle. As I understand it, the Government have power under current legislation to widen the scope of light dues, so how would the new powers assist in the process if, in fact, that provision is already embodied in existing legislation? Is it, on the other hand, the Government's desire to widen the scope of lighthouse dues? This is relevant, and I rose at this stage because I thought it important that the Minister should have the opportunity to reply to those additional points.
Lord Simon of Glaisdale: I rise to support Amendment No. 60 and particularly to support what has been said by my noble friend Lord Greenway. I have already been caught out by the noble Earl straying into this area when discussing the previous amendment, which in fact has the following number. I was rather encouraged to do that because the noble Baroness, Lady Trumpington, the arch intervener, allowed me to go on. The noble Baroness on these occasions sits there rather like an oriental goddess of destruction—in one hand the Bill, in a second hand the list of amendments, in a third hand the groupings, and in the fourth hand a thunderbolt. As it was not hurled at me, I went on!
I need only add this. As my noble friend has pointed out, and as the noble Lord, Lord Clinton-Davis, has pointed out on another point, this provision is completely unnecessary. It gives the Secretary of State power to adopt the draft financial provisions which your
66
Lordships last considered if he thinks it is necessary to bring our provisions into line with the European regulations or international law.
The first thing to be said about that is that it is highly unlikely that there will be any such conflict in the code. As the noble Earl, Lord Caithness, pointed out at Second Reading, at present it is proposed that the user pays and, as I understand it, that is the way the Community thinking is tending. I see that the noble Lord, Lord Clinton-Davis, who knows both sides of this business, nods, but perhaps the noble Viscount can confirm that.
What is being done is to take a power to be operated in the unlikely event of it being required. Secondly, the Secretary of State is not a fountain of all wisdom when it comes to a legal judgment. I do not refer particularly to the Secretary of State of the department, because there is only one Secretary of State in law. We have seen time and time again in recent years how the Government have been mistaken in their view of the law. That is the second reason why this sort of provision is undesirable.
The third reason is this. It will be used as a precedent even if it is not used for the purpose for which it is designed. Last century, the poets spoke of freedom broadening down from precedent to precedent. What we have seen this century is bureaucracy broadening down from precedent to precedent. It is highly undesirable to establish such a precedent, particularly since it is unnecessary, as has been pointed out, and, thirdly, because in no way does the Bill depend on this provision.
4.45 p.m.
Viscount Goschen: I would like to thank all noble Lords who have spoken in the debate on this very important subject. As I said at Second Reading, I feel that the provisions of the Bill have generated considerable anxiety, not least among the general lighthouse authorities. Perhaps part of the reason was the fact that there was not extensive consultation on these provisions of the Bill. I regret that, and feel it is my duty at this stage to attempt to allay the fears that have been voiced around this table, and indeed by people concerned with the General Lighthouse Fund and authorities outside the chamber.
At the time of consultation on the draft Bill in June we thought that it would be possible to bring in any necessary consequential changes to light dues using secondary legislation under the European Communities Act. We have since concluded that we could not do this because the particular financial measures need primary legislation. That is why the draft Bill said one thing and the final Bill said another. However, that does not mean that we should not attempt to put the position right. That is essentially what we have sought to do with this Bill.
I listened very carefully, also, to the words of the noble and learned Lord, Lord Simon, on the subject. The one point which I did not accept was that because the courts have occasionally found against the Government it would be unwise to write anything into a Bill which meant that the Secretary of State would have to interpret

67
the law. I have not expressed that very well, but I thought that was the thrust of what the noble and learned Lord was saying.
Lord Simon of Glaisdale: If the noble Viscount would allow me, surely Ministers and the Executive are not the people to interpret the law. Our constitution vouchsafes that to courts of law.
Viscount Goschen: I certainly agree with the noble and learned Lord, and it would be very unwise of me to enter into a legal argument with such an authority on the subject of the constitution as the noble and learned Lord. Nonetheless, Ministers continually have to take decisions that involve being presented with legal advice by our legal advisers, and Ministers have to take decisions on the basis of that advice. Those decisions are occasionally challenged in the court; sometimes the Government win and sometimes they are found against. Nonetheless, Ministers have to take decisions, and they are advised by competent legal advisers. If people seek to challenge those decisions then of course the court is the authority which decides whether the Ministers acted correctly or not. I do not suppose I have expressed that in a very concise manner, but I understand that that essentially is the situation.
Going beyond that specific point, I would like to explain again the Government's thinking on this issue, and where we feel we are now. Schedule 2 makes provision for a range of new charges to recover the cost of maritime services. But such a system already exists for the more limited purpose of paying for aids to navigation, and we have heard some of the history from the noble Lord, Lord Beaumont. Briefly, ships pay light dues when they enter British and Irish ports, and those dues are paid into the General Lighthouse Fund. The fund is managed by the Secretary of State and disburses revenue to the three GLAs. These three GLAs maintain lighthouses and other aids to navigation out of this revenue. The General Lighthouse Fund is separately accounted for, in effect it is ring-fenced and there is a transparent account of these transactions.
In drafting the Bill, we needed to consider the position of the General Lighthouse Fund as it was a living example of the sort of system which Schedule 2 envisages. That is why the two issues of seeking to generate a wider charging system and the charging system on a much more limited basis, already in place in the UK are linked. Let me say at once that we are content with the present operation of the GLF, but we did not wish to decide now to exclude the light dues from being considered when a new international agreement had been developed. So it seemed sensible to make provision on the face of the Bill for contingent powers to amend or to abolish the GLF. At the same time we wished to be as clear as possible on the circumstances in which it might become necessary to alter the GLF. There are references in paragraphs 3 and 12 of Schedule 2 to show what would happen and the mechanics thereof when a new charging system came into being. To address some of the earlier concerns, the important point here is that these provisions leave unaffected the constitution and main responsibilities of
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the three general lighthouse authorities. Indeed, the only mention of the GLAs in the Bill is in their capacity as collectors of light dues.
Paragraph 3 of the schedule makes clear that the Secretary of State will have no power simply to incorporate the General Lighthouse Fund into any new arrangements. Two preconditions are set out on the face of the Bill. First, there must be a European Community or other international obligation which envisages the incorporation of lighthouse expenditure with other marine services within a new payment structure. Secondly, those obligations must be incompatible with continuing the present lighthouse fund arrangements under Part VIII of the Merchant Shipping Act 1995. If the new international arrangements were compatible with continuing the present arrangements, the present arrangements would continue, and that is a very important point indeed. The noble Lord, Lord Beaumont, felt that it was unlikely that such wider agreement would come forward. In that case, the noble Lord, Lord Beaumont, has no need whatever to be concerned about this part of the Bill, because that precondition would not be met. Therefore, there would be no triggering of the consequential provisions about which there has been considerable discussion.
There is a third precondition before the Secretary of State can act, which has already been perceived. In introducing a new charging system by regulation, the Secretary of State would need to subject his proposals to the affirmative resolution procedure, so requiring parliamentary debate on specific proposals. There is no question of the Secretary of State, under these provisions, being allowed to amend the present arrangements at will. As was mentioned during Second Reading, the Delegated Powers Scrutiny Committee has looked at the powers in Schedule 2 to amend the primary legislation. It has concluded that the affirmative resolution procedure, which is stipulated in the schedule, provides:
"the appropriate degree of Parliamentary control".
Paragraph 12 makes consequential provisions for the General Lighthouse Fund, and it is subject to the same constraints or preconditions. Occasionally, we have heard the point made that paragraph 12 would allow a "raid" on the General Lighthouse Fund by the Exchequer. This is not realistic. The fund is prudently managed, indeed with the advice of the shipping industry as the Lighthouse Advisory Committee. It does not represent a huge reserve, and it has definite obligations, both towards expenditure on maintaining and replacing aids to navigation, and also towards paying the pensions of employees and former employees of the three general lighthouse authorities. I would like to deal with that point, as I was asked specifically by the noble Lord, Lord Beaumont, at the end of my remarks.
If, therefore, the preconditions set out in the Bill were met, and if in those circumstances, the Secretary of State decided to bring forward proposals for the abolition or merger of the General Lighthouse Fund, it is evident that he must also make arrangements for the continuation of the obligations now falling to the fund's resources. The point is evident, but if it would reassure the Committee, I would be quite happy to repeat that assurance.

69
If, however, we accepted these or similar amendments we would perpetuate a division between, on the one hand, lighthouse expenditure and the General Lighthouse Fund and, on the other, the funding arrangements to support the other maritime services with which Schedule 2 is concerned. The point of view that we have taken is that we already have an existing system which achieves part of what we are trying to achieve within Europe and wider; that is a user pays system, but we are trying to take that wider. We do not feel that we could ignore what we already have when we were considering proposals to bring about a wider system.
Several noble Lords, during the Second Reading debate, and indeed the noble and learned Lord, Lord Simon, during the course of your Lordships' Committee stage, raised the question of prematurity. It certainly is the case that there are no existing European or international obligations which would trigger these provisions. However, as we have heard, there has been some support in the European Community and we have initiated the call for studies which would bring such an arrangement about. In other words, it is not just a theory but it is an active proposal and it is something for which we felt we had to make provision.
On the specific question of pensions activity, the GLAs' collective pensions cost some £10 million per annum. The GLF published accounts include a statement that the Secretary of State will seek to ensure that annual reserves are maintained at sufficient levels to meet the pension liabilities. The Government's view is that this is a secure and sensible way of paying GLA pensions. We are effectively charging pensions through light dues against the maritime trade of Britain and Ireland, a population of 60 million. Since 90 per cent. of our trading requirements are met by sea, there is a very secure base indeed for sustaining pension liabilities.
Our forecasting obviously relies heavily on the GLAs themselves, but the current view is that the pension liability will peak in the year 2001 at about £10.5 million and will decline thereafter. The duty already falls on the Secretary of State to specify matters of funding under Section 214 of the Merchant Shipping Act 1995. It is clear that any arrangements under this Bill which may imply a contingent change to the GLF do not change the duty on the Secretary of State to determine the form of pensions. At present—again quoting from the GLF accounts—the Secretary of State must determine that the rules of the Principal Civil Service Pension Scheme shall apply.
In summary on the pension question—which is important and was raised by the noble Lord, Lord Beaumont—we would expect, if it proved necessary to activate Schedule 2, paragraphs 3 and 12, that the normal rule of no worsenment would apply in respect of pensions, while the details of funding would obviously depend on the detail of international agreement, as we have heard. That is a powerful assurance with regard to the important matter of pensions, and I hope it will be considered.
70
I have listened very carefully to noble Lords who have argued that such preparatory legislation is wrong in principle, but I do not believe that to be the case. We have had to make provision for what might happen as a result of a wider agreement.
The noble Lord, Lord Beaumont, drew attention to the GLF issues. A number of noble Lords have commented on them. I hope what I have been able to say this afternoon has given further assurance to noble Lords and others who are concerned about the GLF. I hope I have been able to reassure the Committee about the specific points on which there have been concerns and, therefore, the specific reasons why we have brought forward the proposals. However, I feel that this is again an important issue and one on which the discussion will continue. If the noble Lord, Lord Beaumont, wishes to withdraw his amendment, the discussion can certainly continue at another stage of the Bill. I have no doubt that between now and that stage further discussions can occur beyond the precincts of your Lordships' House.
Lord Clinton-Davis: It has been said that there was no extensive consultation and that this produced anxiety. Was there any consultation? If there was only limited consultation or no consultation, what is the explanation for that? After all, we rely in matters of this kind on the Minister's department to ensure that there is adequate consultation precisely to allay anxieties and, more than that, to ensure that the department—which does not have a monopoly of wisdom in these regards—is able to take advantage of the expertise and experience of those who ought to be properly consulted. The Minister owes the Committee a little more substantial explanation because we do not want this to become a precedent. I know it is not uncommon for mistakes to be made, but if that can be acknowledged we can move on.
I am not seeking to capitalise on this matter. It is just that under any government this sort of thing can occur and it is not good. It is not good for the practice of democracy. It is not good for Ministers themselves, who ought to have access to the view of people who are alive to the situation affecting their industry and, for that reason alone, ought to be consulted. I would ask the Minister, before this debate is concluded, whether he would enlarge a little on that point. It may well be that there is a perfectly good explanation, but the Committee is entitled to hear it.
5 p.m.
The Earl of Caithness: Before my noble friend replies, I would like to take up the point raised by the noble Lord, Lord Clinton-Davis, and use the phrase used by the noble Lord, Lord Greenway—"feathers have been ruffled". I can understand that, particularly with regard to the shipping industry. My noble friend has given a very honest admission and has apologised to all those concerned. I hope we can move forward from that, and that the department has learned the lesson that consultation, particularly on an issue such as this, is advisable.
It seems that we share much common ground. We are all on common ground that the user should pay, which relates quite clearly to the shipping industry and the

71
costs incurred as a result of its activities. The noble Lord, Lord Beaumont, said there are existing powers, and I know he is right, but the existing charging regime can be widened—for instance, to the leisure industry, which, in all equity, ought to pay its fair share for navigational aids.
I hope my noble friend will confirm, however, that the existing legislation is not broad enough, which is one of the reasons why we need items in this schedule. There are certain costs which are borne which we cannot claim back and which ought to be claimed back under the user pays principle.
Having said that, there is the downside which I mentioned at Second Reading, which takes me back to the preamble of the noble Lord, Lord Clinton-Davis, to his speech at Second Reading, which is that this will incur extra cost, if we are the only country to impose these costs, because it will impose costs on shipping and on our ports that perhaps our European partners will not impose. That will lead to a distortion of trade and extra costs.
On the question of Europe, having listened to what my noble friend says, it appears that the situation has moved forward quite markedly from what I remember with regard to an acceptance of the user pays principle. It is on this point that I believe that the Government are now right to include these provisions. I know that the noble and learned Lord, Lord Simon of Glaisdale, says that there is no agreement yet. But, having listened to what my noble friend said and noting the quite substantial improvement there has been in three or four years, this provision is worth keeping in the Bill because of the other matters which are set out in paragraph 3. That is the big "if' at the beginning which limits the Secretary of State's powers quite considerably, and then subparagraphs (a) and (b) follow on.
I do take note of the concern of the shipping industry, but I also feel that the explanation given by my noble friend has been a good one, worthy of merit.
Viscount Goschen: I would like to thank my noble friend Lord Caithness for his points with regard to the situation of charging and user pays.
My noble friend is quite right that we do need the additional powers given in this legislation to charge on a wider basis for a different set of services—for the counter-pollution and other services that are detailed in the Bill. We could not simply use existing legislation to achieve that, so my noble friend is right.
Secondly, I strongly acknowledge the point about unilateral action and the effect on competitiveness in this country. This country takes the competitiveness of UK industry extremely seriously. At Second Reading I went to considerable lengths to emphasise that our very firm preference is for action with regard to an international agreement, for the very reasons my noble friend raises. I am grateful to him for raising those points. It has enabled me to give that assurance a second time.
With regard to the consultation, I feel that the noble Lord, Lord Clinton-Davis, is perhaps going over old ground. I have sought to provide an honest explanation
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with regard to our then understanding of the European legislation and our change of view subsequent to the consultation exercise. That is the reason why there was no specific consultation on this measure, and I regret that. I regret the fact that, because of this change of view, no consultation occurred on that specific proposal, and indeed I made an apology to that effect at the Second Reading stage of your Lordships' consideration of the Bill. This was not so much an oversight as a change of view about what was and was not possible. That is the reason why we have come to the situation now; and I certainly regret that the lack of consultation has caused rather more feathers to be ruffled than I suspect would have been the case otherwise. There is nothing I can add to that. It is the policy of the Government to consult as widely as possible and gain as much detail as possible. Indeed, we covered that in earlier amendments when the noble Lord, Lord Clinton-Davis, was remarking on the level of consultation that the Government generally undertake.
I hope I have given an explanation of why the situation has occurred. I regret it. But I hope that with the assurances that I have been able to give, we can take the discussion on from there.
Lord Beaumont of Whitley: I would like to thank the Minister for the detailed explanations and also for the assurances that he has given. A number of those assurances are particularly welcome, including the one about pensions. I would like to take this matter away and look at it again. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn. [Amendments Nos. 61 to 63 not moved.]
Lord Beaumont of Whitley Lord Beaumont of Whitley moved Amendment No. 64:
Page 28, leave out lines 10 to 16 and insert—
("(4) In particular—

(a) regulations under paragraph 2(2)(a) above may not impose a charge in respect of a ship where no action has been or is being taken with a view to enforcing international shipping standards in the case of that ship:

(b) regulations under paragraph 2(2)(b) above may impose a charge in respect of a ship even though no action has been or is being taken with a view to preventing, reducing or minimising the effects of pollution from that ship; and

(c) regulations may provide that no charge is imposed in respect of a ship which does not exceed a prescribed tonnage or does not exceed a prescribed length.").

The noble Lord said: The purpose of this amendment is to ensure that charges in connection with port state control are not levied on the good ship or on ships that are not subject to port state inspection. Charges in connection with port state control should not be levied on ships which are either in the first place not selected for inspection or found on inspection to be in compliance with the international standards. Charges should only be levied on those ships found deficient. In particular, UK-flag ships are not subject to port state control in the UK but they are already subject to flag-state control for which charges are raised.
I realise that if the good ships do not have to subsidise the bad ships that may keep them good, but there is no reason to think they will not keep good anyway. I beg to move.
Viscount Goschen: I have listened carefully to what the noble Lord had to say about this group of amendments and I understand the noble Lord was speaking to Amendment No. 64 on its own. The thrust behind the amendment would preclude charging in respect of which no action is being taken to enforce international shipping standards. Action would typically be a survey or an inspection, whether a UK ship under flag state control or a foreign ship under port state control. We do not feel that such a restriction would be appropriate. The shipping industry as a whole benefits from the application of international standards on safety and pollution, and it is right that the industry as a whole should pay. I emphasise that any charging regime would apply both to UK and foreign ships.
I am not sure that the noble Lord is quite right in what he says about UK ships already paying for flag state control. There are some fine differences to point out here. They would pay for surveys but it is my understanding that that would not be the case for ad hoc inspections. There is a technical point between us here. I should like to ascertain the definitive position for him. If he will allow, I shall write to him with those details and circulate that to Members of the Committee who have shown an interest because it is an important point. Essentially the Government believe that the industry as a whole benefits, so the industry as a whole should pay; otherwise one would simply be imposing a change to the fee regime.
I hope that the noble Lord will await my letter on the details of who pays what for what. We might take that matter up if the noble Lord is not satisfied with my explanation.
Lord Beaumont of Whitley: I shall await the Minister's letter with avidity. In the meantime I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Beaumont of Whitley Lord Beaumont of Whitley moved Amendment No. 65:
Page 28, line 43, at end insert ("and any charges imposed shall be reasonable").
The noble Lord said: The purpose of Amendments Nos. 65 and 66 is that there should be an overriding requirement that charges imposed are reasonable, and that there should be an appeals procedure against the level of charges. Recommendation 98 of the Donaldson Report calls for,
"charges sufficient, but not more than is required".
In their response to Recommendation 98 in Cmnd. 2766, the Government supported that in principle and therefore I imagine that they will accept the amendments. I beg to move.
The Earl of Caithness: Could there not be a case where a shipowner thinks that something is reasonable but it does not cover the cost?
Viscount Goschen: My noble friend has made a reasonable point on that issue. Amendment No. 65, as the noble Lord, Lord Beaumont, has described, would require charges to be reasonable.
I do not believe that including such a requirement in primary legislation is necessary. I understand that there is no precedent for such a provision in any of the existing regulations which cover the fees charged at present. The requirement for the regulations to be subject to affirmative resolution provides a sufficient safeguard against excessive charges. In addition, as I said earlier, we would publish a compliance cost assessment before introducing regulations. We would also publish accounts showing the amount raised through charges and the associated expenditure.
The presumption, therefore, is that Government will act in a reasonable way, and that is the precedent that has been set throughout all the other regulations. I see the noble and learned Lord, Lord Simon of Glaisdale, showing some mirth at the idea of government acting reasonably; it often occurs!
Amendment No. 66 imposes a requirement that regulations must provide for appeals against both decisions that charges are due and the amount of charges. Again, we do not believe that that is necessary. We would expect there to be an appeals mechanism against decisions that charges are due, and paragraph 10 specifically provides for that. However, we do not believe that this need cover the amount of charges; the requirement for affirmative resolution is a sufficient safeguard. Indeed, there is a direct parallel with light dues. There are no such provisions for appeal as to the amount of the dues. That is a precedent which we should consider carefully.
For those reasons I ask the noble Lord to think again about the amendments.
We all support reasonableness, but we have an existing system whereby that reasonableness is already built in.
Lord Beaumont of Whitley: I shall certainly take the matter away and look at it, but for once, I both understand the answers and accept them. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 66 to 68 not moved.]
5.15 p.m.
Lord Greenway Lord Greenway moved Amendment No. 69:
Leave out Schedule 2 and insert the following new Schedule—
("SCHEDULE 2
FUNDING OF COUNTER-POLLUTION MEASURES ETC.
1. After section 302 of the 1995 Act there is inserted—
"Funding of counter-pollution measures etc.
302A. Schedule 11A (funding of counter-pollution measures etc.) shall have effect."
2. After Schedule 11 to the 1995 Act there is inserted—
"SCHEDULE 11A
FUNDING OF COUNTER-POLLUTION MEASURES ETC.
Charges in connection with port state control
1. Regulations under this Schedule may make provision imposing charges for the purpose of recovering the whole or a part of any costs incurred by the Secretary of State in connection with any of his functions which—

(a) are exercised through the Marine Safety Agency; and

(b) are functions of enforcing international standards relating to—

(i) the safety of ships;

(ii) the prevention of pollution from ships; or

(iii) living and working conditions on board ships.

Charges in connection with prevention etc. of marine pollution
2. Regulations under this Schedule may make provision imposing charges for the purpose of recovering the whole or a part of any costs incurred by the Secretary of State in connection with his functions under section 293.
Charges in connection with setting of standards
3. Regulations under this Schedule may make provision imposing charges for the purpose of recovering the whole or a part of any costs incurred by the Secretary of State in connection with his functions which—

(a) are exercised through the Marine Safety Agency; and

(b) are functions of establishing, developing or monitoring standards relating to

(I) the safety of ships; or

(ii) the prevention of pollution from ships.

Ships in respect of which charges may be imposed
4.—(1) Regulations under this Schedule may not require a charge to be paid except in respect of—

(a) a ship which has entered a port in the United Kingdom; or

(b) a ship which is anchored within 500 metres of an installation which is in United Kingdom waters or a part of the sea specified by virtue of section 129(2)(b).

(2) Nothing in any regulations under this Schedule shall be construed as requiring a charge to be paid in respect of a ship which is exercising—

(a) a right of innocent passage through the territorial sea, Or

(b) a right of transit passage through any straits used for international navigation, unless the charge is for a specific service rendered.

(3) Subject to sub-paragraphs (1) and (2) above, the regulations may impose a charge in respect of such description of ship as may be prescribed.
(4) In particular—
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(a)regulations under paragraph 1 above may impose a charge in respect of a ship even though no action has been or is being taken with a view to enforcing international shipping standards in the case of that ship;

(b) regulations under paragraph 2 above may impose a charge in respect of a ship even though no action has been or is being taken with a view to preventing, reducing or minimising the effects of pollution from that ship;

(c) regulations under any of paragraphs 1 to 3 above may provide that no charge is imposed in respect of a ship which does not exceed a prescribed tonnage.

(5) For the purposes of sub-paragraph (I) above, the circumstances in which a ship shall be regarded as entering a port in the United Kingdom include circumstances in which the ship enters any United Kingdom waters which are regulated or managed by a harbour authority.
(6) In sub-paragraph (1)(b) above "installation" means an installation which is—

(a) an offshore installation within the meaning of the Mineral Workings (Offshore Installations) Act 1971; or

(b) to be taken to be an installation for the purposes of sections 21 to 23 of the Petroleum Act 1987.

Persons by whom charges to be paid
5.—(1) Regulations under this Schedule may not require a charge to be paid in respect of a ship by a person who is not—

(a) the owner of the ship;

(b) the person registered as the owner of the ship;

(c) the operator of the ship;

(d) the manager of the ship;

(e) the charterer of the ship; or

(f) the agent of a person mentioned in any of paragraphs (a) to (e) above.

(2) Subject to sub-paragraph (1) above, charges imposed by the regulations shall be payable by such persons as may be prescribed.
Amount of charges
6.—(1) Regulations under this Schedule may impose a charge—

(a) of a fixed amount, or

(b) of an amount determined in accordance with the regulations,

and may, in particular impose any charge authorised by sub-paragraph (2), (3) or (4) below.
(2) Regulations under paragraph I above may impose in respect of a ship a charge whose amount depends on—

(a) whether action has been or is being taken with a view to enforcing international shipping standards in the case of that ship; and

(b) if action has been or is being so taken, the nature of the action.

(3) Regulations under paragraph 2 above may impose in respect of a ship a charge whose amount depends on—

(a) whether action has been or is being taken with a view to preventing, reducing or minimising the effect of pollution from that ship; and

(b) if action has been or is being so taken, the nature of the action.

(4) Regulations under any of paragraphs 1 to 3 above may impose in respect of a ship a charge whose amount depends upon the ship's tonnage.
Collection and recovery, etc.
7. Regulations under this Schedule may make provision—

(a) with respect to the collection and recovery of charges; and

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(b) for charges which fall due under the regulations but which are not paid to carry interest.

8. Regulations under this Schedule may make provision for appeals against decisions that charges are due in respect of ships.
Miscellaneous and supplementary
9. Any sums received in consequence of regulations under this Schedule shall be paid into the Consolidated Fund.
10.—(1) Regulations under this Schedule shall be made by the Secretary of State with the consent of the Treasury.
(2) In this Schedule "prescribe" means prescribe by regulations." ").
The noble Lord said: The Committee will be pleased that I do not intend to rake over the ground we covered a few moments ago when the Minister gave a very full explanation of the Government thinking behind the possible proposals for winding down the General Lighthouse Fund.
My amendment, which seeks to replace the present Schedule 2 in the Bill with the Schedule 2 that appeared in the draft Bill, and therefore has been consulted upon by all parties, is in many ways a probing general amendment to air the whole subject again. This we have already done.
I should like to reinforce what the noble Lord, Lord Beaumont of Whitley, said about light dues in general. This is a user pays system. It has worked extremely well for a great number of years. I know there are arguments from time to time on the part of shipowners that it costs too much and the ports argue that it is making them uncompetitive with ports on the Continent. Nevertheless, it is a tried and tested system. It works well. It has been well managed over the years and in fact we have not had a rise in light dues for the past two years which is evidence that it is well managed.
Concurrent with that, the general lighthouse authorities have been carrying out a long and complicated process of automating all our lighthouses, our lightships and indeed our buoys which are now by and large converted to solar power instead of the old gas power. It is a rolling programme that is proceeding as planned.
Trinity House has issued a consultation document on how we should proceed with navigational aids after the year 2000. They were concerned at the contingency proposals in the Bill to wind down the General Lighthouse Fund. If those were to be implemented, they wondered where they stood on plans for the next century because they thought that the proposals might have some bearing on their future plans.
I listened carefully to what the Minister had to say earlier. I am not entirely convinced by his argument yet. On the one hand he said that the user pays system is the best one—the one we employ at the moment—and I am delighted that some interest is now being shown in Europe. There are still many stumbling blocks to overcome before we have general agreement. I believe I am right in saying that the Germans are not at all happy about following our system.
If, as we all hope, our system prevails in the end and the rest of Europe comes into line, then as the Minister has said, we do not need to make any changes. The present system of light dues will continue. On the other
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hand, I cannot help feeling that the Government are not quite so confident; otherwise why put in this effectively long stop in case Europe should not decide to go down the route which we currently follow and should come up with an alternative, which would mean winding down and transferring the General Lighthouse Fund into general government funding?
I shall read carefully what the noble Viscount has said, and I look forward to hearing anything further that he may have to say at the moment. I should just point out one further thing in my amendment, which again relates to the schedule in the draft Bill, and that is on the question of charges for maritime services. The general lighthouse authorities have no problem with this, nor indeed I believe do the shipowners. It is the correct way to proceed, as indeed was so ably put forward by the noble and learned Lord, Lord Donaldson, in his report. However, there was one funding provision which was not included in the draft Bill, and that is charges for functions relating to the promotion of the safety of ships.
I do not know whether the Government are going to try to get shipowners to pay for advertising campaigns to tell them to run safer ships or whatever, but that was certainly not consulted upon, and that is one reason why it is not in my amended Schedule 2. I believe I have said enough, and I will listen to anything further that the noble Viscount has to say, but I am sure we will return to this matter at a later stage. I beg to move.
Viscount Goschen: I certainly welcome the approach that the noble Lord, Lord Greenway, has taken in moving his amendments, which return essentially to the text of the draft Bill. The noble Lord is quite right that we have had discussions already this afternoon concerning the charging regime and the General Lighthouse Fund. I am pleased to hear of the noble Lord's support for applying pressure within Europe to get a wider user pays charging regime. The fact is that we have a user pays regime for the lights, but again the United Kingdom Government want to widen that. Hence the provisions to include charging for other matters such as marine pollution contingency. Therefore, there is inevitably change involved in the UK's arrangements if we can achieve this wider agreement.
Again, I would just briefly return to the point which I made to the noble Lord, Lord Beaumont, that if noble Lords are of the view that this is a very long way away, of course the contingent provisions that kick in with regard to changing the GLF would not apply; they would not kick in.
Let me just give a brief rehearsal of the rationale for the provisions which the noble Lord's amendment seeks to remove. In taking enabling powers to cover a possible new charging system, we need to deal with the possible implications for the existing charging system. In effect, we need to be clear how the existing and new systems would relate to one another, and that is what the Bill's present text sets out. The consultation draft of Schedule 2 did not cover the point, as I have explained, because at that time we understood that any changes to the light dues system which were required by an international

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agreement could be achieved through secondary legislation under the European Communities Act. As I have said, we now understand that that is not the case.
We therefore set out in the Bill limited and contingent but explicit proposals to change the light dues system if, and only if, an international or European obligation requires us to do so. That is the key point here. I understand that by moving the original text of the Bill as an amendment, the noble Lord has sought to probe further the Government's thinking behind that, but I hope I have been able to give him some further detail. However, as with the previous amendment, I would expect the discussions on this important matter to continue.
Lord Greenway: I am most grateful to the Minister. Rather than delay the Committee any longer, I will just say that I will read carefully what he has said, and, as he rightly says, I am sure we will return to this matter at a later stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 2 agreed to.
Clause 13 [Carriage of hazardous and noxious substances]:
Lord Berkeley Lord Berkeley moved Amendment No. 70:
Page 15, line 44, at end insert—
("Review of Chapter.
182D.—(1) The Secretary of State shall review the operation and effectiveness of this Chapter as soon as practicable after the period of three years beginning with the date on which it came into force and in the course of that review he shall consider—

(a) the adequacy of the compensation provided under the Convention for pollution of fishing grounds;

(b) the effectiveness of the procedures for alleviating the hardship suffered by persons affected by such pollution; and

(c) the need to seek to amend the provisions of the Convention concerning the limitation of liability in accordance with the procedure laid down in Article 48 of the Convention.

(2) The Secretary of State shall prepare a report based on the review and, as soon as practicable after the report is prepared, shall lay copies of the report before each House of Parliament.'"').
The noble Lord said: I wish to move Amendment No. 70 standing in the name of my noble friend Lord Clinton-Davis. As the Committee will be aware, this is an addition to the end of Clause 13 which gives effect to the International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances at Sea 1996. The convention is set out in Schedule 3 to the Bill. Amendments to this convention cannot be tabled to the text because that would impose different obligations in respect of compensation for claims in the UK compared with other countries and would conflict with the UK's obligations under the convention. I think we understand that.
This is a probing amendment which would impose a statutory obligation on the Secretary of State to review the operation of the convention in the UK three years after it comes into force. Unless something like this is done, there must remain a concern among those who
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could be affected by this compensation as to how it will work. The amendment seeks some mechanism to require the Secretary of State to review the operation and effectiveness of this chapter—"the adequacy of the compensation", as it says, and "the effectiveness of the procedures"—and to provide a forum to discuss the need to amend the provisions in the future if they are seen to be unsatisfactory. That is the purpose of this amendment. I look forward to hearing what the Minister has to say. I beg to move.
Viscount Goschen: The Government have some sympathy with the intention behind this amendment. Officials of the Department of Transport have participated fully in the lengthy discussions on the text of the Hazardous and Noxious Substances Convention which was adopted by the IMO earlier this year. We were determined that the convention should be effective in providing prompt and adequate compensation to victims of marine pollution. Indeed, the convention contains many provisions which were suggested by the United Kingdom delegation specifically to achieve that aim.
This determination to get the convention right does not end when it enters into force. We intend to be one of the first states to ratify the convention. This will enable us to participate in the decisions of the organisation established by the convention and to review its effectiveness on a continuing basis. That is also the policy we have adopted for the International Oil Pollution Compensation Fund, on which the HNS Convention is closely modelled. We are all agreed that the HNS Convention is very good and plugs a gap which previously existed. Officials of my department would certainly want to play a close role in the policy-making process of the new body, as they have done with the IOPC.
The noble Lord's amendment would require a single review of the HNS Convention three years after it had entered into force. It would be very unlikely that the convention would have had sufficient time to generate enough useful experience of compensation for such a review to be useful. We anticipate that the incidents which the HNS will deal with will be quite infrequent—that is the nature of what the fund is seeking to do in dealing with potentially extremely serious incidents. We hope they will be infrequent.
I recognise what the noble Lord is trying to achieve through his amendments. I suggest that it would be far more profitable to continue the Government's existing policy of on-going work to ensure that the convention is effective. The convention already provides that it should be assessed after five years by the assembly of the HNS Fund, and I endorse that. I hope that, with my information on the on-going review process and the interest of the UK Government in this specific scheme, the noble Lord will be satisfied that we take this seriously and do not feel that consideration has ended upon introduction of the scheme.
Lord Berkeley: I am grateful for the Minister's explanation. It is good to hear the detailed involvement of the British Government in this very important subject.

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The Minister is absolutely right that three years may be the wrong time, and maybe it should be longer, but he has responded positively to my comments on the amendment. I shall study what he said with interest. In the meantime I beg leave to withdraw this amendment.
Amendment, by leave, withdrawn. Clause 13 agreed to.
Schedule 3 agreed to.
Clause 14 [Limitation of liability]:
On Question, Whether Clause 14 shall stand part of the Bill?
5.30 p.m.
Lord Clinton-Davis: I have given notice that I wish to debate clause stand part here because it will give us the opportunity to examine the issue of punitive damages and the processes pursued, particularly in the United States. The background to this is that neither the 1976 Convention on Limitation of Liability for Maritime Claims, nor the 1996 protocol to the convention, provides for adequate liability for damage to what are termed "non-use resources"; that is to say species and habitats that cannot readily have a monetary value attaching to them. The same is true of the 1969 Civil Liability Convention and the 1971 Fund Convention, as amended by their respective protocols. All these were established to provide compensation to victims of oil pollution from tankers.
Under any of these conventions liability for damage to non-use resources is limited to paying for reasonable wildlife rehabilitation measures—for example, the cleaning of birds—and reasonable wildlife or habitat restoration measures. An example of that may be salt marsh replanting. The conventions do not allow for the levying of punitive damages for damage inflicted on wildlife or habitats by oil pollution. This limitation is reflected in the definition of pollution damage at Section 181(1) of the 1995 Merchant Shipping Act, which specifically excludes:
"Any damage attributable to any impairment of the environment except to the extent that any such damage consists of—

(i) any loss of profits, or

(ii) the cost of any reasonable measures of reinstatement actually taken or to be taken".

Indeed, the Minister (at col. 777 of Hansard of 17th November) said this:
"We do not subscribe to the notion of punitive damages per se as applies in the USA oil pollution Act of 1990".
In the United States punitive damages are permissible under the Domestic Oil Pollution Act of 1990. What happens is that assessments are made of damage to non-use resources; for example, the number of individual birds killed. The punitive damage is then calculated using a variety of methods aimed at placing monetary values on individual plants, animals or habitats. One such method is known as contingent valuation, whereby members of the public are interviewed in order to assess their willingness to pay—in dollars, that is to say—to have, for example, a bird protected. The funds collected from the shipowner for punitive damages are then fed into rehabilitation and
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restoration projects, and surplus funds can then be used for other unrelated conservation projects if that is necessary. However, some groups have concerns about the method used for assigning monetary values to wildlife and habitats. Perhaps a better way of employing this approach would be to levy a financial penalty based on other factors such as the amount of oil spilled.
As I said at the beginning, I have given notice of this debate because I believe the Minister's view that the principle of punitive damages should be discounted should be discussed. It may well be that damages of this kind could create a significant deterrent to shipowners against taking some of the measures that they might otherwise take. It may be a way of helping to reinforce the fact that much of the damage caused to wildlife and habitats by oil pollution simply cannot be remedied by rehabilitation or restoration measures. The method of calculating damages certainly needs further consideration.
I would be most interested to hear what the Minister has to say in relation to this matter. I am not saying for myself that I go along with the idea of punitive damages, but I thought it was a useful vehicle to discuss the issue, and I hope that the Minister will be able to respond to the points I have made.
Viscount Goschen: I am grateful to the noble Lord for giving us this opportunity to discuss the matters that are contained within Clause 14, which is concerned with the limitation of liability. Clause 14 provides for the UK to implement and ratify the protocol, which amends the 1976 Convention on Limitation of Liability for Maritime Claims. The proposal would increase the amount of compensation available to meet maritime claims not met by the present oil compensation regime and the HNS Convention once it is in force. So I would just like to re-emphasise for the benefit of the Members of the Committee that we are not talking here about the IOPC Fund nor the HNS Convention once it is in force.
The convention that we described allows shipowners the right to limit their liability to third parties, and, as I have mentioned, it specifically excludes liabilities which are covered in other international instruments, for example oil and in future HNS, and I thought perhaps that some of the remarks that the noble Lord, Lord Clinton-Davis, made might have been addressed to matters concerning the International Oil Pollution Compensation Fund. However, I was not entirely clear about whether he was talking about oil damage that would be related to the IOPC. As that is not what Clause 14 describes, I will just go on to make a couple of further points about the protocol itself.
In May 1996, the IMO adopted a new protocol to the 1976 convention. The main effect of this protocol is to increase the limit on liabilities by a factor of about 2.5. This is the first increase in the limit since 1976. The protocol also provides for a rapid amendment procedure for future increases in the limits.
We are determined that limits on shipowner liability should be high enough to provide sufficient protection for innocent third parties, but it should still be insurable

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at reasonable costs. I believe that the limits in the 1996 protocol achieve those two aims and get that balance right.
However, I do not believe that we should forget that the shipping industry is one of very few which is allowed or able to limit its liability in this way. There is a real danger that the international community could question this right to limit liability if the limits were found to be too low to meet the legitimate needs of victims. We are fully committed to ensuring that this does not occur by working to ensure that the limits are realistic and appropriate. That is what Clause 14 does and we believe that it is of considerable importance to get those limits right.
Some of the remarks of the noble Lord, Lord Clinton-Davis, concerned what occurs in the event of oil pollution that would be covered by the IOPC Fund. Non-economic damage is not covered by the existing Conventions because of the difficulty of assessing that damage. After the Oil Pollution Act, the members of the IOPC Fund, and later the IMO, considered the matter and decided against taking environmental non-economic damage forward. That remains the position for the international community.
The final point is a caution not to mix compensation with punishment. We agree that they should be separate under the IOPC Fund. For the oil compensation we have sought to set up a fund which works quickly and effectively to compensate those who have suffered because of oil damage rather than a system for punishment. I hope that answers some, if not all, of the questions the noble Lord raised with regard to Clause 14.
Lord Donaldson of Lymington: Before the noble Lord, Lord Clinton-Davis, replies, could I draw the attention of the Committee to paragraph 19.45 of what is referred to in my family as "the good book"? It deals with the question of punitive damages and points out that with regard to the major spills at least, the chances of anybody deliberately producing a major spill or being in a position whereby the possibility of punitive damages would in any way increase his reluctance to produce a major spill are negligible.
There are tales without number of the way in which the American authorities administering the OPA have managed to put in claims for non-economic damage which almost beggar belief. It may not be true, but I am told that they have done surveys of people living in the hinterland of places where there was an oil spill. They have said to them that surely they would have been going to the beach to bathe rather than playing golf if it had not been damaged, and asked them how much it was worth to them not to be able to go even if they would not actually have gone; and thus enormous claims are built up. I hope we shall not go down that route. I do not really think it is a question of hope; I am certain that we shall not. But it is as well that we realise where that route could lead us.
Lord Clinton-Davis: I am grateful to the noble and learned Lord, Lord Donaldson, for drawing attention to
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paragraph 19.45 in the report where he expressed very tersely but effectively the case against punitive damages. I do not dissociate myself from that. I merely thought it was right that we should discuss an issue which is important in the shipping industry, which, as the Minister says, is one of the few industries where there is limitation of damages.
It is right to point out that as far as aviation is concerned, there appears to be a move away from limitation of that kind and, as I understand it, already the United States and Japan do not limit their claims in the way that is done in shipping or in the way that is done generally in relation to aviation matters. Indeed, there appears to be a movement in the International Civil Aviation Organisation in the direction that the United States and Japan have gone. The two industries are not that dissimilar as far as this issue is concerned. It may well be that there will be a similar movement in shipping.
The Minister has replied pertinently to the points which I have raised, but I would like to think carefully about what he has said. We may want to return in some way, not to the substance of the question of punitive damages, but to other matters which are germane to this clause. It was worth while having the opportunity of listening to the Minister and, indeed, to the noble and learned Lord, in their comments on this debate.
Clause 14 agreed to.
Clause 15 [Compulsory insurance]:
Lord Clinton-Davis Lord Clinton-Davis moved Amendment No. 71:
Page 16, line 33, after ("regulations") insert ("subject to approval by resolution of both Houses of Parliament").
The noble Lord said: This is a short point which does not require very much explanation. I would like to know from the Minister why these regulations should not be subject to approval by resolution of both Houses of Parliament. Certainly some examination of these issues by Parliament is appropriate, and I will listen to what the Minister has to say. I beg to move.
5.45 p.m.
Viscount Goschen: The Government believe that regulations made under the powers in Clause 15 would not be appropriate for the affirmative resolution procedure. There are just a few points to make on this basis which I hope will satisfy the noble Lord, Lord Clinton-Davis, as to why we have chosen to go down this route under the note of procedure for these regulations. They would be highly technical and may need to be updated frequently. We believe that it would be unnecessarily time-consuming for Parliament to be required to approve all such regulations. The other point is that it would also delay the introduction of measures which the Committee has agreed are essential and indeed urgent.
As the Bill is currently drafted, the regulations would be subject to annulment in either House. This would allow Parliament the option to scrutinise the regulations without imposing unwarranted delay or demands on its time. In other words, if the noble Lord or his colleagues felt that the Executive was trying to rush through measures that were inappropriate, they would of course

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be able to draw this to the attention of Parliament. But as they are technical regulations and as there might well he a need to update them, I hope he will agree with me now that in this instance it is more suitable to the negative procedure.
Lord Clinton-Davis: It is not so much this noble Lord or noble Lords on this side of the House. It is much more likely that it will be the noble Viscount who will have to make that decision. If I were the Minister, I would adopt exactly the same response to the point that I made. But it is common practice in most of these debates to test the Government as to what is appropriate in the circumstances. I agree with the Minister that the negative procedure is more appropriate than the affirmative one. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Viscount Goschen Viscount Goschen moved Amendment No. 72:
Page 16, line 39. after ("specified") insert ("and satisfying such other requirements as may be so specified").
The noble Viscount said: These amendments relate to insurance. Yesterday we had a long and detailed debate on the amendment from the noble Lord, Lord Clinton-Davis, which I understood was essentially attempting to achieve the same thing.
These amendments are intended to clarify the provisions relating to shipowner financial security for third party liabilities. The amendment does not make a significant change to the content of the Bill, but the intention is rather to make explicit what was previously implicit.
The intention behind Clause 15 was that the Secretary of State should have the power to specify, first, the persons required to have insurance rather than security; secondly, the liabilities to be covered; and thirdly, the types of insurance or other security which would be acceptable. These amendments would amend new Section 192A(1) of the 1995 Act to make this explicit.
The changes we are seeking to introduce, and which I hope will meet with the approval of the Committee, are in response to an important point which was raised by the noble and learned Lord, Lord Donaldson, at Second Reading. We have therefore brought forward the approach of saying that,
"after ('specified') insert ('and satisfying such other requirements as may be so specified')".
During the debate yesterday we reached agreement that we were not entirely sure what would be the "such other requirements" that may be so specified, but we all agreed that it was important for the Secretary of State to be able to qualify that in order to tackle the potential problem of worthless insurance whereby the contracts were meaningless because they had no real force or power behind them.
I hope therefore that the Committee will feel able to agree to the two amendments. I thank the noble and learned Lord again for raising this important point at Second Reading. I beg to move.
Lord Donaldson of Lymington: I hope the Minister will not take it amiss if I say that Sir Humphrey would have been proud of the statement he has just made. I
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had no doubt at all that the Bill was defective and did not have the powers which are now to be put into it and which were so necessary. The Bill is now making explicit what was previously implicit. That is a remarkable achievement.
Suffice it to say that I very much welcome the additional words. They will achieve what is required. It is difficult to see exactly what form the regulations will take at the moment, but they are sufficiently general and explicit to give the Minister all the powers that he will need. I thank the Minister for moving the amendment.
Lord Clinton-Davis: I am grateful to the Minister for that response. He is quite right: we had a long debate yesterday on this issue and the matter was left in a fairly satisfactory position. We agreed that it would not be inappropriate for this House, at a later stage of the Bill, to ascertain by means that are available what progress has been made in the discussions with the insurance industry about making effective the assurances that the Government make.
We hope that the Minister will find through his officials that the consultations that go on will secure the objective that he has set out both yesterday and today. In those circumstances, I beg leave to withdraw the amendment.
Noble Lords Noble Lords: Order!
Lord Clinton-Davis: The Minister is quite right. I am so used to moving amendments, but these, unusually, are his!
Viscount Goschen: We all have to have a go at moving amendments every now and again. We feel that these government amendments achieve the purpose that was identified by the noble and learned Lord, Lord Donaldson, at Second Reading, and I am pleased to hear his welcome and acceptance of them.
On Question, amendment agreed to.
Viscount Goschen Viscount Goschen moved Amendment No. 73:
Page 16, line 41, leave out ("may be") and insert ("satisfies requirements").
The noble Viscount said: I spoke to this amendment with the previous amendment. I beg to move.
On Question, amendment agreed to.
[Amendment No. 74 not moved.]
Lord Clinton-Davis Lord Clinton-Davis moved Amendment No. 75:
Page 17, line 43, at end insert
("(7) Regulations under this section may provide that any claim for compensation for damage against the person or persons so insured or secured may be brought directly against the insurer or other person providing security and such regulations shall provide for the rights or defences or limitations of liability, or all of them, to which the insurer or other person providing security shall be entitled.").
The noble Lord said: This is a somewhat different point. The idea underlying Amendment No. 75 is to enable a claimant to acquire a direct right to enforce the policy or security against the insurer or the surety. The creation of rights in third parties against the insurer or surety would clearly require a careful examination of

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the legal issues involved. For example, the present shortcomings of the domestic insurers Third Parties (Rights against Insurers) Act 1930 would have to be addressed.
Apart from domestic legal issues, there may be private international law issues where the security is provided by a foreign insurer or surety, and so on. In this draft amendment we are seeking to introduce an enabling provision to the Bill so that these issues can be addressed and the mischief identified by the noble and learned Lord, Lord Donaldson, can be properly resolved.
In alluding to this issue during the Second Reading, and also in the debate yesterday, I said one has to worry a little about a situation where the benefits thought to accrue to creditors which arise directly out of the damage involved should be paid to those creditors. We should not have a situation where that money is utilised by the shipowner to be discharged to other—perhaps many—creditors who had nothing to do with the accident concerned. I am not suggesting that we have exactly the right wording, but it is important that the issue should be addressed. It is a matter which may also be included in the discussions which the Minister and his officials propose to have with the industry to discover how workable this proposal is. This is not an easy matter, but it needs to be addressed with some degree of urgency. I beg to move.
Viscount Goschen: The amendments under consideration would allow the regulations to make provision for direct action against the insurer. This could include a foreign insurer. Our view is that we could not introduce such a requirement unilaterally. We opposed the United States' recent Oil Pollution Act which provides for such action. The US has since experienced difficulty in securing marine pollution cover from overseas insurers.
We believe that direct action can only be achieved through international agreement, as has already been done for oil and HNS. Discussions are continuing at the Legal Committee of IMO on a possible international scheme for compulsory insurance. These discussions will all cover the possibility of direct action by third parties for claims other than for oil and HNS damage. We will strongly support such proposals.
I hope that, with an explanation of our support for this type of approach in the international forum and of our difficulties and the potential breach of international law obligations, the noble Lord will see fit to withdraw his amendment, bearing in mind that we support what he is trying to achieve.
Lord Clinton-Davis: I am grateful to the Minister for his response, not for the first time. This is not an easy matter, and I readily agree that it is an issue which needs to be confronted on an international scale. Perhaps the Minister could inform the Committee what action has so far been taken to address this issue at the instance of Government, at the IMO or some other organisation. It is a matter of urgency.
The Minister is right that the United States have experienced difficulties in regard to their own problems. I wonder whether the Minister could therefore indicate
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what action has been taken by the Government to promote discussion, first, at the IMO or, secondly, in any other forum, and what seems to be the response from people whose support the Government are seeking to elicit so that there might be some possibility of the principle underlying this amendment coming to fruition.
Viscount Goschen: We consider the whole issue of insurance to be very important. Not only do we give it that importance within this Bill, but also in the international forum, and in particular the IMO. We have made it very clear that this is a priority. We had this agreed by the IMO Legal Committee in September as the next priority after HNS. I understand that the situation is that the United Kingdom representatives at IMO made it very clear that we consider this a high priority. The view that it is a high priority has been accepted by IMO. I hope that provides the indication the noble Lord is seeking.
Lord Clinton-Davis: It will encompass this issue?
Viscount Goschen: The discussion is primarily about compulsory insurance, but the point that the noble Lord has raised is important and we would strongly support this type of approach. I hope that that, combined with the priority that we give to the insurance as a whole, gives the noble Lord a proper explanation of the position.
Lord Clinton-Davis: I thank the Minister for that explanation and am satisfied that that is the appropriate approach. In the circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 15, as amended, agreed to.
Clause 16 [Discharge books]:
[Amendment No. 76 not moved.]
Clause 16 agreed to. Clause 17 agreed to.
6 p.m.
Lord Beaumont of Whitley Lord Beaumont of Whitley moved Amendment No. 77:
After Clause 17, insert the following new clause
TRANSFERS OF LOCAL LIGHTHOUSES TO HARBOUR AUTHORITIES
(" In section 203 of the 1995 Act (individual transfers of local lighthouses to harbour authorities) for "A general lighthouse authority may. at any time, with the consent of the Secretary of State, transfer to a harbour authority" there is substituted "A general lighthouse authority shall, at any time, after consultation with a harbour authority and with the consent of the Secretary of State. transfer to that harbour authority.").
The noble Lord said: The purpose of this amendment is to continue the effect of Section 202 of the Merchant Shipping Act 1995, which is expected to be repealed by Section 27(2) (Schedule 7) of this Bill, and to require the transfer of local aids to navigation to port authorities where appropriate.
Section 202 of the Merchant Shipping Act 1995 originated in the Ports Act 1991 and required the transfer by the general lighthouse authorities to port

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authorities of aids to navigation in their statutory areas where those aids were primarily for local navigation. That particular programme was completed in 1995. However, a number of aids to navigation were identified as possible candidates for transfer, but proposals were not forthcoming from the GLAs. Section 203 of the Merchant Shipping Act governs the voluntary transfer of such aids to the ports.
From time to time new cases will arise where transfer would be appropriate, due, for example, to changes in users' navigational patterns, or changes in port authority or geographical limits. In these circumstances transfer should also be compulsory. The principle of compulsory transfer was established by the 1991 provisions. Such transfer would be consistent with the principle of user pays, since the users of individual ports should pay for all appropriate infrastructures through conservancy dues or charges. General light dues should fund only aids to general navigation. I beg to move.
Lord Greenway: I am in general agreement with the noble Lord, Lord Beaumont, on the amendments he has moved this afternoon, but here I feel I must part company with him. This new clause would, in general terms, mean that instead of general lighthouse authorities having the discretion to transfer to harbour authorities any lighthouse, buoy or beacon which it appears to them is only used for local navigation, and which therefore should be the responsibility of the local harbour authority, there would now be an obligation on the general lighthouse authorities to do so.
A general transfer of local lighthouses from the GLAs to local harbour authorities was effected, as the noble Lord has just said, by Section 202 and Schedule 9 of the Merchant Shipping Act 1995, which gave effect to the regime set out in the Ports Act 1991. This general transfer took place in April 1993, and accordingly Section 202 is repealed by the current Bill as a spent provision.
My understanding is that Trinity House and the other general lighthouse authorities wish to retain their discretion as set out in Section 203 of the 1995 Act, which is itself specifically intended to deal with cases where circumstances have changed since the general transfer of lighthouses to which I have already referred.
It is fully consistent with the overall responsibility which the GLA has had under the 1995 Act to decide which aids to navigation are to remain as general navigation aids and which should properly be transferred to the local harbour authority's jurisdiction. I submit that is not a matter for the local harbour authority to decide.
Viscount Goschen: I rise to speak to the amendment with much the same view as that established by the noble Lord, Lord Greenway. I, too, am slightly mystified by the amendment in that it removes a discretion and replaces it with an obligation, and I wonder whether that was possibly not the intention behind the noble Lord's amendment. I originally thought that what he was seeking to do was seek a duty of consultation, but of course consultation already occurs and is a major part of the system, and indeed
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representations could be made to the Secretary of State. I believe that perhaps we are talking at slightly cross purposes. If I am wrong, I apologise to the noble Lord, and recognise that his intention was to create a duty, an obligation, rather than giving the general lighthouse authorities discretion as they have at the moment.
Lord Beaumont of Whitley: I would like to thank both the noble Viscount and the noble Lord for what they have said, which I will take away and consider. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn. Clauses 18 to 20 agreed to.
Clause 21 [Retention of documents by Registrar General]:
On Question, Whether Clause 21 shall stand part of the Bill?
Lord Clinton-Davis: I have chosen to promote a debate in relation to this clause, which refers to removing a requirement which currently exists for the registrar general to retain documents transmitted to him. It replaces that with a requirement to retain documents at the Secretary of State's discretion. Many of the documents, I believe, are useful in terms of settling disputes, and the registrar is in a position to act as an arbiter. Consequently, I question whether in fact the action which the Government desire to take in relation to this clause is right, and whether the registrar general should in fact keep documentation to assist him in this particular process.
The 1995 Act requires the registrar general to record and preserve all documents. It is not very long ago that the House debated that Bill, and the Government have themselves come forward with that proposition. It enables archive records to be available for investigation of incidents and accidents so that blame can, where appropriate, be apportioned and lessons learned for the future. I believe, therefore, it is conceivable that an archive which is incomplete could prejudice that purpose.
It is useful to have records of the kind to which I have referred located in a central place. It is important for the seafarer, and personal details can be verified if the seafarer should require assistance from the welfare organisations. I would therefore not be remiss in calling for retention of something that has existed for 75 years, because it is usually the case that reference to records for such purposes is necessary, particularly in later life.
I do not know what has motivated this change. Is it the sweeping aside of unnecessary regulation, which I support? I question it in this case, however, because the deregulation Bill was in fact being discussed by this House at much the same time as the Merchant Shipping Act 1995. So they must have had some other reason. Is it that there is a lack of storage space? I know very little about CD-ROMs, scanners and things of that kind, but I understand that storage space is not at such a premium these days. New records are stored electronically, old records can be disposed of annually if they are unnecessary. Surely, the registrar general's duty to

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record and preserve could be interpreted to mean that retention of the original is not required in all circumstances.
I gave notice of my intention to oppose the Question so that the Minister could respond to what is an important probing debate. 1 have some suspicion about the Government's motivation here, for the reasons I have sought to explain in this short speech and I hope the Minister will be able to allay my anxieties.
Lord Greenway: I share some of the concerns that the noble Lord, Lord Clinton-Davis, has just mentioned. I am connected with all sorts of maritime organisations, some of which delve into history, and I know that there has been concern in the ranks that it is getting more difficult to get hold of some records which are potentially very useful to would-be historians of the future. I know storage is a problem, but if some of these records are to be disposed of, as I think was hinted at by the noble Lord, I am sure that there must be some way that we can guarantee that they are handed over to some other organisation with the space and the willingness to preserve them for future posterity.
Viscount Goschen: I have listened extremely carefully to the debate. Clearly, maintaining proper records is an important objective. It is an important thing to do but we must all agree that there has to be a limit somewhere here. Clause 21 replaces the requirement for the registrar general to record and preserve all documents transmitted to him with a requirement to hold all such documents as required by the Secretary of State. The recording and preserving of all documents is, indeed, an onerous task and in practice the majority of records are accessed infrequently. The clause reduces the burden of document storage and subsequent cost to the department by allowing the Secretary of State to limit the period of storage.
The noble Lord, Lord Clinton-Davis, summed up the argument by saying that many of the documents are useful, and I emphasise the word "many". The noble Lord also recognised the spirit of deregulation and that just because something has been happening for a very long time and is a very intense bureaucratic task it does not necessarily follow that we should seek to perpetuate it unless we can find good reasons for doing so. The important documents, as specified by the Secretary of State, would continue to be held.
The question was raised as to whether the registrar general would destroy the documents that he no longer requires. The answer to that is "not automatically". In consultation with the department's record officer in the Public Record Office, records would either be passed to an official place of deposit or be destroyed. Listening to the concerns of the noble Lord, Lord Greenway, I am sure that it would not be beyond us to have the records preserved in some manner if it was felt sufficiently strongly that there was a real desire to have that done.
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One might suggest that we transmit them to the office of the noble Lord, Lord Clinton-Davis, and see how he gets on with cataloguing them all for electronic storage.
Lord Clinton-Davis: Yes, for an appropriate charge.
Viscount Goschen: The noble Lord has identified the value of his time. We all agree. Seriously, it is important to keep proper records. However, we do not want to perpetuate a highly bureaucratic task which results in a huge amount of documentation, most of which is never looked at by anyone. I would be happy to continue to have discussions (perhaps with the noble Lord, Lord Greenway) to see whether there is any other solution. I am not sure about the position of the Public Record Office. It would depend on whether it wanted to accept the volume of documentation. Perhaps someone else would. We would have to make checks with regard to confidential material. The Government have no intention of destroying useful documentation; we are merely trying to streamline the burden. I hope the Committee will accept that Clause 21 makes a valuable contribution to that end.
6.15 p.m.
Lord Clinton-Davis: What appears unimportant to a Secretary of State may not appear unimportant to a seafarer with a particular problem. That constitutes a real anxiety. What consultation was undertaken by the department in relation to this issue? What parliamentary control would there be? It is very difficult to imagine that Parliament would be able to control this situation any better than the Secretary of State. Why, I repeat, was this issue passed by in the 1995 Bill? I would be very interested to know whether the Secretary of State or the Minister would care to let us examine a document which, I hope, has not been destroyed—the Notes on Clauses which support the 1995 proposition that this right should be retained. The Minister has not explained that.
How would the Minister or his officials know what should be kept? Would not seeking to distinguish between what should be kept and what should not be kept impose as bureaucratic a burden as keeping the present system? If the Minister can persuade the Committee that there is a real need for this provision, that masses of documents have accrued which are of no interest to anybody at all, and that nobody's rights will be submerged as a result of this destruction of documents, I would accept it, but I am suspicious.
I am more confused by the Minister's explanation than ever, particularly with regard to what happened in that year. Why was this issue not noticed at that time? Was it considered to be something which ought not to be challenged? I suspect that the Government did not want to challenge it at the time. I repeat that it was when we were contemplating the Deregulation and Contracting Out Bill—it cannot be separated from that—so the Minister's attention, and that of his officials, must have been drawn to that point in relation to all legislation going through the House at that time.
I am not in favour of keeping undue and unnecessary regulatory processes which ought to be swept aside. However, I am deeply concerned that some rights, some

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ability to be able to look at and to scrutinise documents which may be of great relevance to an individual but of no relevance of anyone else and to seek assistance in certain circumstances, should be maintained.
I am grateful to the Minister for saying that he is prepared to consider this with the noble Lord, Lord Greenway. However, I think that others are involved too. It would perhaps be right to consider it with the seafaring unions which are more concerned than anyone about the situation regarding individual rights. It may be that at the end of those discussions the Minister will feel that their anxieties are not real. However, I am not persuaded at the moment that that is so. I will listen with great interest to the Minister's reply to, or rebuttal of, what I have said, but so far I am not persuaded.
Viscount Goschen: I particularly enjoyed the noble Lord's lengthy and dramatic peroration with regard to the 1995 Act and why we did not examine this matter then. The noble Lord knows that that Act was pure consolidation and that we are not able to change the law during a consolidation measure such as that.
With regard to consultation, the measure was included within the draft Bill. The same consultation procedure was used as was followed for all the other measures, with the exception of the GLF provisions.
There is no difference between the noble Lord, Lord Clinton-Davis, and myself on this. It is important to maintain proper records. I noted his commitment to deregulation and his desire not to impose a large bureaucratic burden where there was limited benefit. We believe that that is the case in this specific instance, but the Secretary of State, as we know, can say which documents should be held and which should not. I do not understand why the Secretary of State should be passed every single document in his evening Box. He will make sure that the important categories of document are maintained.
There is very little difference between us on this. We recognise the concerns put forward by the seafaring unions and other bodies about the maintenance of records. Indeed, some of the records are very important.I fully recognise that. However, the fact remains that a huge amount of documentation is being held which is of very little interest to anyone, but I am willing to discuss this further with whoever wants to discuss it and to take all views further into consideration.
Lord Clinton-Davis: Of course, your Lordships will know that the Secretary of State will never directly consider this matter at all, except perhaps where a document of some real significance generally arises, but the Secretary of State will be asked to consider the destruction of certain documents. He will not know—the officials will not know—whether they are really important to an individual or to a group of individuals.I appreciate the fact that the Minister is prepared to discuss such matters, but it would be desirable for such a meeting to be arranged before we come to Report stage.
I am not satisfied that we have the right answers here, but we do not need to consider the matter in any further detail now and I propose to return to the matter at a later stage.
Clause 21 agreed to.
Clauses 22 and 23 agreed to.
Schedule 4 agreed to.
Clause 24 [Piracy]:
Lord Clinton-Davis Lord Clinton-Davis moved Amendment No. 78:
Page 21, line 33, leave out from ("shall") to ("be") in line 34.
The noble Lord said: It may be for the convenience of the Committee to discuss also Amendment No. 79. I seize this opportunity to debate an issue of supreme importance to shipowners and seafarers. The marginal note relating to this clause refers to the word "piracy". It is on that issue that I wish to detain the Committee for a short period of time.
Piracy is certainly a serious matter. There have been frequent instances where crews have been exposed to unacceptable perils, with people being set adrift in rafts, being manacled and being given no provision for food or clothing. If such activities were to take place in the air or on land, there is no doubt at all that there would be a hue and cry, a public outcry, and demands for swift action to deal with the situation. Somehow or other, however, although debates take place from time to time on the issue of piracy, there is not the same degree of public concern.
Pirates have been described in their passports as "entrepreneurs", which is going a bit far, but they have been so described. The majority of reported attacks, which might be described as "maritime mugging", are ferocious. Excessive violence is used often for very little gain, perhaps for a mooring rope, a few pots of paint, or the relatively small amount of money which can be stolen from crews. However, a great number of such attacks go unreported.
The financial loss involved may not be huge; it has been estimated within the IMO as something of the order of 200 million dollars a year. That is not huge in the whole context of the maritime world. Nevertheless, I believe that we should not avoid taking those issues very seriously indeed.
There is also a risk to other shipping which should not be overlooked. There have been a number of instances where ships attacked by pirates have been allowed to make their own way, effectively crewless, without anybody on the bridge, in congested areas. That is a matter of some importance.
What is piracy? According to Article 101 of the United Nations Convention on the Law of the Sea, it is defined as follows:
"Piracy consists of the following acts:
[a] any illegal acts of violence or detention, or any act of depredation, committed for private ends by the crew or the passengers of a private ship or a private aircraft, and directed:

(i) on the high seas, against another ship or aircraft or against persons or property on board such ship or aircraft;

(ii) against a ship, aircraft, persons or property in a place outside the jurisdiction of any state;

[b] any act of voluntary participation in the operation of a ship or of an aircraft with knowledge of facts making it a pirate ship or aircraft;

[c] any act of inciting or of intentionally facilitating an act described in subparagraph [a] or [b]".

Article 103 defines a pirate ship or aircraft. I shall not weary the Committee with that definition.
Someone who has great experience in the field of fraud and crime in the maritime world is Mr. Eric Ellen, the executive director of the International Chamber of Commerce Commercial Crime Services. I have known Mr. Ellen for many years. I met him when I was a Minister responsible for shipping and I have a high regard for his integrity and ability. He is a former senior police officer. He is certainly acknowledged as one of the world's leading experts on piracy.
What he is campaigning for is a wider and more appropriate definition of piracy to deal with its present realities. He wants to define it as follows:
"Piracy is the act of boarding any vessel with the intent to commit theft or other crime and with the capability to use force in furtherance of the act".
I believe that would be a useful definition to apply. However, I recognise that it can only be applied internationally: it cannot be applied by this country alone. It is not appropriate to import that definition into the Bill. Having said that, I should like to know what initiatives the Government are taking in relation to the whole question of piracy.
I am aware that in 1993 the Government issued the Merchant Shipping Notice M1517 which sets out measures that can be employed to lower the possibility of attack. In my submission that is not really adequate because that notice omits emphasis on manning levels, which seem to me to be crucial in dealing with this whole area. If one has satisfactory manning levels the chances of pirates being able to attack the crew are necessarily reduced. They might not disappear altogether, but they would certainly be reduced. Some people might ask whether the expense of making vessels less vulnerable in danger areas would be excessive. However, some owners, for example the Swedish company, Concordia Maritime—this step is perhaps rather unusual, but the company is nevertheless profitable—believe that the better manning of vessels by well-trained crews of good quality produces real rewards for shipowners. That company has, I repeat, been extremely profitable in this field.
I said before that this is a serious issue. Some 125 piracy attacks have taken place this year so far in Asia, in the Mediterranean, in Brazil, in Indonesia, in the Indian sub-continent and indeed in many other places. Death results quite frequently. I invite the Minister to indicate to the Committee what initiatives the Government are taking to promote proper and adequate discussion and action in the IMO. I know the Minister is as concerned about this as anybody in the Committee—of course he is, he must be—but it is international action that is required. I believe the Committee would be interested in hearing what the Minister has to say in that regard. I beg to move.
6.30 p.m.
Viscount Goschen: The first thing to say on this subject is that I wholeheartedly agree with what the noble Lord, Lord Clinton-Davis, has said about the
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seriousness of piracy. It is not as irregular in its occurrence as one might think if one did not have specific knowledge of shipping circles. There have been a number of very serious attacks indeed, and even fatalities. This is an issue on which we have had substantive discussions with, for example, NUMAST, the officers' union. We certainly take seriously our role of disseminating information.
I shall say a few words about the amendments to which the noble Lord is speaking. Clause 24 of the Bill currently deals with piracy beyond the territorial sea. The noble Lord's amendments would widen the scope to include piracy within the territorial sea. This is unnecessary because existing legislation in the Aviation and Maritime Security Act 1990 provides sufficient powers to suppress illegal acts in the territorial area, and such offences would be caught by the ordinary criminal law.
I suspect the reason the noble Lord tabled these amendments was not necessarily to try to promote the provision which he has mentioned but rather to draw attention to this issue. The Committee is grateful to the noble Lord for drawing attention to the issue.
The noble Lord asked what the Government's role is in this matter. First, it is to listen to the views of such bodies as NUMAST, the officers' union, and the views of ship operators and others who are involved in the industry. Secondly, our role is to disseminate information, which is a role and task which we take seriously. I understand that the information is often provided by Mr. Ellen's organisation, which the noble Lord mentioned. We also discuss problems with foreign administrations where there are particular problems in their areas. In addition, as the noble Lord said, we have produced a merchant shipping notice on piracy. This was later adopted by the IMO as its guidance to the international maritime community. Our advice is comprehensive and covers the points which were raised by the noble Lord. Members of the Committee might be interested in seeing that document and, if so, I shall certainly place copies in the Library.
To sum up, piracy is a very serious issue indeed. We deplore the attacks that have taken place. We believe that we have a role in issuing guidance, in disseminating information and in discussing matters with foreign administrations where there are particular problems in their areas. I hope I have taken the opportunity to discuss the Government's position on this important issue. I hope the noble Lord will take on board the explanation with regard to his specific amendment.
Lord Clinton-Davis: I thank the Minister for his generous support. In a way the amendment is almost irrelevant to the discussion we have had. I simply wanted to promote a discussion about piracy.
Viscount Goschen: Piracy.
Lord Clinton-Davis: The Minister says "Py-racy"; I say "Piracy". What I would like to know before I withdraw the amendment, which I certainly propose to do, is this. The Minister referred to discussions which go on with other governments from time to time. Is there

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anything happening currently with regard to the International Maritime Organisation? Do the Government propose to take any further initiative? It would be useful for the purpose of the Committee if the Minister could answer those two points.
Viscount Goschen: The IMO is indeed concerned about this issue, as we all are. The fact that it has adopted our merchant shipping notice as international guidance is an encouraging step. I understand that the matter is kept under continuous review and is due to be raised at a meeting which will occur shortly. When the United Kingdom Government discuss this issue with colleagues in the IMO we make very similar points to those which I have made to the Committee today: that this is indeed a very serious issue, particularly in some specific parts of the world.
With regard to ongoing talks with foreign governments, I think the noble Lord was referring to whether there were specific problems; for instance, where there has been a serious attack, we would certainly take the matter up, and we will continue to do so.
Lord Clinton-Davis: I am grateful to the Minister for that. I would encourage him perhaps to persuade the Foreign Office to ensure that this is a matter which is raised at the Commonwealth conference, because a number of the most serious acts of piracy occur in the seas adjoining Malaysia, India and Singapore, as well as Indonesia. These three Commonwealth countries could have a specific role to play alongside the Government. It is of such importance because it damages trade; it interferes with the security of people going about their legal business; and it imposes threats upon them in the future. That is a wholly undesirable state of affairs. Having said that and listened to the Minister, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 79 not moved.]
Clause 24 agreed to.
Schedule 5 agreed to.
Clauses 25 to 27 agreed to.
Schedule 6 [Minor and consequential amendments]:
Viscount Goschen Viscount Goschen moved Amendment No. 80:
Page 61, line 21, after ("authorities)") insert—
("(a)").
The noble Viscount said: It may be convenient if I speak also to Amendments Nos. 81, 82 and 83. The purpose of these amendments is to make absolutely clear which references in the Merchant Shipping Act are to statutory harbour authorities and which are to harbour authorities. This clarification has been thought necessary following the consolidation provisions of the Merchant Shipping Act 1894 and the Harbours Act 1964, now contained in Part VIII of the Merchant Shipping Act 1995. The amendments restore the position prior to that consolidation by reintroducing the distinction between the two types of harbour authority. I beg to move.
Lord Clinton-Davis: As I understand it, the purpose of the amendments moved by the Minister is to alter the
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words "harbour authority" to "statutory harbour authority". The term "harbour authority" is defined in Section 313 of the Merchant Shipping Act 1995, but "statutory harbour authority" is not defined in Section 313, and nor do the four proposed amendments seek to address that point. Can the Minister indicate the definition of "statutory harbour authority" in the Merchant Shipping Act 1995 if I am wrong about that?
It may well be that there is not a lot between us, because it may be possible to define "statutory harbour authority" either in terms of the 1995 Act or elsewhere. I do not have the answer to that immediately to hand, but perhaps the Minister would like to answer that point.
Viscount Goschen: Perhaps I may draw the attention of the Committee, and particularly the noble Lord, Lord Clinton-Davis, to page 62 of the Bill, line 40, new subsection (2)(d). There is contained therein a definition of "statutory harbour authority".
Lord Simon of Glaisdale: The noble Viscount referred to the amendment being designed to facilitate consolidation. That is admirable, but can he say where the merchant shipping legislation stands in the queue for consolidation?
Viscount Goschen: There has already been considerable consolidation within the merchant shipping legislation, resulting in the Merchant Shipping Act 1995.
Lord Simon of Glaisdale: I mean to consolidate this Bill with the general corpus.
Viscount Goschen: I do not have an instant answer to that. I should have anticipated it because it is just the sort of question that the noble and learned Lord often asks Ministers and they are unable to respond. I would certainly like to consider it. It may be premature as this is still a Bill and not yet an Act. But I would hate to use one of the noble and learned Lord's own arguments back to him.
Lord Clinton-Davis: The Minister has more than adequately responded to the point I made. I was wrong, and I thank him for putting me right.
On Question, amendment agreed to.
Viscount Goschen Viscount Goschen moved Amendments Nos. 81 to 83:
Page 61, line 23, at end insert (", and
(b) in subsection (4)(b), for the words "harbour authority", where they first occur, there is substituted "statutory harbour authority".
4A. In section 197 of the 1995 Act (general powers of general lighthouse authority), in subsection (2), for "harbour authority" there is substituted "statutory harbour authority".
4B. In section 201 of the 1995 Act (powers of harbour authorities), in subsection (1), for "harbour authority" there is substituted "statutory harbour authority".").
Page 61, line 26, at end insert—
("5A. In section 203 of the 1995 Act (individual transfers of local lighthouses to harbour authorities), for the words "harbour authority", where they first occur, there is substituted "statutory harbour authority".

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5B. In section 204 of the 1995 Act (surrender of local lighthouses), in subsection (2), for "harbour authority" there is substituted "statutory harbour authority".").
Page 61, line 30, at end insert
("6A. In section 210 of the 1995 Act (light dues leviable by local lighthouse authorities, in subsections (1) and (2) for the words "harbour authority" there is substituted "statutory harbour authority".").
The noble Viscount said: I have spoken to these amendments with Amendment No. 80.
On Question, amendments agreed to.
Lord Greenway Lord Greenway has given notice of his intention to move Amendment No. 84:
Page 62, line 12, leave out ("or Schedule 11A").
The noble Lord said: The Minister has responded with great courtesy and patience, and not a little humour, to our amendments in the course of this Committee and so the least I can do is save his voice for our future deliberations on Report by not moving my last amendment.
[Amendment No. 84 not moved.]
Schedule 6, as amended, agreed to.
Remaining schedule and clauses agreed to.
Title agreed to.
Bill reported with amendments.
The Committee adjourned at sixteen minutes before seven o'clock.

  Iraq: Policy
  Iraq: Policy
  Indonesia: Defence Equipment
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  NATO: Members' Rights
  NATO: Members' Rights
  NATO: Counter-Proliferation Policy
  NATO: Counter-Proliferation Policy
  NATO and US Anti-Ballistic Missile Defence Schemes
  NATO and US Anti-Ballistic Missile Defence Schemes
  Wartime Atrocities: Telegraphic Intercepts
  Wartime Atrocities: Telegraphic Intercepts
  Alexander Nikitin
  Alexander Nikitin
  Public Record Office, Rolls Chapel
  Public Record Office, Rolls Chapel
  Open Skies Treaty
  Open Skies Treaty
  Port of Tyne Authority Privatisation
  Port of Tyne Authority Privatisation
  Dichlorvos
  Dichlorvos
  European Fisheries Council, 22nd November
  European Fisheries Council, 22nd November
  House of Lords: Painting
  House of Lords: Painting
  Organophosphates: Maternal Exposure
  Organophosphates: Maternal Exposure
  Organophosphate Detoxification
  Organophosphate Detoxification
  Organophosphates and PsChE Synthesis
  Organophosphates and PsChE Synthesis
  Sheep Dip Exposure Effects: Research
  Sheep Dip Exposure Effects: Research
  RUC: Women Officers
  RUC: Women Officers