Sitting of 21 October 1997

Preamble
The House met at a quarter past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Chichester.

Lord Renwick of Clifton
Sir Robin William Renwick, KCMG, having been created Baron Renwick of Clifton, of Chelsea in the Royal Borough of Kensington and Chelsea, for life—Was, in his robes, introduced between the Baroness O'Cathain and the Lord Haskel.
Lord Walker of Doncaster
The Right Honourable Sir Harold Walker, Knight, having been created Baron Walker of Doncaster, of Audenshaw in the County of Greater Manchester, for life—Was, in his robes, introduced between the Lord Mason of Barnsley and the Baroness Dean of Thornton-le-Fylde.
Lord Sainsbury of Turville
David John Sainsbury, Esquire, having been created Baron Sainsbury of Turville, of Turville in the County of Buckinghamshire, for life—Was, in his robes, introduced between the Lord Sainsbury and the Lord Hollick.

Disability Discrimination Act: Implementation
2.51 p.m.
Lord Ashley of Stokeasked Her Majesty's Government:
Whether they propose to bring into force further parts of the Disability Discrimination Act 1996, while work progresses on drafting comprehensive and enforceable civil rights legislation.
The Minister of State, Department for Education and Employment (Baroness Blackstone): My Lords, we shall move to implement the remaining rights in the Disability Discrimination Act as soon as practicable. Although the Act is far from perfect, implementing the further duties in Part III will bring real benefits for disabled people. This is only one way in which we intend to meet our commitment to comprehensive and enforceable civil rights for disabled people. While we proceed with Part III, we shall establish the task force which will look into the wider issues of securing disability rights, and begin on setting up a disability rights commission.
Lord Ashley of Stoke: My Lords, is my noble friend aware that I welcome that Answer because not only are a
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disability rights commission and enforceable civil rights important for disabled people but the implementation of the Act is important, too? Is she further aware that many disabled people are anxious about the delays in relation to all three proposals? Will my noble friend tell the House, first, when the consultations will be concluded; secondly, how long Ministers will require to consider them; thirdly, when the commission will be set up; and, fourthly, when we shall have implementation of the Disability Discrimination Act and enforceable civil rights?
Baroness Blackstone: My Lords, I am grateful to my noble friend Lord Ashley for welcoming my Answer. As regards the task force, some details have yet to be decided. The inquiry will be chaired by my honourable friend Mr. Alan Howarth, Parliamentary Under-Secretary of State in the Department for Education and Employment. Its work will take approximately 18 months, but that will not prevent consideration of the commission and its setting up. The Act will take some time to implement fully, but we expect that it will be in place by 2005. That was the year which the previous government set for completion of the work required for implementation.
Earl Howe: My Lords, can the Minister tell the House a little more about the Government's plans to set up a disability rights commission? What will be the cost of setting up and running the commission and what will be its remit?
Baroness Blackstone: My Lords, it is premature to try to estimate the cost. However, I am sure that your Lordships will welcome a commission which is concerned to ensure the civil rights of disabled people. Legislation is required, which is one of the reasons why it is too early to give its exact cost and precise remit. We do not yet have a Bill, nor will we have before the next Session of Parliament at the earliest.
Lord Molloy: My Lords, will my noble friend he good enough to bear in mind the fact that the Royal British Legion will have an interest in this matter? Despite the attitude of Members opposite, I believe that the Royal British Legion is an honourable organisation—
Noble Lords: Hear, hear!
Lord Molloy: My Lords, it is about time that those Members stopped sniping at it. Will my noble friend ensure that the legion is duly informed of any changes, because it has a natural interest in the matter?
Baroness Blackstone: My Lords, all groups which have an interest in disability will be consulted by the task force, which is to be set up soon. Furthermore, the disability rights commission, when it is eventually in place, will take the views of groups such as the Royal British Legion and many others which have an interest in the matter.
Lord Addington: My Lords, will the Minister assure me that guidance will be specific and therefore all

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sectors will know exactly what they must do? Furthermore, will the National Disability Council be given sufficient funding to fulfil that obligation, thereby eliminating the danger of many people violating the civil rights of disabled people as a result of ignorance?
Baroness Blackstone: My Lords, the National Disability Council is an important body in representing the interests of disabled people. Whether it will be sensible to continue with the council after the establishment of the commission is another matter. In the meantime, we shall ensure that the council has the resources to carry out its work, and we shall take note of everything that its representatives say.
Lord Rix: My Lords, does the Minister agree that if welfare to work is to be effective for people with disabilities, the co-operation of small companies will be necessary? If so, will she tell the House whether the exemption of small companies—that is, those with 20 or fewer employees—to take on disabled people in the application of the Disability Discrimination Act will cease before 2005?
Baroness Blackstone: My Lords, I am aware that there is considerable anxiety about that exemption and the Government are examining it. However, the exemption is clearly set out in tightly defined regulations in the Act and therefore no changes can be made until Parliament considers those.
Lord Renton: My Lords, is the Minister aware that it took years to get this legislation on to the statute book, that it was a compromise and that it was not demanding on the Government? Bearing in mind that the Minister will receive the support of employers' organisations, will she act to speed up the timetable for its implementation?
Baroness Blackstone: My Lords, I am aware that in spite of the fact that many organisations representing disabled people have reservations about the Act, it is in the interests of such people that Part III is implemented. I can give no guarantee about the speed of the implementation, but we shall consider whether we can move a little faster than was intended by our predecessors, the Conservative Government.
Lord Lester of Herne Hill: My Lords, does the Minister agree that the long-term aim for the year 2005 should be that there is equal protection for the rights of disabled people and other victims of discrimination with equally effective enforcement in respect of all the main forbidden grounds of discrimination?
Baroness Blackstone: My Lords, yes, I agree with that. However, I am sure that the noble Lord, Lord Lester, will understand that it will take some time to achieve it and that the Government are determined to make progress in that.
Lord Campbell of Alloway: My Lords—
The Lord Privy Seal (Lord Richard): My Lords, as we have taken eight minutes on this Question, I wonder whether the noble Lord will allow the noble Baroness, Lady Masham, to ask a question.
Baroness Masham of Ilton: My Lords, there is a section in the Act which deals with taxis, and many taxis have now been adapted for disabled people. What will the Government do to those taxi drivers who refuse to pick up disabled people, therefore making their lives very difficult?
Baroness Blackstone: My Lords, I am sure that that is exactly the sort of issue which the task force, which is to be set up very shortly, should look at. I shall make sure that the chairman of the task force is aware of concerns expressed about it in this House.

NHS Trusts: Board Membership
3 p.m.
Lord Dean of Beswickasked Her Majesty's Government:
What steps they are taking to ensure that National Health Trust board members are resident in the areas of the boards to which they belong.
The Minister of State, Department of Health (Baroness Jay of Paddington): My Lords, under the Government's new procedures, candidates are expected to live in the area served by the trust involved. Only in exceptional circumstances would we be prepared to depart from that: for example, where there are severe local recruitment problems—and I am glad to say that, as far as I can see, that is not the case at the moment; or where a particularly strong candidate has demonstrated in some other way his commitment to the local community; or where there is someone living only just outside the borders of the trust whom it might be sensible to appoint.
Lord Dean of Beswick: My Lords, I am grateful to the Minister for that reply. Is she aware that people have been pressing for such a decision for a long time? During my political career, I have been associated with two major cities, Leeds and Manchester. Is the Minister aware that in both places, the chairmen of their trusts are from well outside the city? Does it not seem strange that in two of the biggest cities in the country someone suitable could not be found and that the positions were filled by people living miles away? That looks extremely odd to people who live in those cities.
Baroness Jay of Paddington: My Lords, I am grateful to my noble friend for drawing attention to those local examples. The primary aim of the new policy has been precisely to make trust boards much more representative of the communities they serve. I hope that

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under the new practice that will indeed be the case and that examples like those quoted by my noble friend will not happen again.
Earl Howe: My Lords, will the noble Baroness clarify the range of criteria by which an individual's suitability for board membership of a trust will be assessed? In particular, does she agree with me that it is unfortunate that the issue of private medical insurance should have been raised in that context? Will she remove the uncertainty which persists about whether, in the Government's view, holding such insurance is compatible with board membership?
Baroness Jay of Paddington: My Lords, perhaps I may first welcome the noble Earl to the Dispatch Box with his new portfolio. Having served in the last government in the departments of agriculture and defence, I am not entirely sure whether he will find the area of health more or less controversial. Let us hope that we both find it a tranquil backwater which we can explore together.
A list of essential criteria for membership of a trust board has been widely published. It includes the issue raised by my noble friend Lord Dean of Beswick about living in the area of the trust. Another important element is that someone should have a very strong personal commitment to the NHS; it is also a desirable qualification that such people should have experience as carers or users of the NHS. That represents very clearly the Government's policy. People will not be excluded automatically because they have private medical insurance but the two criteria I have described—a strong personal commitment and being a user of the NHS—makes it very clear where our preference lies.
Lord Taylor of Blackburn: My Lords, is my noble friend aware that the terms of office of quite a number of people filling those posts at present will end shortly? When will the department make a statement as to the new occupiers of those posts?
Baroness Jay of Paddington: My Lords, I am grateful to my noble friend for raising that matter. It is the case that more than 1,000 appointments are due for renewal or for reappointment during this coming month. That is more than one-third of the total number of trust appointees. It has been a very substantial task to look through all the applications, so many of them based on the new criteria which I explained in answer to the previous question. Perhaps we have been a little dilatory in trying to get through all those new appointments but we are aware of that. I should like to take this opportunity to say that they will all be processed as quickly as possible but if the number of appointment forms sitting on my desk is matched by those on the desks of my ministerial colleagues—I believe, in fact, that theirs are more substantial—we certainly have a major task ahead of us. However, we hope that it will lead to a very great improvement in the quality and character of the trust boards.
Baroness Robson of Kiddington: My Lords, the Minister described the criteria for appointments. In her
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original Answer, she mentioned exceptional circumstances in which someone could be appointed from outside the area of the trust board. Can she assure me that one of those exceptional circumstances will not be political allegiance?
Baroness Jay of Paddington: My Lords, yes, political allegiance is not a criterion mentioned either in the essential or desirable list.
Lord Evans of Parkside: My Lords, does my noble friend agree that more important than where members of trust boards reside is the performance of the trust boards themselves? In particular, their affairs should be conducted in a more open fashion. For example, should the press and public not be invited to attend meetings and should not the salary and expenses of all board members be public knowledge?
Baroness Jay of Paddington: My Lords, on the first point, I agree entirely with my noble friend that the clarity and transparency of trust business is extremely important. As my noble friend may be aware, my right honourable friend the Secretary of State has already given guidance to the health service which will be brought forward in a more formal way in December asking that all trust board meetings should be made open. That is consistent with the policy practised for some time by health authorities. We believe that that will increase transparency and communication between the trust boards and local communities and will make it much more useful as a way of reflecting the interests of those communities.
Lord Dean of Beswick: My Lords, do I take it from the Minister's reply that where a chairman lives outside the area of the trust board which he chairs, if a suitable replacement can be found within the area a change of appointment will be made?
Baroness Jay of Paddington: My Lords, it is not our intention to exclude people who presently hold posts from those chairs because of their place of residence. However, when that appointment is due for renewal, that will certainly be a guiding criterion.

NATO Enlargement: Progress
3.8 p.m.
Baroness Ramsay of Cartvaleasked Her Majesty's Government:
What progress has been made towards NATO enlargement since the Madrid Summit of 8th July.
Lord Whitty: My Lords, I am pleased to report that good progress has been made since Madrid on a wide range of practical issues, with a view to ministerial agreement at the North Atlantic Council in December. Poland, the Czech Republic and Hungary have all submitted details of their forces to NATO planners and have begun discussions with NATO on the political, military and financial aspects of acceding

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to the North Atlantic Treaty. We expect that the ratification process for all three countries will be completed by April 1999, which, incidentally, is the 50th anniversary of the Washington Treaty.
Baroness Ramsay of Cartvale: My Lords, I thank my noble friend for that reply. I should declare an interest here as chair of the Atlantic Council of the United Kingdom. Will my noble friend comment on the costs of enlargement? Does he agree that, on present figures, the costs seem manageable; and also that the benefits are enormous? As the Prime Minister said, the benefit of a generation not going to war in Europe in their lifetime, nor sending their children to war, is a prize beyond value.
Lord Whitty: My Lords, I think that the whole House will concur completely with the latter sentiments of my noble friend. Clearly, the extension of NATO is one symbol of the end of the Cold War in Europe and one reason that the next generation will not live in fear of a European war.
Clearly, there are costs involved in enlargement. NATO is currently analysing requirements with a view to assessing those costs in time for the December meeting to ensure that NATO's continued military effectiveness operates with the new members. Those costs will be divided over a long period of time among 16 existing allies as well as the three new members. The UK currently contributes nearly one-sixth of NATO's common budgets, and the European allies together account for about 70 per cent. of those budgets. We expect that those shares will apply equally to the NATO budgets of the enlargement process. But as my noble friend says, those costs give us the great prize of peace in Europe.
The Earl of Lauderdale: My Lords, can the Minister tell the House what progress has been made in assuaging Russian anxieties in this respect?
Lord Whitty: My Lords, the House will be aware of the founding act agreement between Russia and NATO. It is the intention of the British Government, and indeed our allies in NATO, to ensure that the new security process in Europe is an inclusive one to which the Russians are party. Therefore, we are attempting to establish a positive relationship for the new security regime in Europe. On the other hand, there is no Russian veto over acceding countries to the NATO Alliance.
Lord Jenkins of Putney: My Lords—
NobleLords: Cross-Benches!
Lord Richard: My Lords, we have just a few minutes left of Question Time. I wonder whether my noble friend will allow the noble and gallant Lord, Lord Craig, to ask the next question and then my noble friend can ask his afterwards.
Noble Lords: Oh!
Lord Craig of Radley: My Lords, given the much increased workload that Central Region headquarters is
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undertaking to integrate the armed forces of the three new NATO nations, and given the amount of work which AFNORTHWEST undertakes in "Partnership for Peace" and liaison with the Leningrad Military District, do the Government now agree that this is not the time to be considering the closure and disbandment of the latter headquarters?
Lord Whitty: My Lords, the whole matter is under review both within NATO and, in terms of our own contribution, within our own strategic defence review. We certainly do not expect the additional cost of enlargement significantly to increase the size of the British contribution from our defence budgets to the common NATO budgets.
Lord Wallace of Saltaire: My Lords, can the Minister tell us whether any study is under way?
Lord Richard: My Lords, I intimated that I thought the best way to proceed would be to hear first the noble and gallant Lord, Lord Craig, then my noble friend Lord Jenkins, followed by anyone else.
Lord Jenkins of Putney: My Lords, I am grateful to my noble friend for intervening on my behalf. Does my noble friend agree that enthusiasm for NATO's enlargement, irrespective of party and whether within or without party, is far from being widespread or unanimous?
Lord Whitty: My Lords, what is pretty widespread and unanimous is the whole process of ending the Cold War within Europe. Indeed, the extension of NATO to those who were not that long ago facing each other across the Iron Curtain is an important symbol. NATO enlargement of itself does not bring that security, but it is part of the process which brings that very welcome security to Europe.
Lord Wallace of Saltaire: My Lords, can the Minister say whether any studies are under way regarding the implications of enlargement for NATO itself? Is it the assumption of Her Majesty's Government that three new members within the next 18 months, and possibly a further group within the next four to five years, will leave NATO unchanged? Alternatively, do the Government expect that NATO itself will be transformed by this immense increase in membership?
Lord Whitty: My Lords, I believe the realistic assessment is somewhere between not changed and transformed. Clearly NATO's structures have served us well, but the adhesion of three additional countries will lead to some change. I expect that to be manageable within those structures.
Lord Moynihan: My Lords, given President Chirac's statement that France will not share any of the new members' accession costs and prevarication on whether to join NATO's integrated military structure, can the Minister say how far the Government think that the

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disagreements between the American and the French within NATO will cause future problems and delays for NATO expansion?
Lord Whitty: My Lords, I do not expect them to cause delays. It has been the view of Her Majesty's Government that it would be better if France were part of the military structures of NATO. As regards the reported remarks of President Chirac in the French press, we believe that the consensus in Madrid was that there would be a sharing of the costs of enlargement among all the European allies, including France.
Lord Kennet: My Lords, can my noble friend confirm my memory—I am sure that he can—that the Prime Minister has said that he would not expect any increase in British defence expenditure to result from this enlargement? Further, can my noble friend say how the most interesting proportional figures that he has just given compare with the allocations which are at present under discussion between the American Secretary of State and the Senate Foreign Relations Committee?
Lord Whitty: My Lords, first, I can tell my noble friend that the Prime Minister indicated that our contribution to the common NATO budgets, which of course is less than 1 per cent. of our total defence costs, would not be expected to rise significantly as a result of enlargement. Secondly, in relation to the American position, I should point out that all sorts of figures are being discussed in America at present. We would expect the cost of enlargement to be shared approximately as per the current division between America and the European allies.

Ethnic Minorities: Education
3.15 p.m.
Baroness Lockwoodasked Her Majesty's Government:
What action they propose to support the education of children from ethnic minorities when funding currently provided under Section 11 of the Local Government Act 1966 ceases on 31st August 1998.
The Parliamentary Under-Secretary of State, Home Office (Lord Williams of Mostyn): My Lords, as my right honourable friend the Prime Minister has said, the previous plans which would have meant a reduction in the level of Section 11 funding from £83 million to £43 million will not stand. As soon as we have completed our review of the spending plans, we shall let local authorities have more precise information about arrangements after August 1998, when current funding approvals are due to run out.
Baroness Lockwood: My Lords, I thank my noble friend the Minister for that most welcome reply. Does he appreciate just how welcome it will be to those local authorities which have substantial numbers of ethnic pupils in their schools'? Perhaps I may press my noble friend a little further and ask him whether the current
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budget of £83 million is likely to remain intact or whether there is likely to be any reduction, or even an increase, in that respect? If that is so, can my noble friend tell the House how much would be involved in either case?
Lord Williams of Mostyn: My Lords, I am grateful for my noble friend's comment relating to local authorities. Of course, we do know how important this is for them. We have made it clear that the reductions that the previous government's spending plans entailed will not stand. Perhaps your Lordships will understand that we must complete our review of the plans before we can determine the precise figure for next year.
Lord Graham of Edmonton: My Lords, does my noble friend the Minister accept that Section 11 money has been well spent and has served a very good purpose over the years? Does he further accept that the changes which the Government have in mind certainly ought to perpetuate that which has taken place in the past? However, can my noble friend comment on the view that one of the disadvantages is that, while there is a need for a rolling programme, in the past that has only lasted for a few years? In view of the need to teach English to ethnic minorities, is it not essential for such a rolling programme to be extended from three to, say, five or even seven years?
Lord Williams of Mostyn: My Lords, I entirely endorse my noble friend's observation; namely, how important the teaching of English is as a second language. Indeed, in the Prime Minister's words, it is "an investment for the future". As a child I certainly benefited from the teaching of English as a second language. I hope that your Lordships will think that it was a useful investment for the future. In answer to my noble friend's specific question, I can tell him that every project has its own relevant quantified targets. Every target and outcome is subject to regular monitoring. The point made by my noble friend about a rolling programme is one which will be borne carefully in mind in our consultations with all interested parties, not least the local authorities.
Lord Dormand of Easington: My Lords, I should like to join in the welcome that has been given from these Benches for the restoration of what was meant to be cut under the previous government. Is my noble friend aware that Section 11 money really is a jewel in the education finance crown and one that is fully and wholeheartedly supported by all teachers' unions, whose co-operation we will need during the next few difficult years? Perhaps I may just put in a plea that there should not be any reduction even when the review has been completed.
Lord Williams of Mostyn: My Lords, I accept my noble friend's description; it is indeed a jewel in the crown. I do not believe that anyone who heard the Prime Minister's speech at Brighton could be in any doubt about the Government's commitment to supporting Section 11 funding. However, my noble friend will not be amazed to discover that I cannot guess the outcome of the review to which I referred.
Baroness Blatch: My Lords, is the Minister aware that tripartite discussions have taken place between the Home Office, the Department of the Environment and the Department for Education to consider the efficacy of the expenditure of these moneys? If one looks more closely at the matter, one finds that some schools and some local authorities spend these moneys more efficaciously than others. A child who does not speak English as a first language is a burden on a teacher. Section 11 moneys cover only certain languages. Does not the Minister agree that this budget heading sits better with the education department than with the Home Office?
Lord Williams of Mostyn: My Lords, I am, of course, aware—as the noble Baroness indicated—that discussions have taken place for some years past in respect of departmental responsibilities. I am well aware that some have argued that the responsibility we are discussing should be transferred to the Department for Education and Employment. The noble Baroness said that teaching a child English as a second language is a burden on a teacher. That is why Section 11 funding exists. However, this is also a matter of giving a child an opportunity to grow fully and be respected within a community which we are proud to think offers a welcome to diverse cultures.
Lord Rea: My Lords, will the Home Office continue to administer this scheme or will it be transferred to another department, perhaps the Department for Education and Employment? In either case, will the scope or length of the project be affected in any way? Does not my noble friend agree that this scheme is a useful way of encouraging and promoting a harmonious, multicultural society—a concept which certain prominent Members of the Benches opposite do not seem to worry about?
Lord Williams of Mostyn: My Lords, in a sense the noble Lord's question overlaps that which the noble Baroness asked a moment or two ago. The Home Secretary has the general responsibility for fostering healthy community relations and that is why to date the grant has been administered by the Home Office. We are reconsidering arrangements. Our consideration of future funding arrangements will doubtless lead us to revisit the topic which the noble Lord and the noble Baroness have raised.

Magistrates' Courts (Procedure) Bill [H.L.]
Report received.
Local Government Finance (Supplementary Credit Approvals) Bill
Report received.

Local Government (Contracts) Bill
3.23 p.m.
The Parliamentary Under-Secretary of State, Department of the Environment, Transport and the Regions (Baroness Hayman): 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 Hayman.)
On Question, Motion agreed to.
House in Committee accordingly.
[The CHAIRMAN OF COMMITTEES (Lord Boston of Faversham) in the Chair.]
Clause 1 [Functions to include power to enter into contract]:
Baroness Hayman Baroness Hayman moved Amendment No. 1:
Page 1, line 19, after ("financier") insert (", or any insurer of or trustee for the financier.").
The noble Baroness said: In moving Amendment No. 1, I wish to speak also to Amendment No. 9 which deals with the same area of the Bill. Subsection (1) of Clause 1 makes it clear that a statutory provision which confers a function on a local authority also confers power to enter into certain sorts of contract with the private sector. These are contracts for the provision or making available of assets or services for the purposes of, or in connection with, the discharge of the function concerned.
Subsection (2) makes it clear that the authority has power to enter into a contract with a person providing finance in connection with a contract for the provision of assets or services. Typically, such a contract would allow the financier "step-in rights"; that is, rights to intervene where the contractor is unable to meet his obligations to the authority or the financier. The aim of this arrangement is to ensure that the financier's interests in the contract are protected.
In the course of further consultation on the Bill it has been brought to our attention that other parties involved in a public-private partnership scheme may be given step-in rights by the local authority. First, there may be an arrangement whereby the financier's insurer, who covers the risks undertaken by the financier in financing the project, is given a right to intervene in the contract when things start to go wrong. In this way, he looks after his interests as insurer and forestalls a claim by the financier.
Secondly, there may be an arrangement with a trustee appointed by a group of loan stockholders or other persons providing finance for a public-private partnership scheme. The step-in rights given by the authority to protect the interests of such investors are given to their trustee and not directly to them. Again, the purpose of the step-in rights is to protect the interests of investors when it seems that the contractor is getting into difficulty with the discharge of his obligations.
All these arrangements are sensibly designed to forestall the claims and financial problems that can arise when a contractor becomes insolvent or is for some

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other reason unable to carry on effectively with a project. Amendment No. 1 would widen the scope of Clause 1(2) to clarify that a local authority may make such arrangements, not only directly with financiers but also with financiers' insurers or trustees. It is, of course, still necessary that the finance and the step-in rights should be provided or given in connection with the project.
Amendment No. 9 amends Clause 4 of the Bill to provide that a contract between a local authority and a financier's insurer or trustee may be a certified contract and thus may have the protection of Clause 2(1) of the Bill, the "safe-harbour" provisions. I beg to move.
On Question, amendment agreed to.
Clause 1, as amended, agreed to.
Clause 2 [Certified contracts assumed to be intra vires]:
Baroness Hayman Baroness Hayman moved Amendment No. 2:
Page 2, line 22, leave out from first ("a") to end of line 27 and insert ("local authority has entered into a contract which is a certified contract ("the existing contract") and the existing contract is replaced by a contract entered into by it with a person or persons not identical with the person or persons with whom it entered into the existing contract, the replacement contract is also a certified contract if—").
The noble Baroness said: Amendment No. 2 is another amendment that I hope will prove uncontentious. The Bill provides "safe-harbour" protection for certain sorts of contract entered into by a local authority; that is, contracts for the provision of services for a period exceeding five years, and contracts with financiers and their trustees or insurers. The effect of the safe harbour is that the provider of the assets or services and a person financing the transaction can be assured that their contracts with the authority will not be treated as being outside the authority's powers or improperly entered into by the authority. This will apply in any court proceedings except judicial review or proceedings initiated by the authority's auditor.
Clauses 2 to 4 make provision about the requirements and procedure for certifying a contract so that it can have the benefit of the safe harbour. The effect of Clause 2(4) is that where a certified contract is novated, that is, replaced by another identical contract because a new contractor or financier is substituted for the original one, the new contract will also be regarded as a certified contract.
The amendment makes it clear that Clause 2(4) of the Bill applies only in a case where there is a novation of a certified contract. A contract is novated where a person, typically a new contractor, takes over all the rights and liabilities of one of the parties to the contract. This requires the consent of the other party. If, for example, the novation was to change the identity of the contractor under a certified contract, the local authority would agree to accept the performance of the contract by the new contractor, and the original contractor would be released from his liabilities under the contract.
The effect of Clause 2(4) is that the new contract which comes into existence on a novation of a certified contract shall also be a certified contract. The amendment makes it absolutely clear that for these
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purposes a contract is replaced only if the parties to the contract are different. If a contract replaced a certified contract without any change in the identity of the parties, the replacement contract would not be a certified contract by virtue of Clause 2(4). This could arise, for example, where a certified contract was radically amended. I beg to move.
On Question, amendment agreed to.
3.30 p.m.
Baroness Hayman Baroness Hayman moved Amendment No. 3:
Page 2, line 37, at end insert—
("() The application of subsection (1) in relation to a contract entered into by a local authority does not affect any claim for damages made by a person who is not (and has never been) a party to the contract in respect of a breach by the local authority of any duty to do, or not to do, something before entering into the contract (including, in particular, any such duty imposed by a statutory provision for giving effect to any Community obligation relating to public procurement or by section 17(1) of the Local Government Act 1988).").
The noble Baroness said: Clause 2, together with Clauses 3 and 4, provides a procedure for a contract to be certified by an authority. Certification prevents the lawfulness of the contract being raised in private law proceedings, typically those between parties to the contract, on the grounds of a lack or misuse of powers. It means that the contract shall be deemed to have effect as if the authority had had power to enter into it and had exercised its power properly.
This amendment makes it clear that Clause 2(1), in providing that the authority is taken to have exercised properly its powers to enter into a certified contract, does not prevent a person other than the contractor from bringing an action against the authority seeking damages because proper procurement procedures have been disregarded. The clause, without the amendment, could be interpreted as having this effect. In particular, we have in mind a claim by an unsuccessful bidder for the contract who feels that proper procurement procedures have not been complied with. Such legal action, while no doubt unwelcome to the authority, could result only in the payment of damages by the authority, and not in the setting aside of the contract. It would not therefore affect the position of the appointed contractor or his financiers.
This amendment is a response to concerns made in another place and also reflects helpful comments received in the course of consultation. It clarifies that third parties can sue for damages if a local authority has conducted the tendering for a certified contract improperly or unfairly. The main circumstances under which this would be likely to arise are where the authority has failed to comply with the regulations which implement the EC rules on public procurement, or where it has failed to comply with the duty under Section 17 of the Local Government Act 1988 not to take account of non-commercial matters when it lets a public works or supply contract.
I hope that that clarifies the purpose of the amendment and that the Committee will be satisfied with the explanation. I beg to move.
On Question, amendment agreed to.
Clause 2, as amended, agreed to.
Clause 3 [The certification requirements]:
Baroness Hayman Baroness Hayman moved Amendment No. 4:
Page 2, line 41, at beginning insert ("The requirement specified in this subsection is that").
The noble Baroness said: In moving Amendment No. 4, it may be for the convenience of the Committee if I speak also to Amendments Nos. 5 to 7.
These amendments are for clarification. They clarify a point about the certification requirements referred to in Clause 3, and so ensure that the requirements for certifying contracts will operate as intended. They are designed to ensure that the validity of a certificate will not depend on whether the authority actually complies with certain regulations made under Clause 3.
Among the requirements for giving a valid certificate is the one in Clause 3(2)(e) that a certificate must state that it has been copied to any person to whom a copy is required to be given by regulations, and the one in Clause 3(2)(g) that a certificate must confirm that any requirements in regulations about the issue of certificates have been complied with. The amendments make it clear that a certificate is not invalidated where, although it makes such a statement or gives such confirmation, a local authority does not, in fact, copy a certificate to a prescribed person or comply with any requirement imposed by regulations.
As long as a certificate states that it has been copied to any persons prescribed in regulations and confirms that requirements imposed by regulations concerning the issue of the certificate have been complied with, the contractor can be satisfied that the certificate will not be invalidated if it becomes evident that the authority had not in fact done those things, or there was not evidence that they had. This was always the intended effect of Clause 3. The amendments merely make it clear that this is the position.
On Question, amendment agreed to.
Baroness Hayman Baroness Hayman moved Amendments Nos. 5 and 6:
Page 3, line 15, at beginning insert ("The requirement specified in this subsection is that").
Page 3, line 17, at beginning insert ("The requirement specified in this subsection is that").
On Question, amendments agreed to.
Clause 3, as amended, agreed to.
Clause 4 [Certification requirements: supplementary]:
Baroness Hayman Baroness Hayman moved Amendment No. 7:
Page 3, line 20, leave out from ("Where") to ("shall") in line 21 and insert ("the certification requirements have been satisfied in relation to a contract by a local authority, the certificate which has been issued").
On Question, amendment agreed to
Baroness Hayman Baroness Hayman moved Amendment No. 8:
Page 3, line 25, at end insert—
("() Where the certification requirements have been satisfied in relation to a contract by a local authority within section 1(3)(a) or (d), the local authority shall secure that throughout the period for which the contract operates—

(a) a copy of the certificate which has been issued is open to inspection by members of the public at all reasonable times without payment, and

(b) members of the public are afforded facilities for obtaining copies of that certificate on payment of a reasonable fee.")

The noble Baroness said: The amendment deals with an assurance given by my honourable friend Mr. Raynsford in another place.
The safe-harbour provision in Clause 2(1) of the Bill comes into play where a contract is certified in accordance with the requirements and procedures set out in Clauses 2 and 3. Because of the effect of certifying contracts, which will usually be for a long period and involve substantial payments by the authority, the certification of a contract would be a matter of public interest, and it is important that certificates should be available for public inspection.
In another place the Government gave an undertaking to ensure that certificates would be available for exactly that inspection. We undertook that existing legal provisions would be examined and, if necessary, an amendment to this Bill would be tabled which would secure a right for the public to inspect certificates issued in respect of contracts under Clause 3 of the Bill.
The amendment does precisely that. Having looked at the existing legal provisions, we thought it necessary to put on the face of this Bill the right to public access and public inspection. Therefore the amendment requires a local authority, other than the receiver for the Metropolitan Police District or a probation committee, which has issued a certificate to secure that a copy of the certificate should be freely available for inspection by members of the public at all reasonable times, and to provide facilities to allow a copy to be obtained for a reasonable fee. The authority remains under this duty for as long as the certified contract operates. I beg to move.
On Question, amendment agreed to.
Baroness Hayman Baroness Hayman moved Amendment No. 9:
Page 3, line 38, at end insert (", or

(b) any insurer of or trustee for such a person.").

On Question, amendment agreed to.
Clause 4, as amended, agreed to.
Clause 5 [Special provision for judicial reviews and audit reviews]:
Baroness Hayman Baroness Hayman moved Amendment No. 10:
Page 4, line 5, after ("on") insert ("an application for judicial review or").
The noble Baroness said: This amendment, together with Amendments Nos. 11 and 12, applies equally as a response to matters raised in another place, and by many of the interested parties who gave evidence during consultation on the Bill.
The effect of the safe-harbour protection provided for a contract certified under the Bill is that the person entering into the contract with the authority can be assured that his contract will not be treated as being outside the authority's powers or improperly entered into by the authority. By virtue of Clause 5(1), this will apply in any court proceedings except judicial review or proceedings initiated by the authority's auditor.
The Government do not intend to deprive anyone who has a genuine interest in the decision of a local authority to enter into a certified contract of his right to ask the court to review the lawfulness of the decision and to set it aside. Nor do the Government intend to remove from anyone the protection afforded by the statutory audit controls to which a local authority is subject. Accordingly, these public law remedies are excepted from the scope of the safe harbour.
However, it is important that, where a certified contract is challenged in judicial review or by the auditor, the court should have a clear discretion to allow the contract to continue if, after weighing up all conflicting interests and taking account of all relevant circumstances, it feels that on balance that would be the correct thing to do.
Accordingly, the Bill preserves the right of a person with sufficient interest in a decision of a local authority to enter into a certified contract to challenge that decision by applying for judicial review. The Bill also preserves the powers of the auditor and of the court to look into the lawfulness of a local authority's decision to enter into a certified contract—that is, where the authority is one whose accounts are subject to the statutory audit requirements.
The effect of these amendments is twofold: the amendments would expressly give a court a discretion in judicial review, as well as audit review, to determine that a certified contract shall have effect as if the local authority had had power to enter into it and had exercised that power properly; and they would require the court, in considering how to exercise this discretion, to have regard to two particular matters. The court would have to consider the likely consequences of a decision to set the contract aside, first, for the authority's financial position, and secondly, for the provision of services to the public.
It is important that these matters, in particular, should be looked at by a court in deciding the outcome of a judicial review or audit review. A certified contract is likely to operate for a long period of time and to involve heavy investment by the parties to the contract. Furthermore, an order setting such a contract aside would be likely to disrupt the provision of public services and generally be against the wider interests, financial and otherwise, of the local community. The objective is to ensure that the court is clearly empowered to decide that a certified contract found to be ultra vires shall nevertheless continue to have effect, and to require the court, in deciding on this, to give full weight to these factors.
Where the court determined that a contract should continue to have effect, the rights and liabilities of the parties would, of course, be unaffected by the
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proceedings which resulted in that determination. Also, there would be no reason for the Government to change the treatment of the contract under the local authority revenue support system. I beg to move.
On Question, amendment agreed to.
Baroness Hayman Baroness Hayman moved Amendments Nos. 11 and 12:
Page 4, line 10, leave out from beginning to ("considers") in line 11 and insert ("(having regard in particular to the likely consequences for the financial position of the local authority, and for the provision of services to the public, of a decision that the contract should not have effect)").
Page 4, line 16, leave out ("subsections (1) and (2)") and insert ("this section").
The noble Baroness said: I have spoken to these amendments. I beg to move them en bloc.
On Question, amendments agreed to.
Lord Bowness Lord Bowness moved Amendment No. 13:
Page 4, line 18, at end insert—
("(5) Where the court makes a finding pursuant to subsection (3)—

(a) the local authority shall be prevented from attempting to repudiate the contract on the grounds that it did not have the power to enter into the contract, and

(b) no power of surcharge shall apply to any member or officer of the local authority in respect of the contract.").

The noble Lord said: We are all agreed, on both sides of the Committee, that the purpose of the Bill is to facilitate the ability of local authorities to enter into PFI deals and to remove the uncertainty over the powers of local authorities so as to give greater confidence to those on the other side of such transactions. I hope that the Minister will accept that the amendment is brought forward in that spirit; namely, to try to find a way forward.
On a straight reading, Clause 5 as it stands, even as amended by the Government this afternoon, is silent in relation to the position of a local authority which might for its own purposes seek to repudiate a contract on the grounds that a court had found that it was ultra vires.
At this stage, that may not be likely. However, there is always a danger, as time moves on after a contract is entered into, that it may in the future be seen by an authority as having become commercially inconvenient. I therefore ask the Minister to examine the matter. The contract would be a certified contract; and a court would have decided that the contract, although ultra vires, should continue. Therefore, following that thinking through, should the statute not provide that the local authority should be prevented from taking action of its own account to repudiate the contract? The second leg of the amendment seeks to ensure that, in the case of a contract certified but subsequently found to be ultra vires but within the category of a contract that should continue, members and officers should be protected from penalty in such circumstances.
I am far from certain, although I am happy to be convinced by the Minister, that the Bill makes that aspect clear. We ought to go as far as is reasonably possible to ensure that there are no grounds to dissuade authorities,

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through the medium of either their members or their officers, from entering into such private finance initiatives. I beg to move.
Lord Mishcon: I wonder whether the noble Lord would like to re-examine his amendment in case what I now say happens, rather extraordinarily, to be accurate. This amendment is governed by subsection (3), which reads as follows:
"Where, on an audit review relating to a certified contract entered into by a local authority, a court … (a) is of the opinion that the local authority did not have power to enter into the contract"—
and these are the vital words:
"or exercised any power improperly in entering into it".
The noble Lord's amendment takes in the whole of what I have just read and states that, in those circumstances—even presumably where the contract was entered into improperly in purported exercise of a power—there should be no power of surcharge to any member or officer. Is that what the noble Lord intended? If it is not, is his amendment not inclusive of that provision?
3.45 p.m.
Lord Bowness: I hesitate to disagree with the noble Lord, Lord Mishcon, given the great experience and knowledge that he brings to these matters. If challenged on the precise wording of the amendment, I should have to bow to advice; however, I stand by the main thrust and principle. I do not wish the situation to arise whereby a court has found in the terms of the section as amended and the local authority then nevertheless seeks to repudiate the contract. If the Minister can tell me that the clause prevents that, and if the noble Lord, Lord Mishcon, can tell me that the law prevents that, I will read their remarks with great interest. The point I seek to make is the one that I have made, however imperfectly, and I plead guilty to the imperfections of the amendment as drafted.
Lord Mishcon: The noble Lord speaks with his usual courtesy, for which I am grateful. However, will he concede at least that he would not wish to exempt a member or officer of a local authority where that member or officer concurred in acting improperly in regard to the exercise of a power to enter into a contract?
Lord Bowness: The noble Lord poses a difficult question. That suggests that I seek to excuse those who willingly, knowingly and wilfully entered into an improper contract. The point that I seek to make is that they should not, post the event of a court having found in accordance with this section, then seek to repudiate their contract.
Lord Campbell of Alloway: I do not wish to take up the time of the Committee on this point. However, there is a point of substance that warrants further consideration. I listened with great care to the remarks of the noble Lord, Lord Mishcon. I respectfully ask that the Minister, without commitment, might reconsider the matter with her advisers.
Lord Donaldson of Lymington: The experience of local authorities repudiating their obligations on the basis
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that they had no power to enter into them is always a distasteful one. It has occurred in the past. The reason has largely been that there has been some whisper from district auditors that they were acting outside their powers, and they have therefore repudiated the contract—I am bound to say willingly in some cases. That is thoroughly distasteful. The Bill would prevent it happening.
Under Clause 5(3), once the matter has gone before the court and it is determined that the contract either was properly entered into or, alternatively, was not properly entered into but in the public interest ought to be allowed to continue, we find, according to the clause, that the contract is to be treated as if it has and always has had effect as if the local authority had power to enter into it. That would wholly prevent the local authority claiming that it had no power. It could only arise on a parallel contract if the local authority tried to do it again.
The other objection to the amendment is that when contractors repudiate their contracts, whether or not they are local authorities, they do not repudiate on any particular grounds. They may try to justify their repudiation at a later stage on a number of grounds because by that time they may have been advised by counsel that the grounds might enable them to get away with it. But one will never find a local authority tying itself to any particular form of repudiation.
If the second part of the amendment were agreed to, the officers would make certain that they did not repudiate on that ground; they would simply repudiate, full stop. So, with the greatest respect, I doubt whether the amendment advances the matter much further. Indeed, I doubt whether it is necessary at all.
Baroness Hamwee: The noble and learned Lord made, with much more elegance and authority than I could, exactly the point that I intended to make. It seems to me that the first part of the amendment is simply unnecessary. The words towards the end of Clause 5(3) seem clear.
On the broader political point, I do not suggest that the noble Lord, Lord Bowness, is attempting to give protection to members and officers of local authorities if they do not justify that protection. However, I join those who take the line that the power of surcharge has various criteria attached to it. It will come under consideration in any event following the comments of the Committee chaired by the noble and learned Lord, Lord Nolan. I should be unhappy if a particular Bill applied particular criteria to the application of the surcharge power.
Baroness Hayman: This has been a short but useful debate on the amendment put forward by the noble Lord, Lord Bowness. I accept the spirit in which he proposed it and I hope that my assurances will be added to those of other Members of the Committee that the issues with which he is concerned are covered by the Bill. On the first issue, the amendment does not advance the case. On the second issue of surcharge, it would in principle be wrong to pass the amendment as it is.
Perhaps I may explain the two paragraphs separately. In proposing the amendments to Clause 5—Amendments Nos. 10, 11 and 12, which the Committee has just

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accepted—we ensure that in judicial review as well as in audit review a court may determine that a certified contract shall have effect as if the local authority had had power to enter into it and had exercised that power properly. Secondly, the amendments require the court, in exercising that discretion, to have regard to the financial and social consequences of a decision to set the contract aside.
Subsection (5)(a) of Amendment No. 13 deals with a situation in which a court in public law proceedings has made such a decision to allow an ultra vires contract to continue. The amendment seeks to prevent the local authority in subsequent civil proceedings from repudiating the contract on grounds of lack of vires.
The Government fully share the concern that such an action by the authority should not be successful. As the noble and learned Lord, Lord Donaldson, said, there are distasteful cases where that is brought into play. But we are satisfied that the Bill, as amended by the Government, already achieves that effect.
In such civil proceedings, the court would be considering the effect of the safe-harbour clause, Clause 2(1). In so doing, we believe that the civil court would be bound to take account of the determination by the earlier court in public law proceedings that the contract has and always has had effect. We are satisfied, therefore, that the authority could not in those circumstances successfully repudiate the contract in civil proceedings.
The amendment is, therefore, unnecessary. But more than that, it could harm the structure and effectiveness of the Bill by raising an implication that the safe harbour in Clause 2(1) would not be equally effective after a court has said that an ultra vires contract could continue as it would have been before the court's determination.
Perhaps I may turn to the issue of the surcharge. Again, subsection (5)(b) takes as its starting point a determination by a court that an ultra vires contract is to continue. The amendment provides that no power of surcharge is to apply to a member or officer in respect of such a contract. The intention appears to be to remove the powers of the court and the auditor under Sections 19 and 20 of the Local Government Finance Act 1982. In the case of the court, the power is to order a person responsible for unlawful expenditure to repay it. In the case of the auditor, the power is to certify a sum as due from a person who had failed to bring it into account or whose wilful misconduct had led to a loss or deficiency.
The Government's view is that these are matters which can best be left to the court or the auditor in the context of the particular contract. Where there has been unlawfulness, it is right that the court or the auditor should be able to consider whether there has been a loss to the authority which should be made good.
I should make clear that, once the court has determined that the contract is to continue, there is no continuing unlawfulness or loss, so that any such action would relate only to the past. There could not be a surcharge continuing into the future in respect of such a contract.
But action relating to the past is very improbable. Where the court determines that the contract should continue, it is first of all unlikely that any error made by the officer or member would be of sufficient magnitude
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as to justify the use of Sections 19 or 20. It is also unlikely that there would be a loss to the authority. Only in the most extreme case would there be any question of action by the court or the auditor to require a repayment or impose surcharge. In such an extreme case, I believe that the court and the auditor should retain their individual freedom to act.
Nothing in the Bill increases the potential liability of local authority officers, whether involved in the decision to enter into the contract or to give the certificate. An officer is unlikely to incur any liability relating to a contract if he acts reasonably and to the best of his knowledge in accordance with the powers of the authority. As always, only wilful misconduct puts the officer or member at risk, and it is right that it should do so. In this respect, it is right that a contract certified under the Bill should be treated in the same way as any other contract or decision made by a local authority.
I wish to reassure the noble Lord, Lord Bowness, that we do not see this as in any way dealing with technical issues or extending the potential liability of councillors or officers in those circumstances. But, equally, we do not think it would be right to remove from the courts or the auditor the ability, where there has been wilful misconduct—and I believe that was the view expressed by the noble Baroness, Lady Hamwee—to impose a surcharge if in the specific circumstances that seems right. That is a point on which we understand the Audit Commission will issue guidance to auditors to help clarify the situation. In those circumstances, I hope that the noble Lord, Lord Bowness, will be reassured and willing to withdraw the amendment.
Lord Bowness: I have, on other occasions and in similar debates, envied those who have been able to stand at the Dispatch Box on one side or the other and say: "Well, of course, I'm not a lawyer". I am not allowed that excuse. Therefore, the best thing I can do is to thank the Minister for her explanation and say that I shall read carefully what she and other Members of the Committee have said. Having read it, I hope that I shall be as satisfied and certain as the Minister is that such circumstances cannot arise.
In justification of having brought the amendment to the Committee to be discussed, I have to say that, as the noble and learned Lord, Lord Donaldson, said, there have been a number of cases where local authorities have sought to do precisely what I feared this clause might allow them to do. However, I will take the amendment away and read the Official Report. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 5, as amended, agreed to.
Clause 6 agreed to.
4 p.m.
Clause 7 [Absence of relevant discharge terms):
Baroness Hayman Baroness Hayman moved Amendment No. 14:
Page 5, line 16, leave out from ("section") to ("do") in line 21 and insert ("the circumstances in which there are no relevant discharge terms having effect between the local authority and a

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person who is a party to the contract include (as well as circumstances in which no such terms have been agreed) circumstances in which the result of a determination or order of a court, made (despite section 6(4)) on an application for judicial review or an audit review, is that such terms").
The noble Baroness said: This amendment responds to a point raised by the noble Lord, Lord Bowness, during the Second Reading debate about the relationship between Clauses 6(4) and 7(3) of the Bill, a matter which I agreed at the time to consider further.
I have explained how, where a certified contract is challenged in judicial review or audit review, the court will have a discretion to determine that the contract may continue notwithstanding that it was outside the authority's powers or was improperly entered into, that is, ultra vires—the point with which we have been dealing. Where the court determines that a contract should be set aside, it is important that there should be some enforceable provision in place to which the parties can appeal to determine the consequences of the court's decision.
Accordingly, Clause 6 of the Bill safeguards any provisions which the parties to a certified contract may agree to regulate the consequences of a court order setting the contract aside. The court order will not affect the enforceability of such provisions if they provide solely for the payment of compensation to the contractor or financier or the ownership or possession of any assets provided under the contract, or both of these things.
Where such "discharge terms" have been agreed, it is important that they should themselves be protected by a safe-harbour provision so that the contractor or financier can be assured that they will not be treated as being outside the authority's powers or improperly entered into. That is achieved by Clause 6(4) of the Bill, which, like Clause 2(1) for the main contract, provides that the authority shall be taken to have had power to enter into the discharge terms and to have exercised that power properly.
Of course, it may be that no discharge terms are agreed for a certified contract. To meet that contingency, Clause 7 provides as an ultimate fall-back that the contractor or financier should receive damages as if the contract had been repudiated by the authority. That is, the contract is treated as if it were brought to an end by the authority's repudiation of its obligations under it, and the contractor is then entitled to be paid damages designed to put him into the position in which he would have been if the contract had been properly fulfilled. He would, for example, be entitled to something for actual and anticipated loss of profit.
It is possible that the court could be persuaded to consider the lawfulness of discharge terms notwithstanding the safe harbour and might conclude that they were not proper discharge terms at all. The court might conclude, for example, that they made some outrageous provision (for example, that the authority should pay a penalty) or were agreed by the authority with an improper motive, or even that there was reasonable suspicion of some collusion or fraud. Unlikely though that may be, the Government are determined that the Bill should provide authorities,
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contractors and financiers with the certainty of knowing what consequences would flow from it. Accordingly, the amendment to Clause 7(3) makes clear that that too would be a situation in which there were no discharge terms, so that the contractor or financier would be entitled to repudiatory damages.
Amendment No. 14 clarifies the circumstances under which there are no discharge terms having effect. Clearly, there will be no discharge terms where none has been agreed by the parties to the certified contract. But it is also possible that, despite Clause 6(4) of the Bill, a court might conclude in an extreme case in public law proceedings that terms agreed as discharge terms are not to have effect. The amendment would deal with that very unusual but possible circumstance. I beg to move.
Lord Bowness: I thank the Minister for bringing forward the amendment in response to the requests that were made at Second Reading. I shall reserve my remarks as to how I believe that the provision ought to be extended until I move the amendment standing in my name.
On Question, amendment agreed to.
Lord Bowness Lord Bowness moved Amendment No. 15:
Page 5, line 21, at end insert—
("(4) A court shall only make a determination or order under subsection (3)(b) if the discharge terms—

(a) contain some provision which is grossly unreasonable or which discloses some improper purpose; or

(b) provide for some unlawful consequence.")

The noble Lord said: At Second Reading I asked whether there was a conflict between Clauses 6 and 7 of the Bill. Clause 6 and its various subsections seem to me very clear. There is reference to:
"No determination or order made in relation to a certified contract on … judicial review or … audit review, shall affect the enforceability of any relevant discharge terms relating to the contract".
Later, there is reference to,
"the relevant discharge terms shall have effect (and be deemed always to have had effect) as if the local authority had had power to agree them (and had exercised that power properly".
That appears to envisage no circumstances in which, in regard to a certified contract, the discharge terms can be challenged. However, as I submitted at Second Reading and do so again, that is contrary to Clause 7, which contemplates:
"a determination or order made by a court…that … such terms … agreed do not have effect".
The Government's amendment and the Minister's explanation seem to accept that there are particular circumstances in which the discharge terms can be challenged. Therefore, it seems to me that it would be helpful if we could be rather more precise as to the circumstances in which that finding was to be made. For that reason, I have suggested that the court should only make such a determination,
"if the discharge terms contain some provision which is grossly unreasonable or which discloses some improper purpose; or provide for some unlawful consequence".
I am not absolutely happy about the words "grossly unreasonable" but my advice was that the word "outrageous", which was my choice, would cause other problems. Members of the Committee may give me some advice on the appropriate word to use. I hope that the Minister will he able to say that there is some merit in being able to narrow the circumstances in which such a determination can be made, even if she has to take the matter away and seek from government advisers substitute wording for "grossly unreasonable". I beg to move.
Lord Donaldson of Lymington: When I spoke earlier I should perhaps have declared an interest in that I am chairman of the Financial Law Panel which has played quite a part in the preparation of the Bill.
The amendment produces an interesting point, which it does not really address but raises by a side wind; namely, whether the court could set aside the discharge terms without setting aside the contract. Quite clearly, if it set aside the contract, it would set aside the discharge terms and the whole lot would go. The contractor would be left with his fall-back position, his damages or compensation on the basis of a deemed repudiation.
I just do not know whether a court could set aside discharge terms. I say "I do not know" because I venture to think that no one knows. I had considerable experience as Master of the Rolls in dealing with judicial review cases and at no time regarded myself in that field as bound by precedent. I and my colleagues looked at the situation as it was developing in a public law context and decided on the right course to take. Perhaps the most outstanding example was the Datafin case, which people will know about. It was a classic example, if I may say so, of what could be described as "judicial engineering". I do not doubt that a court would consider setting aside discharge terms if they were sufficiently obnoxious, notwithstanding the fact that it might want the contract to continue.
Let me say one general word about the special discharge terms. The secretariat of the Financial Law Panel and I have looked carefully at that matter. For what it may be worth, our view is that neither local authorities nor contractors should spend much time on special terms. Local authorities can hardly be heard to say that the basis of repudiation is unreasonable and dangerous since they may well have had no power to enter into the contract. Nor can the contractor say, "I want something better than the standard fall-back repudiation", which provides full compensation for any loss that he suffered.
It may well make more sense economically therefore, certainly in terms of managerial time, to forget about special terms and either simply provide in the contract that the discharge terms shall be on the statutory basis—which I could look up and quote but I will not—or leave it with no discharge terms, in which case the statutory discharge terms will apply. They survive everything, judicially engineered or not. They are the sheet anchor of the contractor's protection.
Baroness Hayman: Amendment No. 15 deals with the same area as the government amendment which the
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Committee recently accepted. In discussing Amendment No. 14, I explained that it clarifies the circumstances under which no discharge terms have effect. That may be because none had been agreed by the parties to the contract and, indeed, as the noble and learned Lord, Lord Donaldson, said, it may well be that in many circumstances parties to the contract decide that that is the most sensible course to take. But in other circumstances discharge terms that come within the safe-harbour provisions will be written into the contract. It is important therefore that we envisage the circumstances in the potential clash at which the noble Lord, Lord Bowness, was looking when those discharge terms may be examined in public law proceedings and viewed not to have any effect.
Amendment No. 15 deals with the latter possibility. It seeks to specify the circumstances in which a court may set aside agreed discharge terms. It is when we come to being specific that the difficulties arise. The noble Lord, Lord Bowness, accepted that "grossly unreasonable" may not be the best formulation and that "outrageous" did not seem to meet the Bill. The noble and learned Lord, Lord Donaldson, used the word "obnoxious" in those terms. It is when we start trying to specify that the difficulty arises.
It is only in the most extreme cases that a court would even need to consider a matter of this kind. As I explained, Clause 6 (4) establishes that discharge terms are themselves protected by a safe harbour. Only in exceptional circumstances would a court decide to set aside the discharge terms. Those circumstances include those described in Amendment No. 15, but there may be others.
The Government do not feel that it is right or appropriate to prescribe or limit the circumstances under which a court could conclude that Clause 6(4) did not apply. The circumstances would be so individual and specific that it is a matter of law and discretion best left to the courts. It is important to ensure that contractors and banks entering into certified contracts should have the certainty of knowing what would happen in the highly unlikely event that both their contract and agreed discharge terms were set aside in public law proceedings.
The government amendment to Clause 7 ensures that where, despite Clause 6(4), agreed discharge terms are not to have effect, the ultimate fall-back entitlement to repudiatory damages will come into play. All that Clause 7(3)(b) seeks to do is to ensure that all contingencies are covered. I hope that that provides some reassurance to the noble Lord, Lord Bowness, that the issues with which he was concerned in the specific circumstances are covered by the legislation as it now stands.
4.15 p.m.
Lord Harmar-Nicholls: Perhaps I may interrupt the noble Baroness and ask whether she is able to say that she will take the amendment back so that it can be looked at again. The Government are satisfied that the worries expressed by my noble friend and by the noble and learned Lord, Lord Donaldson, will be covered: that it is a rare and unusual situation.

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However, a case has been made that there is uncertainty about this. When my noble friend expressed objection to a certain phrase there was general acceptance in various parts of the Chamber, indicated by Members of the Committee nodding their heads. When a case has been sufficiently made for the Minister to accept that there is a case—it may be the noble Baroness will go on to say that she will look at the matter again and I may be being presumptuous—if the Minister then sits down and does not say that the Government will look at it again in the light of the examination by both the Opposition and the Cross-Benchers, we should not be carrying out our duty correctly.
Lord Donaldson of Lymington: Perhaps the Committee will forgive me for speaking twice. I clearly did not express myself properly. I was merely intrigued about the possibility of the courts setting aside discharge terms without setting aside the contract as a whole. But being intrigued is one thing; having problems with it is quite another.
For my part, I have no doubt whatever that the right thing to do is to leave the courts to deal with these matters on a case-by-case basis. That is what they are being asked and required to do by the statutory nature of the contract as a whole. Why should there be anything different about the discharge terms? I hope that nothing I have said will be taken to cast any doubt upon my support for the Bill as drafted, subject to the Government's amendment. I am convinced that there is no need for any further amendment or further need to examine the matter.
Baroness Hayman: I am extremely grateful to the noble and learned Lord, Lord Donaldson, for that intervention. The noble Lord, Lord Bowness, may be reassured. Were it the case that the Government were proposing the narrower definition and there was concern that circumstances raised by the Committee were not covered, I would be happy to take the matter away and look at it again. In fact we are in the opposite situation where the Government are giving a broader definition in order to allow the courts to have exactly the sort of discretion that the noble and learned Lord described.
If we were to accept the amendment before us, we would be narrowing down the circumstances in such a way that we may not have envisaged a case in which the court properly ought to be able to set aside the discharge terms. For that reason perhaps the noble Lord, Lord Bowness, will withdraw the amendment. The circumstances are covered and it is better to have the wider power for the court than to restrict it as Amendment No. 15 would do.
Lord Bowness: At one stage I thought I was going to be reassured. I am sure that the noble and learned Lord, Lord Donaldson, did not intend to shatter my reassurance. However, when he tells the Committee that he does not know whether or not courts can set aside discharge terms from a reading of this Bill and when I hear that we ought to leave things on a case-by-case basis, I remain somewhat concerned.
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Local government litigation and the parties to it have shown themselves over the years to be extraordinarily inventive. It seems to me that to pass a Bill which on the record will show that we do not know whether or not the courts can do that would be a mistake. Nevertheless, I shall again read what the noble Baroness said, consider it and decide whether or not we wish to return to this matter at a later stage. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 7, as amended, agreed to.
Clause 8 agreed to.
Baroness Hayman Baroness Hayman moved Amendment No. 16:
After Clause 8, insert the following new clause—

CONTRACTING OUT OF FUNCTIONS IN CONNECTION WITH CERTIFIED CONTRACTS
(".—(1) An authorisation given by virtue of an order under section 70 of the Deregulation and Contracting Out Act 1994 (authorisation by local authority of exercise by another person of functions of authority for period not exceeding ten years) may specify that it is to be for a period exceeding ten years if it is given in connection with a certified contract.
(2) But an authorisation given in connection with a certified contract may not by virtue of subsection (1) specify that it is to be for a period exceeding the shorter of—

(a) the period for which the contract is to operate, and

(b) forty years.

(3) For the purposes of this section an authorisation is given in connection with a certified contract if—

(a) the authority by which it is given is a local authority for the purposes of this Act,

(b) the authority and the authorised person are parties to the contract, and

(c) the authorisation is given to enable the authorised person to perform or better perform his obligations under the contract.").

The noble Baroness said: In moving Amendment No. 16 I shall speak also to Amendments Nos. 18, 19 and 20. It is a basic principle of public law that a public authority cannot delegate to someone else the exercise of a function conferred on it by Parliament. However, under Part II of the Deregulation and Contracting Out Act 1994 a Minister is empowered to make an order which allows local authorities to contract out the exercise of their functions; that is, of functions specified in the order. It is anticipated that many contracts certified under this Bill will be contracts for public-private partnership projects and that in some cases functions may need to be delegated to ensure the success of these projects. One area of local authority business where an order is to be made is in relation to highways functions, and it is important to ensure that an authority wishing to rely on the order will be able to contract out relevant functions for the whole period of the contract. I shall explain why these amendments are needed to achieve this.
The 1994 Act provides that a local authority may not authorise a contractor to exercise any function which it is allowed to contract out for a period of more than 10 years. This restriction is likely to hinder public-private partnership projects which rely on the authority delegating a function, because, for commercial

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reasons, these will generally need to be for a period exceeding 10 years. As I have indicated, at present the projects most likely to come up against this obstacle are projects for the construction and maintenance of highways. But the same difficulty may arise in other cases where the success of the partnership depends on the contractor being authorised to exercise a function without obtaining continual instructions from the authority.
It is likely that many public-private partnership contracts will run for 20 years or more. It is important that we look at any obstacle to the success of partnership schemes. The effect of the amendment is that where a local authority is to enter into a certified contract it may authorise the contractor to exercise any function which it is permitted to contract out by an order under the 1994 Act for the period for which the contract is to operate. But a contractor cannot be authorised to exercise any function for a period of more than 40 years.
It is important to recognise that the extended period for contracting out will only apply where a function is delegated so that a contractor can perform or better perform his obligations under a certified contract. It is also important to understand that a local authority which delegates a function to a contractor retains full responsibility for the exercise of the function concerned. So, for example, if a member of the public is adversely affected by a decision made by a contractor in the exercise of a local authority function, he will complain to the local authority—and be able to take any proceedings against it—as if the authority itself had made the decision.
Amendments Nos. 18 and 19 are consequential amendments. The effect of these is that the new clause will be treated in the same way as Clauses 2 to 8. It will come into force at the same time as those clauses—on a day to be appointed by the Secretary of State—and it will apply to any contract entered into after 12th June 1997.
Amendment No. 20, which slightly modifies the Title of the Bill, is required to reflect the subject matter of the new clause. I beg to move.
On Question, amendment agreed to.
Clause 9 [Power to treat expenditure as not being capital expenditure]:
Baroness Hayman Baroness Hayman moved Amendment No. 17:
Page 6, line 22, leave out ("55(7)") and insert ("55(3) or (7)").
The noble Baroness said: This amendment refines the amendment to Section 57 of the Justices of the Peace Act 1997 proposed in Clause 9 of the Bill, and further extends the opportunity to enter into partnership contracts.
Under the Justices of the Peace Act, local authorities are responsible for providing the accommodation, goods and services required by magistrates courts' committees. The original clause facilitates partnership contracts for magistrates' courts by allowing such contracts to be redefined as current expenditure for the purpose of providing grant support. They would be entered into by the paying authority.
Under Section 55(2) of the Act, a magistrates courts' committee is, however, able to procure any goods and services which are current expenditure items direct from suppliers rather than through the paying authority.
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Section 55(3) defines current items as items which, if they were procured by the paying authority, would not be capital expenditure. The amendment, by including Section 55(3) in the regulation-making power conferred by Clause 9, will enable expenditure under certain partnership contracts to be treated as "not capital" for the purpose of allowing magistrates courts' committees to procure direct. The effect of this will he to allow magistrates courts' committees to enter into specified contracts direct with suppliers.
The intention is to make regulations which will allow magistrates courts' committees to enter into partnership contracts for the provision of IT services. It is not intended that this be extended to contracts for the provision of serviced accommodation, which will remain the responsibility of the paying authority. I beg to move.
On Question, amendment agreed to.
Clause 9, as amended, agreed to.
Clause 10 agreed to.
Clause 1 1 [Short title, commencement and extent]:
Baroness Hayman Baroness Hayman moved Amendment No 18:
Page 6, line 40, leave out ("8") and insert ("(Contracting out of functions in connection with certified contracts)").
The noble Baroness said: I spoke to this amendment when moving Amendment No. 16. I beg to move.
On Question, amendment agreed to.
Baroness Hayman Baroness Hayman moved Amendment No. 19:
Page 6, line 43, leave out ("8") and insert ("(Contracting out of functions in connection with certified contracts)").
The noble Baroness said: I spoke to this amendment when moving Amendment No. 16. I beg to move.
On Question, amendment agreed to.
Clause 11, as amended, agreed to.
In the Title:
Baroness Hayman Baroness Hayman moved Amendment No. 20:
Line 6, at end insert ("; and for connected purposes.").
The noble Baroness said: I spoke to this amendment with Amendment No. 16. I therefore move it formally. I beg to move.
On Question, amendment agreed to.
House resumed: Bill reported with amendments.

Employment Rights (Dispute Resolution) Bill [H.L.]
4.27 p m
Lord Archer of Sandwell: 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.—(Lord Archer of Sandwell.)
On Question, Motion agreed to.
House in Committee accordingly.
[The DEPUTY CHAIRMAN OF COMMITTEES (Baroness Lockwood) in the Chair.]
Clause 1 agreed to.
Clause 2 [Determinations without a hearing or full hearing]:
Baroness Turner of Camden Baroness Turner of Camden moved Amendment No. 1:
Page 2, line 9, leave out ("given their written consent") and insert ("consented in an agreement in writing after receiving adequate independent advice within the meaning of section 9 of the Employment Rights (Dispute Resolution) Act 1998.").
The noble Baroness said: In moving the amendment I wish, with the leave of the Committee, to speak also to Amendments Nos. 3 and 4, with which Amendment No. 1 has been grouped, and to restate some of the points I made when the Bill was debated at Second Reading.
I commend my noble and learned friend for bringing forward the Bill. It is a genuine attempt to make things easier, and in particular faster, for employees who have suffered the trauma of job loss. The present situation is unsatisfactory. There are queues for cases to be heard and the workload of industrial tribunals—now to be known as employment tribunals—has increased. It can mean that a lengthy period will elapse before a dismissed employee succeeds in getting satisfaction.
Clause 2(3A) specifies that employment tribunal regulations may authorise the determination of proceedings without any hearing (and in private) where the parties have given their written consent. My amendment seeks to provide that instead of "given their written consent" should be the words,
"consented in an agreement in writing after receiving independent advice within the meaning of section 9 of the Employment Rights (Dispute Resolution) Act 1998".
I believe that the point made in the amendment is clear, and I hope that it is acceptable. It is not simply enough that the dismissed employee—I am thinking particularly of the dismissed employee rather than of the employer because the employer is more likely to have advice readily available—should not give up what might be important rights, such as the right to a day in court and to a hearing, without understanding precisely what is involved. It has to be understood—I am sure that it is understood by the sponsors of the Bill—that the dismissed employee is often in a shaken state. In the past few years unemployment has begun to affect industries and undertakings where it was once thought that employment was secure. As we all know, that is no longer the case. A substantial amount of money could be involved in the case of a long-serving employee—at least, it would be a substantial amount in the eyes of the employee. It is therefore crucial that the right to a full hearing should not lightly be surrendered and that the employee should have advice before that right is given up.
I turn now to Amendment No. 3. The Bill continues with provisions on determinations without a full hearing. It allows for that to occur where an employment tribunal is, on undisputed facts, bound by the decision of a court in another case to dismiss the case of the person or persons by whom or against whom the
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proceedings are brought. My amendment seeks to remove that provision from the Bill. I believe that the issue of when the legal outcome of undisputed facts is binding is very difficult. Employment tribunal decisions are constantly being reversed by the EAT when it thinks that the legal outcome is obvious or where it is bound by some higher court. What happens if, after a decision under this clause, the European Court of Justice, for example, gives a different interpretation of the law? I should appreciate hearing something on that point from my noble and learned friend who is sponsoring the Bill.
Amendment No. 4 seeks to set out a preliminary issue which is important and basic. Under the terms of the Bill, a preliminary issue can be dealt with without a full hearing, but the question of whether a complainant is a "worker" within the meaning of the provisions is important. It would not be right to determine the issue of whether an individual is a "worker" (although it is a preliminary issue) without the full facts going before a tribunal.
I regard the right of a dismissed employee to a full hearing as of great importance. It should not lightly be surrendered. The number of cases likely to be suitable for determination without a full hearing will probably be small, but we want to ensure that such important rights are safeguarded. Nowadays there are many variants of the employer/employee relationship. The growth in contract working may give rise to complex issues. Is the person concerned an employer, self-employed or an employee? This matter can be complex and needs to be thoroughly examined. A determination without a full hearing may not be appropriate in such circumstances. I beg to move.
Lord Campbell of Alloway: I should like briefly to support Amendment No. 4, but to oppose Amendments Nos. l and 3. I support Amendment No. 4 for the reasons given in substance by the noble Baroness, Lady Turner of Camden. However, I am a little puzzled on Amendment No. 1. The drafting of the clause surely assumes that the consent may be subsequently withdrawn. If there is any problem about the circumstances of giving the consent, it is assumed that the consent may be withdrawn. Therefore, I cannot appreciate the reason for the complexity of the provisions of the proposed amendment.
Amendment No. 3 seeks to leave out lines 27 to 30. Surely the removal of those words could well inhibit due administration and would stop the tribunal from getting on with its work. Such tribunals will have many cases to deal with. At the moment I cannot see any real justification for the amendment.
Lord Lester of Herne Hill: I support the amendments and shall seek briefly to explain why. The Bill deals with employment rights. Some of those rights are basic civil and political rights, such as the right to equal treatment in employment without arbitrary discrimination on various grounds. There is no legal aid for what will become employment tribunals and under the provisions of this Bill the employee will be surrendering his or her right to a full judicial hearing. If

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that is done without cast-iron guarantees that the employee knows what he or she is doing and if a determination is made without a full hearing, there is a serious risk of a denial of due process of law or, to put it in European terms, of a breach of Article 6 of the European Convention on Human Rights which provides that in the determination of his or her civil rights and obligations everyone is entitled to a fair hearing by an independent and impartial tribunal established by law. I do not oppose the purpose of the Bill, but what is happening here is that in lieu of that basic right (which is guaranteed by Article 6 of the convention and which is soon to be guaranteed by our domestic law when we incorporate the convention into UK law), there will be a system which will deprive the applicant of those basic rights.
It is therefore extremely important either that these amendments are accepted or that we have guarantees in lieu of them to ensure that there is no denial of due process in the determination of civil rights and obligations. I am encouraged by the fact that the noble Lord, Lord Campbell of Alloway, shares those same concerns about fairness and due process. Indeed, I am sure that they are shared by noble Lords on all sides of the Committee. It would be a strange irony if this Government, who are committed to protecting human rights under the rule of law, were to whittle away those rights in respect of some of the most vulnerable members of our society. I therefore support the amendments.
Lord Archer of Sandwell: I thank my noble friend Lady Turner of Camden for her kind commendation of the Bill. Clause 2 confers on the Secretary of State the power to make regulations authorising the tribunal in certain circumstances to determine the process without a hearing or without a full hearing. As my noble friend said, one proposal is that that may be done where the parties have consented in writing. Amendment No. 1 would provide that that consent would be effective only if each party had first received adequate legal advice.
I say at once that we discussed this on Second Reading and that my initial reaction to those provisions was exactly the same as that of those noble Lords who have spoken today. Noble Lords will recall that at Second Reading I said that that had also been the reaction of the Council on Tribunals which I have the privilege to chair. Accordingly, I repeat the declaration of interest which I made then. I said that I had been persuaded otherwise for two reasons. First, I believe that we should be cautious about compelling someone to take advice on pain of being deprived of an option that that person has said he or she wishes to exercise. Surely, one human right is the right not to take advice if one does not wish. I would not go to the stake for the absolute application of that principle. Something turns on the nature of the decision to be made. When one comes to Clauses 7 and 8 and the option to submit a dispute to arbitration, the advantages and disadvantages of taking that course are not obvious to everyone without explanation. As to that, I take a different view.
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In relation to the decision that we are now discussing. I believe that the matter is fairly simple. As a general principle I believe that a person should not be compelled to take advice and that should overrule the other considerations. That is perhaps a theoretical objection. But there is a much more severely practical reason why I took the view that I did. The effect of insisting that a party takes advice before the choice is effective is that if the individual has not done so the consent is invalidated, and anything then done pursuant to it is similarly invalidated. If it emerges subsequently that advice has not been taken, the whole determination will be invalid. That means that the tribunal cannot safely proceed without ensuring that proper advice is taken, and the other party cannot be sure of his or her position without similarly ensuring.
But the whole purpose of the proposal is to permit a disposal without a hearing, or without a full hearing. If a party does not want a hearing, presumably he or she will not wish to attend; yet someone will now have to ask that person what advice he or she has taken, who has given the advice, what qualifications the person has and what that advice is. That would defeat the whole purpose of the Clause 2 procedure and mean more preparatory work than the time which would be saved by the procedure.
My noble friend seeks to provide that the advice should be adequate. I understand why. There is no point in taking advice unless it is adequate. But the tribunal and the other party will therefore have to inquire into the adequacy of the advice before they proceed. Of course, the tribunal may now determine proceedings in the absence of a party and there is no requirement that a party should take advice before deciding whether or not to attend the proceedings. The provisions of Clause 2 simply spare the tribunal from arranging a public hearing. It would be very strange, would it not, if a party did not need advice for absenting himself altogether and yet could not consent to a partial hearing or a hearing on papers without taking advice?
Following what I said at Second Reading, the Council on Tribunals has considered the matter and has been persuaded to take the view that I now take. For those reasons, I hope that my noble friend will not press her amendment. But that does not mean that I do not consider advice to be highly desirable. I agree with all noble Lords who have spoken. When my noble friend Lord Haskel speaks I hope that he will give an undertaking that the Government will do everything in their power to make advice available and encourage parties to seek it. When a letter goes out to the parties from the tribunal one possibility is that that should contain information about advice that is available and strongly encourage the parties to take it, but it seems to me that to require it as a condition of the validity of proceedings defeats the whole purpose of the provisions of Clause 2.
In relation to the comments of the noble Lord, Lord Campbell, consent once given cannot be withdrawn. That is part of the provision in the Bill, and it is quite deliberate. If it were possible for a party to give consent to a particular form of proceeding and, when it was well under way, to say that he had thought

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about it again, or had had a dream about it the previous night, and wanted to withdraw it, the burden upon the tribunal would be added to and it would not serve the purpose of this Bill, which is to lighten the burden.
I turn to Amendments Nos. 3 and 4. I observe that the groupings with which noble Lords have been presented can be described only as eccentric. I made some suggestions about them. Those suggestions were ignored. It is not the first time in my life that my advice has been rejected, and I do not suppose for a moment that it will be the last. However, I should like to make clear that it is not my fault. Therefore, we are discussing topics that do not really belong together.
Before I address my noble friend's amendments, perhaps I may spend a moment clarifying the provision that she seeks to amend. The provision is an enabling provision that empowers the Secretary of State to make regulations. The regulations may authorise a tribunal in certain circumstances to determine proceedings not without a hearing but without hearing anyone other than the parties. That may provide an answer to the point raised by the noble Lord, Lord Lester. The parties are entitled to attend and they can make any submissions that they see fit.
In what circumstances may that procedure be authorised? The answer falls into two parts: first, where the facts are not disputed. If it appears at the outset that there is a dispute on the facts, or if a dispute of fact emerges during the proceedings, this provision does not apply. For the moment I am addressing only Amendment No. 3. Secondly, it applies only if upon those facts the tribunal is bound by the decision of a superior court to decide the case one way. The question that arises is: what purpose is to be served by calling witnesses? The purpose of Clause 2 is to protect the tribunal from having to hear proceedings that cannot serve any purpose. In the circumstances set out it appears that a full hearing with witnesses cannot serve any purpose.
I turn to Amendment No. 4. If an individual does not have the right to bring a complaint, the tribunal has no jurisdiction to hear the case. One would have thought it sensible to sort out as swiftly as possible at the outset the question whether or not the tribunal had jurisdiction without the need to hold a full hearing with the parties and witnesses being present. To require a full hearing in all those cases will simply slow down the hearing of cases, which is the very purpose that we all seek to address in these debates. There must be many cases where a full hearing is unnecessary, a waste of time and resources and simply holds up adjudication on other people's rights. I hope that on reflection my noble friend will think again about these amendments. I seek to give her the opportunity so to do.
4.45 p.m.
Lord Lester of Herne Hill: Before the noble and learned Lord sits down, perhaps I may seek to clarify one point. I entirely accept everything he has said about the parts of the Bill that exclude only third parties from hearings and not the parties themselves. As far as
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concerns the exclusion of jurisdiction by consent, is the noble and learned Lord not troubled that, given the complexity of some of the issues that arise, without legal aid and a guarantee of proper legal advice, a person may surrender his or her right to a full hearing before the tribunal as a party without understanding the implications of what he or she is doing? It will become irrevocable. Then we shall find ourselves with problems of breaches of Article 6 of the convention. There was a case called Mrs. Airey v. Ireland. She could not obtain legal aid for her separation in Ireland and the court there found that that was a breach of Article 6 of the convention—denial of access to justice. Does the noble and learned Lord agree that there is a problem about that here, and the Council on Tribunals no doubt agonised for precisely that reason?
Lord Archer of Sandwell: I hope that I will not embarrass the noble Lord, Lord Haskel, if I express total agreement with what the noble Lord, Lord Lester, has just said about the provision of aid and advice. We might discuss whether there are other ways of doing it, but he and I will be solidly shoulder to shoulder on this. I do not believe that the amendment addresses that problem, and so I do not think that this is the occasion on which to address it. It seems to me that nullifying the effects of Clause 2 just means that the cure is worse than the disease.
Lord Wedderburn of Charlton: I support my noble friend Lady Turner in regard to Amendment No. 4, which may perhaps be lost in the debate on the other amendments, in view, as my noble and learned friend said, of the somewhat eccentric groupings that we have today. One of the cases in which a worker should not have anything other than a proper and full inquiry by the tribunal is the matter which either opens or closes the door to the portals of justice in the employment tribunals—the decision as to whether or not he or she is an employee.
The next time Members of the Committee go to buy their maxi-burger across the counter from a young person they should try to decide whether that young person is an employee. You will almost certainly find that they are on zero hours; that is to say, that they come at beck and call—the Germans call it kapowaz—of the employer. They come when called; they go when told to go away. Some of them are paid for the time that they are there. Others I have come across—extraordinary—are paid for the number of minutes they move; that is to say, they come when called and sit on a chair. When business goes up they are called for to serve more maxi-burgers.
Members of the Committee may be able to work out whether there is a contract with a particular young person; what that contract is; whether it is unilateral or synallagmatic; whether it is a normal contract to pay a certain amount for certain hours. The types are almost endless. It is at that point—whether or not the tribunal can find a contract of employment—that justice is either shut out or opened, at least as a possibility.
There is a strong case with the developments in the labour market—what is usually called the flexibility of the labour market, which means that people are called

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upon to do different types of things, and cannot resist because they want the job—that it should be vital that the hearing be as full and detailed as possible, and that the wisdom of the wing persons be added to that of the lawyer in the chair. I beg my noble friend the Minister to say that he will at least consider the point in Amendment No. 4 at some point between now and Report.
Lord Haskel: Although we share my noble friend's sympathy for the amendment, I am afraid that the Government do not support the amendments, because they place unnecessary burdens on both tribunals and the users of tribunals. They also remove measures that the Government wish to introduce, which we believe will improve tribunal procedure. We attach a great deal of importance in the Bill to improving tribunal procedures.
Amendment No. 1 would force parties to seek advice before making a decision as to how the tribunal can determine their case. As my noble and learned friend Lord Archer said, the Government consider it important that parties to proceedings should seek the advice that they consider appropriate. I can assure my noble and learned friend that we encourage them to do so, for example, in the guidance and other literature which is provided to the parties. However, the Government would not wish to seek to require the parties to take advice, save in exceptional circumstances. A circumstance where it is necessary for there to be additional safeguards is where the parties enter a compromise agreement, because in doing so they forfeit their right to have their case determined by a tribunal. Such a right is not in question here.
Amendment No. 3 would prevent the tribunal from determining cases without hearing evidence where it is bound by a decision of a superior court. I assure the Committee that the Government do not intend that power to be used where the decision of a superior court is being appealed to a higher court. Our intention is that the provision will be used only where the law is settled. It does not prevent a party from challenging the settled law by appealing through the judicial system. We do not consider it necessary to introduce an express power for the tribunals to stay proceedings. That, in practice, occurs already, where the tribunal considers the interests of the party and justice so require.
I turn to Amendment No. 4. I am not sure that the amendment addresses the problem which my noble and learned friend Lord Wedderburn stated so eloquently. Amendment No. 4 would undo the good work which has taken place in streamlining procedures to weed out those cases which a tribunal has no jurisdiction to hear. Our intention is to clarify that a full hearing is not necessary where a tribunal is able to decide a preliminary hearing that the applicant does not have a right to bring a case; for example, because he or she is not an employee to whom the right applies. We feel that the amendments would hamper our efforts to improve the tribunal system.
Lord Archer of Sandwell: I am most grateful to my noble friend for giving way. Does he agree that there is
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nothing in the clause at present which would preclude the fullest argument as to whether or not someone is an employee?
Lord Haskel: I think that my noble and learned friend is right on that. As I was saying, the three amendments would hamper our efforts to improve the tribunal system, which, as I said at the start, is the whole purpose of the Bill. I hope that the Committee will reject the amendments.
Lord Campbell of Alloway: I am sorry to intervene. Incidentally, neither his noble friend nor I is learned in this place. We are just ordinary Lords. I take the point that the Government are trying to improve the procedure. Following that point, I went against Amendments No. 1 and 3, but let us look again at Amendment No. 4 with an open mind. There is nothing there that is detrimental to the procedure. There is no logical objection to Amendment No. 4. Words are being used, but I cannot understand the substance of the objection to Amendment No. 4. It can only do good. It is fair; it is reasonable; it is just; and it conforms with the rudimentary requirements of the European convention. What is wrong with it? Why do the Government object to it? They cannot just stick to a brief and go on saying the same thing. What is the logical objection?
Lord Haskel: The objection is as I said before. Amendment No. 4 would undo the good work which has taken place in streamlining procedures to weed out those cases which a tribunal has no jurisdiction to hear. The purpose of the Bill is to speed up the tribunals' work.
5 p.m.
Lord Mishcon: Before my noble friend sits down, perhaps I may deal with a point appositely raised by the noble Lord, Lord Campbell of Alloway; that is, who in this House is entitled to be called learned. In the other place—Members will forgive me if I use the word "merely"—one must be merely a Queen's Counsel in order to be called learned. The obvious lesson is that who is learned in the House of Commons is not deemed to be learned in the House of Lords.
Lord Archer of Sandwell: I am grateful to my noble friend for giving way. I believe that the reference was to me. I understand that former Law Officers are learned in this House, at least in the technical sense.
Lord Mishcon: My noble and learned friend is right. I was trying to say that someone who is learned in the House of Commons because he is a Silk is not deemed to be learned in this House. That means we have a different level of what is learned.
Lord Lester of Herne Hill: Before the noble Lord continues, and while we are seeking to ensure that our usage is correct, does he agree that another undesirable practice has crept in; that is, to refer to a Minister as "the noble Minister"? I believe that that is incorrect—at

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least, at an early stage in the previous government I was rebuked for saying so. It seems to me that all Lords are noble but Ministers are no more noble than anyone else.
Lord Mishcon: If we continue to deal with anachronisms which exist between the two Houses, we shall stray from the main purpose of the debate.
Does the Minister agree that everything that was said in regard to Amendment No. 1 would be cured if only the Government would announce in the near future that their legal aid programme included appearances before tribunals? Not only would that be a gracious move, about which we spoke in Opposition some time ago, but it would also save more money than it would expend because the tasks of tribunals would be simpler and would occupy far less time.
Lord Haskel: I can respond to my noble friend only by saying that the issue of legal aid for appearances before tribunals is one on which I ought to take advice and return to him.
Baroness Turner of Camden: I thank the Minister and my noble and learned friend Lord Archer for responding to the amendments so fully. As regards Amendment No. 1, which deals with seeking advice, I am glad to learn from the Minister that it is intended to encourage people to seek advice. Perhaps as a trade union official I may say that one encouragement would be for everyone to belong to a union. If they were dismissed they would from day one have automatic access to independent and adequate advice. Unfortunately, not everyone belongs to a union. Therefore, I hope that everyone will be encouraged to take advice before attempting to reach consent or written agreement under the Bill. I hope that if people turn to advice bureaux—for example, the NACAB—they will ensure that people are given independent and adequate advice. It is not my intention today to divide the Committee on this amendment. I shall read with great care what has been said by the Minister and my noble and learned friend.
Amendment No. 3 deals with a legal point. I note what has been said and will take no further action today. However, as regards Amendment No. 4, I strongly believe that we are dealing with a different and important matter. The issue of whether or not a person is an employee is of considerable complexity. As my noble friend Lord Wedderburn indicated, there have been considerable changes in the labour market. There has been a growth of contract labour of one kind or another in respect of which it is not clear whether a person is self-employed or an employee. Furthermore, there has been a growth in "zero employment" when people take up work often because it is all they can find. Their position in relation to employment law is somewhat confused.
I note what has been said today. It is not my intention to divide the Committee, but I believe that Amendment No. 4 in particular is of importance. I hope that the Minister will look at it before the Report stage
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because several noble Lords, including the noble Lord, Lord Campbell, expressed great anxiety about the issues it raises. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Wedderburn Lord Wedderburn moved Amendment No. 2:
Page 1 line 24, after ("determination") insert ("or stay").
The noble Lord said: The division of labour in our labour market means that Amendment No. 2 falls to me. I shall move it briefly, almost formally, for a particular reason. It suggests merely that the tribunal in regard to its form in Clause 2 has the power not only to determine the matters before it but also to stay the proceedings. It may be that that meaning of the amendment led the groupings to include Amendments Nos. 6 and 7, both of which are concerned with the more important question of representative, group or test actions—whatever they are to be called—which have grown in importance in employment law. I know that my noble friend Lady Turner wishes to speak on that issue and that the noble Lord, Lord Lester of Herne Hill, has tabled an amendment in that connection. Amendment No. 2 is therefore a paving block for their amendments. I beg to move.
Baroness Turner of Camden: I shall speak to Amendment No. 6 which is grouped with Amendment No. 2. It would enable tribunal rules to make provision for test cases or representative proceedings in cases where a number of workers' rights depends upon a test action instead of each having to enforce their rights individually.
Every trade union official has had to deal with cases in which a number of members have been dismissed, possibly in exactly the same circumstances. However, because of the nature of our legislation each case must be taken individually. As I know from experience, often willing victims are sought and one or two cases are heard in what amount to test cases. The idea is that if a case is won the employer will apply the findings to all others so affected, rather than face masses of similar cases.
Of course, it does not always work like that. Sometimes the employer may decide to continue resisting or may take the case to appeal. Therefore, the dismissed employees will have to wait longer. If the idea of the amendment were adopted, time would be saved because many cases could be heard together. Furthermore, it would he much better from an industrial relations standpoint because the issue could be dealt with at once and more speedily.
Moreover, the amendment does not prescribe a method; it simply opens the door. The regulations, which are referred to in the amendment, would come later. Therefore, I hope that what is suggested here is acceptable or, if not, that something similar might be considered. It really would make much more sense than the present situation and, in my view, would lead to a much speedier resolution of cases that affect more than one or two employees.
Lord Lester of Herne Hill: With the leave of the Committee, I should like to speak to Amendment No. 7. It is really a narrower version of Amendment No. 6. It

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is more narrowly targeted. Its purpose is to allow the Secretary of State to make provision by regulations for representative proceedings before employment tribunals with respect to an alleged contravention of the Sex Discrimination Act, the Race Relations Act, the Disability Discrimination Act or the Equal Pay Act.
At present, those sorts of representative proceedings are available only in the High Court under Order 15, Rule 12. It would be perfectly possible to alter the industrial tribunal rules of procedure to introduce something similar. Under the current industrial tribunal rules of procedure, Rule 18 allows the tribunal to consider applications together where there is a common question of law or fact arising in some or all of the originating applications or where the relief claimed in some or all of the applications is in respect of, or arises out of, the same set of facts. But it is still necessary for each and every complainant to lodge a separate piece of paper, a separate originating application. In some situations, as I shall explain, where the number of applications can be very large—hundreds or even thousands—the situation is unworkable and unjust.
Before I come to the example, perhaps I may make two comments. First, it is a great pleasure to speak after my mentor, the noble Lord, Lord Wedderburn of Charlton, who tried to teach me contract law some time ago at Cambridge University. I did not learn enough which is why I practise in the field of public law and employment law. Secondly, it is a great pleasure to speak after the noble Baroness, Lady Turner of Camden, because she was a very distinguished trade union official in a case in which I was instructed and which I should like to use to illustrate the problem.
It was the speech therapist case, the case of Enderby and others, which has now gone on for 11 years. The noble Baroness's trade union, under-resourced, was compelled by the absurd rules of procedure, which we are trying to improve and make practical for employers and employees, to file, I think, more than 1,000 originating applications in England and Wales, in Scotland and in Northern Ireland, all to deal with precisely the same points; namely, whether speech therapists, mainly women, could or could not compare their work and pay to hospital pharmacists and clinical psychologists so as to have their EC rights to equal pay for work of equal value.
The case, as I say, has so far lasted for 11 years. Because all those pieces of paper had to be issued up and down the country, instead of having a single piece of paper on which one could, if necessary, list the workers concerned in an orderly way and have the issue determined in an orderly way in one tribunal, health authorities and now national health trusts up and down the country on both sides of the Irish Sea and on both sides of the Border have been overwhelmed by those hundreds of originating applications. The union has been unable properly to keep track of all of them. After 11 years of the tortuous proceedings that have been undertaken, many of the applicants have disappeared, died or changed their jobs. Moreover, the whole nature of employers has changed because of the privatisation
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of the health service. And guess what, my Lords? After 11 years I expect that the Government will say that the regional health authorities must foot the bill.
It does not end there, because your right to have your case decided within a reasonable time is guaranteed again by Article 6 of the European human rights convention and also by European Community law where the equal pay and treatment directives guarantee right of access to an effective judicial process. The ludicrous gap in the procedures of the industrial tribunals means that when there is a common point of fact or law which can decide the case for everybody, instead of employees or employers being able to have it gathered together in one forum, one tribunal, and dealt with properly, there is a quite absurd situation. I hope very much that when we hear from the Minister in due course we shall not be told that we should wait for wider studies or consultation on this aspect.
I understand that the position is that the noble and learned Lord the Lord Chancellor has set up a working group to consider introducing the concept of representative action into British law generally, mainly for consumer-related claims. As I understand it, the Department of Trade and Industry has asked the working group to consider the question of representative proceedings in employment tribunals. The DTI would like to see those recommendations before it decides to make provision for representative proceedings before industrial tribunals. I believe that there is to be a consultation paper in a matter of some months.
With great respect, that is not good enough when one is dealing with the urgent need for speedy access to justice in this class of case. It is extremely important that at the very least we put into this Bill a power—and that is all it is—in the Minister to be able to provide for that procedure by subordinate legislation. Otherwise, we shall have to wait for another government measure, a primary measure, before we can achieve that power. I know that the TUC would like to see something on those lines and is particularly concerned about equal pay claims, as am I. Therefore, I very much hope that whatever may be the wider questions, at least in the area of discrimination law and equal pay we shall be able to give to the Secretary of State the power to enable that to be done as soon as possible.
Lord Archer of Sandwell: We are in a slightly curious position with these amendments. Most of my noble friend's amendments are designed to curtail the power of the court to take a decision without having a full hearing. This amendment seeks to extend the court's power.
In relation to Amendment No. 2, I hope that my noble friend will accept that her amendment is not necessary. In the kind of the circumstances which I think she contemplates, chairmen usually direct that a case should not be listed until the appropriate time; for example, when a particular point of law has been decided. Usually, when the application is made, that direction is given. They do that without any hearing at all, even the limited kind of hearing which Clause 2 contemplates. To require them to hold any kind of formal hearing would simply add a further layer to what takes place.

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Therefore, I hope my noble friend will accept what I hope is an assurance I can give that the power which she seeks to confer is not necessary because it exists already and is used.
I turn now to Amendments Nos. 6 and 7. The presidents of the industrial tribunals, whom I think both the Government and I have consulted, have taken the view that the existing powers under the rules are sufficient for multiple cases to be handled. For example, tribunals are able to arrange for test cases in cases where there are multiple claims. The Froege Fisscher case is an obvious example. I should be reluctant to compel tribunals to adopt procedures which might not be suitable in all cases. However, before I move on, there is something that I should mention. I am not blaming anyone for it because it is one of those things that we have to contend with in this Chamber, but some of today's amendments were tabled at a very late stage. My noble friend Lord Haskel and I have been in and out of meetings all day. We have been receiving briefings in the manner of one sheet of paper at a time. I am not sure that I would want to lay down any hard and fast rules in that respect at this stage. My noble friend Lord Wedderburn has just reminded me that our amendments were tabled last week; it is now Tuesday of this week. I make no further comment save to say that, "It ain't easy kid". That was the point I was trying to make.
I turn now to Amendment No. 7 tabled by the noble Lord, Lord Lester. We were not wholly taken by surprise that what the noble Lord largely had in mind were the speech therapist cases. They are difficult. We all know that swathes of management and personnel consultants make a living out of trying to organise personnel and pay structures. Frequently no two such cases are alike. It is not always easy to ensure that a decision on one case should apply to all the others. I am sure that the noble Lord would be the last to suggest that this is an easy field.
Lord Lester of Herne Hill: I am grateful to the noble and learned Lord for his comments. Obviously I did not succeed in explaining the problem. It is a mechanical problem. Quite simply, if there are 1,000 individual alleged victims who want to bring forward their cases, each of them must fill in his own originating application and submit it to different tribunals throughout the United Kingdom. The relevant officials must then try to group it all and decide what to do about it, while the union involved has to chase up the matter. However, a single piece of paper could list the names of all those 1,000 people and the matter could be remitted to one tribunal.
When the presidents of the industrial tribunals are consulted about test cases, that is the right course to take. However, I am not referring to test cases; I am referring to the ludicrous mechanical problem whereby one has to fill in all these bureaucratic forms against different employers, all with the same common defence imposed upon them by the Secretary of State. If we are trying to improve efficiency for employers, employees and industrial tribunals, I ask rhetorically: what on earth is the objection to a power (which is all it is) to
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introduce representative proceedings in order to gather such cases in an orderly, inexpensive and efficient way? Thus far I have not heard any argument to suggest that that is a bad idea.
Lord Archer of Sandwell: I would certainly not suggest that it is a bad idea. I fully take note of the noble Lord's point and believe that it should be addressed. If such a provision had been in the Bill, I can well imagine that some of my noble friends—and, no doubt, the noble Lord—would have said, "Yes, we must have safeguards here. We must think the matter through and ensure that, before anyone allows his name to go down, he has received adequate advice". So it is not a matter that can be dealt with at a stroke. I am not really saying any more than that. We would be making a fairly substantial departure from present procedures if we accepted the amendment. I do not believe that we should leap into such action.
As the noble Lord said, my noble and learned friend the Lord Chancellor has established a working group to look into the whole question of representing a range of interests. As I understand it—and my noble friend the Minister will correct me if I am wrong—the group will be meeting over the next three or four months and then, as the noble Lord suggested, there is likely to be a paper for consultation.
In those circumstances I should have thought that it would be sensible to await the outcome of such a review. If one is to try to address a problem, there is a great deal to be said for getting it right rather than for getting it wrong and having to put it right in two years' time. It seems to me that that would be sensible rather than attempting to rectify the situation in Committee. We should really await the outcome. For those reasons I hope that my noble friend and the noble Lord will consider withdrawing their amendments. That does not mean that I do not think they have a point. Moreover, it does not mean that I cannot say what my noble friend Lord Haskel cannot say—I will be on their side if they have to lobby the Government. I am only saying that I would like to be clear about what it is we seek to achieve. In my view, we should wait until all that information is available to us before we jump in.
Lord Haskel: For the sake of clarity, I should point out to Members of the Committee that I am speaking to Amendments Nos. 2, 6 and 7. Like my noble and learned friend Lord Archer, I have some sympathy with the aim of the amendments. I know that the handling of multiple claims made to industrial tribunals can be difficult. Indeed, the noble Lord. Lord Lester, described them in a most eloquent manner. However, we believe that tribunals have sufficient powers to deal with them. It is not clear whether powers are required in order to give effect to dealing with cases in the way suggested.
It is important not to restrict the powers of tribunals to deal with such cases in the manner that they judge to be most appropriate. In particular, the question of representative action requires a good deal of thought. As my noble and learned friend Lord Archer noted, such action would involve a radical departure from existing practice. However, having said that, I can assure the

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Committee that the Government will carefully consider the recommendations of the working group set up by the Lord Chancellor to ascertain whether any action needs to be taken in respect of industrial tribunals.
In addition, the Equal Opportunities Commission is reviewing the Equal Pay Act and the Sex Discrimination Act. It will be reporting its findings in the Spring of 1998. Rather than anticipate what the commission might propose, I believe it would be better to await the outcome of its review. The EOC's proposals can be given proper consideration and the Government can give their response to them. I am sure that the commission is only too well aware of the difficulties involved in equal pay and equal value cases. Moreover, the Government have announced that a ministerial task force is to be set up to implement the manifesto commitment concerning enforceable and comprehensive civil rights for disabled people. Again, I believe it would be sensible to await the outcome of that review.
Baroness Turner of Camden: I thank my noble friend the Minister and my noble and learned friend for their responses to my amendment. I am very glad to learn that it is generally understood that there is a problem here. I am grateful for that assurance and for the assurance that consideration is being given to the matter by the government body to which my noble friend referred.
Multiple claims have been a problem from the very beginning of industrial tribunals. When they were first introduced, I can clearly remember making regular submissions on behalf of my union before industrial tribunals. If you got more than one or two people involved in an issue, you tried to find someone who would be a suitable test case. You would then take the case and hope that, if you won it, the results would be applied to other employees. However, as I said earlier, it did not always work out in that way.
The amendment is an enabling measure. It simply provides for regulations to be introduced. Indeed, it does not specify any kind of procedure because that was not our intention. In speaking to his amendment, I am very glad that the noble Lord, Lord Lester, made reference to the speech therapist case. That is really an example of a case which seems to have gone on for a very long time. Certainly my union would not have been able to have embarked upon so lengthy and expensive a procedure had there not been support from the EOC. I happen to know that the commission is also concerned about the whole business of representative proceedings.
In fact, when I was a member of the commission, that precise point was included among the representations that we made from time to time to improve legislation. I am sure that the commission will want to proceed with the issue. Nevertheless, I do not intend to divide the Committee at this stage of the proceedings. I shall simply emphasise again that this was an enabling amendment to ensure that regulations would be introduced. That could of course be quite complex and detailed consideration would have to be given to such regulations before they could be introduced. I still think
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that there is a strong case for the amendment but I accept that my noble friend the Minister is seized of the problem.
5.30 p.m.
Baroness Blatch: Before the noble Baroness sits down, perhaps I may ask the Minister a question. In responding to the amendment the Minister referred to enforceable civil rights for the disabled. In response to a Question today in this Chamber the Minister responsible for employment referred to a timescale but said that it was not likely to come into being until the year 2005. What is the timescale for this measure?
Lord Haskel: I am afraid that I do not have a timescale.
Lord Wedderburn of Charlton: I hope that the Minister will read carefully the debate that has taken place today. As regards the point about representative action, in a sense all that is being asked is that we take the High Court practice under order 15, rule 12, to which the noble Lord, Lord Lester, referred, and apply it to industrial or employment tribunals. As regards the working group of the noble and learned Lord the Lord Chancellor, can the Minister find out—I am sorry to add to his burdens—by Report Stage whether or not that working group will deal with industrial tribunals, or employment tribunals as I must learn to call them now that we have dealt with Clause 1? I had thought that the working group would not deal with those tribunals, at least until a later stage. If the Minister can enlighten us on that point, that would be extremely helpful. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 3 and 4 not moved.]
Lord Lester of Herne Hill: I now wish to speak to Amendment No. 7.
The Deputy Chairman of Committees (Lord Dean of Harptree): I am afraid that the noble Lord has missed his opportunity.
Lord Archer of Sandwell Lord Archer of Sandwell moved Amendment No. 5:
Page 2, leave out lines 34 to 38.
The noble and learned Lord said: It may be for the convenience of the Committee if, in moving Amendment No. 5, I speak also to Amendment No. 40. I do not think that I need detain the Committee for any great length of time. These are two technical amendments to give effect to something that was always the intention. Tribunals already have the power to require written answers to questions which they formulate. If a party fails to answer a question, his or her case may be struck out. However, if there are more than two parties involved, that may not prove to be an adequate sanction and the dispute may still require a full hearing when otherwise that could be avoided.
The effect of Clause 2 is to introduce the sanction which now exists in Section 7 of the Industrial Tribunals Act 1996 which makes failure to comply an offence.

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The danger is that that may be thought to deprive tribunals of the power which they have in other cases. What no one wishes to do is to prevent tribunals exercising the powers they already have. The purpose of these amendments is simply to make clear that Clause 2 does not affect any of the other tribunal powers. I beg to move.
Lord Haskel: The Government fully support these necessary but minor technical amendments.
On Question, amendment agreed to.
Clause 2, as amended, agreed to.
[Amendment No. 6 not moved.]
Lord Lester of Herne Hill Lord Lester of Herne Hill had given notice of his intention to move Amendment No. 7:
After Clause 2, insert the following new clause—

Employment Rights (Dispute Resolution) Bill [H.L.]

  REPRESENTATIVE PROCEEDINGS
  ("In section 7 of the Employment Tribunals Act 1996, after subsection (4) insert—
  "(4A) Employment tribunal procedure regulations may make provision for representative proceedings to be brought on behalf of a number of persons having the same interest in proceedings in respect of an alleged contravention of any of the employment provisions of the Sex Discrimination Act 1975, Race Relations Act 1976, Disability Discrimination Act 1995 or in respect of an equality clause within the meaning of the Equal Pay Act 1970.").
  The noble Lord said: I have already spoken at some length on Amendment No. 7. In response to what has already been said, I wish to make one or two further comments. Amendment No. 7 comes well within the object and purpose of the Bill which, as I understand it, is to promote efficiency in industrial tribunals provided that the procedures adopted are fair and workable. As I have sought to explain, Amendment No. 7 does not seek to impose any procedure on an industrial tribunal. It simply seeks to empower the Secretary of State—after the working parties have reported—to be able, by subordinate legislation, to introduce appropriate representative proceedings regulations in whatever form the Minister then thinks fit. It is important to have that power included in this Bill so that this rather urgent matter can be dealt with thereafter. I hope the Committee does not think that the speech therapists' case was in any way unique. There have been many others. The ghastly mess of the coal board case comes to mind in which I was not involved. I have acted on behalf of employers as well as employees. I can assure the Committee that we are engaged in a game of snakes and ladders on both sides with plenty of snakes and not many ladders.
  My concern in putting this measure before the Committee is that we should have a power in place which can be used and modified in the light of the findings of the working groups. Many years ago Professor F.M. Cornford wrote a marvellous guide for young academic politicians in which he referred to the doctrine of the unripe time; that is, the doctrine that one should not do today what one knows to be right because at some unspecified time in the future one might get round to doing something about that. I have not heard anything to suggest that the time is not ripe to allow
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  hundreds and thousands of individual cases to be able to be joined procedurally where the interests of justice so require, but not otherwise.
  I do not seek to divide the Committee on this matter, but I hope that the Government and the noble and learned Lord, Lord Archer of Sandwell, might reflect further before the next stage to see whether an appropriately vague power can be included which will not prejudge the precise form of representative procedures but will at least enable them to be introduced as the justice of the situation demands in the light of the findings of these various working parties and those of other worthy workings of the mill. As I said, I do not seek to divide the Committee on this point or press the matter any further. I shall not move Amendment No. 7.
  [Amendment No. 7 not moved.]
  Clause 3 [Hearings etc. by chairman alone]:
  Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 8:
  Page 3, line 5, leave out ("11, 163 or").
  The noble Lord said: This amendment has been grouped with Amendment No. 9. This is the territory, as it were, not of a full hearing but of a hearing by the chair alone. I use the vernacular of all who are under 25 as their generation has come to know the chair as something other than a piece of furniture. I appreciate that noble Lords have not yet arrived at this desirable level of converse, but the term gets one out of the sexist problems when using the word "chairman" or, as in our committees, the phrase "my Lord Chairman" when a noble Baroness presides.
  The problem of a chair sitting alone worries a number of people who are concerned with the work of tribunals. The amendments ask my noble and learned friend and the Minister about the principles on which we are extending the jurisdiction of chair alone. Are there principles underlying the movement? Some people argue that the movement towards a chair alone relates to the cost of the wing persons. I do not say that myself, but it is a concern.
  The move is to keep out of the territory of chair alone Section 163 concerned with redundancy payments and enforcements, and subsection (4) of the clause concerned with the enforcement of small sums—up to four weeks' compensation—which workers may receive under the scheme introduced to implement the directive of 1977 which begat the TUPE regulations of 1981. I shall not say that again; I put it more easily. Subsection (4) is the way in which in the last resort one enforces one's compensation for failure by the employer to meet his obligations under the transfer of undertakings regulations.
  I can see arguments one way and another. However, the amendments are put forward with the ambition that my noble and learned friend or the Minister will tell us on what principles we are extending the chair alone jurisdiction. In some circles that is seen as a derogation from tripartism. The industrial tribunals—hey are now to be called employment tribunals—n many ways have been a good example of tripartism at work, with a legal chair, an employee or union representative on one side, and an employer representative on the other. The

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  Committee should not forget that many on the Continent view those tribunals as something of interest which works rather better than some of their labour courts. I should be grateful if the Minister will reassure us about the principles of the matters raised in Amendments Nos. 8 and 9. I beg to move.
  5.45 p.m.
  Lord Archer of Sandwell: Not for the first time, my noble friend Lord Wedderburn and I are shoulder to shoulder. I yield to no one in my support of tripartism. It is their tripartite nature on which the tribunals' enviable reputation is founded. Nevertheless, there are jurisdictions in which the role of what we call lay members— am in no way disrespectful; I simply distinguish them from legal chairmen, and I use that word following the statute—s less relevant. Typically those are technical cases, and ones which may turn more on law than on fact or judgment about what is reasonable or fair. The Bill proposes to make some fairly minor additions to the categories in which a chairman may sit alone, although he will have power in an appropriate case to decide that he will sit in a full tribunal of three.
  My noble friend's amendments refer to three of the additions: Sections 11 and 163 of the Employment Rights Act 1996; and Regulation 11(5) of the Transfer of Undertakings (Protection of Employment) Regulations 1981. The Committee may think that each of those jurisdictions is eminently suitable to be determined under the sit alone provision.
  Section 11 provides that where an employer has failed to provide a written statement of employment particulars, or written notice of any changes in them, or an itemised pay statement, his employee may apply to an industrial tribunal. In such cases the issue is whether a party has received something in writing to which he is quite clearly entitled. There are unlikely to be any disputes about the facts. However, if during the proceedings any factual issues arise, the chairman may well use his discretion to bring in two lay colleagues.
  Section 163 of the 1996 Act provides that a tribunal may hear proceedings relating to the right to and amount of statutory redundancy payments. The principle there is that the issue to be determined is essentially straightforward in nature, in the vast majority of cases. It is nothing more than simply ensuring that an employee's entitlement is correctly calculated and that he has received it. If factual questions emerge, again the chairman is directed to use his discretion to sit as a tribunal of three.
  I hope that the Committee will consider that the principle is fairly clear, although one has to consider each jurisdiction on its merits.
  Amendment No. 9 in effect deletes subsection (4) of the clause which refers to regulation 11(5) of the 1981 regulations. That is the regulation which allows an employee to complain to a tribunal on the ground that he or she falls within a category of employees who have been given an award of compensation—t is sometimes called a protective award—or the failure to inform and consult employees' representatives about the transfer of
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  an undertaking; and that he or she has received no such compensation. Again there are unlikely to be any factual issues. It is almost a debt-collecting process, as I am sure that, with his experience, my noble friend will accept.
  I stress that the Bill does not seek to alter the position relating to proceedings under regulation 11(1)—that is, proceedings in which a protective award is being sought in the first instance. They should always be heard before a full tribunal. They will generally involve subjective judgments about the operation of information and consultation procedures—all the matters about which my noble friends are so knowledgeable. Clearly it is right that lay members should form part of the tribunal in those circumstances.
  What Clause 3(4) seeks to do is to allow a chairman to sit alone in cases where a protective award has already been awarded under that procedure but the employer has not paid it. So there are just two questions for the tribunal to consider: first, is the applicant an employee of a description to which an award has been made; and, secondly, has the employer failed to pay the money? Again, those are straightforward questions. I hope that my noble friend will feel that they are exactly questions on which there are unlikely to be issues of fact or questions of what is fair and reasonable, when either it was a debt-collecting procedure or there is a question of law. That is the procedure which it is intended to follow.
  Lord Haskel: I should like to take this opportunity to put on record the Government's commitment to the use of lay members. Their practical experience in the workplace is valuable in the majority of tribunal cases. However, the jurisdictions included under this provision are ones in which the contribution of lay members is less valuable. Therefore the Government must resist these amendments because they are inconsistent with our objectives for the clause. They prevent a chairman or chairwoman sitting alone from hearing cases under eminently suitable jurisdictions where determinations are made on agreed matters of fact and principles of law. As my noble and learned friend Lord Archer said, where factual discrepancies emerge, the chairman is directed by the regulations to consider using his discretion to sit as a tribunal of three. I therefore hope that my noble friend will withdraw his amendment.
  Lord Wedderburn of Charlton: I am sure that I shall be able to satisfy the Minister if he will just give me a moment. It should be understood that what has been said about tripartism does not represent the model that all of us share. That is to say, when there is a group of three of this sort, especially if they sit together more than once, they tend to work up a corporate or neo-corporate sense. Indeed, chairs know that if they are outvoted by the wing persons, they should not resent it, even if it is on a point of missed law and fact. It happens all the time. I shall read Hansard very carefully; however, if the model of tripartism advanced in this debate were followed, turning the pages of all the statutes involved I suspect that the wing persons would be present on only a very small number of sections. That

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  does not mean a small number of occasions, but a small number of sections. However, I promised to satisfy the Minister and therefore beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  [Amendment No. 9 not moved.]
  Clause 3 agreed to.
  Clause 4 agreed to.
  Clause 5 [Legal officers]:
  Baroness Turner of Camden Baroness Turner of Camden moved Amendment No. 10:
  Page 4, line 4, at beginning insert ("in respect of the functions defined in subsection (6A).").
  The noble Baroness said: Clause 5 deals with the appointment of legal officers. My amendments Nos. 10, 11 and 12 are grouped; with the permission of the Committee I shall speak to all three. Their intention is to define what are the functions of the legal officer. They do not appear to be defined in the Bill.
  The amendment specifies that the functions are to make such inquiries as are necessary at an interlocutory stage of the proceedings, including the taking of statements from a party who appears to be unrepresented, with a view to clarifying the issues in the proceedings.
  The range of functions determines what kind of qualifications will be required. If they are to be highly qualified and experienced lawyers, what then is their relationship to the chairman to be? If, however, the functions are as described in the amendment, then it would be an appropriate appointment for, for example, a young law graduate. It would not be necessary to have an experienced solicitor or a barrister, or in Scotland an advocate.
  The Notes on Clauses, for whose receipt I am indebted, state that the legal officers appointed will be able to do everything that a chairman is permitted to do under the rules of procedure. If that is so, why not simply have more chairmen rather than this new kind of appointment? On the other hand, it seems that there is a useful limited range of functions which could quite well be performed by a legal officer who perhaps would not necessarily be experienced but would have an appropriate legal qualification. It would not be necessary in that case to have someone who had experience as a solicitor or a barrister. Otherwise there could be some conflict between the legal officer and the chairman if such officers are to be able to do everything that the chairman is permitted to do. There is a case for having this, as it were, superior kind of clerk who handles the kinds of functions referred to in the amendment and who would not therefore need to be quite so experienced but would perhaps have legal qualifications in the sense of having a law degree. I beg to move.
  Lord Lester of Herne Hill: I have some difficulty in speaking to these amendments because of the lack of clarity in the Bill itself. My problem is that, on the face of it, the proposal in Clause 5 would permit regulations
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  to be made that would allow these legal officers to do what a chairman may do under the rules of procedure. That is anything at all. The provision is widened by an earlier clause in the Bill. On the other hand, the Notes on Clauses that have been most helpfully provided tell us that what is contemplated is narrower than that, but not as narrow as what is proposed in these amendments; namely, that the legal officers are to relieve the tribunal chairmen of some of the interlocutory duties that they currently carry out. Those, we are told, include granting postponements and extensions of time; making witness orders; requiring parties to answer questions; ordering further and better particulars and the discovery of documents; and disclosing the cases being dismissed on withdrawal by parties.
  I do not start with any inherent objection to using legal officers, provided they are properly qualified, to take those interlocutory decisions. But the difficulty we are in is that, on the face of it, the Bill allows people with probably only three years' legal qualification to do the work that is presently done by people with 10 years' qualification or more—the chairmen and women—and to do in principle not only the interlocutory work but anything that can be done by the chairmen.
  I hope that we shall receive clarification on the matter since I may later suggest to the Committee that if the Notes on Clauses accurately reflect what is intended that is what should be stated in Clause 5. However, my difficulty in supporting these amendments is that they reduce the function of the legal officers to something so narrow that it will not relieve the chairmen of industrial tribunals of the burdens unnecessarily placed upon them.
  My other difficulty is that Amendment No. 12 on its own, forgetting Amendment No. 11, would mean that the legal officers would not have to be legally qualified even though they would be taking important interlocutory decisions. I cannot see that anyone without some legal background and qualification could decide important questions such as whether to order further and better particulars or the discovery of documents, which can often be critical in the outcome of a case.
  That is a long-winded way of saying that I believe that Amendments Nos. 11 and 12, standing together, give too limited a role to the legal officer; but if one separates them, then the advice in Amendment No. 12 is that judicial powers will be exercised by people without any legal qualifications. The real vice is not addressed by these amendments; namely, that Clause 5 seeks too much—it seeks to give these legal officers all the powers of a chairman, not only the interlocutory powers listed in the Notes on Clauses. I hope that that is clearer than mud.
  Lord Archer of Sandwell: It may be for the assistance of the Committee if I indicate first what is proposed in relation to legal officers as I understand it. My noble friend Lord Haskel will correct me if I go wrong. It is hoped that, as the noble Lord, Lord Lester said, they may relieve chairmen of some of the burdens that they are presently required to shoulder. It has been suggested that one could achieve the same objective by having more chairmen. The answer to that is that there

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  is little point in using resources to employ more chairmen if some of their functions may be discharged more economically.
  I spend hours of my time asking for more resources to be allocated to tribunals to improve the service that they give. In the real world we are not likely very often to win that argument. I should be reluctant to weaken the argument by pressing for resources which do not improve the service which they give.
  So the question is: are there some duties at present falling to chairmen which might be more economically carried out equally well by less experienced legal officers? It is not intended that they shall perform all the duties at present performed by chairmen. The Government's intention, as I understand it, is that what duties it would be sensible to confer on them should be tested by a pilot scheme. The kinds of functions such people might fulfil have just been referred to by the noble Lord, Lord Lester: making orders for further and better particulars, making orders about listing and so on.
  Perhaps I may turn first to my noble friend's amendment. She seeks to do two things. First, according to the amendment—although I follow that it might not be her intention in moving it—she seeks to use legal officers for a purpose which was never envisaged. Secondly, she seeks to ensure that they cannot be used for any other purpose, not even the purpose for which they were envisaged. My noble friend wants them to be used, as I understand it, to assist unrepresented and unassisted parties. There may well be a need for that role and perhaps my noble friend and I will be on the same side if that issue arises. But it would be quite inconsistent with an adjudicating function adjudicating objectively if they are advising one of the parties. We could not have the same people exercising both functions. So unless my noble friend wishes to say that she opposes even the idea of testing a role for legal officers which the Bill envisages, we could not confer those alternative functions on them. I hope that she does not intend to eliminate them altogether.
  As to the qualifications of the legal officers, the noble Lord, Lord Lester, stated the question: are there some functions which people with fewer qualifications or perhaps less experience than chairmen might sensibly carry out? It would relieve chairmen of that burden. I understand that what the Government have in mind in their pilot scheme—and again I shall be corrected by my noble friend if I am wrong—is that they will be barristers and solicitors, probably—although it is not yet set in stone, as I understand it—of three years' experience. It seems to me that the kind of issues which the noble Lord, Lord Lester, ventilated could be carried out perfectly well by people with that experience. That is what is suggested. The decisions will be subject to review, in the same way as a review is now available in interlocutory matters and their decisions will, of course, be subject to appeal.
  I should have thought that if one attempted to employ legal officers with fewer qualifications, confidence in the system would be undermined and we might be inviting all kinds of appeals and applications for judicial review and that kind of difficulty. So I hope that my
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  noble friend and the noble Lord will agree that, as an experiment, as a recipe for the initial pilot scheme, the Bill has it about right. But again I would not say that we are so right that it is beyond any possibility of amendment. The trouble is: in which direction do we amend? Either someone will say: "You are not providing people with the appropriate qualifications", or they will say: "You are giving them jobs which are beyond what they are qualified to do." I hope that we might be allowed at least to try the pilot scheme.
  6 p.m.
  Lord Haskel: I am speaking to Amendments Nos. 10, 11 and 12. Perhaps I may clarify the Government's position on legal officers since it might be helpful to the Committee. It is our intention that the concept of legal officers will be tested by way of a pilot scheme. The details of the scheme will be specified in the tribunal procedure regulations after consultation with the tribunal presidents. I can inform the Committee that the consultations are already in progress.
  I can also assure Members of the Committee and the noble Lord, Lord Lester, who was concerned, that it is our intention that legal officers will be qualified barristers, solicitors or advocates, to ensure that tribunal users and the public at large can have confidence in their determinations.
  Legal officers will not be able to conduct full hearings. We propose to restrict further their competency by the regulations during the pilot study. It is not envisaged in the pilot that they will conduct pre-hearing reviews or a determination under the new procedures introduced under Clause 2 of the Bill. My noble and learned friend Lord Archer has already listed the kind of function which we expect to fall within the legal officers' remit. These might include disposing of settled or withdrawn cases, granting postponements, extending time limits, making orders for the provision of further and better particulars and making orders requiring the attendance of witnesses or the discovery or inspection of documents.
  The aim of the legal officer scheme is to provide a useful support for chairmen, particularly those working in the overstretched major city centres. In particular, we want to release them from some of their interlocutory work, to leave them free to sit in tribunals, actually hearing cases. We will work closely with the tribunal presidents to ensure that any pilot is properly tested and evaluated.
  Given our aims for the scheme, I am therefore unable to support the amendments as tabled. It is essential that in the primary legislation we are given the flexibility necessary to draw up a scheme and to amend it as the results of the pilots suggest and as experience unfolds. The regulations will strictly define all elements of the scheme, including the functions which the legal officer may perform and the qualifications he or she will have. I have indicated today what those qualifications will be and the kind of work which a legal officer will be

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  expected to do. I therefore hope that the Committee will accept those assurances and await the results of the pilot scheme.
  Lord Lester of Herne Hill: Before the Minister sits down, can he clarify two points in his helpful statement? First, am I right in thinking that the legal officers will not be appointed by the Lord Chancellor or by the Lord Advocate in Scotland, but by the Secretary of State? If that is right, might there not be problems about the appearance of independence and impartiality in terms of the European Convention on Human Rights if the appointment is by the Minister and not by either of the high judicial officers of the state?
  Secondly, when the Minister referred to "qualified barristers, solicitors or advocates," will it be enough if they simply have the bare qualifications? Alternatively, will there be some requirement, as I hoped, that they would have some experience, even if it were only two or three years? That is because they will be dealing with matters like discovery which can require quite difficult matters of judgment which can determine the outcome of a case.
  Lord Haskel: In reply to the noble Lord, I can confirm that the Secretary of State will appoint the legal officers and that they will have some experience. However, the definition of that experience has not yet been decided.
  Baroness Turner of Camden: I thank the Minister for his explanation of what is intended here, and what it is intended that the legal officer should do. In response to the noble Lord, Lord Lester, I should say that my noble friend and I had intended that Amendments Nos. 11 and 12 should stand together. I had envisaged a much lower level of function than has been explained today. Perhaps I had envisaged it as a possible career opportunity for the numbers of law graduates who now leave universities sometimes wondering whether they will obtain employment.
  However, as regards the proposed range of functions, I can quite see that it would be necessary for the people concerned to have relevant experience. I take note of what has been said about the pilot scheme and the consultations which are to take place—indeed, which are currently taking place—and the fact that once the pilot scheme has been completed the results will be considered. No doubt, if amendments have to be made to the scheme, they will be made. In view of what has been said this afternoon, I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  [Amendments Nos. 11 and 12 not moved.]
  On Question, whether Clause 5 shall stand part of the Bill?
  Lord Lester of Herne Hill: I gave notice that I should like to be heard on this Question. There has already been a fairly full debate and much useful clarification. My attention was drawn to the problems raised by Clause 5 by an extremely experienced chairperson, sitting well north of Hendon. I had better not name her or him; suffice it to
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  say that the person concerned is extremely experienced and most concerned about possible unfairness that could result from an over-broad use of this power.
  I confess that I still have two difficulties. One is that, on its face, the provision is not limited to interlocutory matters at all. The power permits regulations to be made to allow the legal officers to do everything that a chairman is permitted to do under the rules of procedure. I shall not take up the time of the Committee in going through the question of how wide those functions are: they are very wide indeed. If, in truth, this provision is to deal only with interlocutory matters in the way that, say, in England and Wales a Master does in the High Court of Justice, I should have thought it was not asking too much for the power to be limited to interlocutory matters. Certainly, that would allay my concerns. I should be grateful if further thought might be given to that point.
  My second point concerns the power of appointment. This matter indeed troubles me. It is not a mere technicality if the Secretary of State is to appoint judicial officers. There are cases in Strasbourg which hold—certainly where a government is involved in any matter, and governments can be involved in cases before employment tribunals, as the equal pay cases exemplify—that, where a judicial officer is appointed by a Minister and not by someone wholly independent (in the way in which the Lord Chancellor guarantees separation of powers in his one body, or as the Lord President in Scotland guarantees more formally as well), serious questions may be raised.
  I certainly do not wish to divide the Committee on this matter. But I hope that further thought may be given to those two main points, which would allay my concerns.
  Lord Renton: The noble Lord, Lord Lester, has done good service by drawing attention to this rather strange clause. I support what was said but I should like to add one or two comments. It looks as though on a wide range of matters, as the noble Lord said, the chairman of the tribunal or a legal officer, who may not have consulted each other at all, can exercise powers which the tribunal as a whole would have power to exercise and can do so without even consulting it.
  It may be that the noble Lord hopes and believes that there will be such consultation. But, on the face of this clause, that is what can happen.
  Perhaps I may point to page 4 of the Bill, where, at lines 6 and 7 it says:
  "any act so done, shall be treated as done by an employment tribunal".
  That introduces a legal fiction and is something that we should try to avoid. I hope that the Government will give further thought to this clause. I feel that it needs reconsideration.
  6.15 p.m.
  Lord Archer of Sandwell: I thought I was fairly clear as to the answer I proposed to give to the noble Lord, Lord Lester. I am not so sure about the point made by the noble Lord, Lord Renton, whose views on these matters we all treat with the greatest respect. Perhaps we should have further discussions on this matter. If the noble Lord was saying that it should not be open either

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  to chairmen or legal officers to make interlocutory decisions without consulting the full tribunal, I am not wholly clear about the procedure that he envisages. Judges of the High Court make decisions every day of the week without consulting all the other judges. Consultation within the tribunal is something which it seems to me ought not normally to be provided for. If have misunderstood the noble Lord, and the fault may well be mine, I should be happy to discuss his anxieties with him.
  With regard to the two specific anxieties raised by the noble Lord, Lord Lester, I understand that he prefers to limit the powers in the Bill if it is not intended to use very wide powers. That is almost the precise point that I would have made when I was in this kind of debate. The difficulty that we are always in is that, if we propose to impose a limitation on a power, then just when one needs to use it, we discover that it has been limited in a way that no one intended. Certainly, I should not be adverse to discussing with the Government whether there is a sensible way of imposing some limit on the power, if only so that people are not misled.
  As to the noble Lord's second point about who should make the appointments, it has usually been the position of the Council on Tribunals that it would prefer to see appointments made by the Lord Chancellor. I confess that the difficulty had not occurred to me in the context of this clause. But now that the noble Lord has raised it, I should, perhaps, without in any way seeking to predetermine the outcome, like to have some discussions about it with the Government.
  Lord Renton: Before the noble and learned Lord sits down, as he was so good as to refer to what I had to say, perhaps I may ask him to bear in mind that it is not just interlocutory procedural matters which are involved. At the bottom of page 3 of the Bill, there is a reference to:
  "any act required or authorised by the regulations to be done by a tribunal".
  It says "by a tribunal". That could go very wide indeed. We have not, of course, seen the regulations or been told what they will contain. So this matter must be reconsidered by the Government.
  Lord Archer of Sandwell: I believe that the point now made by the noble Lord is precisely the point made by the noble Lord, Lord Lester; namely, that the powers expressed in the Bill are wider than the powers it is intended to use. Certainly, if it were intended to use those powers, I can well understand the noble Lord's anxiety.
  Lord Haskel: The Government are certainly happy to discuss the limits on the powers of legal officers in the light of the pilot scheme. It is the whole purpose of the pilot scheme to gain experience of the work of the legal officers.
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  As for appointments, certainly we would give further consideration to this matter; but I should say that the tribunal lay members at the moment are appointed by the Secretary of State.
  Lord Lester of Herne Hill: Before the Minister sits down, perhaps he would clarify one matter. So far as concerns his first point, am I right in thinking that the Government intend the powers to be limited to interlocutory matters, as the Notes on Clauses made clear, and not to deal with substantive matters going to the merits of the issues in dispute? As I understand the remarks of the noble and learned Lord, Lord Archer of Sandwell, and the Notes on Clauses, that is the intention. It is not, therefore, a question of the pilot study, because the pilot study will simply study the use of the powers to deal with interlocutory matters and nothing more.
  As for the power of appointment, although it is right that lay members are appointed by the Secretary of State, the legally qualified chairman—am I not right?—is appointed by the Lord Chancellor. So far as I am aware, all legally qualified chairmen of tribunals are appointed by the Lord Chancellor or, in Scotland, the Lord President. Will the Minister therefore look at the matter again to see whether the legal officer—who is to be the "mini" judge like a master in the Supreme Court—should not also be appointed by the Lord Chancellor and his department?
  Lord Haskel: The Government agree entirely with the noble Lord, Lord Lester. He described exactly how those officers are appointed. In relation to the envisioned work of the legal officers, that might include the disposing of settled or withdrawn cases, granting of postponements, extending time limits and making orders. I listed the various things that they may do.
  Lord Renton: Will the noble Lord be so good as to at least comment on the points made by the noble Lord, Lord Lester, and supported by me in regard to the uncertainty of the powers which the chairman or the legal officer—or both—will be able to exercise without consultation with other members of the tribunal? We do not know to what extent those powers will be limited to administration, minor and interlocutory matters.
  Lord Hope of Craighead: Perhaps I can intervene briefly in this debate against the background of my experience. I was the Lord President in Scotland until recently and, as an administrator, had to deal with a similar problem; that is, the delegation to clerks of court—to use the Scottish language—of precisely the kind of powers discussed in this clause.
  My experience indicated that there is a great range of issues, some of which are simple and can safely be delegated. In practice they were delegated without a need for consultation back to the judge on whose authority the order was ultimately being pronounced. Other issues, such as discovery, were much more complicated. In practice it was left and still is left to the clerk of court to exercise a measure of commonsense, subject also to a degree of supervision, as to whether consultation was required. In my experience—I say this

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  with the greatest respect to all those who have spoken—it would be unwise to attempt to define too precisely in the clause what is to be covered. A great deal will depend on whatever regulations or instructions are given once the clause is put into effect.
  One further point in relation to what the noble Lord, Lord Lester, said in regard to appointments may also be relevant, though I appreciate the force of what he said against the background of the European Convention. The clerks of court to whom I delegated the power to grant this kind of order in my capacity as Lord President were officials appointed through the court service. Unlike the judges, they were not the subject of independent appointment. For my part, I was content to delegate those functions to them against that background.
  Lord Lester of Herne Hill: As I am the only person who is formally opposing the question on Clause 5, and having listened especially to the noble and learned Lord, Lord Hope, I withdraw my opposition. I am reassured by everything he said. I am grateful to the Committee for giving me the opportunity of airing these matters, which seemed to me to be of some importance.
  Clause 5 agreed to.
  Clause 6 agreed to.
  Clause 7 [ACAS arbitration scheme]:
  Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 13:
  Page 5, leave out line 44 and insert—
  ("(a) setting out—

  (i) an arbitration scheme for the resolution of disputes concerned with a contravention or alleged contravention of Part X of the Employment Rights Act 1996 under subsection (1)(a), under which an arbitrator or arbitrators may decide whether there has been such a contravention, or

  (ii) an arbitration scheme for the resolution of disputes under any other enactment specified under subsection (1)(b), and").

  The noble Lord said: On Second Reading, my noble friend and I made it clear that we wished to try to find greater protection for the arbitration system which is being inserted into the procedures of unfair dismissal in this Bill. The amendments which follow are meant to move in that direction.
  We feel that the Bill, as it stands, contains various risks which are unnecessary. To plunge in medias res, let us take an arbitrator who goes way outside his remit; he is someone who depends upon the statute for his position. Some lawyers will think immediately of judicial review. I say at once that I understand judicial review to be extremely unusual in arbitration matters. When one looks at the learned and authoritative tome of the noble and learned Lord, Lord Mustill, and Mr. Boyd—thinking back to the old rule of becoming an authority after one is dead, I am happy to say that they are both still with us—one sees that they make it clear that judicial review is rare. However, if one reads the whole of their book it makes it clear that that is
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  concerned with commercial arbitration. It is also usually concerned with arbitrators who do not have a statutory face such as those arbitrators in the ACAS scheme.
  In our view, if the situation were left unchanged, then the prospect of disaster for the arbitration system would be just as great as the Grunwick case disaster for recognition procedures under the Act of 1975. Indeed, the two professors who have been extremely influential and led this wing of the alternative disputes movement—it is a much more general movement in academic and intellectual circles—wrote in 1995 after the Green Paper put the question on the map, that perverse decisions of arbitrators,
  "could be challenged through the process of judicial review".
  They went on to quote from the well-known judgment of the noble and learned Lord, Lord Diplock, in Council of Civil Service Unions v. Minister for the Civil Service (1985) setting out the three headings of illegality, irrationality and procedural impropriety as the modern basis of judicial review. My noble and learned friend Lord Archer will always prefer that we do not call it "irrationality", but Wednesbury "unreasonableness". I do not believe that there is any ground for disagreement among the lawyers that those are the possibilities and that they must rate pretty high for the arbitrator who goes outside his powers or in some way is bitten by irrationality of the Wednesbury kind.
  We therefore suggest that where there is a need for a reference—I stress that it is a question of a reference—Members of the Committee will see later that we use the Employment Appeal Tribunal. However, in Amendment No. 13 we are pointing out that two things are needed for the arbitration to stand up, apart from the agreement of the parties: first, the threshold; and, secondly, the substantive remit.
  The Bill sets out the threshold. It is clear in Clause 7 that the threshold in subsection (1) of the new Section 212A will be a claim which could be the subject of proceedings arising out of a contravention or alleged contravention of Part X of the Employment Rights Act 1996. Part X deals with unfair dismissal. Once the arbitrator has in his hands a complaint of that kind, he can go ahead. But then one asks, "How wide can he go?"
  There is an assumption in the Bill and an assumption in the ACAS document, kindly produced for us in draft, that one always knows what kind of case one has in one's hands. I suspect that it is not unusual in litigation or arbitration begun on one footing—a complaint, perhaps, of unfair dismissal—to find that on the second day or when the documents or evidence are in that the central point becomes something quite different. Perhaps it is a point on sex discrimination or a point on equal pay. What is the arbitrator to do in such a case? The Bill does not tell us and the ACAS document is uncertain. The ACAS document says that if either party is unhappy with the non-legalistic nature or lack of appeal on a point of law it need not opt to go to arbitration. But one does not know whether one wants an appeal on a point of law or on a point of anything else when one has not yet opened the case. That comes only when one is beginning to see what the answer is.

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  It is, with respect, a necessary part of this scheme, if it is not to founder very quickly under judicial review or similar proceedings, that the arbitrator is clearly told that the central thrust of the project is unfair dismissal and not anything else.
  I am not suggesting that arbitrators will, out of some malevolence, seek other grounds for their competence; merely that when other points arise they need to be told what to do. Our amendment, in sub-paragraph (i), goes to what I call the substantive remit. It refers to a scheme,
  "under which an arbitrator or arbitrators may decide whether there has been such a contravention".
  That will very often merely be a matter of discretion on reasonableness and the like. That is what people have in mind. But the arbitrator must surely not go outside that. There is nothing anywhere to give him notice that it is dangerous to go outside the contravention which is his basic issue.
  Perhaps I may make one further point. It is often said, and it is said by ACAS, that what is needed among the arbitrators is what it calls "experience of the world at work" and "the possession of analytical and social skills". Those are highly desirable. But it also adds:
  "Legal experience is not considered necessary".
  That is part of the approach which fails to designate the arbitrator's position in a proper way. Let us consider, for example, the case of the arbitrator who wants to indicate an award of compensation. It is a matter of discretion, but a matter of discretion within Part X of the Employment Rights Act 1996. Let us suppose he sees a case where there has been agreed arbitration. There is an agreed unfair dismissal but it is an unfair dismissal where only some of those who were dismissed who have come to him as a party were taking industrial action at the time. The employer says, "Well, fine, but we must reduce this compensation by a proper amount." They say, "You cannot reduce our compensation merely because we were taking industrial action. That is to be put aside."
  That is, in a very short compass, what your Lordships' Judicial Committee decided just a week or so back in the case of Tracy v. Crosville Wales Limited. I defy anyone to read the extraordinarily interesting judgment of the noble and learned Lord, Lord Nolan, without some legal experience. What is the arbitrator to do if he has no legal experience or does not know where to turn? It is not the proper approach to legalism to believe that it is only lawyers who bring in legalisms. We all know plenty of people who can be very legalistic but who do not happen to be lawyers. We also know some lawyers who are fairly legalistic. But the identical nature of the two groups is not proven and is not clear.
  To come back to Amendment No. 13, what would I say? I would say to the arbitrator, "It will be difficult for you. It may be that you need legal advice. But you must at least remember"—under the last two lines of sub-paragraph (i)—that you are an arbitrator who must decide whether there has been such a contravention and work to that standard—the standard of Part X of the Act—and not go elsewhere". I do not suggest that our amendment solves all the difficulties. It may be that it would have been a good idea to have had some
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  regulations made to spell out the problems. However, I do submit that without something further than is in the Bill many arbitrators will get into a difficult position very early on. It is the experience of the arbitration system in the first three or four years which matters most to this important experiment in our employment jurisprudence. I beg to move.
  6.30 p.m.
  Lord Archer of Sandwell: I am grateful to my noble friend both for the way he introduced the amendment and for his courtesy in having discussed it with me prior to these debates. I wonder whether it would assist our debates if, like my noble friend, I made one or two general comments first on what we are seeking to achieve in introducing the arbitration option.
  The intention is that the ACAS arbitration scheme should be final and binding. That is precisely its advantage. That is the inducement to people to use it—in appropriate cases. We are not attempting to set out an alternative tribunal system. We are providing an alternative means for the parties to resolve their disputes. By definition, the arbitration scheme will be different and I do not believe we should seek to replicate the features of the tribunal system. Nevertheless, I wholly agree with my noble friend that it is important for the scheme to have safeguards and to ensure that the remedy for unfair dismissal, whether it is received from the tribunal or as a result of arbitration, should be comparable in the two cases. The remedies, too, will be set out in the scheme itself. We shall be debating the remedies later.
  On the question of serious errors, I agree with my noble friend that if there is a serious irregularity in the way the arbitrator has performed his role we need some kind of safety valve. Whether that should be through the Employment Appeal Tribunal, as is suggested in a subsequent amendment, is something we can discuss when it arises. The tribunal's primary function is to consider appeals on points of law arising out of the decisions of industrial tribunals, whereas I suspect that what we may be considering is cases where there has been an irregularity in the procedure. Some may argue that the High Court has more experience of dealing with that kind of situation.
  There have been discussions as to whether the Arbitration Act 1996 should apply automatically. Members of the Committee will have observed that there is a power in the Bill for the Secretary of State to apply provisions of it and to modify those provisions. I think my noble friend and I would agree that that was designed for commercial arbitrations and is not wholly appropriate to fit into the industrial relations field. However, having considered it further, I am persuaded that it contains a number of useful provisions of which an ACAS arbitration scheme might sensibly take account. The enforcement provisions are an obvious example. They would permit the exclusion of appeals on points of law but give the courts powers to intervene in proceedings where it is absolutely necessary to prevent substantial injustice.

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  The difficulty we are all in at this stage is that these discussions have taken place at a comparatively late point prior to our debates. My understanding—I shall be corrected by my noble friend Lord Haskel if I am wrong—is that the Government are minded that at least both the enforcement proceedings and the serious irregularity appeal provisions should apply but they wish to discuss with ACAS what is the best way of doing that and whether any modifications will be necessary. The serious irregularity provisions appear to be ideally suited to cover what happens if the arbitration goes wrong in that way. It would allow a court to consider a complaint that there were procedural irregularities and other sources of injustice.
  I turn to Amendment No. 13 specifically, but we are again in difficulty with the grouping because we are dealing with principles which apply to more than one amendment. As I understand what my noble friend has just said, he is seeking in his amendment to ensure that the arbitrator shall be told clearly, "You will deal with unfair dismissal issues. You won't deal with other issues which are later discovered to have crept into the dispute". I have every sympathy with that. I hope that my noble friend will confirm that it is intended that ACAS will prepare a scheme for arbitration relating to unfair dismissal disputes—that is, a scheme arising out of contravention of Part X of the Employment Rights Act. It is self-evident that any scheme which the Secretary of State approves for the arbitration of disputes about unfair dismissal will attempt to make it clear that the jurisdiction relates to disputes arising out of an infringement of Part X. Therefore, I hope that the difficulty which I think that my noble friend has envisaged is not likely to arise.
  On the question of what test of fairness is to be applied, I understand that discussions are taking place with ACAS to determine whether it is possible for the scheme to build on the existing test to take account of an industrial relations standard based on the ACAS code of practice. It might be considered desirable to allow the parties to ask the arbitrator to have regard to the ACAS handbook on discipline at work. As I understand it, the minimum will be the standard of fairness which is set out in Part X.
  I fear that we have a difficulty in all these debates, but I think that we all agree on the objective. I hope that at this stage my noble friend will not seek to tie the hands of the Secretary of State by including provisions which can be addressed at a later stage when considering what is to be in the order (when the Secretary of State makes the order) or when ACAS puts forward a scheme. If we attempt at this stage of the Bill to circumscribe those powers too closely, particularly since we are all in the kind of difficulty which my noble friend has mentioned, we may later live to regret it.
  Lord Haskel: In reply to my noble friend, I can confirm that the serious irregularity and other provisions will apply. I can also confirm that the ACAS scheme will be for unfair dismissal. It is clear that the Secretary of State would be approving a scheme relating to unfair dismissal claims because of this and the arbitration
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  would have no powers to consider any other jurisdiction. It would be for the parties to satisfy themselves that their case was limited to unfair dismissal. If the arbitrator discovered another issue, the parties would have the right to take that issue to an industrial tribunal. The agreement to arbitrate would not have removed the tribunal's jurisdiction in these areas.
  My noble friend Lord Wedderburn asked about the legal experience of the arbitrators. The view of ACAS is that arbitrators will be deciding mainly on questions of fact, such as whether the person was dismissed fairly or unfairly. However, I have no doubt that ACAS will have heard what my noble friend said and will take his words into consideration. Therefore, I believe that my noble friend's amendment is not necessary.
  6.45 p.m.
  Lord Wedderburn of Charlton: I thank the Minister for that reply to my amendment. This is not the first time that I have been known to be "not necessary". Indeed, one of the problems of dealing with my noble friend the Minister and my noble and learned friend is that normally when there are two people in to bat, we can throw the ball in at one end and hope to run them out, but it is much more difficult to manage when two batsmen are hitting the ball at the same time. I say that because my noble and learned friend Lord Archer turned his mind to various other matters to which we shall come and which I should like to keep until we come to consider the Arbitration Act 1996.
  With regard to Amendment No. 13, I have to say that the Minister has not completely convinced me that the existing provisions are sufficient to bring to the mind of the arbitrator the risks that he may run. Indeed, all three of us have skated over the very simple point that, given an unfair dismissal case, the arbitrator may find that an equality clause with regard to equal pay is at the centre of the matter although nobody realised it before. However, there are centres and centres and it may be that the arbitrator can still deal with the unfair dismissal, having in mind the other matters that have arisen, or it may be that the arbitrator finds that sex discrimination or equal pay really is at the centre of the case. I suggest to the Minister that before we come to Report we should consider including in the Bill—or at any rate in the ACAS scheme—provisions emphasising the centrality of the issue of unfair dismissal and that that should be put to the arbitrator. With those remarks, I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 14:
  Page 6, line 12, after ("section") insert ("and after receipt by the employee or employees party to the proceedings of independent advice within the meaning of section 9 of the Employment Rights (Dispute Resolution) Act 1998").
  The noble Lord said: We come to the question of the written agreement of the parties and their informed consent. As we had this debate on a previous clause, I had not been intending to say anything about it now because it seemed that we had said enough on the matter previously. However, I am moving the amendment

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  because here we have one of those mysterious and odd groupings which I think it is agreed have to be changed. As I understand it, through the proper channels I have de-grouped Amendments Nos. 16 and 17 which will now be dealt with separately after Amendment No. 15. I understand also that if I provide the launching pad, my noble friend Lord Gladwin will be able to move Amendments Nos. 19 and 20 at this point and still remain in order. I hope that that is clear. I beg to move.
  Lord Gladwin of Clee: I wish to move Amendment No. 19—
  Baroness Turner of Camden:—to speak to Amendment No. 19.
  Lord Gladwin of Clee: No, I wish to move Amendment No. 19. That is what I wish to do. Perhaps someone can guide me as to whether I can and I shall then speak to it.
  At the moment, the law provides industrial tribunals with three remedies to deal with cases of unfair dismissal: compensation, reinstatement and re-engagement. In this amendment I am concerned only with reinstatement or re-engagement. An order by the tribunal that an unfairly dismissed employee shall be reinstated is defined as an order that,
  "the employer shall treat the complainant in all respects as if he had not been dismissed and must include benefits payable in respect of the period since dismissal and rights and privileges, including seniority and pensions";
  In other words, the sacked worker goes back to the position that he enjoyed the day before he was unfairly dismissed.
  The second remedy that is available to an employment tribunal is re-engagement. This is similar in effect to reinstatement except that the employee does not necessarily go back to the same job that he had before he was dismissed. The job to which he returns must be comparable, suitable and, as far as reasonably practical, as favourable as the previous position. It may be with an associated or successor company. The tribunal decides what terms should apply and the date by which there must be compliance. This is a more flexible remedy than reinstatement but it preserves the employment rights of the unfairly dismissed worker.
  Why, therefore, does the Bill provide for the fourth remedy of re-employment? What does re-employment mean? The suspicion is that it may be re-employment in a post less favourable than the one previously held by the worker before he was unfairly dismissed. I am sure that that is not the intention of the Bill, but it is unwise to give arbitrators an ill-defined remedy that is neither needed by nor provided to employment tribunals, particularly when this clause in the Bill gives to employment tribunals the duty to enforce re-employment orders that they themselves cannot make.
  I should like to speak also to Amendment No. 20. This is a probing amendment which provides a vehicle for putting a number of questions to my noble friend. Industrial tribunals make compensation orders against employers who have unfairly dismissed employees. If the employer does not pay, the sacked worker takes the
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  order that he has received from the tribunal to the county court for redress. If an employment tribunal orders reinstatement or re-engagement and the employer does not comply with that order, the unfairly dismissed employee returns to the tribunal and is awarded compensation and an enhanced award by way of a kind of penalty against the employer for not reinstating him. If the employer does not pay, the employee takes that order to the county court for enforcement.
  What happens under the new arbitration scheme? First, does the worker who has been awarded compensation for unfair dismissal go straight to the county court if his former employer has not paid the compensation? Secondly, where an arbitrator has awarded reinstatement or re-engagement and the employer has refused to comply with such an order, why must the employee get in the queue and go to an employment tribunal for compensation and the additional award that must be assessed? Why should not the employee return to the arbitrator for an order? After all, he knows all of the details of the case and he is in a much better position than the industrial tribunal to determine the level of compensation and exemplary damages. This is particularly important where there has been an award by an arbitrator of re-engagement, because re-engagement is a much more complex business upon which to adjudicate.
  I believe that these questions require an answer, and I look forward to the response of my noble friend.
  Baroness Turner of Camden: For some strange reason, Amendments Nos. 23 and 24 have been included in this group. I should like to speak to Amendments Nos. 23 and 24. During Second Reading several noble Lords made reference to the undesirability of including discrimination cases in the new arbitration procedures since they were often extremely complicated and might very well result in references to the ECJ. At Second Reading I gave examples of cases that had been very complex. This afternoon the noble Lord, Lord Lester, has given the example of a sex discrimination case involving a speech therapist that has been on the go for 11 years and has included a reference to the ECJ.
  At Second Reading there appeared to be general agreement that the new fast-track procedures proposed in the Bill would be suitable for only relatively simple unfair dismissal cases. If that is so, it does not appear to me that the clauses of the Bill to which my amendment refers are necessary. I had the impression at Second Reading that the noble and learned Lord had some sympathy for that point of view. One wonders, therefore, whether there are any views on the amendments, whose object is to leave out those references to discrimination cases which, if it is not proposed to deal with discrimination through the fast-track procedures, it is not necessary to include in the Bill.
  Lord Meston: I intervene simply to join the noble Lord, Lord Gladwin of Clee, in questioning the usefulness of the words "or otherwise re-employ". It would be very unfortunate if arbitrators had a power that was not given to an ordinary tribunal exercising this

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  jurisdiction. It may be that the purpose of those words is to recognise that the statutory provisions to enable re-employment by associated or subsidiary companies are not wide enough. That may be one possible argument. I had experience of a case involving the employee of a government department that ceased to exist. The question arose whether the tribunal could make an order that she be re-employed by another government department. On a reading of the statute it appears that the existing provisions covering subsidiary and associated companies do not meet the requirements. If that is so, that may be a reason for adopting this phraseology, but in that case the amendment may be made not merely to this power but to the substantive power in the main legislation.
  I turn to the amendments spoken to by the noble Baroness, Lady Turner. I share her concern, which has not been ventilated so far except in passing by the noble Lord, Lord Wedderburn, about the risk of a case that appears to be an unfair dismissal case turning out to be an equal pay or discrimination case, as all too often happens in practice. I have been involved in cases where that has happened. Of course, the tribunal can adapt its procedures and carry on dealing with the real issues between the parties. It would be very unfortunate if arbitrators could not do that or there had to be a bifurcated procedure whereby the arbitrator was tempted to carry on with the unfair dismissal aspect, leaving the issue of discrimination to a separate hearing. If arbitrators are not to deal with discrimination it is most important that there should be a clear means of ensuring that there is no potential discrimination element in the case before the matter goes to arbitration.
  7 p.m.
  Lord Lester of Herne Hill: Because of the unhappy grouping of the amendments, we are having to jump all over the place. I support what was said by the noble Baroness, Lady Turner of Camden, especially in relation to Amendment No. 23. I hope that the Minister will be able to obtain some advice on the matter, because I take this amendment as an important one upon which to focus. Under the Bill as it stands, the jurisdiction of the ordinary courts and tribunals is to be ousted by arbitration, where the parties agree, in cases involving sex discrimination or unequal pay. That is an area where European Community law, of course, has direct effect. It overrides any national inconsistent legislation to the contrary, including an Act of Parliament.
  The two directives that deal with that are the equal pay directive and the equal treatment directive in employment. They guarantee to every employee that every member state will introduce into its national legal system the methods necessary to enable all who consider themselves wronged by a failure to apply to them the principle of equal treatment or equal pay to pursue their claims by judicial process after possible recourse to other competent authorities.
  I cannot see how an arbitration system that binds in this way, and excludes utterly the jurisdiction of the employment tribunal or other court, can possibly be described as satisfying the obligations contained in the
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  equal pay and equal treatment directives. Therefore it seems to me that, quite apart from the unfairness of the matter in relation to other forms of discrimination, to focus upon just the one type of discrimination where employees are given directly affected rights, a right to judicial process after possible recourse to other competent authorities, must be protected by Parliament, by government, and by the courts. Therefore I beg the Minister to take advice upon this matter, because it seems to me that the case for Amendment No. 23 is unanswerable.
  Lord Archer of Sandwell: I do not wish to appear to repeat ad nauseam our gripe, but the grouping has now led us into a situation where anyone reading these debates will find it almost impossible to decipher what we are talking about.
  I shall deal first with the amendment tabled by my noble friend Lord Gladwin. The purpose of the clause is to allow an industrial tribunal to enforce an order involving re-employment. As he said, it is where the employer has not honoured the order that the question of enforcement then arises. There are two possibilities: first, to take it back to the arbitrator; or, secondly, to refer it to the tribunal. It seems more sensible to allow the matter to be dealt with by the tribunal as though it were an order of the tribunal.
  ACAS has not yet of course prepared the scheme. It has prepared a memorandum but there are many details which yet require to be discussed. The scheme itself will set out all the remedies available under it. My understanding is that the Government intend the awards of re-employment by arbitrator to be similar, if not identical, with the remedies available in Part X, but they do not want to rule out the possibility of an order by an arbitrator which may consider it sensible to add something like:
  "and there shall be a bonus paid for the new work because of some change in the situation".
  I understand that my noble friend is suspicious of that. It might be used to impose upon an employee a form of employment which is less advantageous to him than that which he has lost. I do not believe that that is the intention, and I do not believe that it has to follow. It would be possible to formulate a reference to an arbitrator which took account of that. What is more likely is that an arbitrator might want to offer some kind of compensation.
  What I think everyone wants to avoid is the situation where, if that were done, if it did not fall precisely into the formula under Part X, no one would have power to enforce it. That, I think, is why the Government are anxious to include in the clause the words which my noble friend wishes to delete.
  I believe that we need to think further about this. I understand my noble friend's anxieties. However, I am certain that the Government's concern is not to permit something to be imposed on employees which they may not wish; it is for something to be included to enable an employee to feel that he has not had a raw deal. That is the purpose. It may be that were my noble friend not to pursue his amendment at this stage, we could have further discussions before Report.

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  As to the point made by the noble Lord, Lord Meston, we have to accept that it is not intended totally to duplicate in arbitration schemes the jurisdiction of the tribunal. They are, as I believe I said earlier, two different methods of resolving a dispute. They are not intended to be two alternative forms of tribunal jurisdiction. Of course it is not intended that they should administer two totally different systems in law. So I wholly take the point made by the noble Lord.
  I believe that the parties will normally ensure that a dispute which they refer to an arbitrator is a dispute about unfair dismissal and not about discrimination. Most arbitrators would want to ensure that that is what they were embarking upon before they embarked upon it, but I can see that something could arise in the course of an arbitration which had not been foreseen. I think that we are all looking for some way of dealing with that.
  I turn now to Amendment No. 23. We are in this difficulty, if the Committee will forgive me, that before I address Amendment No. 23 I should say a word about my Amendment No. 21 which is for debate at a later stage, although I do not believe that it is a highly controversial proposal. The Committee may remember that on Second Reading I said that the proposal in Clause 7 is confined, in the first instance, to claims for unfair dismissal, but the Bill would empower the Secretary of State to extend it to other occasions for dispute, such as discrimination. That could be done by means of the negative procedure. That is what is in the Bill.
  I said on Second Reading that that seemed to be open to two objections; first, the objection of principle, voiced by the Council on Tribunals many times, that a new jurisdiction should be established, wherever possible, by primary legislation and that where, for some reason, that could not easily be done, it should be established by an order requiring affirmative resolution, because it should be subject to the maximum parliamentary control.
  Secondly, the Committee may recollect that I said that I accepted that some noble Lords took the view that while the proposal might sensibly provide a further option for those claiming for unfair dismissal, it was not normally a suitable method for dealing with other forms of dispute. One solution, which I think my noble friend Lady Turner chose, was to debate the issue at this stage and to exclude ab initio part of the spectrum of the option.
  I hope that my noble friend Lord Haskel will confirm that in the present circumstances the Government have no intention of extending the scheme to any further forms of dispute. The Committee will remember that he assured us on Second Reading that if ever there were such a proposal there would be the fullest consultation. The question therefore is whether we should decide the issue now or when it arises after the consultation and after we have had some experience of how the scheme works already in relation to unfair dismissal. I am convinced that we must ensure that there can be no extension of the scheme without such a debate taking place. I hope that my noble friend agrees that the
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  sensible time for that is when we are in a position to weigh up what has happened to the scheme and to the consultation and the situation that exists at the time.
  Returning to Amendment No. 23, not only does it seem better to debate the question of whether the provision should be extended if and when it arises, but I believe that my noble friend's amendment will have an effect opposite to what she intends. Members of the Committee will remember that the consultation paper proposed that parties should be able to exclude the jurisdiction of the tribunal by referring the dispute to any form of arbitration. The Bill provides that the jurisdiction of the tribunal will be excluded only by agreement to refer to an ACAS scheme and only if that agreement comes about in the course of an action by a conciliation officer or by way of a valid compromise agreement.
  The problem is that the present legal position appears to be uncertain. I am bound to say that if I am pressed on the matter I cannot give the result of detailed research because I can quote only the advice that was given to me at a late stage in our consultations. However, it may well be that the present position is that it is uncertain whether any form of arbitration may exclude the jurisdiction of the tribunal. I understand that the question has not been decided. One important effect of Clause 8 is to preclude that possibility. If the disputes which my noble friend has in mind are removed from Clause 8 that possibility may be reopened. I am sure that that is not my noble friend's intention, nor an outcome which any Member of the Committee would seek to bring about.
  For those reasons, I hope that we may have at least time for further thought and that at this stage my noble friend will withdraw her amendment.
  Lord Lester of Herne Hill: Before the noble and learned Lord sits down, will he deal with the point that I raised? It was that in one area European Community law is paramount and we must preserve the right of access to the judicial process after arbitration, if there is to be arbitration. That must be guaranteed, or we are in clear violation of both directives. We must take that into account as a serious matter.
  Lord Archer of Sandwell: I am sorry, I overlooked the point. It is the subject of a later amendment, but I shall be happy to deal with it now. We have had substantial discussions on the issue—indeed, I am told that some officials lost a night's sleep when considering it last night. Everyone agrees that the point must be dealt with, but we may need to consult on how it should be dealt with. I can give the noble Lord an assurance that it has not been and will not be overlooked.
  Baroness Blatch: Heaven forfend that officials are losing nights' sleep over anything. Perhaps the Minister will forgive me for intervening at this point, but there has been such a great deal of disquiet on all sides of the Chamber about the ordering of the groupings that I find it baffling. I understood that in respect of any Bill groupings are agreed by those who table amendments. If

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  they disagree with the grouping they can either uncouple ahead of the agreed groupings or indulge in asking the House to rearrange them on the Floor.
  I am disturbed by the disquiet because it appears to be affecting the noble and learned Lord, Lord Archer, the noble Lords, Lord Lester and Lord Wedderburn, and the noble Baroness, Lady Turner. It sounds like a minor matter, but it would make more sense to the debate to have a grouping agreed by those who have tabled amendments.
  7.15 p.m.
  Lord Haskel: In view of the confusion over the grouping, perhaps it would help the Committee if I deal with the amendments one at a time. I agree with my noble and learned friend Lord Archer the impact that Amendment No. 14 would have where a conciliation officer has already taken action. We, too, regard the amendment as undesirable. However, we regard it as important that, where an employee is considering entering a compromise agreement, he will need to receive independent advice. That is provided for in Clause 8.
  Amendment No. 18 would seek to reverse the power of the Secretary of State to apply parts of the Arbitration Act. My noble friend explained why the Government have it in mind to apply some of the provisions of the Arbitration Act, notably in relation to enforcement and serious irregularities, subject to consultation with ACAS. This provision will allow proper safeguards to be included in the arbitration scheme.
  As regards Amendment No. 19, my noble friend has explained why it might restrict the powers of the tribunal to enforce the award of an arbitrator. I can confirm that the Government intend that the remedies or award which an arbitrator may order should be identical or similar to those in Part X of the Employment Rights Act. However, in the event that the ACAS scheme provides awards or remedies which differ, albeit slightly, from those in Part X, we wish to ensure that it can be enforced.
  Amendment No. 20 is unnecessary in the light of the Secretary of State's power to apply the Arbitration Act. I confirm that the Secretary of State has it in mind to apply the enforcement provisions of the Act, subject to consultation with ACAS. However, we will consider further what noble Lords have said about that.
  As regards Amendments Nos. 23 and 24, I can confirm that at present the Government have no plans to introduce further arbitration schemes. As I said on Second Reading, if the Government wished to consider other arbitration schemes—for example, as regards discrimination provisions—they would first consult widely with interested parties—for example, the Equal Opportunities Commission, the Commission for Racial Equality and groups of the disabled. Furthermore, the amendment tabled by my noble and learned friend Lord Archer will make the power of the Secretary of State subject to the affirmative procedure.
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  I hope that I have given the Committee the assurances that it seeks. As regards the comments of the noble Lord, Lord Lester, we will consider them and seek further advice.
  Lord Wedderburn: I suspect that the debate that we have just had was riding on the back of Amendment No. 14. Therefore, it is right that I should beg leave to withdraw that amendment. However, the debate included Amendment No. 18, which deals with the problem with the Arbitration Act. Perhaps I may make one comment on that Act; I believe that for the first time the Minister said that the Government would consult seriously with ACAS to consider importing some sections of it. I beg the Government to consult not merely with ACAS, because it does not know a great deal about the Arbitration Act 1996. Arbitration Acts have always been excluded from employment matters. I beg the Government to consult with those who are expert in commercial arbitration, for which the 1996 Act was passed, in order to ascertain whether it is a suitable vehicle to use as an answer to problems to which no other answer has yet been given. With that, I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 15:
  Page 6, line 14, at end insert—
  ("() Where—

  (a) a party to an arbitration under a scheme to which this section applies shows before, or within a period of one month of, the award being made that there arc reasonable grounds to believe that a reference should be made to the European Court of Justice, or

  (b) the arbitrator concludes that such grounds have been shown to exist,

  the case shall be referred by the arbitrator, or failing him by that party, to the Employment Appeal Tribunal which shall, if it gives leave, hear and determine whether any such reference shall be made and, if so, which questions shall be formulated for that purpose.").
  The noble Lord said: Amendment No. 15 has also been semi-discussed in the wider debates that the Committee has had. Perhaps I may recapitulate very briefly. First, it raises the problem which the noble Lord, Lord Meston, put to us where the duckling of an unfair dismissal case turns out, after a day or so, to be the swan of equal pay or sex discrimination. What is the arbitrator to do?
  Unfair dismissal certainly includes dismissal under the TUPE regulations of 1981. The Court of Appeal had cause to hold that again this year in the course of MRS Environment Services v. Marsh. But as the noble Lord, Lord Lester, pointed out more than once, European Community law requires the availability of judicial process, certainly in Directive 76/207, Article 6, on equal treatment, and there are those who argue that the demand for judicial process goes somewhat wider.
  Therefore, it cannot be that this Parliament will pass a Bill which leaves with an arbitrator a decision on matters which could be about equal pay and sex discrimination. There must be some judicial process. It was the bother with that question which led my noble friends and I to table Amendment No. 15.
  Perhaps I may just explain it. It provides that where there are reasonable grounds to believe that a reference should be made—and perhaps that should read "might be made"—to the European Court of Justice or the arbitrator concludes that such grounds have been shown to exist, he must refer the case.
  The question arises as to where he should refer the case. It has been argued this evening that the reference should be to the High Court. With great respect to those who have argued that point, I adhere to what has been put into the amendment. The High Court may or may not know anything about employment. As everyone who goes there knows, you may be lucky or unlucky. I do not believe that the judges of the High Court would deny that. But the one place where an appeal can be heard which does know something about employment law is the Employment Appeal Tribunal. There seems to us no reason, therefore, why we should not put to the Employment Appeal Tribunal a case which, if it is put at the back of the queue for industrial tribunals, will have to wait another year. That is not the spirit of the Bill. It should not be put back to the industrial tribunal but should be put straight to the EAT. The EAT should be asked whether it will give leave and we have built in an extra defence mechanism against trivial, unimportant matters. If the EAT says, "Yes, this is the sort of case where a reference is likely to be made", we can formulate the questions. I do not expect that this amendment has all its semantics correctly posed, but it is an outline of an answer to a question to which, if we do not provide an answer, we shall put through a Bill which is contrary to the European sources which, whatever we think of them, we must respect.
  We used to find that the previous government did that sort of thing, but I do not believe that our Government will wish to do anything of the kind. I hope that the Minister will tell us that he will consider this very favourably when the matter is considered before Report. I beg to move.
  Lord Lester of Herne Hill: I agree with the object of the amendment but I disagree with the means employed. The object is to try to introduce a judicial process where it is needed as a result of European Community law. That need was illustrated in a famous case, Johnston v. the Chief Constable of the RUC 10 years ago when the European Court of Justice in Luxembourg looked at Article 6 of the European Convention on Human Rights and said that there had to be proper judicial process. The other European Court in Strasbourg has made it clear that the national court must be able to look at facts as well as law: there must be a merits determination by an independent and impartial tribunal established by law. Therefore, the two European courts are on exactly the same lines. They both require a merits determination by an independent tribunal which satisfies all the requirements of judicial process. Of course, arbitration can come first but that has been made quite clear.
  The difficulty about the amendment is that it does not achieve that. Of course, the arbitrator or arbitrators cannot refer a question of law to Luxembourg. It must be a court or tribunal. That is why the noble Lord,
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  Lord Wedderburn of Charlton, has drafted an amendment which seeks to get questions sent to Luxembourg by a court—by the Employment Appeal Tribunal. However, it fails to deal with the real problem; namely, that the arbitration is no substitute for judicial process. The amendment merely seeks to ensure that questions of Community law can be sent to Luxembourg whereas it is up to the national system to guarantee a national court or tribunal that can decide questions of fact, having applied the questions of Community law.
  To understand that, one must read a lot of rather dull European human rights convention cases together with the case of Johnston to which I referred. I apologise for all of that legal gobbledegook but I believe strongly that there is a very serious problem which is not solved by the amendment.
  Lord Archer of Sandwell: I do not wish to repeat what I said earlier on this matter. I take fully the point made by my noble friend and I take fully the addendum of the noble Lord, Lord Lester. Part of our difficulty is that at present the European Court of Justice is seized of a number of cases on the extent to which arbitral awards should be the subject of judicial review or other forms of review. As I understand it, the United Kingdom has intervened in those cases on the basis that it wishes to preserve so far as possible the principle of finality which is the very inducement to enter into arbitral proceedings.
  It may be that my noble friend Lord Haskel will confirm this, but my understanding is that the Government wish to reserve their position on the extent to which references on arbitration to the European Court of Justice must be allowed until the outcome of those cases.
  I take fully the point and share the impatience of my noble friends who would like to resolve something at this stage. However, I believe that we are more likely to get ourselves into difficulties with the European Court of Justice if we jump the gun. This is precisely the sort of case management where, in the tribunal, we should persuade a legal officer or perhaps a chairman to stand the matter out. We are not in a position to do that with our procedures but I think that until at least the next stage in our debates, I ask my noble friend to withdraw the amendment.
  I should just add that it is possible under the Arbitration Act for my right honourable friend the Secretary of State to make use of Section 45 to ensure that there is a method of referring the matter to the European Court. I understand that that may not appeal to my noble friend who does not like the Arbitration Act anyway.
  Lord Wedderburnof Charlton: Oh, I like it.
  Lord Archer of Sandwell: I would not seek to be doctrinaire about it. I know that it was designed for commercial arbitrations. I can see the difficulty about applying it to employment law but it may be a possible way forward. I do not seek to say more than that at this stage but I hope that my noble friend will make it possible to have further discussions.
  7.30 p.m.
  Lord Lester of Herne Hill: Perhaps the noble and learned Lord can clarify one matter. I take it that the pending cases are not dealing with what is meant by judicial process in the equal pay and equal treatment directives where it is clear beyond argument that they are dealing with the process before an independent and impartial tribunal established by law. Therefore, as I understand it, the noble and learned Lord is not suggesting that arbitration would be a substitute for judicial process within the meaning of those directives.
  Lord Archer of Sandwell: I do not think that that is being suggested. However, I would not like to give a definitive answer without seeing the exact nature of the pleadings, which I have not as yet been able to do. Nevertheless, I take the point that the noble Lord makes. It is possible that they do not deal directly with that point, but they certainly impinge very widely on the debate that has just taken place.
  Lord Haskel: Perhaps Members of the Committee will understand my reluctance to come between such eminent lawyers as regards matters of European law. I thank my noble and learned friend Lord Archer who eloquently addressed the complex legal question in relation to the issue. I can confirm that the Government need to wait until the European Court of Justice has given its decisions on these cases before addressing the question of references to that court. If, in the light of the decisions from the European Court of Justice, it is considered appropriate to provide for references to the European Court of Justice, I can assure Members of the Committee that the Government will do so. I noted what my noble friend Lord Wedderburn and the noble Lord, Lord Lester, said and can confirm that the Government will give serious consideration as to whether the Employment Appeal Tribunal would be the appropriate court to consider such matters in the first instance.
  Lord Wedderburn of Charlton: In order to make progress I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 16
  Page 6, line 14, at end insert—
  ("(5A) A scheme under this section shall provide that, where a party claims on reasonable grounds that the arbitration award contains or is based upon a serious error of law or some other ground which might have been cause for judicial review, that party may apply within one month after the date of the award to the Employment Appeal Tribunal which, if it gives leave, shall have jurisdiction to hear and determine the application.
  (5B) The Secretary of State shall make an order providing for the jurisdiction of the Tribunal under subsection (5A) and shall in particular provide that the remedy for a complaint shall he the remedy stated in subsection (5A) and not otherwise.").
  The noble Lord said: I shall speak briefly to Amendments Nos. 16 and 17. Again, part of the thrust of the amendments has congealed in our rambling debates around various previous amendments. The central point of both amendments is as follows. Where a party, or the arbitrator, sees that there are reasonable
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  grounds for saying that what would normally be a course for judicial review has arisen—I put it in that very quick form because obviously the grounds of judicial review are various and we have touched upon them in previous debates—or, to put it a different way as regards Amendment No. 17, where there has been a substantial divergence from the provisions of Part X of the 1996 Act on unfair dismissal, what might well have gone to the High Court under the judicial review process would, under our suggestion, go to the Employment Appeal Tribunal.
  When I think back to the amendment we have just dealt with, I can quite understand the objections which have been made about the Employment Appeal Tribunal in previous discussions. However, with respect, I do not believe that they apply in this respect. No Members of the Committee have dissented from the view that the EAT is a judicial body of quite unusual character with a High Court judge and two wing persons all of whom are senior in their understanding of industrial relations employment law. That would be a suitable body to hear or determine an application made to it on such a matter, or to give such direction or remedy as it "considers appropriate", to use the words of Amendment No. 17.
  Both amendments suggest that the Secretary of State should make regulations or an order providing for the application of Part X of the 1996 Act on unfair dismissal and state that this should be the only route and remedy. In other words, our text would cut off the remedy of judicial review to the High Court because we have provided an avenue to the Employment Appeal Tribunal. Of course, I appreciate the view that has been put to me as regards both amendments; namely, that the normal appellate route from the EAT to the Court of Appeal and the House of Lords would remain open. It would not be proper to cut that off in any way or even to suggest that one could do so.
  However, in the normal case, one has to find an answer to the question: what do you do where, with the best will in the world, the arbitrator has been led astray when dealing with a sex discrimination case, an equal pay case, or whatever? I am now falling into the pit of my noble and learned friend's area of Wednesbury unreasonableness. It can happen, but what are we to do about it? As far as we know, the Bill and the draft scheme do not tell us. The amendments are a suggestion of an answer to the problem. I have not yet heard any answer forthcoming from anywhere. Such suggestions do not depend on any cases which are awaiting decisions from Luxembourg or anywhere else; they are immediate suggestions to solve an immediate problem in the Bill. If it is not solved, as I said earlier, the Bill's arbitration system may well founder on a Grunwick type of case. That would be most unfortunate. The amendments are meant to avoid such a situation. I beg to move.
  Lord Archer of Sandwell: I confess to a feeling of déjà vu. I believe that we had this part of the debate earlier in the evening. There is certainly a wide area of agreement between my noble friend and myself and indeed my noble friend Lord Haskel. We need a safety valve but I am not sure about the extent of such a safety

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  valve. For example, I do not know whether it should include a Wednesbury situation. I know that my noble friend referred to me in that context. The fact is that I confided to him that I have lived all my life with the expression "Wednesbury mad" because I was born and bred in Wednesbury. I should remind Members of the Committee that that was a case in which it was decided that the council of Wednesbury had not been mad and in fact had been totally reasonable. However, whether we want to include that kind of unreasonableness is something which I believe requires a little further thought.
  The second matter which requires a little further thought is what would be the immediate channel to proceed to from the tribunal. Whether it should be the EAT which is certainly eminently qualified to deal with mistakes of law or whether it should be the High Court which deals with mistakes in procedure is something which, again, requires perhaps a little more thought. My noble friend is absolutely right to say that we will probably have to make some decision on the matter. A possible solution would be to leave the matter to ACAS and its scheme and to the Secretary of State in the order that he makes. I can see some Members of the Committee shaking their heads at that suggestion and I suspect that, if I were not actually presenting the Bill, I might be doing the same. As I said, I should like to have further discussions on the matter. I have outlined the two areas where I believe further discussions are required. I hope that my noble friend will not press the matter tonight.
  Lord Haskel: I shall speak to Amendments Nos. 16 and 17. The Government certainly agree that a safety valve is necessary. That is why we are minded to use the serious irregularities provisions of the arbitration Act, subject to consultation with ACAS. In that way the Government will ensure that the rights of individuals are protected. As my noble and learned friend Lord Archer said, the remedies might be set out in the scheme itself. I should like to stress that they are likely to be the same as those in Part X of the Employment Rights Act 1996. However, we shall take note of the points made by my noble friend and my noble and learned friend and consider the matter further.
  Lord Wedderburn of Charlton: I am grateful to my noble friend the Minister for his comments. I believe it is the first time we have agreed that a solution must be found in this Bill, or, as he says, in the scheme. I am tempted to read Section 68—but I shall not—of the Arbitration Act which concerns irregularity. However, I shall leave that for the Committee's bedtime reading because the types of irregularity set out in Section 68 go far wider than Wednesbury unreasonableness and concern ultra vires provisions or a lack of procedural fairness. It is difficult to see how they can apply to this kind of arbitration. However, I note that the Government wish to consider the section and they have the power under Clause 7(6) to amend the Arbitration Act if they wish to adopt it as amended. That could form the basis of something useful. I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  [Amendments Nos. 17, 18, 19 and 20 not moved.]
  Lord Archer of Sandwell Lord Archer of Sandwell moved Amendment No. 21:
  Page 6, line 43, leave out ("which") and insert—
  ("(10) No order shall be made under subsection (1)161 unless a draft of the statutory instrument containing it has been laid before Parliament and approved by a resolution of each House.
  (11) A statutory instrument containing an order under this section (other than one of which a draft has been approved by resolution of each House of Parliament)").
  The noble and learned Lord said: The expedition with which we have dealt with the previous few amendments rather overtook me. I have already spoken in effect to this amendment. I do not think it is controversial and I have explained it twice in the course of our debates. I beg to move.
  On Question, amendment agreed to.
  7.45 p.m.
  Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 22:
  Page 6, line 44, at end insert—

  Arbitration scheme: constraint or pressure by employers etc.
  212B.—(1) An employee shall not be subject to constraint or pressure, directly or indirectly imposed upon him by an employer or other person, connected with his agreement to take part or to continue to take part in an arbitration to which a scheme under section 212A applies.
  (2) An employee may apply to an employment tribunal in respect of a contravention of this section, and where the contravention is proved the tribunal shall make a declaration and may award such compensation to him as is just and equitable against any such employer or other person.
  (3) Where a tribunal makes a declaration under this section, the employee may apply to the court which, where it finds that the constraint or pressure is continuing, may make such order as seems to it just and equitable."").
  The noble Lord said: I refer to a situation in which a worker's rights depend upon the agreement established between him or her and the employer. One must understand that in some firms at any rate the inequality of bargaining and negotiating power may be such that some further protection is required. The Committee may be pleased to hear my next point. I know from anecdotal evidence that an interesting set of developments is taking place on just this question in the United States. Unhappily—or perhaps happily for the Committee—the written evidence which was supposed to arrive in the post has not yet done so. I know that in the 7th Circuit Court of Appeal and, I understand, in a case that has been referred to the Supreme Court, the following issue will be discussed. An employer may tell an employee, "You agree to a grievance arbitration procedure and I shall do this or that" while implying that he will do no such thing unless the employee goes ahead with the procedure.
  Some protection is required for employees. We in this Chamber do not live in such an unreal world as many people believe. We know perfectly well that employees will be leant upon in some cases when they do not belong to a good independent trade union or when they

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  do not have technological skills that the employer cannot do without. Surely therefore the Government must agree with the words of the amendment which states,
  "An employee shall not be subject to constraint or pressure … Imposed upon him"
  to agree to take part in arbitration or to agree not to do so. I should have thought this matter is non-controversial. I beg to move.
  Lord Meston: I support this amendment because the spirit of the provision, as I understand it, concerns voluntary arbitration—the emphasis being on the word "voluntary". However, I wonder whether it goes far enough. It seems to me to be an important corollary of this amendment that it should invalidate any term of the contract of employment which appears to require an employee to go to arbitration as opposed to exercising any of his other remedies before a tribunal or a court.
  Lord Archer of Sandwell: I confess that I am persuaded by my noble friend that there could be a problem in some circumstances. I am certain that not all employers are so beyond criticism that they would not seek to apply pressure. I remind the Committee that the Bill already contains a safeguard in that the procedure does not operate at all unless either it has been instigated by a conciliation officer or the party has received advice of a kind which we shall debate in a few moments.
  If there is pressure which goes beyond that—that is to say, to persuade an employee to ignore the advice which he is given, or to ignore what he is told by a conciliation officer—I am not wholly sure what safeguards we can include in this Bill. If there is that kind of pressure, there will also be pressure to prevent an employee from taking advantage of the safeguard which my noble friend now seeks to include. I believe that there is a difficulty with this. We have to accept that there are some kinds of pressure which may be used surreptitiously and against which there can be no safeguards in this Bill. I hope that my noble friend will see the difficulty which occurs to me.
  Lord Haskel: I speak to Amendment No. 22. As my noble friend has said, this amendment appears to be reasonable in that it is aimed at offering a protection against being pressurised into agreeing to refer a case to the ACAS arbitration scheme. However, the Government do not consider that it is necessary in the light of other protections which are already, or will be provided for, in the Bill. There is the requirement to obtain independent advice from one of those specified in Clause 9, as amended, or a conciliation officer will have been involved. These are important protections and will seek to ensure that the decision to refer the dispute to arbitration is a voluntary one. If an employee considers that he or she is being pressurised to take part in arbitration, it is highly unlikely that he or she will do so. That person need not give his consent and in the absence of it the case will proceed to a tribunal hearing.
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  This requirement for consent informed by independent advice is in my view the real safeguard against undue pressure.
  Lord Wedderburn of Charlton: I am grateful to my noble friend the Minister for that reply. I restrain myself to pointing out that my amendment goes rather wider than I have perhaps given it credit for. It applies not merely to an agreement to take part in arbitration but also to an agreement to continue to take part in arbitration. An employee may have agreed to go to arbitration and a manager may then say to him, "You go on with this stuff and you will not get any more over time even if you are reinstated and come back here". We know that such things happen. This is not a game of chess, as it were, where we move pieces about. We are dealing with real people. I say to my noble and learned friend Lord Archer of Sandwell that I am of course speaking about those employers who will act in such a way. Fortunately there is a large number of employers who will not act in such a way. Perhaps the small employers might act in such a way rather than the large employers. However, an employer may say to an employee, "You have started this arbitration game and we do not like that sort of thing here". I believe that out of his mouth there has already been a constraint. Already there is something from which an employee needs protection. With the best will in the world, I do not find such protection in the Bill. If there is to be provision in the Bill, I look forward to that with gratitude.
  Lord Archer of Sandwell: Before my noble friend sits down, will he address the point I made? If that kind of constraint is being applied to the employee, will he then apply to an employment tribunal in respect of the contravention?
  Lord Wedderburn of Charlton: Yes. That is what happens all the time in employment protection law. At this point the worker says, "I have to give up here. I cannot go back to that employment". Of course, if he continues with the employment perhaps he does not need extra protection. In this provision I am giving him some extra protection in the form of compensation as a restraint upon the employer. I put it fairly high. It is true that he will lose that employment. I assume that that is so with such an unreasonable employer. But he would go away with some compensation. Under the Bill he receives nothing. I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Clause 7, as amended, agreed to.
  Clause 8 [Effect of arbitration agreements]:
  [Amendments Nos. 23 and 24 not moved.]
  Clause 8 agreed to.
  Clause 9 [Advice of non-lawyer]:
  Lord Archer of Sandwell Lord Archer of Sandwell moved Amendment No. 25:
  Page 8, line 32, leave out (""independent advice"") and insert (""advice from a relevant independent adviser"").
  The noble and learned Lord said: The law currently provides that a compromise agreement is valid only if the applicant has received independent advice from a qualified lawyer. That is already independently of this Bill. The Bill amends the provision, widening the qualifying sources of advice by providing that the applicant need only have received independent advice—that is to say, not necessarily from a qualified lawyer. Clause 10 provides that for the agreement to be valid, the person giving the advice must have been in possession of a,
  "'contract of insurance, or an indemnity'".
  The amendment of my noble friend Lady Turner further alters that provision. It would restrict the qualifying sources of advice by providing that the advice comes from someone who is independent of the employer, and specifying three categories of person qualified to give the advice. The first is a qualified lawyer; that is the current position. The second is a full-time official of an independent trade union. I believe that the position of my noble friend Lady Turner is that it should be a full-time official. I would wish to add that many part-time officials or voluntary officials of trade unions may be well qualified to give the advice. Apart from that, I go along with my noble friend. The third category of my noble friend's amendment is that it should be,
  "a person of a category designated … by the Secretary of State".
  I accept that one advantage of my noble friend's amendment as against mine is brevity. I apologise for the length of some of my amendment. If they are accepted there are a fairly substantial number of consequential amendments. In Amendment No. 36 I propose that a person shall be within the qualification if he is a qualified lawyer, or,
  "an officer, official, employee or member of an independent trade union who has been certified in writing by the trade union as competent",
  and authorised to give the advice. The onus would be upon the union to ensure that the person in question was competent to give the advice. The third category refers to a worker in an advice centre who has been certified as competent to give the advice, or a person of a description specified in an order by the Secretary of State.
  I should make it clear that a person would not be a relevant independent adviser if he was employed or acting for the other party or was connected with the other party; or if the trade union or advice centre was the other party or connected with the other party; or if the person was charging for the advice—one thing we all want to exclude is someone making a fat profit from giving advice and giving it badly—or in the case of a person designated by the Secretary of State if he did not satisfy the other conditions in the order.
  Amendment No. 36 then defines the meaning of "qualified lawyer" for the purpose of the other provisions. It defines an "independent trade union" and what is meant by "connected" for those purposes. I do not think that I would earn the undying gratitude of the Committee if I were to go into further details about the consequential amendment. We all seek to get the
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  provision right. I do not guarantee that my amendment is beyond improvement. However, if my noble friend Lady Turner is prepared for my amendment to proceed and to withdraw her amendment, then at least we could meet any further criticisms when they arise. I beg to move.
  Baroness Turner of Camden: I thank my noble and learned friend for introducing this extremely comprehensive amendment, which I fully support. It goes far beyond and is much more detailed than my amendment and is very valuable for that reason. I particularly welcome the inclusion in Amendment No. 36 of the paragraph relating to the official of a union who may or may not be a full time official but who has to be certified by the union as being an appropriate person to give the advice. I think that that is a good amendment.
  I shall not move my amendment in the light of this comprehensive amendment proposed by my noble and learned friend.
  Baroness Blotch: For the benefit of those following the debate, has the noble and learned Lord, Lord Archer of Sandwell, spoken to Amendments Nos. 25 to 29, 36, 37, 39, 42 to 47 and 49 in this grouping?
  Lord Archer of Sandwell: I certainly intended to. That is why I said that I doubted I would earn the gratitude of the Committee if I dealt with them individually. But I am grateful to the noble Baroness. I omitted to say at the outset that it would be for the convenience of the Committee perhaps to discuss them altogether.
  Lord Haskel: For the benefit of the Committee, I should like to speak to Amendments Nos. 25 to 29, 36, 37, 39, 42 to 47 and 49, which are the amendments of my noble and learned friend Lord Archer.
  The Government fully support the amendment which he has tabled. At Second Reading a number of Peers made it clear that they felt that Clause 9, unamended, would be likely to enable unscrupulous people to set up as advisers. The Government consider that the persons and the categories specified in my noble friend's amendment are suitable to provide advice on compromise agreements, especially given the safeguards which he has so elegantly built into the clause.
  On Question, amendment agreed to.
  [Amendments Nos. 26 to 29 not moved.]
  Clause 9, as amended, agreed to.
  Clause 10 [Indemnity cover]:
  Lord Archer of Sandwell Lord Archer of Sandwell moved Amendment No. 30:
  Page 8, line 44, at end insert ("profession or").
  The noble and learned Lord said: This is an amendment simply to set right what I believe was an oversight. The insurance provisions of the Bill as initially drafted would apply to solicitors who are members of the Law Society. Some solicitors are not members of the Law Society but they are still provided

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  for by the indemnity fund. It was not intended to exclude them and this amendment ensures that we do not. I beg to move.
  8 p.m.
  Lord Haskel: The Government support this amendment.
  On Question, amendment agreed to.
  Clause 10, as amended, agreed to.
  Clauses 11 and 12 agreed to.
  Clause 13 [Internal appeal procedures and unfair dismissal awards]:
  Lord Archer of Sandwell Lord Archer of Sandwell moved Amendment No. 31:
  Page 10, line 34, leave out from ("was") to ("but") in line 36 and insert (", at the time of the dismissal or within a reasonable period afterwards, given written notice stating that the employer provided the procedure and including details of it,").
  The noble and learned Lord said: The purpose of Clause 13 is to encourage parties to resolve disputes closer to the source, before they resort to tribunal proceedings. The merits of that principle are too obvious to require argument. It is a general principle of jurisprudence that those aggrieved should avail themselves of those remedies that are immediately to hand before they range further afield. However, at Second Reading and in subsequent discussions a number of my honourable friends urged upon me the need for safeguards. For example, a party ought not to be penalised for failing to avail himself of a procedure of which he does not know.
  There are already some safeguards which I believe will be effective. Noble Lords will recollect that Section 207 of the 1992 Act requires that, in any proceedings brought before a tribunal, the ACAS code of practice on disciplinary practice and procedure is admissible in evidence and is to be taken into account. That code provides, among other things, that there should be a disciplinary procedure; that it should so far as possible be one that is accepted as reasonable by all those affected; that the management shall seek to involve employees in compiling the procedure; and that trade unions should, where possible, have a role in that process. It also provides that employees should be made fully aware of the procedure and how to avail themselves of it.
  Reflecting further on what was said at Second Reading and subsequently, I tabled this amendment. It seeks to provide that, before an employee is penalised for failing to make use of internal procedures, he must have been notified in writing at the time of the dismissal or within a reasonable period afterwards that the procedures exist and as to what they entail. So it would not be sufficient that an employee should have been told at some time in the distant past. I believe that this provision will help to implement the real intention of the clause, which, after all, is not that anyone should be penalised but that people should avail themselves of a sensible internal procedure. I beg to move.
  Lord Wedderburn of Charlton: My noble and learned friend has put a case for his amendment that is
  688
  unanswerable. I wonder, however, whether between now and Report some slight difference might be made to the wording in the light of the decision, which we did not discuss before but which I know he now has, in the case of Goold v. McConnell in 1995. The reason the case is important is that the Employment Appeal Tribunal decided that it was,
  "an implied term in a contract of employment that the employers will reasonably and promptly afford a reasonable opportunity to their employees to obtain redress of any grievance they may have",
  and that they should have a written statement as to that procedure.
  Although the judgment goes wider, one reason that the obligation arose was Section 3 of the Employment Rights Act 1996, which, coming through other Acts before it, amounts to the implementation in British law of the 1991 directive. The directive required us to ensure that notification was given to employees at the time of the contract of employment—a provision that we had largely implemented previously, after 1963. Given Section 3 of the 1996 Act, the worker or employee ought to have notice of the grievance procedure at the time, within two months of his engagement, unless he is engaged by an employer with fewer than 20 employees, an exception that it is possible to make under Section 3 of the Act.
  I noted with care my noble and learned friend's remark that the requirements that the employee must be told at the time of dismissal, or within a reasonable period afterwards, were separate to and additional upon the requirement, as he said, at some distant time in the past, at the time of his engagement. I therefore put a question to be considered by him and his advisers before Report. Would it not be worth including in this text a provision to make clear that it is a requirement in addition to any requirement under Section 3 of the 1996 Act?
  Lord Archer of Sandwell: Before my noble friend sits down, the point he raises is largely a drafting one; namely, the amendment achieves what we all want it to achieve. I certainly undertake to examine the point and to consider the matter with him before Report stage.
  Lord Meston: I hesitate to interrupt, but it occurs to me that the amendment does not go quite far enough. As I understand the present position in law, an internal appeal procedure, if exercised, does not necessarily prevent time running for the purposes of commencing industrial tribunal proceedings. So although the amendment goes some way towards ensuring that an employee is provided with information about the internal appeal procedure if he does not already have it, it does not meet the mischief in some cases of the employee thinking that, although he has been dismissed, the fact that he is exercising the internal appeal procedure operated by his employer will prevent time running for the purposes of applying to the employment

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  tribunal. That has always struck me as unfortunate. The tribunals have a discretion; nevertheless, it can work against the employee to his considerable detriment.
  Lord Archer of Sandwell: I am grateful to the noble Lord for pointing that out.
  Lord Haskel: The Government wholeheartedly support my noble and learned friend's amendment. We firmly believe that, where possible, parties to disputes should resolve those disputes voluntarily between themselves rather than by recourse to a third party or a tribunal.
  As my noble and learned friend indicated, since the tribunal must take into account the circumstances of the case and the ACAS code of disciplinary practice and procedures in employment, an employee will not be penalised for failing to use a procedure which the tribunal considers to be unfair.
  On Question, amendment agreed to.
  Baroness Turner of Camden Baroness Turner of Camden moved Amendment No. 32:
  Page 11, line 12, at end insert ("but no reduction shall be made under this section where a reduction has already been made in the compensation awarded to the employee under section 122").
  The noble Baroness said: This issue can be dealt with quite simply. The Bill provides for a reduction to be made in the award where the employee has failed to use internal procedures. My amendment is very simple. As I understand it, there can be a reduction in the basic award where there has been some degree of industrial fault. The intention is that there should not be a double reduction: a reduction in the basic award for industrial fault as well as a reduction because the employee has failed to use the internal procedures specified in the Bill. It is a simple point, and I wonder whether the Minister would be good enough to respond to it. I beg to move.
  Lord Archer of Sandwell: I am grateful to my noble friend for her concise introduction of the amendment. It is a matter which my noble friend Lord Haskel and I have considered. The difficulty is that it is possible for one of the parties to have behaved unreasonably twice. There would be unreasonable behaviour which led to the dismissal and then further unreasonable behaviour not to avail themselves of the redress. I wish to reflect further before I agree to my noble friend's amendment. I do not know the view of my noble friend Lord Haskel.
  Lord Haskel: I am speaking to Amendment No. 32. As my noble and learned friend Lord Archer made clear, the intention of this clause is to encourage the use of internal appeals. But, as he said, there are cases where it might not be unreasonable for two deductions to be made: for example, if a dismissed employee unreasonably refused an offer of reinstatement. However, the tribunal will be able to take account of all the circumstances of the case.
  Baroness Turner of Camden: I thank my noble friend for that response. I was most anxious to ensure
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  that there was not a double penalty on the employee and that is what the amendment was about. I am grateful to my noble and learned friend for his acknowledgement that there could be a problem here. It is not my intention to press the amendment. It is a simple issue. I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  8.15 p.m.
  Baroness Turner of Camden Baroness Turner of Camden moved Amendment No. 33:
  Page II, leave out lines 13 and 14 and insert—
  ("(4) The amount of such a reduction shall not exceed the amount of two weeks' pay and the amount of such a supplementary award shall be such as is just and equitable, but where the complainant is not reinstated or re-engaged shall not be in any case less than the amount of ten weeks' pay.
  (5) An amount awarded as a supplementary award under this section shall not be taken into account in the calculation of the limits on the amount of compensation under section 124 of this Act."").
  The noble Baroness said: It is well understood that the purpose of this part of the Bill is to ensure that there are internal procedures and that they are properly utilised. At Second Reading I expressed some concern that such procedures might not be known to the employee or could have been imposed unilaterally without negotiation. The employee might therefore feel suspicious of them. To a considerable extent, the point is met by Amendment No. 31 to which the noble and learned Lord spoke.
  The Bill also provides for a supplementary award to be made in certain circumstances where the employee has been prevented by the employer from utilising internal procedures. As I read the wording, the supplementary award which may be made if the employee has been prevented by the employer from utilising an internal procedure is two weeks' pay or, rather, not more than two weeks' pay. I believe that that is insufficient.
  My amendment provides for a supplementary award of not more than 10 weeks' pay. If the intention is to encourage the use of internal procedures, it could be done in one way by making it more of a penalty on the employer if he prevents the employee from utilising the procedures. Therefore, if one gives up to 10 weeks' pay as a supplementary award at the discretion of the tribunal, it seems to me that it is surely not too much of a penalty to impose on an employer who has prevented the employee from utilising an internal procedure. I beg to move.
  Lord Archer of Sandwell: I understand the purpose of my noble friend's amendment. However, I am bound to say that the intention throughout the whole of the Bill is that it should enjoy the confidence of both employers and employees. I think that she would agree that probably if her amendment were incorporated it would appear to be less than symmetrical as between the two. This may be a case where appearances are rather important. I am grateful to my noble friend for pointing

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  out that the difficulty in her mind is addressed by Amendment No. 31. I hope that she will not wish to press the amendment.
  Lord Haskel: I am speaking to Amendment No. 33. I agree with my noble and learned friend Lord Archer that in our view it would produce an unfortunate imbalance in the working of the Bill and would move away from what we are seeking to achieve.
  Baroness Turner of Camden: I thank the Minister for that response and also for the comment made by my noble and learned friend. It is not my intention to press the amendment, I wanted to give voice to my concern that where an employer has been particularly obstreperous and has prevented the use of a procedure, there should be some penalty on him. Up to 10 weeks' pay seemed to me to be appropriate. But in view of what has been said about the desire for a degree of symmetry, if I may put it like that, in the way in which both sides are treated, I shall not press the amendment. I beg leave to withdraw it.
  Amendment, by leave, withdrawn.
  Clause 13, as amended, agreed to.
  Clauses 14 and 15 agreed to.
  On Question, Whether Clause 16 shall stand part of the Bill?
  Lord Blease: Clause 16 refers to Northern Ireland and I wish to make a brief point at this Committee stage for the record. As I understand it, if the Bill has parliamentary approval the clause provides that the principles of the Bill can be enacted in Northern Ireland. However, that will require an appropriate Order in Council procedure.
  Perhaps I can say in support of the clause that from views expressed in Northern Ireland on employment rights, the Bill has warm approval. It has been welcomed by many experienced people, those directly involved with legal employment matters and those in general industrial relations practice and in industry. For many years there has been a close practical working relationship and exchange of relevant information between ACAS and the Northern Ireland Labour Relations Agency and with the Northern Ireland Department of Economic Development.
  I wish to reinforce the point that the Bill has support in Northern Ireland. Mr. Gerry Loughran, speaking a few days ago at a conference on industrial relations, said:
  "The growing Northern Ireland economy has benefited enormously from the good industrial relations which it enjoys…The Government has a full and challenging economic and social agenda which will require the co-operation of employers, employees, businesses and trade unions working in partnership towards fair protection for people at work, hope for the long-term unemployed while at the same time maintaining and improving business competitiveness".
  I understand that the support for the Bill in Northern Ireland reinforces the objectives required. I support Clause 16.
  Lord Archer of Sandwell: Perhaps I may express my gratitude to my noble friend for what he has just
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  said. For many years I was personally closely associated with industrial relations in Northern Ireland and some of those to whom he referred were close friends of mine. I am grateful for their approval and for what he said.
  Clause 16 agreed to.
  Clause 17 [Commencement]
  Lord Archer of Sandwell Lord Archer of Sandwell moved Amendment No. 34:
  Page 12, line 12, after ("18") insert ("and paragraph I6A of Schedule 1").
  The noble and learned Lord said: It may be for the convenience of the Committee if, with Amendment No. 34, we discuss Amendments Nos. 35, 41 and 48. The point is a brief one.
  Part of the jurisdiction of the industrial tribunal is to hear breach of contract cases. That was a jurisdiction conferred by Section 3 of the Industrial Tribunals Act 1996. Unhappily, it did not make provision for appeals to the Employment Appeals Tribunal. The amendment simply intends to clarify the position by making it plain that the industrial appeals tribunal has jurisdiction to hear appeals in these cases. I beg to move.
  Lord Haskel: Let me say briefly that the Government support the amendments of my noble friend because they are necessary to clarify an oversight in the existing legislation.
  On Question, amendment agreed to.
  Lord Archer of Sandwell Lord Archer of Sandwell moved Amendment No. 35:
  Page 12, line 16, at end insert—
  ("() The amendment made by paragraph 16A of Schedule 1 shall be deemed always to have had effect.").
  On Question, amendment agreed to.
  Clause 17, as amended, as agreed to.
  Clause 18 agreed to.
  Schedule 1 [Minor and consequential amendments]:
  Lord Archer of Sandwell Lord Archer of Sandwell moved Amendment No. 36:
  Page 13. leave out lines 13 to 21 and insert—
  ("2. For section 77(4B) and (4C) of the Sex Discrimination Act 1975 substitute—
  "(4B) A person is a relevant independent adviser for the purposes of subsection (4A)(c)—

  (a) if he is a qualified lawyer,

  (b) if he is an officer, official, employee or member of an independent trade union who has been certified in writing by the trade union as competent to give advice and as authorised to do so on behalf of the trade union.

  (c) if he works at an advice centre (whether as an employee or a volunteer) and has been certified in writing by the centre as competent to give advice and as authorised to do so on behalf of the centre, or

  (d) if he is a person of a description specified in an order made by the Secretary of State.

  (4C) But a person is not a relevant independent adviser for the purposes of subsection (4A)(c) in relation to the complainant —

  (a) if he is, is employed by or is acting in the matter for the other party or for a person who is connected with the other party,

  693

  (b) in the case of a person within subsection (4B)(b) or (c), if the trade union or advice centre is the other party or a person who is connected with the other party,

  (c) in the case of a person within subsection (4B)(c), if the complainant makes a payment for the advice received from him, or

  (d) in the case of a person of a description specified in an order under subsection (4B)(d), if any condition specified in the order in relation to the giving of advice by persons of that description is not satisfied.

  (4D) In subsection (4B)(a) "qualified lawyer" means—

  (a) as respects England and Wales, a barrister (whether in practice as such or employed to give legal advice), or a solicitor who holds a practising certificate, and

  (b) as respects Scotland, an advocate (whether in practice as such or employed to give legal advice), or a solicitor who holds a practising certificate.

  (4E) In subsection (4B)(b) "independent trade union" has the same meaning as in the Trade Union and Labour Relations (Consolidation) Act 1992.
  (4F) For the purposes of subsection (4C) any two persons are to be treated as connected—

  (a) if one is a company of which the other (directly or indirectly) has control, or

  (b) if both are companies of which a third person (directly or indirectly) has control."

  The Race Relations Act 1976 (c.74)
  3. For section 72(4B) and (4C) of the Race Relations Act 1976 substitute—
  "(4B) A person is a relevant independent adviser for the purposes of subsection (4A)(c)—

  (a) if he is a qualified lawyer,

  (b) if he is an officer, official, employee or member of an independent trade union who has been certified in writing by the trade union as competent to give advice and as authorised to do so on behalf of the trade union,

  (c) if he works at an advice centre (whether as an employee or a volunteer) and has been certified in writing by the centre as competent to give advice and as authorised to do so on behalf of the centre, or

  (d) if he is a person of a description specified in an order made by the Secretary of State.

  (4C) But a person is not a relevant independent adviser for the purposes of subsection (4A)(c) in relation to the complainant—

  (a) if he is, is employed by or is acting in the matter for the other party or for a person who is connected with the other party,

  (b) in the case of a person within subsection (4B)(b) or (c), if the trade union or advice centre is the other party or a person who is connected with the other party,

  (c) in the case of a person within subsection (4B)(c), if the complainant makes a payment for the advice received from him, or

  (d) in the case of a person of a description specified in an order under subsection (4B)(d), if any condition specified in the order in relation to the giving of advice by persons of that description is not satisfied.

  (4D) In subsection (4B)(a) "qualified lawyer" means—

  (a) as respects England and Wales, a barrister (whether in practice as such or employed to give legal advice), or a solicitor who holds a practising certificate, and

  (b) as respects Scotland, an advocate (whether in practice as such or employed to give legal advice), or a solicitor who holds a practising certificate.

  (4E) In subsection (4B)(b) "independent trade union" has the same meaning as in the Trade Union and Labour Relations (Consolidation) Act 1992.
  (4F) For the purposes of subsection (4C) any two persons are to be treated as connected—

  (a) if one is a company of which the other (directly or indirectly) has control, or

  (b) if both are companies of which a third person (directly or indirectly) has control."").

  The noble and learned Lord said: This amendment has already been discussed. I beg to move.
  On Question, amendment agreed to.
  Lord Archer of Sandwell Lord Archer of Sandwell moved Amendment No. 37:
  Page 14, leave out lines 16 to 19 and insert—
  ("(3) For subsections (4) and (5) substitute—
  "(4) A person is a relevant independent adviser for the purposes of subsection (2B)(c)—

  (a) if he is a qualified lawyer,

  (b) if he is an officer, official, employee or member of an independent trade union who has been certified in writing by the trade union as competent to give advice and as authorised to do so on behalf of the trade union,

  (c) if he works at an advice centre (whether as an employee or a volunteer) and has been certified in writing by the centre as competent to give advice and as authorised to do so on behalf of the centre, or

  (d) if he is a person of a description specified in an order made by the Secretary of State.

  (5) But a person is not a relevant independent adviser for the purposes of subsection (2B)(c) in relation to the complainant—

  (a) if he is, is employed by or is acting in the matter for the other party or for a person who is connected with the other party,

  (b) in the case of a person within subsection (4)(b) or (c), if the trade union or advice centre is the other party or a person who is connected with the other party,

  (c) in the case of a person within subsection (4)(c), if the complainant makes a payment for the advice received from him, or

  (d) in the case of a person of a description specified in an order under subsection (4)(d), if any condition specified in the order in relation to the giving of advice by persons of that description is not satisfied.

  (6) In subsection (4)(a) "qualified lawyer" means—

  (a) as respects England and Wales, a barrister (whether in practice as such or employed to give legal advice), or a solicitor who holds a practising certificate, and

  (b) as respects Scotland, an advocate (whether in practice as such or employed to give legal advice), or a solicitor who holds a practising certificate.

  (7) An order under subsection (4)(d) shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.
  (8) For the purposes of subsection (5) any two persons are to be treated as connected—

  (a) if one is a company of which the other (directly or indirectly) has control, or

  (b) if both are companies of which a third person (directly or indirectly) has control.'"').

  On Question, amendment agreed to.
  Lord Archer of Sandwell Lord Archer of Sandwell moved Amendment No. 38:
  Page 14, line 21, after ("after") insert ("Wales").
  The noble and learned Lord said: This amendment is simply intended to rectify what I think initially was a typing error in the text. I beg to move.
  On Question, amendment agreed to.
  Lord Archer of Sandwell Lord Archer of Sandwell moved Amendment No. 39:
  Page 14, leave out lines 24 to 27 and insert—
  ("11. For section 9(4) and (5) of the Disability Discrimination Act 1995 substitute—
  "(4) A person is a relevant independent adviser for the purposes of subsection (3)(a)—

  (a) if he is a qualified lawyer,

  (b) if he is an officer, official, employee or member of an independent trade union who has been certified in writing by the trade union as competent to give advice and as authorised to do so on behalf of the trade union,

  (c) if he works at an advice centre (whether as an employee or a volunteer) and has been certified in writing by the centre as competent to give advice and as authorised to do so on behalf of the centre, or

  (d) if he is a person of a description specified in an order made by the Secretary of State.

  (5) But a person is not a relevant independent adviser for the purposes of subsection (3)(a) in relation to the complainant—

  (a) if he is, is employed by or is acting in the matter for the other party or for a person who is connected with the other party,

  (b) in the case of a person within subsection (4)(b) or (c), if the trade union or advice centre is the other party or a person who is connected with the other party,

  (c) in the case of a person within subsection (4)(c), if the complainant makes a payment for the advice received from him, or

  (d) in the case of a person of a description specified in an order under subsection (4)(d), if any condition specified in the order in relation to the giving of advice by persons of that description is not satisfied.

  (6) In subsection (4)(a) "qualified lawyer" means—

  (a) as respects England and Wales, a barrister (whether in practice as such or employed to give legal advice), or a solicitor who holds a practising certificate, and

  (b) as respects Scotland, an advocate (whether in practice as such or employed to give legal advice), or a solicitor who holds a practising certificate.

  (7) In subsection (4)(b) "independent trade union" has the same meaning as in the Trade Union and Labour Relations (Consolidation) Act 1992.
  (8) For the purposes of subsection (5) any two persons are to be treated as connected—

  (a) if one is a company of which the other (directly or indirectly) has control, or

  (b) if both are companies of which a third person (directly or indirectly) has control.").

  The noble and learned Lord said: This amendment has already been discussed. I beg to move.
  On Question, amendment agreed to.
  Lord Archer of Sandwell Lord Archer of Sandwell moved Amendment No. 40:
  Page 15, line 7, leave out ("to give written answers imposed by virtue of subsection (3D)") and insert ("imposed by virtue of employment tribunal procedure regulations to give written answers for the purpose of facilitating the determination of proceedings as mentioned in subsection (3A), (3B) or (3C)").
  The noble and learned Lord said: This amendment has been debated. I beg to move.
  On Question, amendment agreed to.
  Lord Archer of Sandwell Lord Archer of Sandwell moved Amendments Nos. 41 and 42:
  Page 15, line 16, at end insert—
  ("16A. In section 21(1) of that Act (which specifies the decisions from which an appeal lies to the Employment Appeal Tribunal), at the end insert "or
  (g) this Act.").
  Page 16, leave out lines 8 to 11 and insert—
  ("(3) For subsection (4) substitute—
  "(4) A person is a relevant independent adviser for the purposes of subsection (3)(c)—

  (a) if he is a qualified lawyer,

  (b) if he is an officer, official, employee or member of an independent trade union who has been certified in writing by the trade union as competent to give advice and as authorised to do so on behalf of the trade union,

  (c) if he works at an advice centre (whether as an employee or a volunteer) and has been certified in writing by the centre as competent to give advice and as authorised to do so on behalf of the centre, or

  (d) if he is a person of a description specified in an order made by the Secretary of State.

  (5) But a person is not a relevant independent adviser for the purposes of subsection (3)(c) in relation to the employee or worker—

  (a) if he is, is employed by or is acting in the matter for the employer or an associated employer,

  (b) in the case of a person within subsection (4)(b) or (c), if the trade union or advice centre is the employer or an associated employer,

  (c) in the case of a person within subsection (4)(c), if the employee or worker makes a payment for the advice received from him, or

  (d) in the case of a person of a description specified in an order under subsection (4)(d), if any condition specified in the order in relation to the giving of advice by persons of that description is not satisfied.

  (6) In subsection (4)(a) "qualified lawyer" means—

  (a) as respects England and Wales, a barrister (whether in practice as such or employed to give legal advice), or a solicitor who holds a practising certificate, and

  (b) as respects Scotland, an advocate (whether in practice as such or employed to give legal advice), or a solicitor who holds a practising certificate.").

  On Question, amendments agreed to.
  [Amendment No. 43 not moved.]
  Schedule 1, as amended, agreed to.
  Schedule 2 [Repeals]:
  Lord Archer of Sandwell Lord Archer of Sandwell moved Amendments Nos. 44 to 49:
  Page 16, leave out lines 28 to 37.
  Page 16, column 3, leave out lines 39 to 43.
  Page 16, line 43, at end insert—

  ("1993 c. 19.

  The Trade Union Reform and Employment Rights Act 1993.

  In Schedule 6, paragraph 4(b) and the word "and" preceding it.")

  Page 16, line 44, leave out from beginning to end of line 4 on page 17.
  Page 17. line 13, column 3. at end insert—

  ("In section 21(l)(e), the word "or".")

  Page 17, line 25, column 3, leave out from ("tribunal'"') to end of line 30.
  The noble and learned Lord said: It may be for the convenience of the House if all these amendments are moved together. I beg to move.
  On Question, amendments agreed to.
  Schedule 2, as amended, agreed to.
  House resumed: Bill reported with amendments.

  Tobacco Advertising and Motorsport
  8.25 p.m.
  Lord Astor of Hever Lord Astor of Hever rose to ask Her Majesty's Government what effects a ban on tobacco advertising and sponsorship would have on the British motorsport industry.
  The noble Lord said: My Lords, first, let me declare an interest as president, unpaid, of the Motorsport Industry Association. My only interest tonight is British motorsport. As a lifelong non-smoker, I must make it clear that I do not stand here to defend the tobacco industry. I understand the concern of the Government to encourage a significant reduction in the number of people smoking, especially—I speak as the father of six children—among the young.
  The objective of the MIA is to promote and protect our motorsport industry, which is a real British success story. The world's leading motorsport firms choose to be located in this country. They provide 50,000 high-skill, high-tech, high-pay jobs and another 150,000 part-time jobs across 633 businesses, with a combined turnover in excess of £1.5 billion. Flavio Briatore of Benetton said: "If you like prosciutto, you come to Italy. If you like champagne, you come to France. For Formula 1, you come to England. I don't like the weather, but the best engineering is here."
  The motorsport industry in the United Kingdom creates exports worth up to £900 million every year. More than 14 per cent. of turnover is in R&D. That enables the United Kingdom to work at the leading edge of technology and helps advance our engineering capabilities. Developments within electronics, metallurgy, petrochemicals and so on are all maximised in an attempt to win races.
  The motorsport industry needs big money and draws 40 per cent. of its sponsorship from the tobacco industry compared with 3 per cent. for other sports. All the teams standing in the first six positions in the Formula 1 Constructors' Championship have tobacco companies as their biggest sponsor. The World Rally Championship UK-based team either are dependent on tobacco
  698
  sponsorship or have drivers whose income is supported through tobacco sponsorship. This highly successful industry—the envy of the world—flourishes in partnership with the tobacco industry. Its premium will always offer amounts over and above any other potential sponsor.
  There are few industrial sectors that are dominated by any one country to the extent that Britain does the motorsport world. However, that dominance is seriously at risk. There has been press speculation that the Government are close to accepting an amended Luxembourg draft directive which includes a ban on sponsorship, with a five-year grace period. The directive having been approved by the European Parliament, the Government would implement a ban through secondary legislation without the need for a full Bill to go through Parliament next year.
  Is the future of such a successful British industry to be decided in that way? Will Parliament be able to scrutinise the Government's plans in detail? I am very sceptical of the draft directive, not least because there has been no clear evidence to suggest that tobacco sponsorship of sport, and motorsport in particular, increases consumption of cigarettes. In the absence of clear evidence, it is reasonable to question the effects of an ill considered ban, which could do enormous damage to the British motorsport industry. The tobacco industry will remain involved in motorsport, the difference will be that its funds will maintain jobs and profits not in this country but abroad. The proposals will encourage the tobacco industry to sponsor the widest possible range of international sporting activities outside the European Union where there are less demands. New countries want to be associated with the most glamorous sport in the world.
  There is already enormous pressure to increase the number of events in the Asia/Pacific region, with 70 per cent. of the worldwide television audience. Events will soon be held in China, South Korea, Malaysia, and possibly Indonesia and India. In those regions most governments exempt races from any restriction on tobacco advertising and they are growth markets for the tobacco industry.
  Before the Government agree to this directive they must ask themselves the following questions, which I hope the Minister will address in his reply. I have given him notice, but I understand that he may need to write to me on some of the points. First, can the Minister be more specific about the "time and help" promised to sport by the Health Secretary to,
  "wean themselves off tobacco cash"?
  Do the Government have any plans to help find other sponsors from British industry? Jackie Stewart has had to go to the Far East for most of his sponsorship. By contrast, most of the sponsorship for the Prost team comes from his own country, France.
  Secondly, are the Government concerned at the probable disappearance of the British Grand Prix, the Superbike Grand Prix and the RAC Rally to non-ban countries if the legislation goes through? Contracts between the governing body, the FIA, circuit promoters and organisers world wide already contain get-out

  699
  clauses in the event that the appearance—in other words, the liveries—of the cars, have to be fundamentally changed. I foresee British public opinion being deeply unhappy if we lose those prestigious events. Last year's British Grand Prix brought 170,000 to Silverstone, pumping £30 million into the local economy in one week, benefiting 5,420 businesses and 44,700 local jobs.
  Thirdly, are the Government concerned at the enormous investment potential of tobacco money moving away from Britain, followed by an exodus of manufacturers? It is certain that, in the long term, the industry would move from Britain to where the racing is—that is simple economics. Already Asian companies, anticipating the problem, are approaching UK companies with a view to resettling in Asia.
  Fourthly, are the Government proposing to attempt to ban the broadcasting into the UK of international sporting events held outside the European Union if tobacco sponsorship is involved? Formula 1, the most-watched sport in the world, is regularly broadcast into people's homes from around the world, making an effective ban almost impossible. This legislation will not alter the viewing public in Europe being able to watch those races and the total amount of tobacco sponsorship on our television screens will remain the same.
  I cannot believe that the Government would put our dominance in so important an industry at risk, particularly as they have been so supportive publicly of their determination that sporting activity will not suffer. Furthermore, Margaret Beckett indicated that the DTI is keen to support and promote the smaller innovative firms that make up the motor sport industry. The DTI is working very constructively with the MIA to produce an industry-wide database.
  Ill-conceived legislation will certainly have serious employment and fiscal repercussions for the motorsport industry. I believe the Luxembourg proposal is misguided and should be rejected. I am much looking forward to the maiden speech of the noble Lord, Lord Davies, and thank other noble Lords speaking tonight for staying rather later than they expected.
  8.35 p.m.
  Lord Davies of Oldham: My Lords, I am grateful for this opportunity to make this maiden speech. I recall that on the occasion on which I made my maiden speech in the other place in 1974 I sought guidance from the Whips' Office. I was told one thing: "Keep it short". On a subsequent occasion, after I lost my seat and was returned to another constituency, I went again to the Whips and they produced exactly the same phrase. Believe it or not, when I went to my noble friends in this House to ask them what I should do with my maiden speech, they said likewise, "Keep it short". I intend to follow that excellent advice.
  This debate raises some general issues of importance to the nation. I very much agree with the noble Lord, Lord Astor, that the industry is not to be underestimated in terms of its importance. In the latter part of my speech I intend to indicate how important I believe it to be. But
  700
  I also regard the issues which confront the Government in relation to the health of the nation as being of significant importance too. There is no doubt that the relationship between tobacco and ill health in terms of cancer and various respiratory diseases is now well attested, sufficient for most thinking people to recognise that if Sir Walter Raleigh had been bringing the dreaded weed into this country in this year of grace at this time, it would be a proscribed drug on the same level as others which we, in our wisdom, sought to ban. However, we are faced with circumstances in which many people enjoy the consumption of tobacco.
  We must recognise that there has been a substantial reduction in the amount of tobacco consumed in this country, but progress has not been as great as many would hope, particularly among young people. It is disturbing that one-third of young people at the age of 16 have already been smoking, there being an even greater incidence among girls than boys. It may be thought that the last government were somewhat over indulgent towards the tobacco industry against a background where it has not gone unnoticed that prominent members of the last administration have since had interesting relationships with tobacco companies in terms of lucrative contracts and consultancies.
  I know that this Government will approach this issue with greater assertiveness against a background where it will be necessary to increase restriction, as depicted in our manifesto. Other countries have shown the way. It is clear that countries that have a ban on the advertising of tobacco have greatly reduced the consumption of tobacco more rapidly and more intensively than we have. That is why it is important that we should learn from that.
  As a sportsman I have a high regard for the sporting competence of not only the Grand Prix but the whole range of motor sport drivers. But as a sportsman I must attest to the fact that tobacco and sport are ill bedfellows and there are many reasons why we should seek to separate off the relationships between them. However, I agree that the noble Lord made an important case in regard to an industry that we should regard with considerable concern. That is why, when my noble friend the Minister replies, I hope that he will indicate that proposals being advanced will be carried out with great care and consultation with the industry. It is certainly the case that we would not wish to introduce changes that damage such a valuable industry.
  As the noble Lord indicated, it is an industry of which our nation ought justifiably to be proud, not only because from time to time it produces such glamorous figures as Damon Hill winning the world championship—one recognises the way in which the whole nation responded to that achievement last year. The country also needs to appreciate the achievements of British engineers and entrepreneurs in dominating this industry and creating such a success story. It is in somewhat sharp contrast, for example, with British volume car production which we all know has had a sad history over the past three decades.
  It is clear that the motorsport industry benefits from engineering which is relatively small scale. It is carried on in small-scale units which have high skill levels and

  701
  there is a crucially high investment in R&D, as the noble Lord, Lord Astor, mentioned. At this level it is only surpassed by the pharmaceutical industry, another highly successful industry which illustrates the importance of investment in research and development in our industries. It is certainly the case that this industry is probably the closest British parallel to Silicon Valley and the development of the computer industry in the United States.
  Therefore I say that we need to look upon the motorsport industry as one which develops and cherishes high-level engineering. It is perhaps about time that we in this country recognise the importance of engineering. It seems to me that so often we look upon the achievements in art and literature, television presentations and documentaries as worthy of prizes and yet in the world of engineering we continually have no recognition of the real achievements of British engineers. Perhaps it is about time we did, as part of a general drive within our nation, to give much greater emphasis to the engineering and practical skills of our nation and introduce some awards which recognise that aspect.
  Of course the industry also developed another dimension which is close to my heart. I refer to the extent to which it benefited from university links and from creating relationships with higher education institutions in the development of high level technical achievements. That was based also on a skill level which in the 1950s and 1960s gave us our lead in the industry and it helps to explain why we are in the advanced position that we are today. The country had developed engineering and technical skills which we appear to be losing at the present time. There is now less emphasis in higher education and further education in terms of practical skills. I hope therefore we also recognise that this industry could not have got where it did without the development of the education system in those terms. We should recognise too why it might be necessary for us to look at a more balanced curriculum for our able school children in order that engineering resumes its rightful place.
  I recognise that the industry will be faced by difficult adjustments, but other sports have also faced difficult adjustments. At one time the world of golf was very dependent on tobacco advertising for its major events but it has made a successful transition. That is also true with regard to a number of other sports where for a period of time tobacco companies were key sponsors. If sufficient time is given and if we have a sensitive approach to this issue we shall see both the continued predominance of the industry and at the same time the eminently desirable goal of separating sport from tobacco promotion.
  I conclude by saying to my noble friend the Minister that of course I wish the Government well in their determination to make greater strides in improving the health of the nation by restrictions on tobacco advertising and on forms of sponsorship which give support to that. However, we are discussing a unique industry, an industry of great success and achievement, and it is right that the Minister should recognise the
  702
  concerns on both sides of the House that the matter needs careful handling and that there should be consultation before the measures are introduced.
  8.44 p.m.
  The Earl of Liverpool: My Lords, I am delighted to follow the noble Lord, Lord Davies of Oldham, because it gives me the opportunity to congratulate him on an excellent maiden speech from which, I am happy to say, I drew a few crumbs of comfort. He has demonstrated a great enthusiasm to get off the mark in your Lordships' House, having been introduced only last Tuesday; but then I see he lists the word "sport" among his recreations. This no doubt accounts for his impressive speed off the starting blocks.
  I see that the noble Lord was an assistant Government Whip in another place during the last Labour administration—I should perhaps say "Old Labour administration". I congratulate him on wearing so well. He has acquitted himself with distinction on the New Labour Government Benches today. I am sure other noble Lords will agree with me when I say how much we hope we shall have the pleasure of hearing from him on many future occasions.
  I should like to thank my noble friend Lord Astor for enabling us to debate the question of tobacco sponsorship and advertising and the effect a ban would have on the motorsport industry. It is timely because the continued tobacco company sponsorship of sport in general and motor racing in particular is under threat from both the EU and our own Government. My principal concern is that we must resist the ever-onward rush of the nanny state or the "Don't worry, nanny knows best" philosophy.
  The fact is that tobacco is a perfectly legal substance and although it may not be good for your health to smoke, I shall always maintain that it is our inalienable right, living as we do in a free, democratic society, to make our own choices about our lives provided we do so within the law.
  The reason I feel moved to say this is that there seem to be quite strenuous efforts at the moment to cast not only smokers but also the tobacco companies as anti-social and even worse. For example, it was reported in the newspapers that at an anti-smoking summit, organised by Her Majesty's Government and attended by the Minister for Public Health, one of the speakers, Dr. Sandy Macara, chairman of the British Medical Association, was reported as saying that all those opposed to the tobacco industry should "join forces against the corporate criminals". Whatever your views, I hope your Lordships will agree that those are strong words to use against a perfectly legal industry and that this kind of comment does nothing to raise the level of debate. I want to play a part in raising the level of debate and I realise there are strongly held views on both sides.
  As I understand it, the main purpose of a ban is to reduce tobacco consumption. That being the case, I believe it is necessary to look at countries which have already enacted similar legislation. In Norway, which banned tobacco advertising in 1975, the level of smoking increased by 3 per cent. between 1975 and

  703
  1992. In Iceland, which banned advertising in 1987, the level of smoking increased by 21.5 per cent. between 1987 and 1992. In Finland, which banned advertising in 1978, the level of smoking increased by 4.5 per cent. between 1978 and 1992. Even in Australia, which banned advertising and sponsorship in 1992, the Victoria Cancer Society gathered figures which indicate that the percentage of 12 to 15 year-old smokers increased by nearly 5 per cent. in boys and 3.5 per cent. in girls between 1990 and 1993. Conversely, tobacco consumption is falling here in Britain where sponsorship and some advertising are still permitted. Does this add up to conclusive evidence that a ban should be imposed on us and possibly all European countries? I submit that it does not.
  The Formula 1 motorsport circus is now a truly global business with world-wide television audiences, as my noble friend Lord Astor said, in the region of 900 million. If tobacco sponsorship is stopped there is a very real danger that the FIA will be forced to take a difficult business decision and concentrate the races in non-European countries. And we should not be lulled into thinking that this is impractical and could never happen. My information is that there are already a number of countries knocking on the door to hold a Formula 1 Grand Prix. My noble friend Lord Astor mentioned that point. It is one of the most prestigious sporting events in the annual calendar with the promise of thousands of jobs and a massive inflow of funds. So no wonder it is so keenly sought by Asian, Middle Eastern and other countries.
  In any case, let us assume that the Grand Prix races are moved largely outside Europe and that tobacco sponsorship is maintained. How will it be possible to blank out that tobacco sponsorship when the Grand Prix takes place outside an EU country and is viewed on television by the worldwide audience of almost 1 billion, with many millions residing in this country? I hope that the Minister will touch on that point in his reply.
  I am sorry that my noble friend Lord Hesketh is not in his place this evening. In a debate on the motor racing industry on 24th January last year he spoke with great authority on our remarkable success in that industry. With your Lordships' indulgence and with, I hope, my noble friend's approval, I should like to quote briefly from what he said in that debate:
  "Out of a tiny beginning, where we are talking not even about hundreds of employees in 1946–47 but tens, came an industry which today has more than £1 billion of turnover, more than £700 million of exports, more than 40,000 employees and is a world leader. There is no question about that".—[Official Report, 24/1/96; col.1088]
  I believe that those figures have now increased, as was mentioned by my noble friend Lord Astor. It is no mean achievement for any industry and this is an industry of which we can be justly proud.
  But what would be the effect on the industry and the teams which are based here if a ban were imposed? Bernie Ecclestone said in the Mail on Sunday on 29th June 1997 that,
  "if there is a total ban on advertising, the British Grand Prix would he under threat … teams might then start to move away from Britain and we would lose our position as industry leaders".
  704
  Eddie Jordan of the Jordan race team said that,
  "it would be catastrophic for England and Europe if there was a total ban on tobacco advertising. The motor racing industry is a jewel in Britain's crown".
  Perhaps even worse, we are told that we need not worry because Virgin would introduce and sponsor Indy car racing in Britain as a substitute for the Grand Prix. That really is no substitute for F1 Grand Prix as it requires a steeply banked oval track with drivers locked in a permanently left-hand down configuration with few of the driver skills required on a conventional race track. However, I have the deepest admiration for the business and political acumen of Mr. Richard Branson—and he surely knows something I do not!
  In any event, I agree with those who believe that our present motor racing industry is a jewel in Britain's crown. We are the acknowledged world leaders in design, construction and engine technology. The noble Lord, Lord Davies of Oldham, touched on the engineering aspect in his maiden speech. In addition, we have an impressive list of world-class drivers.
  Whatever decisions are taken by Her Majesty's Government and, perhaps more importantly, by the European Union, it is essential that our enviable reputation in this sport is not undermined in any way. Until now we have formed a blocking minority in the European Union to the EU draft directive on advertising and sponsorship, the other countries being the Netherlands, Germany, Denmark and Greece. In the event that the UK and one other country removed their objections—I believe that it is possible that the Netherlands may do so—the Commission's proposals would be passed on 4th December this year. I find this a matter of grave concern and I hope that we may resist going down that route.
  With the indulgence of the House, I should like to conclude with one more brief quote. This is from Mr. Denys Rohan, the chief executive of the Silverstone circuit which hosts the British Grand Prix. He said:
  "We threw away the best motorcycle industry in the world and we did the same with our motor industry. We cannot just look at our feet and let it happen again; it would be sad if we lost the Grand Prix but the future of the industry is my main concern".
  I entirely echo those sentiments and I look forward to receiving an assurance from the Minister that the Government will keep at the forefront of their mind the need to ensure that nothing should be done to undermine our pre-eminent position in the world of motorsport.
  8.55 p.m.
  Lord Chesham: My Lords, I should like to join in the tributes that have been paid to the maiden speaker, the noble Lord, Lord Davies of Oldham. I am sure that we shall hear from him frequently and I look forward to that. With regard to the tobacco industry and golf, perhaps I may mention to the noble Lord that last week the international Alfred Dunhill Cup was played at St. Andrew's.
  I should perhaps declare an interest in the topic of this debate, having been brought up by my father with motor racing as a participatory sport and having in the 1960s been a marshall at many of the motor racing circuits in the UK.

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  My noble friend Lord Astor of Hever is to be congratulated not only on tabling this Unstarred Question, but also on the way in which he has presented his case.
  I also do not agree with the "nanny" state and with the attitude, "We know what is good for you. Indeed, we know better than you what is good for you and therefore we will ban you from doing something because we know better". I take objection to the effects of bans on freedom of choice, on the freedom of the individual and on the freedom of competitive market forces.
  Over the past 50 years, Britain has developed as the world's leading centre of the motorsport industry. That has been due to a number of factors, but primarily dates back to the post-war years when Britain was perhaps better placed to return to motor racing than those countries which had been pre-eminent in the run-up to hostilities; namely, Germany and Italy. As that advantage emerged, so was it capitalised on by a number of brilliant young engineers and commercially astute individuals, the most famous of whom was probably Colin Chapman. Not only was he a ground-breaking designer, but he was also the first person to bring full-scale commercial sponsorship into the world of Grand Prix racing with Gold Leaf Team Lotus. However, I do not think that other famous names such as ERA; Vanwall; BRM; Cooper Climax; Connaught and HWM, to name but a few, should go unrecognised in this context.
  As the British motor racing industry prospered, it built up a pool of talent over the years which in turn attracted more companies and investment. The result today is a multi-million pound industry. Figures have been bandied around, but I understand that it is worth approximately £2 billion, with a significant proportion earned in exports, and employs an estimated 50,000 people.
  The links between motor racing and the tobacco industry have continued non-stop over the past 30 years, providing a mutually beneficial relationship. The tobacco industry has invested considerable funds in racing as a vehicle which can add excitement and brand imagery. One could expect no less. The industry has benefited substantially in terms of investment in infrastructure and has grown into a world-beating force. That goes all the way from the teams, through to the tracks and the entire support industry, including the media.
  A recent analysis of the economic impact of the British Grand Prix on the South Midlands produced the following major findings for 1996. The British Grand Prix injects £28 million into the local economy, including £25 million from outside spending. The race week draws 170,000 spectators, 80 per cent. of whom come from outside the local area, which is defined as a radius of 25 miles. The Grand Prix impacts on 44,960 permanent local jobs. Those figures have been increased in the study by nearly 10 per cent. for 1997. These are not trifling figures. The banning of tobacco sponsorship of the British Grand Prix would seriously jeopardise its existence. I understand that 44 countries have declared an interest in running up to 18 grand prix per annum.
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  Let us not believe that Nanny knows best, my Lords. No thank you, not for me.
  9 p.m.
  Lord Rowallan: My Lords, as the noble Lord, Lord Davies of Oldham, pointed out in his maiden speech, it is ironic that the tobacco industry chooses sport as one of its major outlets for advertising. I am not a smoker, but I now understand that passive smoking is extremely bad for me. I watched my father steadily die from smoking cigarettes. I have no reason for supporting cigarettes, but I love sport. Sport can flourish only with sponsorship. The tobacco industry as a whole every year provides £10 billion to the Exchequer. Further, it advertises to the tune of £50 million and provides sponsorship to the tune of £100 million in this country, but only £9 million to £10 million of that goes to sport.
  Who smokes? This was another interesting point referred to by the noble Lord, Lord Davies of Oldham. I understand that those over 55 and those under 30 tend to smoke a good deal, but that those in the 30 to 55 age group smoke less than any other group. Is that the result of watching parents who are very heavy smokers and living in a smoky, fume-filled atmosphere, or the result of health warnings? There must be a very distinct reason for it. But it is older and, much more frighteningly, younger people who smoke. Despite the £1 million that is spent each year on the campaign to stop children and teenagers smoking and the £13.5 million spent since December 1994 on the campaign to stop adults from smoking more and more are doing it.
  One must understand the difference between advertising and sponsorship. Advertising is designed purely to try to persuade people to buy a particular brand of cigarette. A 1 per cent. switch can mean a £110 million loss or increase in the sale of a particular brand of cigarette. On the other hand, sponsorship enhances the corporate identity and reputation of the sponsor. It provides an opportunity to reinvest socially in the community and it does not specifically encourage people to start smoking or make smokers smoke more. Smoking will not go away if sponsorship or advertising is stopped, but unfortunately many sports will.
  I take this opportunity to thank my noble friend Lord Astor of Hever for initiating the debate this evening in which a number of very interesting points have been raised. This debate is concerned mainly with motorsport, and I can see why. There are eight teams: Ferrari is sponsored by Marlboro; Williams by Rothmans; Benetton by Mild 7; Jordan by Benson & Hedges; McLaren by West; Prost by Gauloise; Minardi by BAT; and Sauber by Red Bull. All of those are sponsored by the cigarette industry.
  I should like to extend the debate a little further because so many other sports will be affected by a potential ban. During the past year a further 14 sports have received money from the tobacco industry: golf, show jumping, snooker, ice hockey, darts, 10-pin bowling, clay pigeon shooting, rugby league, motor cycling, fly-fishing, amateur tennis, yachting, horse-racing and greyhound-racing. That is a fair variety of sports which take place in this country today. Can

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  this country afford financially to give up the income that is received by the Exchequer in taxation and the employment that it provides through retailing and advertising and, at the same time, destroy sports that provide so much to so many? Remember that these sports nearly always take place in parts of the country that are less affluent where we should concentrate on giving people some hope for the future.
  Sponsorship also provides money for new grandstands to comply with the Taylor report and for youth development in different areas. John Lord, chief executive of the Ice Hockey Superleague, stated in a letter to Tony Banks, the Minister of Sport:
  "It remains unclear and questionable who gains but very clear who loses if the Government ban tobacco sponsorship".
  If all advertising and sponsorship is banned, what then? Will the money simply go elsewhere? That certainly seems to have been the case in France. For instance, much to the relief of the racing industry, Martell has sponsored the Grand National. Without television coverage some of the smaller sports will surely struggle as a result of the banning of advertising.
  My noble friend Lord Liverpool said that several countries had already banned tobacco advertising: Norway in 1975, Finland in 1977, Canada in 1989, New Zealand in 1990 and Australia in 1992. I understand that even the tobacco industry admits that there may be a resultant fall of about 4 per cent. That does not appear to me to be an enormous figure. Any fall must promote health, but is it sufficient to ruin so much to provide so little?
  The tobacco industry has been self-regulated since 1977. This is monitored by COMATAS which has representatives from the Departments of National Heritage and Health and UK tobacco companies and importers. That reports to the Secretary of State for Health and the Minister of Sport.
  We live in a free market economy. Please, let us not throw all of that away for individualistic, politically correct or green reasons. I agree that smoking is a dirty habit. I also agree that it costs the National Health Service dearly. It must deal with cancer and all of the other diseases that smoking creates. I know that first hand because of the effect on my father. However, if one takes away advertising and sponsorship, smoking will not go away. People, especially the young, need it when in company. It is rather like drinking. If you have something in your hand it makes conversation a good deal easier. That is one of the main reasons why people smoke and drink.
  Stopping advertising might make the smoker stick with the brand that he is already smoking, because he is not persuaded that there is another brand to which he would prefer to go. Stopping sponsorship will hurt many sports. "Find another sponsor", will, I am sure, be the Government's reply, but it is not easy.
  I run a small equestrian centre. Finding sponsorship is extraordinarily hard unless one has TV coverage. A sponsor is not interested unless one has TV, because he does not benefit from it. Sport is our nation's lifeblood. When there is sport in a neighbourhood, there is little
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  trouble. It keeps people away from the street corner. It keeps them away from drugs. It keeps them away from troublemakers and from potential trouble. We must be seen to support sport. We must support sponsorship, from whatever source, providing that it is legal—tobacco or other sponsorship.
  I cannot believe that seeing a car going around in a particular livery makes millions of people jump up and say, "I want to smoke, and it must be such and such a brand". I do not smoke, as I said, because I saw what happened to my father, but I do not want to see my views imposed upon anyone else. We live in a democracy, or we are supposed to. Let individuals decide whether they want to smoke. Carry on telling them—goodness me, we should! —that it can damage their health, because it can and it does, but let sports obtain money from any legal source they want to keep this country's sport alive and kicking. The benefits far outweigh the costs. I want to see sport continue to thrive in this country. I hope that the Minister will be able to give us the assurance that he, too, wants to see that.
  9.10 p.m.
  Lord Sempill: My Lords, I wish to apologise for intervening in the gap. I am afraid that I arrived somewhat late today and did not realise that the noble Lord, Lord Astor, was bringing forward this interesting Question. Perhaps I may congratulate the noble Lord, Lord Davies, on his maiden speech. It was interesting, and I feel close to the issue of smoking. I am on my feet because, unlike many noble Lords, I have spent eight years in the tobacco industry. I spent the best part of that eight years in the marketing of cigarettes and the seeking of sponsorship for tobacco companies.
  It was interesting to hear noble Lords' comments. I shall not repeat any facts or data, because all the major relevant points have been covered. I believe that I have some experience of advertising, and I should like to draw the Minister's attention to a key issue. It is interesting to note that the Question mentions both advertising and sponsorship in the same breath. We should be clear that they are not quite the same thing. They both belong to the discipline of marketing. Advertising's primary remit, by and large, is to persuade people to try a product or to switch from a product.
  To a large extent, sponsorship rides on the back of that issue. However, we must be well aware of the role played by tobacco companies themselves. We are talking about global giants. The point has been made by many noble Lords that they will not go away. These global giants have substantial cash reserves from which most governments benefit either in terms of excise or corporate taxation. They are actively in the business of trying to sponsor sports. We in this country are one of the major beneficiaries of that.
  There is an advertisement in the Spectator, albeit by the well known Mr. John Carlisle, which clearly outlines that in this country specifically the tobacco industry is self-regulating and is not under what I would call the adverse influence of harsh government legislation. As I said, I was in that environment for eight years, and I know that many of the decisions taken around the tables were taken with self-regulation in mind.

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  British tobacco companies are well aware of the sensitivities of those on the medical side of the fence, but they are also in the business of making profits. They are in a business which is legal. It is a key industry, not just in our country but in many countries world wide. I have just one message to put across. It is that sponsorship may have within it the tool of brand awareness, but that is all it has. Finding sponsorship is very difficult. Few companies in this country, let alone America, are prepared to write out cheques running into six figures to sponsor sport. There is a big questionmark in many marketing organisations as to whether sponsorship is returning the goods. We are not just looking at sponsorship in terms of investment; there is a large degree of philanthropy in it. I believe that the tobacco companies are some of the biggest philanthropists we witness; not dissimilar to the brewers of the late 19th century. I caution the Minister and his colleagues not to destroy the goose which is currently laying the golden egg.
  9.14 p.m.
  Lord Moynihan: My Lords, I offer my sincere congratulations to the noble Lord, Lord Davies, on an excellent maiden speech. It was short, to the point and, given the subject matter before the House, surprisingly uncontroversial. It was effectively argued and sensitive. The noble Lord shares with the Prime Minister strong support for the interests of British sportsmen and women. His is a deep personal commitment to see sport flourish. As a former Minister for Sport and an enthusiastic sportsman, I share his aspirations.
  However, it will come as no surprise to your Lordships that I entertain serious doubts as to the effectiveness of this Government's strategy for sport and recreation. Perhaps, in common with my noble friend Lord Rowallan, I may focus on that strategy. The Government's rhetoric in favour of sport has not been matched by vitally important, substantive policy initiatives to support sport and recreation. On the contrary, I regret that the Government have done much harm to the position not only through this measure on support for sport, but damaging blows to the interests of sportsmen and women.
  Perhaps I may draw your Lordships' attention to the defeat of the Government on the issue, for example, of allowing disabled sportsmen and women the right to participate in competitive pistol shooting. In the debate last week, we heard from many noble Lords who were anxious that the Government's policy was merely a knee-jerk reaction to events. The noble Lord, Lord Howell, raised anxieties that the Government's policy had gone further than was necessary in that it was unlikely that wheelchair-bound sportsmen and women would pose any threat to public safety. That is not a small sporting community; at least 100 sports clubs are affiliated to the British Sports Association for the Disabled, which offers shooting as an activity. I believe that the Government's proposals on that will have a seriously detrimental effect on the lives of many disabled men and women quite unnecessarily.
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  There are other examples of the Government bowing to popular clamour without giving full consideration to their actions in the realm of sports policy. The fervour with which the Government have pursued their firearms policy has ignored the wider implications. I believe that irreparable harm has been done to the chance of any British city to host an Olympic Games in the foreseeable future. Present government policy is responsible for that in that it would be unimaginable to hold an Olympics without the current National Olympic Committee's discipline of shooting being involved. By banning Olympic sport, the IOC will react negatively to any bid from a British city in what is already one of the most competitive selection races in world sport. Why start Britain's bid 10 metres behind its competitors?
  There are other examples of ways in which the Government's policy on sport has lost focus; for example, the idea of the Minister for Sport to ban the national anthem and the Union flag at football matches totally undermines the spirit which such sporting occasions arouse. It would also be true to say that as a great footballing nation we should be proud that we have four national teams able to compete around the world, two of which have already gained places in the World Cup Finals next year. Why, then, do the Government suggest the need to amalgamate the four into one, as put forward for discussion this summer by the Minister for Sport?
  It is vital that decisions are made carefully, rationally and in full appreciation of the consequences. The recent disturbances in Rome served to highlight that, however well intentioned the Government might be—and I believe that they are—it is not good intentions and siren voices which create effective policy, but sensible, comprehensive and pragmatic attention in advance to each and every detail, all executed in co-operation with our international counterparts. In that context, I support the statement made today by the Home Secretary.
  I believe that it was right to place the comments that I am about to make in the context that I have, for Britain is the capital of the motor-racing industry. Any racing enthusiast will be aware of the very successful British teams which regularly lead the field. We should be proud to support them. But the industry is more than names and drivers; it is, as my noble friend pointed out, a global business. It is one which centres around Silverstone in the United Kingdom, with an estimated 80 per cent. of business activity based in that area. That brings to the United Kingdom many highly skilled and highly paid jobs. It has been estimated that 25,000 people work in this sector, helping to bring Britain more than £1.3 billion in turnover a year. They also create more than £900 million in exports alone.
  The Government's proposal to ban sponsorship of motorsports events by the tobacco industry threatens to damage that success story, for I have no doubt that a ban will have serious repercussions on the motorsport industry. Nor am I alone in my thoughts. I shall quote Bernie Ecclestone, vice-president of motorsport's ruling body, the FIA. He commented in the following manner on the announcement of the proposed ban. He said:
  "I cannot believe that when people look at this proposed legislation. that they will do anything to endanger what has become

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  a successful, largely British-based business. It just seems silly to me to think of harming something which England has done so well for 45 years or more".
  I sincerely hope that he is right.
  So what are the likely effects of the ban? There is no doubt that, should a ban be imposed, there will be a dramatic and significant decline in the value of sponsorship given to the various motorsport teams. As it is, in Formula 1 there are only three teams which, as has been rightly pointed out, are not supported in any way by the tobacco industry. A decline in revenue of that magnitude will have a serious effect on the industry. The technical advantages which we have now come to expect as standard will not be made. Apart from the knock-on damage that that may have on the car manufacturing industry, which has relied on the sport's engineering advances to further its own manufacturing techniques, the damage to motorsport as a whole could be disastrous. Without the high-tech engineering which makes this sport so exciting, the audiences would drop.
  However, the ramifications of the decline are more far-reaching than that scenario would suggest. There has been a developing school of thought among those involved in the industry that as Europe shies away increasingly from tobacco advertising so the industry will set its sights on the lucrative American and Asian markets. That would automatically move the motor racing epicentre away from Britain. Such a move would have a dramatic effect on the United Kingdom as a whole, for as my noble friend Lord Astor effectively made clear this evening, last year's Grand Prix brought 170,000 spectators and visitors to Silverstone, injecting £30 million into the local economy. The British Grand Prix generates more spending than any other of the European Grand Prix meetings and has an important economic impact throughout the south-east Midlands.
  However, our duty this evening is to look in some detail at the Government's proposals. They have made it clear that they will support the new European Union draft directive to ban tobacco advertising, thus lifting the stalemate which has prevented the proposed legislation being enacted for the past seven years. The Government have promised also to publish a White Paper on tobacco advertising later this year prior to a draft Bill coming forward in the Queen's Speech of 1998.
  I understand the intentions behind that timetable of action. Everybody in this House wants to bring down levels of smoking. Everybody in your Lordships' House recognises the health risks associated with smoking, but will the Government's actions achieve their goals? The last government maintained that the right way to bring down levels of smoking was to increase taxation on tobacco products. Moreover, the Government negotiated a highly effective voluntary agreement with the motorsport industry which set clear parameters. The tobacco manufacturers agreed not to display their motifs on cars and bikes or to advertise alongside the track. Therefore, there have been no official tobacco advertisements on British circuits for a decade.
  Voluntary agreements have advantages over bans. For example, they offer the Government and the industry flexibility. Changes to codes of conduct can be made in
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  a matter of days. Equally, a voluntary agreement with the motorsport organisations has helped to foster important and excellent relations between governments and the industry. A ban may well have the opposite effect for it is also true to say that the industry remains concerned that their largest sponsors will be driven away by a ban. In contrast, the voluntary agreement has enabled the motorsport teams to maintain levels of technical expertise, retain their manufacturing base in the United Kingdom and at the same time to satisfy Government demands for a curb on television advertising.
  I maintain that developing voluntary agreements is the right way to tackle those sensitive issues. A ban has a number of disadvantages. For example, under a ban, it would be possible for motor racing teams to make their sponsorship clear. If a red and white chevron appeared on a Ferrari, there are few who would be unable to recognise Marlboro as a sponsor, despite the fact that the name does not appear.
  In contrast to a ban, a voluntary agreement would be flexible enough to curb those advertising loopholes through negotiations and, as indicated by the noble Lord, Lord Sempill, in his telling intervention in the gap, there are many other advertising options available to firms. For example, they could develop non-tobacco brand extensions like Marlboro's clothing line (Marlboro Classics) and Dunhill's stationery and leather goods.
  In response to the Government's argument that banning advertising and sponsorship would decrease the consumption of cigarettes, the tobacco firms could find other ways of marketing their cigarettes. For example, they could slash their prices to win the brand monopoly from rival firms; they could spend the money that they would have invested in advertising and sponsorship on other advertising techniques, such as loyalty cards with prizes and coupons or customer magazines.
  Further—and this is one of the most important points that has been made this evening—the Grand Prix could be moved to countries where advertising is allowed. British television viewers would then see the Grand Prix with tobacco advertisements, but beamed in from another country. It therefore seems excessive and unnecessary to implement a ban which will destroy British motorsport and threaten thousands of jobs for no apparent benefit being gained, not least because recent studies (including the one by Michael J. Stewart entitled The Effect on Tobacco Consumption of. Advertising Bans in OECD Countries) have provided evidence to the contrary of what is currently argued by the Minister for Sport. In that important study, 22 countries were analysed over 27 years and the six countries with advertising bans were found to have increased consumption. There is little evidence to suggest that a ban will have any impact on motor enthusiasts' smoking habits.
  I therefore believe that the Government's ban will severely damage one of our key UK industries and thus threaten many thousands of well-paid, highly-skilled jobs. It will damage British motor racing with no hard evidence that a ban will deter those sports fans who

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  smoke from continuing to do so. A tough voluntary agreement in our society is the way forward. A combined approach to attack the causes of smoking—the reasons why young people smoke—is the approach that we should all be taking together so as to implement measures that will achieve a diminution in the incidence of smoking in our country. The proposal before your Lordships' House this evening will not achieve that objective and will do serious damage, as have the other initiatives on sport and recreation that I have mentioned this evening. Indeed, it will do serious damage to the interests of sport and recreation in the United Kingdom.
  9.26 p.m.
  Lord McIntosh of Haringey: My Lords, the whole House will be grateful to the noble Lord, Lord Astor of Hever, for introducing tonight's debate for two principal reasons. First, the noble Lord succeeded in attracting a number of speakers whose expertise, including his own, is well evident by the contributions that they made this evening. In addition, he succeeded in tempting my noble friend Lord Davies of Oldham to speak and thereby gave him an opportunity to make what was clearly an excellent and well-informed speech which was provocative without being controversial, even though it was made shortly after his introduction—and I see no harm in that. I know that we shall hear from my noble friend again. I warn noble Lords that they should wait to see my noble friend when he is being controversial.
  I believe that we begin from a common starting point; namely, that tobacco is uniquely dangerous. It is the only thing on sale in this country which regularly kills even when it is used as the manufacturers intended it should be. My noble friend Lord Davies was right to say that if Sir Walter Raleigh attempted to introduce tobacco now it is very unlikely that it would be made legal at a time when many drugs are illegal. It is also dangerous in the sense that we all recognise that it cannot be banned. The level of addiction of the 25 per cent. of the people in this country who smoke is such that to try to impose a total ban would have much the same result as the attempt to impose prohibition in the United States in the 1920s.
  A number of noble Lords, including the noble Lord, Lord Chesham, referred to the dangers of a nanny state. I agree with much of what he said. An attempt to impose prohibition on smoking would certainly be a clear example of the workings of a nanny state. There is no safe level of smoking. Indeed the lack of a safe level is evidenced by the recent statistics on the dangers of passive smoking, to which the noble Lord, Lord Rowallan, referred. However, this nasty, dirty habit—I hope noble Lords will forgive me if I call it that—causes preventable disease and premature death of the order of something like 120,000 people per year in this country. That is not all. Smoking is particularly dangerous for children. The incidence of smoking among 11 to 15 year-olds is not falling.
  Noble Lords have mentioned a number of statistics about the effect of advertising on smoking. My evidence comes from the Smee Report published by the Department of Health in 1992. I am sure that if that report is not available in the Library, it can be made
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  available. My evidence is that in a number of countries—particularly New Zealand, France and Norway—there is statistical evidence of a decline in smoking, particularly among young people, after the imposition of advertising bans. I heard with interest the statistics given by the noble Earl, Lord Liverpool, and by the noble Lord, Lord Rowallan. However, my evidence is not the same as theirs. The evidence that I have suggests that children who smoke use the most advertised brands. There are research links between advertising and both starting the smoking habit and reinforcing it.
  I refer specifically to the subject of this evening's debate. We know that 38 per cent. of teenagers link motor racing with tobacco sponsorship. A ban on tobacco advertising would also be popular in this country. In a recent opinion poll 61 per cent. of the population thought that there should be no tobacco advertising at all, and 55 per cent. thought that there should be no such advertising and sponsorship of sport. As the noble Lord, Lord Sempill, and other noble Lords said, sponsorship is not quite the same thing as advertising. I even reluctantly recognise that some of it is philanthropic. But surely tobacco sponsorship of motor racing in particular is done because the viewer sees the name of the tobacco brand on the clothes of the driver, on his car and on the barriers of the track. Tobacco advertising of motor racing occurs largely because of that exposure of the tobacco brand. I am not inclined to speak of bad motives in this respect but I believe that the motives of those who sponsor motor racing are fairly clear.
  I turn from the health issue to what the Government propose to do about it. I say straight away that the Government are not concentrating on a ban on this kind of advertising. Our approach to smoking control applies to a much wider area than that. The noble Earl, Lord Liverpool, referred to the anti-smoking summit which was held on the 14th July. There were at that summit representatives of the media, business, the arts, sport, medicine and representatives of health charities. The noble Earl referred to Dr. Sandy Macara of the British Medical Association. The working groups at that meeting discussed a ban on advertising, but they also discussed consumer protection, tax and price issues, public education to which my noble friend Lord Davies referred, and indeed the scope for further bans on smoking in public places. As a result of that summit, and of frequent meetings between the Minister for Sport and the Minister for Public Health, and with all manner of sporting and artistic organisations, towards the end of this year we shall be producing a White Paper on smoking control. Naturally, I cannot be expected to anticipate what that White Paper will say.
  A number of noble Lords have referred to the draft Council directive of the European Union which is more specifically related to tobacco advertising. It is certainly true that, as we understand it, the Luxembourg presidency is pushing for this draft directive to be agreed at the health Council on 4th December. I do not know whether that will be possible because negotiations are still continuing on a number of aspects of the draft directive as regards legal questions about its scope and

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  practical issues—I think that this is of more importance to your Lordships—about its impact on the sport and on the arts. I am sorry that there was not more reference to artistic sponsorship in the debate.
  However, even if the directive were to be agreed, I suspect that there are still considerable difficulties in its way. It would take at least a year to implement, and that year would be on top of any phasing-in period which is highly likely—I would say virtually certain—to be included in any directive. Therefore we are not talking about any very rapid change in the tobacco advertising and motorsport regime.
  I agree very largely with what noble Lords said about the importance of the motorsport industry. The noble Lord, Lord Moynihan, will forgive me if I do not follow him in his more generalised attack on government policy in relation to sport. I am sure we can find a more appropriate occasion to discuss that. But I accept many of the figures which the noble Lord, Lord Astor of Hever, quoted, even though they are different from those given by his own Front Bench. Incidentally, Dunhill—it was cited by more than one noble Lord—is not a tobacco company. It sold its tobacco interests to Rothmans at least five years ago and is involved in other leisure services. I do not need to repeat the figures which have been given so authoritatively. I agree that the motorsport industry is enormously important to this country, both the engineering aspects, which have been referred to, and the economic aspects; the numbers of jobs, and the amount of money. It is not just the turnover, but the foreign earnings in particular. I accept, as noble Lords have said, that in many ways the sport is the jewel in the crown of our sporting activity. We have lost command in so many sports, but motorsport is certainly not one of them.
  I also accept that tobacco advertising is hugely important to the motorsport industry. It is quite different from other sports. I shall not dwell on that, but tobacco advertising as a proportion of sponsorship in other sports is only about 3 per cent. The noble Lord, Lord Astor, tells us that the figure is more like 40 per cent. for motorsport. I can believe that, but I assume that he refers to the worldwide figures. He and noble Lords will know that the Minister for Sport and the Minister for Public Health have had many meetings with representatives of sporting interests and with Max Mosley of the Fédération Internationale de l'Automobile. Mr. Banks has also had meetings with the RAC Motor Sports Association Ltd; and no doubt there will be many more meetings with the Formula 1 constructors and others. Those meetings will be used to frame government policy and to inform debate before we come to the publication of the White Paper later this year.
  We must recognise the limit to government policy. Perhaps this comes back to the "nanny state" arguments of the noble Lord, Lord Chesham. We must accept that motor racing events could move outside the United
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  Kingdom and the European Union to other parts of the world. That is a matter of plain fact. There are other countries willing to take them. We must accept, as we have been told, that the Asia-Pacific region has 70 per cent. of the world TV audience. We must accept that that region is a growth market for tobacco, although in many ways it is deplorable that developed countries should use their commercial clout to encourage tobacco smoking among poorer people, damaging their health and their pockets. The result of all of this must be that we should recognise that compromise will be necessary in order to get through any policy, either in this country or in the European Union, in such a way that it works effectively.
  Perhaps I may briefly respond to the specific questions posed by the noble Lord, Lord Astor. He asked what we meant by "time and help". I indicated that there would be a significant phasing-in period for any changes that are proposed. The noble Lord asked whether we would help to find other sponsors. I can certainly reply that we will. The matter of financial help is much more difficult. We cannot favour those sports that have relied on tobacco advertising as against those that have abstained from tobacco advertising. We should be in danger of encouraging a dependency culture.
  The noble Lord asked about the move to other countries of the British Grand Prix, the superbike Grand Prix, and the RAC rally. He will know from my remarks that we are concerned—I referred to the limits of public policy in this area. The noble Lord asked about the resettlement of the manufacturing industry in Asia as a result. I am not so certain as he is that the removal of grand prix events would bring about a move in manufacturing industry. That is a debatable point. However, again I acknowledge his concerns and confirm that we are paying attention to them.
  On the question of whether we can ban broadcasting into the United Kingdom of international events, also referred to by the noble Earl, Lord Liverpool, I believe everybody knows that we cannot. It may be that with digital television there will be clever ways of blocking out brand names; but we are a long way from that.
  The noble Lord, Lord Moynihan, referred to the voluntary agreement that the Department of National Heritage brokered in 1995. Voluntary agreements are valuable; but they refer only to direct advertising and can only apply to this country. We are looking to something more effective than that.
  Finally, I respond to the challenge of my noble friend Lord Davies of Oldham. He asked the Government to display both greater assertiveness and care and consultation with the industry. If he will forgive my saying so, it is rather difficult to do both of those things. I hope I have shown in my response to this important and valuable debate that our concern is, above all, not with assertiveness but with care and consultation with the industry.
  House adjourned at sixteen minutes before ten o'clock.

  World Trade Organisation
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