Sitting of 23 February 1998

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

    Pensions Review
    Mr. Stringer: If she will make a statement on progress being made on the Government's pensions review. [29074]
    The Secretary of State for Social Security and Minister for Women (Ms Harriet Harman): The pensions review that I announced on 17 July last year fulfilled our manifesto commitment. We have received more than 2,000 responses and we aim to publish our proposals for change in the first half of this year.
    Mr. Stringer: I thank my right hon. Friend for that answer. Does she agree that the impact of the television licence on pensioners is analogous to the impact of the poll tax? Does she agree also that any review of pensions should take that into account either through direct
    2
    compensation in the form of a £2 increase in pensions or by ensuring that pensioners do not have to pay the television licence fee?
    Ms Harman: My hon. Friend is absolutely right. Television is very important to pensioners, and we are concerned to take action on all matters affecting pensioners' quality of life. The cost of the television licence will be considered further by my right hon. Friend the Secretary of State for Culture, Media and Sport. The value of the basic state pension is part of the pensions review, but our manifesto commitment is to maintain it as the foundation of income in retirement and to uprate it at least in line with prices.
    Mr. Quentin Davies: May I give the Government yet another chance to give a straight answer to a straight question—which they have declined to do until now? Will they calm the serious anxieties and anguish felt by millions of people in this country by stating quite clearly that they have no intention of means-testing or affluence-testing the standard state retirement pension?
    Ms Harman: We have made a commitment in our manifesto that we will keep the basic state pension and increase it in line with prices. I thank the hon. Gentleman for giving me another opportunity today to confirm that we will stick to our manifesto promise. We are certainly concerned to do what the previous Government never did: provide extra help for the poorest pensioners. We are doing that through winter fuel payments and by ensuring that those who are entitled to income support receive that benefit.
    Mr. Winnick: What the Government have done to help pensioners since last May is, of course, appreciated by pensioners and by Labour Members. However, will my right hon. Friend bear in mind the earlier point about concessionary television licences? Pensioners' finances would be improved considerably if they did not have to pay television licence fees. In view of the rumours that are floating about, which have been mentioned in the

    3
    press, will my right hon. Friend do whatever she can to ensure that pensioners receive justice as quickly as possible? Pensioners should no longer have to pay the television licence fee or the fee should at least be halved for pensioners.
    Ms Harman: My hon. Friend has repeated those points very strongly. Television licence fees are important when considering pensioners' quality of life and cost of living. My hon. Friend's points are well taken by me, but, more importantly, I am sure that they will be noted by my right hon. Friend the Secretary of State for Culture, Media and Sport.
    Mr. Webb: The pensions review is concerned, among other things, with ensuring that people of modest means save more. The Treasury has undertaken an individual savings account review that is also designed to encourage people of modest means to save more. Will the Secretary of State explain the relationship between those two reviews? Why are they being conducted at the same time, involving different people and different time scales? How will she ensure that the two reviews reach consistent conclusions?
    Ms Harman: The reviews certainly will be consistent and will reach consistent conclusions. The two reviews are designed to complement each other and to have different purposes. The stakeholder pension, which we are consulting about, will ensure that people on low or intermittent earnings have the opportunity to save for their retirement so that they may retire not only on the basic state pension, but on a good, value-for-money second pension.
    Mrs. Humble: Does my right hon. Friend agree that the pensions review and, indeed, the delivery of welfare benefits depend on well-motivated staff? Will either she or one of her Ministers meet me and other hon. Members who represent Fylde-coast constituencies to discuss recent suggestions, which are causing grave concern, that up to 200 jobs will be lost in the major Department of Social Security centres along the Fylde coast?
    Ms Harman: I thank my hon. Friend for raising that point. The motivation of staff is critical to the quality of service and to its improvement, which we want to deliver. My hon. Friend asked for a meeting; I shall ask my right hon. Friend the Minister for Welfare Reform whether he is prepared to meet her and her colleagues from the area. My ministerial team and I regularly meet the DSS unions to ensure that they have a good working partnership with the Department, which was never done previously.
    Mr. Duncan Smith: Last year, the Chancellor of the Exchequer devalued pensions through his actions in the Budget. That was made clear by the Government Actuary, who advised the Government to change the rebate to the state earnings-related pension scheme to avoid creating problems for those who had opted out. Why did the Government not accept and implement in full the Government Actuary's report, rather than slash occupational pensions?
    Ms Harman: The Chancellor acted to ensure long-term investment, which is good for the economy, for pension
    4
    schemes and for people with second pensions. I sought the advice of the Government Actuary, who regularly advises the Government. He gave his advice and we acted on it—everything remains completely in order.
    Mr. Duncan Smith: The Government clearly did not act on the Government Actuary's advice; they did not implement the changes to occupational pensions that he advised. As a result, those with occupational pensions will now have to pay much more than before to stay out of SERPS. That goes against the Government manifesto commitment to
    "support and strengthen the framework for occupational pensions."
    Why has the right hon. Lady decided to slash occupational pensions?
    Ms Harman: As I explained to the House previously—I take this opportunity to explain it again—I sought the Government Actuary's advice, which I considered and on which I acted. The previous Government left hundreds of thousands of people without compensation for the mis-selling of second pensions. We have acted promptly and appropriately, and we are also trying to sort out the mess that the previous Government left in relation to second pensions.

    Housing Benefit
    Mr. Colman: If she will make a statement on the level of fraud in housing benefit. [29076]
    Dr. Whitehead: What plans she has for tackling organised fraud by landlords. [29077]
    Fiona Mactaggart: What plans she has to tackle housing benefit fraud. [29082]
    The Minister for Welfare Reform (Mr. Frank Field): The Government's resolution to seek out fraud wherever it occurs is matched only by our diligence to seek out those who are eligible but do not claim.
    Mr. Colman: I thank my right hon. Friend for that answer. I particularly commend to him the London team against fraud, which consists of all 33 London boroughs working together and sharing information to stamp out housing benefit fraud. Will he deal with the team's concerns about whether banks and building societies can share information with it, or whether, as banks and building societies believe, they are precluded from doing so under the Data Protection Act 1988? Will he consider how he can ensure that the London team against fraud is able to deal effectively with housing mortgage fraud, which is part of housing benefit fraud?
    Mr. Field: I shall certainly consider the matter. The idea for a combined effort throughout London was put to the Select Committee on Social Security, and the proposal was implemented by the previous Government. I ask my hon. Friend to take the thanks of the House to his local authority, which regularly exceeds its target for weekly benefits savings on housing benefit fraud.
    Dr. Whitehead: I, too, thank my right hon. Friend the Minister for his answer. Does he accept that part of the

    5
    problem of fraud by landlords relates to their bad or incompetent management of DSS tenancies? Will he countenance projects whereby good and responsible landlords are encouraged to collaborate with local authorities and manage those tenancies more effectively?
    Mr. Field: I can give my hon. Friend that assurance. In the area which I represent in the Wirral, such projects are already occurring.
    Fiona Mactaggart: I thank my right hon. Friend for his reply. He might be able to implement two further measures that could help. First, he could make it easier for local authorities, such as Slough, which has been doing a great deal of work in this area, to initiate a prosecution where a claim has been withdrawn. That happens when people think that they are being sniffed around. The claim then disappears and the ability to take action is reduced.
    Secondly, it might be possible to consider incentives for local authorities to improve prevention rather than opting for prosecution. I am certain that that would make a real difference, with the result that it would not be necessary to put as much energy into prosecution as is currently being expended.
    Mr. Field: Last November, we increased the powers of local authorities to prosecute landlords who are committing fraud. In December, we issued a verification code, which enables fraud to be tackled at the outset of claims. I thank my hon. Friend and my hon. Friend the Member for Putney (Mr. Colman), whose local authority massively exceeds average weekly benefit savings.

    Child Support Agency
    Mr. Olner: If she will make a statement on the Government's approach to reforming the Child Support Agency. [29078]
    Mr. Field: The Government hope to bring forward proposals for reforming the Child Support Agency before the summer is out.
    Mr. Olner: I thank my right hon. Friend for his reply. For many in this place, reform will not come soon enough. The previous Government introduced the agency, and it has never worked. It has done nothing for children—in other words, it has done nothing to improve their livelihoods. The sooner that reform takes place, the better.
    How widely has my right hon. Friend consulted on reforms? Once consultation has taken place, we must ensure that the appropriate legislation is put on to the statute book as quickly as possible.
    Mr. Field: My hon. Friend will be aware that Baroness Hollis, the Under-Secretary of State, is spearheading the review. She has met many people already, as I have done. I am grateful for the critical faculties that Members bring to the outline proposals, which we debated the other day. I make a plea to Members on both sides of the House: when the proposals are published, let us have the most detailed and critical discussion. Last time round, we sleepwalked many of our constituents into a nightmare. [HON. MEMBERS: "Apologise."] We must not do that again.
    Miss Kirkbride: In the light of the Minister's earlier answer, will he confirm that in his proposals to reform
    6
    the CSA, absent parents will still be expected to make a significant contribution to their children's upkeep, and that the obligation will not fall on to the taxpayer, as before?
    Mr. Field: The answer to that question is a resounding yes. I heard one of my hon. Friends saying a moment ago that I should apologise for the CSA. I, as a politician, apologise for being a Member of this place who put the CSA on to the statute book. Responsibility for the CSA rests with the House. I do not approve of the behaviour of those who, like Pontius Pilate, endlessly wash their hands and blame the agency's staff when responsibility for the operation of the agency is political. The House established the CSA and the House will need to reform it.

    Pensioner Incomes
    Mr. Bradshaw: What assessment she has made of (a) present and (b) future inequality in pensioner incomes. [29079]
    The Parliamentary Under-Secretary of State for Social Security (Mr. John Denham): We want today's and tomorrow's pensioners to enjoy security in retirement. Estimates show that the gap between the best and worst-off pensioners will be even wider in future than it is today under current policies, so a key objective of the pensions review is to ensure that pensioners have an adequate income in retirement and that they share fairly in rising national prosperity.
    Mr. Bradshaw: Can my hon. Friend confirm that the sum that the Government are spending on extra winter fuel payments is more than would have been expended if we had reintroduced the link between earnings and pensions? There is the added advantage of helping poorer pensioners most, including nearly 7,000 in my constituency in Exeter. Does this not show that things can be done now, notwithstanding the outcome of the pensions review, to help narrow the gap between rich and poor pensioners?
    Mr. Denham: My hon. Friend is right. We have taken action to help all pensioners with fuel bills to pay them through winter fuel payments. Help within that has been especially focused on poorer pensioners receiving income support, who have already received their payment of £50. The total cost of the package this year is expected to be about £200 million, which is more than the additional costs that would have been involved in uprating pensions by earnings rather than by prices.
    Mr. Gibb: The Secretary of State has told us that the Government sought the Government Actuary's advice and acted properly upon it. What does "acted upon it" mean? Does that mean that the Government implemented the recommendations in full, or in part?
    Mr. Denham: We have considered the Government Actuary's report and have taken action.
    Mr. Corbyn: Does my hon. Friend accept that, notwithstanding the welcome money for winter fuel, the real way in which to eliminate poverty for many pensioners is to re-establish the link with earnings and to

    7
    increase the pension accordingly? The previous Government took more than £20 a week off every pensioner in this country. Private provision cannot—and never will be able to—help the poorest in this country, who often do not have long-term jobs that enable them to buy into occupational pensions. Should we not look to state provision to eliminate poverty?
    Mr. Denham: We have already taken action to help today's pensioners. The pensions review will report later this summer. It has involved a series of meetings with Jack Jones and the National Pensioners Convention to discuss the position of today's pensioners and what action can be taken.
    Most people who enjoy security in retirement have two pensions: the basic state pension and a second pension, often provided through an invested fund. I am sure that that will be a key element of our strategy for the future.
    Mr. Burns: On pensioner incomes, will the Minister confirm that the Chancellor and the Secretary of State have boasted on numerous occasions that the winter fuel payment will be paid to all pensioners in the United Kingdom? Will he now confirm that that is not the case, that anyone reaching pensionable age on or after 6 January 1998 will not receive the payments this year and that the cut-off date will affect up to 150,000 pensioners by the end of March, when the money is finally expected to be paid? Will he consider making the money available to those pensioners, who are getting not a new deal but a raw deal from the Government? Will he explain the fiasco—and apologise to the House for it—in which cheques were sent to pensioners living in residential homes, and why some of those pensioners will be able to keep the money and others will not?
    Mr. Denham: The House will remember that, on a number of occasions, the hon. Gentleman voted to increase VAT on fuel to 17.5 per cent. Common sense suggests that once the announcement on winter fuel payments was made, it was essential to make payments as quickly as possible. It was important to have a qualifying period that was easier for pensioners to understand and was operationally deliverable. It was set as the week commencing 5 January. If it had been set later, the exercise could not have been completed in time for payments to be made to help with winter fuel bills.

    Income Support (Pensioners)
    Mr. Pond: If she will make a statement on the Government's actions to assist pensioners who are eligible for income support. [29080]
    Mr. Denham: We are determined to help the 1 million pensioners who are not claiming their income support entitlement. We have commissioned research to find out why they do not make a claim, and, from April, we shall run a number of pilot projects to find the best way in which to encourage them to do so.
    Mr. Pond: I thank my hon. Friend for that reply. I am sure that in the pensions review, the needs of the poorest pensioners will be a priority, but, given that Opposition Members continue to peddle the notion that the basic state pension might be subject to a means test, will my
    8
    hon. Friend confirm once again that cuts to, and means-testing of, the basic state pension were part of the previous Government's policy and are nothing to do with the present Government's policy, and that the basic state pension will remain a central foundation of pension provision?
    Mr. Denham: I am happy to reaffirm, once again, our manifesto commitment on which we were elected, and for which pensioners voted in large numbers. The basic state pension will be retained as the foundation stone for retirement and will be uprated at least in line with prices. I am grateful for the opportunity once again to make that statement to the House.
    Mr. Collins: I am most grateful to the Minister for what he just said. Perhaps he will now give a straight answer to my question. Will the Government rule out means-testing the basic pension—yes or no?
    Mr. Denham: This Government will keep their promises. We have promised to uprate the basic state pension at least in line with prices. We have already honoured that commitment. From this April, the basic state pension for a couple will exceed £100 for the first time. We deliver on what we promise.
    Mr. Hope: Is my hon. Friend aware that many people who are in work cannot save with an occupational pension because their employer does not have such a thing? Those people might not be able to afford a private pension scheme. Indeed, those with caring responsibilities are not at work and therefore cannot contribute. Is he aware that if that situation continues, there will be growing inequality in the years ahead when those people reach pensionable age? Can the Government assure the House that, in the pension review, they will look at how we can provide second pensions that are affordable and accessible to people on low incomes or with caring responsibilities?
    Mr. Denham: Yes. The pension review has two key elements: first, our proposals for stakeholder pension schemes, which will be value for money, low cost, flexible and particularly suit those who cannot join an employer's occupational scheme or those for whom personal pensions are far too expensive; secondly, we are also considering—again in line with our manifesto—a citizenship pension for those such as carers who cannot contribute to a funded second pension because of their important role in looking after a member of the family or another person.

    Welfare Reform
    Mr. Boswell: When she last met representatives of disability interests to discuss welfare reform. [29081]
    Mr. Clappison: What recent representations she has received about benefits for the disabled. [29084]
    Mr. Denham: We have received a number of representations on welfare reform. My right hon. Friend and I have twice met members of the all-party disablement group to discuss their views on this important issue. The most recent meeting took place last Monday.
    Mr. Boswell: I thank the Minister for that answer, but will he confirm that neither he nor his Secretary of State—nor, indeed, briefings from No. 10—has yet answered the basic question: whether the entitlements of the 6.5 million

    9
    people with moderate disabilities will be cut as a result of the Government's welfare reform proposals? They need to know—is the answer yes or no?
    Mr. Denham: I can reassure the House that the Government want to ensure that those in genuine need receive the support, in cash and in other ways, that they need. No changes will be made without full consultation, particularly with organisations of and for disabled people.
    Mr. Clappison: Will the Minister bear in mind the representation that his Department received from the Secretary of State for Education and Employment, who said that transferring the disability living allowance to local authority social services departments in any way would make the disabled the victims of the lottery of local authority discretion? Will the Minister rule that out, as it is worrying many disabled people?
    Mr. Denham: We are, as I have said, determined to ensure that the appropriate support, in cash and in other ways, is available for disabled people. We are considering ways in which that can be done as part of the welfare reform process. We will publish our proposals, and they will be subject to the fullest possible consultation.
    Mrs. Mahon: Did members of the disability groups raise with my hon. Friend the matter of the complicated disability living allowance self-assessment forms? Will he consider making the forms simpler because many people are losing benefit who need not do so?
    Mr. Denham: Many important issues have been raised by organisations of and for disabled people, including the complexity of the assessment process. They will be looked at during the review.
    Mr. Barnes: Is the Minister aware of the Government's credibility gap on the future of disability benefits? It has been caused by the cut in single parent benefit and the work of the benefit integrity project, which has led to many people losing their disability living allowance, although they are perfectly entitled to it, and trying to have it re-established on appeal. What are the Government going to do about overcoming their problems with presentation to show that they will not cut out the rights of disabled people in the future?
    Mr. Denham: Evidence from the benefit integrity project broadly confirms the initial estimate of the level of incorrectness in that benefit. We have learnt from the project as it has developed, which is why my right hon. Friend recently announced extra safeguards to ensure that no one would have their benefit stopped or reduced unless additional evidence—not just that provided by the claimant—was available. That is a step forward in safeguarding the work of the project and it shows that we are listening to organisations of and for disabled people as the work progresses.
    Mr. Burstow: Forty thousand people have been through the benefit integrity project, many of whom have wrongly had their benefit stopped or reduced, but have not appealed. Will the Minister reconsider their cases? They feel intimidated and unable to go back through the appeal process because of the way in which the project
    10
    has worked. To ensure that people receive the benefit to which they are entitled and to restore the project's integrity, will he ensure that interviews are reconsidered and claim forms re-examined to see whether they have been completed incorrectly?
    Mr. Denham: If people feel that they have not been properly treated, the review and appeal process is available to them. I am sure that decisions have been made in accordance with the law laid down by Parliament, but we have introduced the extra safeguard to which I referred. If people are in the position described by the hon. Gentleman, they should exercise their right to a review or an appeal.

    UK Presidency (Women)
    Ms Rosie Winterton: What action the Ministers for Women are taking during the UK's presidency of the European Union in conjunction with their European counterparts. [29083]
    The Parliamentary Under-Secretary of State for Social Security (Ms Joan Ruddock): The priority of the Ministers for Women has been to ensure that the women's perspective is introduced into the presidency's key theme of employability. Various activities are taking place on that theme. An initiative on action on violence against women is under way as part of our presidency.
    Ms Winterton: Will my hon. Friend take the opportunity during the UK presidency to discuss the real problems faced by low-paid women, particularly in finding affordable child care? Will she encourage initiatives on a European level, such as the working family tax credit, which would greatly help some of the poorest women in our society to meet child-care costs?
    Ms Ruddock: I thank my hon. Friend for her question. I am pleased to tell her that her view that affordable child care underpins the employability of women concurs with our thinking and our priorities as Ministers for Women in the United Kingdom. We intend to discuss these matters in an informal presidency meeting of Ministers for Women of European Union member states in Belfast on 5 and 6 May. That will enable us to compare best practice, and to show for the first time that the UK Government take child care and the employability of women very seriously indeed. We want to share our thinking with our European partners.
    Dr. Julian Lewis: Do the Minister's plans to improve the employability of women extend to the employability of the remnants of the Greenham Common women, of whom she used to be such a prominent supporter?
    Ms Ruddock: I am very sorry that the hon. Gentleman takes up valuable time at Question Time to make such frivolous points. The employability of all women in this country is of deep concern to the Government. We believe in equal opportunities. Women want to work, and we shall make it possible for more and more women to take their place in the workplace and to balance their family responsibilities, which they also take very seriously.
    Ms Moran: I thank my hon. Friend for that response. I welcome the initiative that the UK is taking under its

    11
    presidency. Is my hon. Friend aware that Britain is the poor parent of Europe in respect of child care? My sister, who lives and works in Paris, has been entitled to child care for her three children since they were one year old. My constituents in Luton would dearly love to have such a system. Can my hon. Friend assure us that, during the UK presidency, we shall see an expansion of quality child care?
    Ms Ruddock: I thank my hon. Friend for that question. I assure her that we shall have particular regard to good practice elsewhere as we develop a national child care strategy. We shall learn from other countries, and shall for the very first time put into practice a system of quality, affordable and accessible child care for parents and children, whose development will benefit greatly from that opportunity.
    Mrs. Gillan: Does the Minister agree that in the United Kingdom, despite a great improvement under Conservative Governments, women's pay for full-time work is still on average only 80 per cent. of men's hourly pay, and that that issue is of great concern to all women? Does the Minister believe that she or the Prime Minister sets a good example to employers, or that the United Kingdom sends a positive message on equality to her European counterparts and gives the right lead, when the Prime Minister appoints her to a ministerial job at a rate of pay £23,623 less than that of her male colleagues? What does that say about the Government's attitude to women employees?
    Ms Ruddock: The hon. Lady is perfectly well aware of the technical reasons for the impossibility of paying a salary for the new position.
    Mrs. Gillan: Not for men.
    Ms Ruddock: The hon. Lady protests, but there are men in the Government who are not drawing ministerial salaries.
    The hon. Lady, who has represented her party and the Conservative Government as a spokesperson on women, has something to apologise for to the women of this country. The Government of which she was a member never championed women's needs; they took no trouble whatever to redress the imbalance between women's and men's pay. With the working family tax credit proposals—and, indeed, the minimum wage—this Government will do more to lift the wages of women than the Conservative Government did to lift the wages of any woman in nearly two decades.

    Fraud Detection
    Mr. Mitchell: What proposals she has for increasing the resources devoted to fraud detection efforts in respect of social security benefits. [29085]
    Ms Harman: We are currently spending £400 million a year on tackling benefit fraud. We will take whatever measures are necessary to tackle fraud in social security.
    Mr. Mitchell: Does my right hon. Friend agree that it is more sensible to begin the necessary work of reforming
    12
    social security with a more vigorous onslaught on fraud and fiddles, whether they are perpetrated by employers or by beneficiaries, than to create an atmosphere of fear and terror by talking of cuts—cuts in benefit, cuts in rates, cuts in eligibility—and continuing the shakedown that the Conservative Government started among the disabled, which is going on at this moment?
    Ms Harman: Let me take this opportunity to reassure people with disabilities and people who are claiming benefits that no one who is genuinely entitled has anything to fear from our welfare reforms. However, we want to rebuild support for the welfare state and we cannot do that if people believe that, although the House lays down the rules for entitlement, they can decide for themselves whether they will draw benefits. We will take tough action to ensure that there is no fraud—tough action in relation not only to claimants, but to employers who evade their national insurance contribution responsibilities.
    I can report that, after one month of our new hotline to tackle national insurance fraud by employers, the Contributions Agency is now investigating 1,000 new cases of reported employer fraud. Such cases, if they are proved, not only defraud the national insurance fund, but strip employees of their entitlement to pensions and to sickness and other benefits.
    Mrs. May: Does the Secretary of State accept that the number of cases of disability benefit fraud has proved to be extremely small? Will she state categorically that that is the case? Will she also reconsider the request from the all-party disablement group for the Government to suspend the benefit integrity project pending an independent review, in the light of real cases of hardship in which disability benefit has been cut or taken away?
    Ms Harman: The benefit integrity project is not an anti-fraud project; it is a project to ensure that those who receive disability living allowance are entitled to it. Some people, although they may have been entitled to it when they first claimed, cease to be entitled because their circumstances change. I am sure that the hon. Lady agrees that it is right for us to ensure not only that those who are entitled receive their benefit, but that those who are not entitled do not receive it. As the Under-Secretary, my hon. Friend the Member for Southampton, Itchen (Mr. Denham) said earlier, we are taking steps to improve the quality of decision making in the benefit integrity project.
    Mr. Swinney: As the Secretary of State will know, fraud accounts for only 12 per cent. of the 20 per cent. of cases in which disability living allowance has been reduced; the remaining 8 per cent. are the result of other factors.
    Following the right hon. Lady's statement and her written answer to me of 9 February on securing additional evidence about decisions made in the benefit integrity project, does she accept that the Government have a responsibility to consider that 8 per cent. of cases and to take the initiative in deciding whether individuals have been properly treated by the Benefits Agency and the project and to restore benefits if that is appropriate?
    Ms Harman: My hon. Friend the Under-Secretary made it clear earlier that it is important for anyone who

    13
    feels that he has been unfairly treated by the benefit integrity project to understand that he has a right to review if he wishes to take up that option. We introduced extra safeguards to the benefit integrity project so that if it is proposed that someone should have his disability living allowance cut or taken away, action will not be taken until further evidence has been sought to ensure that the decision is right. It is unsatisfactory for benefit to be reduced or taken away and for people to have to wait eight weeks for the matter to be sorted out by a review. That is why we have introduced the extra safeguards. We are reviewing the fraud targets on disability living allowance that were laid down by the previous Government because our evidence so far from the benefit integrity project suggests that they were not right, although it seems that the overpayment estimate probably was.

    Lone Parents
    Mr. David Davis: What the targets are for the number of lone parents who will obtain work through the new deal for lone parents. [29086]
    Ms Harman: The new deal for lone parents is already up and running in eight areas. It will be extended nationally to new claimants in April and to existing claimants in October. About 500,000 lone parents with children over five are bringing up their children on income support.
    Mr. Davis: What is the full cost of the scheme per lone parent? Perhaps more important, what is the full cost of the scheme for each lone parent placed in a job?
    Ms Harman: My right hon. Friend the Chancellor has made available some £200 million to finance the new deal for lone parents over the next five years. The cost of more than 1 million lone parents bringing up 2 million children on income support at the end of the previous Government's term of office was about £10 billion. People think it inconceivable that the only Government message to lone parents on income support was, "Stay on it until your youngest child is 16." We are confident that our measures will help lone mothers to get into work and will begin to reduce the number of lone parents on income support.
    Mr. Michael Jabez Foster: Is my right hon. Friend aware that the £50 a week better off figure that has been mentioned does not include the cost of child care? In my constituency, wages are so low that even with the benefit of the minimum wage, for single parents to be better off it would be necessary to make substantial changes to in-work benefits. Are such changes proposed?
    Ms Harman: We are concerned to take all the steps we can to ensure that lone mothers do not have to bring up their children on income support but can get work and make it pay. The minimum wage and the working family tax credit will help low-paid families, the overwhelming majority of whom are lone parents. The cost of child care is an important factor for lone parents. For the first time in this country, we shall have a national child care strategy
    14
    and in his Budget my right hon. Friend the Chancellor will make further announcements about further help with the cost of child care through the tax system.
    Mr. Duncan Smith: Does the Secretary of State agree that after she launched the programme last year she said that it was a major success and claimed a 20 per cent. success rate? It was discovered that the actual rate of those going into work was 5 per cent. She told everybody to wait because some people still had not had a chance to act on the letters and that the scheme would be much more successful as the months went by. The success rate is now 6 per cent. Is not the reality that the programme is floundering and is not getting people into work? Most of those who are going into work are likely to have obtained jobs without that help. What is the right hon. Lady prepared to do to put the programme back on an even keel and make certain that it is a success rather than the failure that it is now?
    Ms Harman: I think that the hon. Gentleman is saying, "Why do we need a new deal for lone parents because they would all get jobs anyway?" As that is not true, do I take it that he is backing the new deal for lone parents? If he is, that is very welcome. In the eight pilot areas, more than half the lone parents have been contacted. That is in stark contrast with what happened under the previous Government, who told them to stay on income support until their youngest child was 16. So far, one in five lone parents who have been asked to attend for interview have attended. That is in contrast with what happened under the previous Government, who never invited them. Of those who have attended, one in three are in jobs.
    This is a pioneering approach. The hon. Gentleman left lone mothers on income support. We will help them to become better off, for themselves and for their families, by getting into work.
    Caroline Flint: I welcome my right hon. Friend's comments on the new deal for lone parents, who agree with her statements. They are being treated as visible rather than invisible women, which is how they were treated for 18 years under the previous Government. However, many lone parents cannot go to work because they lack education and training. I would welcome my right hon. Friend's comments on how we can get the new deal to work for them, so that they are encouraged to go into education and training. Could we consider opening up to lone parents the new deal education and training option presently available for 18 to 24-year-olds?
    Ms Harman: My hon. Friend makes an important point. We want not only to help lone parents get into work, so that they can be better off than they are on benefits, but to ensure that they get opportunities for further education and training. Several hon. Members have raised that matter with me. We are examining whether the new deal can offer lone mothers additional opportunities by providing them with education and training, so that they can not only get a job, but get on in their job.

    New Deal
    Mr. Day: What the benefits status of those under-25s who take part in the new deal will be (a) during the gateway period and (b) during their participation in any of the four options. [29087]
    The Parliamentary Under-Secretary of State for Social Security (Mr. Keith Bradley): The new deal for 18 to 24-year-olds gives young unemployed people real choices to improve their employability and their chances of fully participating in the labour market. During the gateway, young people will continue to receive jobseeker's allowance, provided they satisfy the normal eligibility conditions. Once they enter an option, they will receive either wages or a training allowance.
    Mr. Day: Will young people who choose an option other than the employment option be better off than on benefit? If so, will the extra funding come from the social security budget?
    Mr. Bradley: As I have explained, if young people take one of the options, they will receive either wages or a training allowance. If they receive a training allowance, they will be able to have passported benefits such as housing benefit and council tax benefit, which clearly come out of the social security budget.

    International Women's Day
    Ms Julie Morgan: What plans she has to promote international women's day. [29088]
    Ms Ruddock: The Government's most important contribution to promoting international women's day will be the debate that we have arranged for this Friday. We are ensuring that Parliament has the opportunity to discuss women's priorities and how the Government are delivering on their promises to women.
    Ms Morgan: Does my hon. Friend agree that child care facilities are needed in the House, both for members of staff and for elected Members and that, in the new institutions that we are setting up—the National Assembly for Wales and the Scottish Parliament—child care facilities should be built in from the beginning? Does she agree that Cardiff city hall, one of the options that is being considered to house the National Assembly for Wales, has a ready-made, established, creche? Does she agree that that is a great advantage?
    Madam Speaker: That was very international—well done.
    Ms Ruddock: My hon. Friend would not expect me to be drawn into where the Welsh assembly should be sited. However, in respect both to this Parliament and to any of the new institutions, the Ministers for Women are extremely keen that Members and people who work in these premises have the opportunity to express their child care needs. It is our view that all institutions should have regard to family-friendly conditions of employment and to assistance with child care. When my right hon. Friend the Secretary of State and I recently visited the European
    16
    Parliament, we saw the excellent facilities it makes available not just to Members, but to the many staff who work in the buildings.
    I urge my hon. Friend to join us in the debate on Friday, when she will be able to discuss—as, I hope, will many other hon. Members—whether child care is required, where it should be provided and the sort of child care that we want. Our priorities will be discussed on Friday and I urge hon. Members to be here to debate them.
    Mr. Gray: Is the hon. Lady aware that an analysis of the list of Labour candidates at the election shows that it contained more public school boys than women? What steps will she take to stamp out that disgraceful inequality before the next general election?
    Ms Ruddock: I very much hope that the hon. Gentleman will join us on Friday, when he will be able to express all his concerns about the representation of women, which is a key priority for the Ministers for Women. I can say with pride that our party has put women to the fore and ensured that there is now a record number of women in the House. I hope that the hon. Gentleman's party, and all others, will look carefully at equal representation for women, which I trust they will endeavour to bring about in all new institutions when they have the opportunity to do so.

    Child Support Agency
    Mr. Bob Russell: How many new cases she expects the Child Support Agency to deal with over the next year; and what changes in staffing (a) structures and (b) numbers she will implement to manage demand. [29090]
    Mr. Keith Bradley: In 1998–99, we expect the agency to clear about 560,000 maintenance applications, an increase of more than 56 per cent. compared with the number cleared in 1996–97.
    The agency is reorganising itself over the next year to move more staff on to front-line work and to improve telephone contact with customers. In addition, it will centralise work that does not require face-to-face contact with the public.
    Those changes will allow the agency to increase staffing levels by 300 by March 1999 while saving £5 million in administrative expenditure.
    Mr. Russell: The Minister of State said earlier that Parliament has sleepwalked into the nightmare of the CSA. Is it not time to stop the Rip van Winkle approach to the CSA, bearing in mind the fact that in one year Members of Parliament deal with 18,000 cases? Will the Government provide additional staff to ease the work load of hon. Members dealing with CSA cases?
    Mr. Bradley: Rip van Winkle woke up on 1 May. The Government are undertaking a thorough review of the CSA, as my right hon. Friend the Minister for Welfare Reform explained. We will present proposals in the summer and the points raised by the hon. Gentleman will form part of the review.

    Pensioners (Fuel Bills)
    Mr. Savidge: If she will make a statement on her plans to help pensioners with their fuel bills. [29091]
    Mr. Denham: This is the first time any Government have been prepared to help all pensioner households with their winter fuel bills. A total of £400 million has been made available to provide extra help, for this winter and next, to all pensioner households. One and a half million pensioners on income support have already received a payment of £50; other pensioner households will receive £20. Almost 10 million payments will be made to more than 7 million pensioner households. The majority of payments should be made by the end of March.
    Mr. Savidge: Northern Scotland will welcome all measures that reduce the misery of pensioners' going to bed unnaturally early for fear of fuel costs and the tragedy of cold-related illness and death. Will my hon. Friend consider what further steps can be taken to reduce the tragedy of that sort of suffering?
    Mr. Denham: In addition to winter fuel payments, we have cut VAT on fuel and on materials used in Government-funded insulation programmes, we have abolished the gas levy, there is a review of utility regulation and an interdepartmental group is investigating fuel poverty. The winter fuel payments have been promised for this winter and next. The best approach is to take stock of that policy in the light of the other initiatives and reviews across the Government, including the pensions review, to find out the best long-term way to ensure that pensioners can always heat their homes in the winter.
    Mr. Rendel: Will the Minister confirm that 80 per cent. of the extra winter fuel payments will be made in March or later, meaning that almost all pensioners will have to pay their winter fuel bills before they get the money?
    Mr. Burns: It is a summer supplement.
    Mr. Denham: This is the first time a Government have taken such action. Only in November was it clear that funds would be available for winter fuel payments. We have moved as swiftly as possible to make the payments. The majority will be made by the end of March. No other Government, including the Conservative Government of which the hon. Member for West Chelmsford (Mr. Burns), who is muttering on the Front Bench, was a member, have taken such action to ensure that pensioners can heat their homes in the winter.

    UK Presidency (Women)
    Dr. Gibson: What steps the Ministers for Women are taking on European Union-wide initiatives during the United Kingdom's presidency of the European Union. [29092]
    Ms Ruddock: In addition to what I told my hon. Friend the Member for Doncaster, Central (Ms Winterton), the Ministers for Women are urging all member states to address women's needs for family-friendly employment policies and child care in their national employment
    18
    action plans. We also want to tackle all forms of violence against women. During our presidency, we are urging member states to work at a national level to raise awareness of that issue.
    Dr. Gibson: What steps is my hon. Friend taking to persuade employers to set up workplace facilities for child care? She will know that many European countries have moved ahead faster than us on this. Will she tell us about the training of people employed in workplace child care facilities? Does she agree that at least a minimum wage would be proper remuneration for such people?
    Ms Ruddock: We are concerned about the provision of child care and to ensure choice. Provision by employers is very welcome. We are aware of provision in other nations. We shall study those issues at our conference in Belfast. Quality and training are key to our national child care strategy. A considerable consultation exercise is under way to ensure that the child care provided is good for child development and gives a safe environment. Child caring should be properly remunerated. The minimum wage will give recognition to those who undertake that worthwhile and sometimes taxing work.
    Mr. Wilkinson: Will the hon. Lady take the useful initiative with her European counterparts of trying to find out why the majority of European Union countries have a lower rate of divorce than the United Kingdom? Those lower divorce rates result in less damaging and traumatic experiences for children and a lower cost to the social security budget. If she can discover the reasons, will the Government try to do something about them through their social policies?
    Ms Ruddock: The hon. Gentleman will recognise that there are different cultural patterns—and that there have been different developments—across Europe. Many of us regret that divorce rates are rising throughout Europe. This country is not unique in that. We have learnt many things in our meetings, but such personal issues will not be brought into the European conferences that I have referred to.

    Child Support Agency
    Mr. Bill O'Brien: What plans she has to improve the efficiency of public telephone contacts with the Child Support Agency; and if she will make a statement. [29095]
    Mr. Keith Bradley: Many of the Child Support Agency's customers have said that the telephone is their preferred way of dealing with the agency. The agency recognises the need to improve its telephone service and is taking forward a number of new initiatives with this in mind.
    As many parents have work or domestic commitments during the day, the agency has begun to employ staff to work a wider, more flexible range of working patterns over a six-day week. As well as extending the opening hours when telephone contact can be made with it, the agency will increasingly use the telephone to get in touch with customers at an early stage in their application. The aim is that much more of the business will be conducted

    19
    over the telephone than by correspondence. This will allow the agency to gather the information needed more quickly and help speed up the assessment process.
    For customers with general inquiries, more resources are to be allocated to the agency's national inquiry line from April 1998.
    Mr. O'Brien: Any improvement in the service provided by the CSA is welcome. Will my hon. Friend take on board the need for better training for CSA staff? People are referred from one department to another and computers sometimes go down, which means that answers to queries are not received. The latest problem arises from
    20
    the fact that people are being advised that although the Government guaranteed that 70 per cent. of the net wage would be retained by the absent parent, that figure could be reduced to 60 per cent. or less. That problem must be dealt with because it is causing great concern, not only in my constituency but across the country.
    Mr. Bradley: My hon. Friend takes a great interest in this subject. As we move towards a more case work-focused, front-line service with greater use of the telephone, training will be an essential feature of that service, and we are determined to put extra resources into that part of the agency's work.

Planning for Communities
3.30 pm
The Secretary of State for the Environment, Transport and the Regions (Mr. John Prescott): Madam Speaker, I wish to make a statement on planning for the communities of the future. A document setting out our approach is published today and has been placed in the Libraries of both Houses. The document includes a response to the public consultation on the previous Administration's Green Paper, "Household Growth: Where Shall We Live?".
I hope that we can refocus the debate and, in doing so, change some of the language that we use in it. To my mind, much of the debate so far has been clouded by unhelpful language, crude figures and confused statistics. For example, the term "brown-field" is not helpful. I propose to talk about recycled land, which, of course, can be in cities—[Interruption.] There is no difference at all in the interpretation; "recycled land" is simply a better term. It can, of course, be in cities, towns or villages.
Green-field is too often confused with green belt, as if the two were always the same. Most important, while the technical term "household growth" is sometimes necessary, it does not adequately describe our main concern, which is to develop sustainable communities, now and in the future. I hope that, following today's statement, the Opposition will join us in a sensible debate—which does not seem likely—about how to achieve that aim, while recognising the real difficulties involved in meeting household growth in a sustainable way.
My Department published the latest projections of growth in the number of households in March 1995, under the previous Administration. The projections suggest that around an extra 175,000 households a year will be formed in the 25 years from 1991 to 2016. That is because of population growth and because people are living longer and couples are separating more often. However, household growth has been outstripping population growth increasingly since the turn of the century. It is not new.
The dilemma is clear cut and affects us all—how to accommodate more households and, at the same time, protect our precious countryside, without causing rents, house prices or homelessness to spiral upwards. It is a matter not just of how many households but of where they will live.
There are four key elements in our new approach. The first is increased flexibility. We shall emphasise that the projections are guidance, not building requirements. The second is more decentralisation. Regional planning conferences will have more responsibility and accountability in deciding the most sustainable way of meeting the needs of their communities. The third is making the best possible use of previously developed land and existing buildings. We must put the heart back into our cities and put cities at the heart of our strategy. The fourth is that what I set out today is part and parcel of our determination to achieve better integration of a range of policies that affect communities.
In order to achieve greater flexibility, we are determined to get away from a simplistic "predict and provide" approach in housing, as we have done for road
22
building. We shall treat the household projections as guidance, not house building requirements. Moreover, we shall allow for greater flexibility in adjusting regional and local plans to ensure that, over time, local provision meets local need.
Decentralisation is an essential aim of the Government—whether in devolution, in establishing the regional development agencies, or in our proposals for London—which I am pleased to see the Opposition now support.
We therefore propose to strengthen the role of the regions in translating projections into regional planning guidance. The regional planning conferences will work together with the Government offices to determine how much extra housing is needed in their regions.
The aim will be to increase the local ownership figures so that local authorities translate the new regional guidance into plans and actions on the ground. I want to see better public information on the consequences of decisions on releasing land for housing, so that those responsible can be held accountable and the public debate can be better informed. I want it to be a truly bottom-up approach.
The conferences may be able to justify lower or higher housing figures than those implied by the projections, but we shall expect local authorities to monitor and report on the effects of their decisions. If the effects are damaging, authorities will need to act—or, in the last resort, we may need to intervene—but the whole philosophy of our new approach is to strengthen local responsibility and to have a bottom-up approach. We shall move to that new approach as quickly as possible in the reviews of regional planning guidance that are already under way. As soon as the new regional planning guidance is ready—possibly as early as next year—it will be open to local authorities to review their development plans.
In considering development plans in advance of new regional planning guidance, I shall continue to treat each case on its merits, taking account of today's statement.
It is our firm policy to protect our countryside and revitalise our towns and cities, by maximising the use of recycled land and existing buildings. One of the most effective ways of relieving the pressure on the countryside is to revitalise our cities and improve the quality of urban life. That is why I have called for an urban renaissance in Britain, requiring a whole range of measures. It is not just a matter of urban housing, let alone planning; it is about tackling the range of problems affecting the quality of urban life—in relation to crime, education, jobs, transport or the environment. Many of the same problems also affect rural communities, to which we must also direct our attention.
Last Wednesday, I unveiled the winner of the millennium village competition. The millennium village is a flagship scheme, providing 1,400 homes on recycled land at Greenwich. The development will be built to the highest quality of architectural and environmental design. Energy use will be 80 per cent. better than average. Every home will be linked to the internet, opening new horizons of communication. It will be a development for the whole community. There will be homes for rent as well as homes to buy, with provision for jobs, shops, public transport, health and schooling. The millennium village will point the way for urban regeneration in future, and I have asked

23
English Partnerships to seek out other similar sites for urban villages, to share the benefits throughout the country.
That initiative will run alongside our other main programmes: nearly £1 billion under the capital receipts initiative, £250 million announced last week under the estates renewal challenge fund and our other urban regeneration programmes. Such initiatives will help to meet a higher proportion of future housing need on recycled land in our towns and cities, rather than in the countryside.
The target set by the previous Administration was
"that, by 2005, half of all new housing should be built on re-used sites".
In practice, they achieved an average of 42 per cent. between 1985 and 1995—rising from 38 per cent. in 1985 to 50 per cent. in 1995. The figures are national averages—ranging from 33 per cent. in the east midlands to 83 per cent. in London—but the target was not based on any assessment of the availability of recycled land.
In future, we shall expect each regional planning conference to make a proper assessment of land availability and set regional targets for the use of recycled land. That has never been done before. It is an important change and it will sharpen the focus of policy and action on the ground. Last week, I asked my Department to work with English Partnerships and local government to create a national database of land use, which will give local authorities reliable information on the amount of recycled land available for housing.
Today, I go further. Local authorities, developers, builders and the professions have all been looking for a lead. To spearhead that unprecedented collective effort, I have established a task force to help make better use of recycled land. I have asked my noble Friend Lord Rogers of Riverside to lead it. It will co-ordinate and develop a wide range of activity and innovation.
I consider that a national target for the use of recycled land can help to guide regions and local authorities, and help them to improve their performance. With our new policies in place, we expect local planning authorities to be able to raise the national proportion of new homes to be built on previously developed land to 60 per cent. over the next 10 years. We shall come back to refine the national target in the light of regional targets when they are known and when our database is established.
We also want for the first time to measure separately the reuse of previously developed land in urban areas and in rural areas, so that we can get a better focus on urban redevelopment. Many of the respondents to the Green Paper accepted that 60 per cent. would not be easy. No one should underestimate the problems and costs of redeveloping some sites, such as those that are contaminated. Indeed, it cost more than £100 million to decontaminate the Greenwich millennium peninsula site alone—a decision taken by the previous Administration.
If we are to make our towns and cities attractive places in which to live and work, we must ensure a good quality of life. That is why we reject so-called "urban cramming" and pressures to build on green spaces in towns. Our parks and green spaces are part of what makes town living attractive. That is why we have strengthened the protection against building on school playing fields—a practice allowed by the previous Administration.
24
I now come to an important new element in our proposals. We propose to follow a sequential approach to the location of new housing and a phased approach to the release of land. Whenever possible, recycled land in urban areas should be built on first, provided that it can be well linked to public transport, jobs, shops and other facilities. The same tests will apply to the sequence of development of green-field sites. We shall also need to allow for release of empty property and so-called windfall sites. Some of the responses to the previous Government's Green Paper called for economic instruments, such as a green-field tax, to be introduced. As a first step, we want to open up debate on the use of that type of measure. Final decisions on taxation are, of course, a matter for my right hon. Friend the Chancellor of the Exchequer.
Much of the debate has concentrated on urban housing, but we must also allow for the housing needs of people in rural areas. Many country people are deeply concerned at the lack of affordable housing, often because houses are bought by wealthier commuters or as holiday cottages. A young couple in a village have every much a right to a decent home as their counterparts in the town.
Hon. Members will be aware of the recent report by the Rural Development Commission, the "1997 survey of rural services", which highlighted specific problems in the rural economy, particularly after 18 years of the previous Administration. Communities fall into decline and are no longer able to sustain jobs and essential local services. Those problems are particularly acute in our former coalfield communities, which are often in rural areas and which pit closures have left devastated. We must find new ways to address those problems. We want to see thriving communities in our rural areas—a living countryside.
It was the post-war Labour Government who laid the foundations of the modern town and country planning system, including green belts and national parks. The Government remain committed to protecting the green belts and the wider countryside—protection of the green belt is as strong as ever. Any new development, whether in town or country, must be sustainable development. There will be exceptional cases—such as that of Hertfordshire—where pursuing the most sustainable solution may lead to adjustments in the green belts, which is precisely what the previous Administration used to do. Nevertheless, since we came to office less than 10 months ago, some 30,000 hectares have been added to the green belt in boundary changes. I expect that trend to continue in this Parliament under this Government.
Successful community development depends on a wide range of policies. We shall tilt the balance in favour of urban development, not only through the planning process but through fairer regional development, improving our public transport, raising standards in our schools and tackling crime. We shall consult on how best to implement the proposals and take them forward in partnership with those involved, especially the regional planning conferences.
This statement represents a break with the past on one of the most important issues facing us today: how and where we should live. We want to replace the top-down, "predict and provide" mentality of the past with a more responsive and accountable system that is better able to revitalise our towns and cities and protect a living countryside that we all enjoy. I believe that the proposals

25
will help us to achieve our twin aims of urban renaissance and ensuring that we hand on a green and pleasant land to future generations.
Hon. Members: Hear, hear.
Sir Norman Fowler: Labour Members cheer now, but it would be more impressive had they not cheered exactly the opposite policy three weeks ago. Everyone knows that, however it is dressed up, this is a major Government U-turn. It makes nonsense of everything that Environment Ministers have been saying over the past nine months. How does the Secretary of State square what he said today with, for example, what the Minister for London and Construction was saying a few months ago about the impossibility of the policy that has just been announced?
Against that background, let me ask the Secretary of State a few short questions to find out how deep his conversion goes. How will his announcement affect plans for development in the green-belt land and countryside that he has already personally waved through in Hertfordshire, West Sussex and Newcastle? Will he order a halt on those plans? How does it affect the structure plans of counties such as Hampshire? Will they proceed on the new or the old basis in making their plans?
On the target for brown-field developments, or recycled land as the Secretary of State prefers to call it, why have his Ministers consistently said up to now that a 60 per cent. target is unrealistic? He acknowledged in his statement that his Department's statistics show that the previous Government raised the brown-field use figure not to 42 per cent. but to 50 per cent. Is he aware that our target remains 66 per cent? I have no doubt that in a few weeks' time the Government will have accepted that also.
On Lord Rogers's committee, is the Secretary of State aware that the public will need to be convinced that this is not just yet another Government review? Will the committee be entirely independent? Will it be asked not only to identify brown-field sites but to suggest measures to encourage their use? In that respect, does he recognise that measures such as the new development land tax that he mentioned may be good for the Treasury, but do little to stop development, given the vast difference in price between agricultural and development land?
Is the Secretary of State aware that it is not enough for him to say that although he has approved the destruction of the green belt in one area, he has approved its extension elsewhere? The one certainty of that policy is that green-belt land is permanently lost and that the green-belt principle is undermined.
Opposition Members have campaigned against development in the countryside and in the green belt, and for maximum use of brown-field sites and recycled land. This afternoon, the Government have accepted our arguments. Both we and the public will need to be convinced that the Government's words will be followed by action. The best way for the Government to show a new resolve is by reversing a number of the damaging decisions that they have already taken to destroy the green belt.
Mr. Prescott: I find it difficult to accept that the Opposition spokesman realises that he was in government for 18 years. As he pointed out, and as I fairly said,
26
the Opposition's record on using brown-field sites ranged from 38 per cent., to 50 per cent. in their last year in government. It was therefore fair for us to say that the average was 42 per cent. I was a little surprised that he raised the matter of targets because, in government, they achieved their target of 50 per cent. in one year—
Sir Norman Fowler: It was more than 60 per cent.
Mr. Prescott: That was before they moved. It was 50 per cent., then, as I understand, a consultation document recommended that 60 per cent. be considered. Then, the hon. Member for South Suffolk (Mr. Yeo) wrote to me saying that I should adopt a target of 75 per cent. I wrote back to ask him whether that was his party's policy. The shadow Cabinet was then immediately convened, and the figure changed to 66 per cent.—all in a matter of weeks. I do not think that we can treat the Opposition spokesman's claims with any seriousness.
I want to have a serious debate. I did not slag off the Opposition in my statement; I did not think that there was a necessity to do so. [Interruption.] Just try and stick with it. We are trying to have an intelligent debate about a serious matter: where people live. I have tried to be helpful in suggesting changing some of the terms. In 12 months, I hope to have more information about where brown-field sites are. I find it amazing that the previous Government had not found out. In order to make a judgment, it is important to find out the amount of recycled land or brown-field sites we have. We are going to do that, and I hope that the House will be better informed as a result, so that we may have a more intelligent debate. [Interruption.] I am dealing with the opening comments of the right hon. Member for Sutton Coldfield (Sir N. Fowler.)
I have said that any decisions that come before me will take the statement into account until the necessary changes that the statement requires are made. I particularly chose to mention Hertfordshire in my statement, to show that I was prepared to break into the green belt in order to connect the area to a transport corridor. The basic principle is about meeting transport requirements, by moving more people on to public transport. The House will have to have more and more debates about that. It is true that, after 10 months in office, there are over 30,000 more hectares of green belt. That is quite important. It shows just how important we think those matters are.
With regard to Lord Rogers's independent review, we hope that he will be able to report in the first 12 months precisely how much land is available. The report will be independent. I am sure that anybody who knows him will agree that he would not accept any proposition that was not of an independent kind.
What we have done today is to indicate a change. It will make for a more intelligent debate. I appeal yet again to the Opposition to join us in that debate. People outside the Chamber are concerned about where their homes and communities will be, whether in rural or urban areas, and look to us to have a proper debate.
Mr. Gerald Kaufman: Is my right hon. Friend aware that his statement will be music to the ears of my constituents, in terms of both the development of what he calls recycled land and

27
the protection of the living countryside, especially green spaces in towns? My constituents will be particularly pleased to hear his confirmation, in response to the bluster from the right hon. Member for Sutton Coldfield (Sir N. Fowler), that the criteria in his statement will be used in judgments to be made. Is my right hon. Friend aware that the intention, so far thwarted, of North West Water to build a housing estate, office blocks and an hotel on the only piece of open, green countryside adjacent to my constituency, is rejected by thousands of my constituents who have fought the proposal for years? We look to him to approach any planning applications in the light of the criteria in his statement.
Mr. Prescott: My right hon. Friend reminds the House that it is not just urban playing fields but small woodland areas and forests in our towns and cities that need protecting. I cannot comment on the particular case that he mentions, as it may come before me in my quasi-judicial capacity.
Mr. Matthew Taylor: The Deputy Prime Minister's statement is an extremely important step away from the discredited policies of the former Government, under which six out of 10 homes were built on green-field sites—many of them as a result of the overturning of local objections, and some as a result of the overturning of the views of local inspectors.
Would the decisions that the right hon. Gentleman has taken and which were based on the previous Government's policies have been different under these new policies? If so, why does he not announce a moratorium on further major development in the green belt pending the implementation of the new strategies? After all, he has accepted that they may take a year to implement, and just taking them into account is no guarantee that they will be followed.
Why has not the right hon. Gentleman accepted the view of the round table that reported to the previous Government: that 75 per cent. of properties could be built on brown-field—or what he calls recycled—sites?
Mr. Prescott: The hon. Gentleman is right about the different policies pursued by the previous Administration. I may have omitted to answer the point about whether there has been a U-turn. Indeed, I challenge the right hon. Member for Sutton Coldfield to show that anything I have said today differs from what I have said before. [Laughter.] It is no good saying, "Ho, ho, ho!" I will need more evidence than Opposition laughter before I will accept that there has been a U-turn. [Interruption.] Clearly, the right hon. Member for Sutton Coldfield cannot contest what I have said.
As for the 75 per cent. target, I believe that 60 per cent. is difficult enough to achieve. We need to assess how many brown-field sites are available before we can judge how the policy is working. I have set that work in hand.
Changes to plans or moratoriums would require legislation, and I am not in a position to introduce legislation at this stage. I shall, however, take into account the principles that I have identified in my statement. Local authorities, too, will no doubt take them into account when they make their assessments under the new system.
28
Most of the targets are for 15 or 20 years ahead. I am sure that the new procedures, which will give local authorities a better chance of flexibility and of including the regional dimension, will lead to further changes. Those will be matters for regional planning guidance and conference discussions.
Mr. Andrew F. Bennett: Does my right hon. Friend accept that if the strategy is to work, we must be prepared to look after existing housing areas far better than we have done in recent years? We must be prepared to spend more money on them, especially high-density housing schemes. We shall also need to regenerate the urban parks—where is the money to come from?
Mr. Prescott: I am surprised by my hon. Friend, who fought on the same manifesto as I did at the general election. It spelled out the fact that there would be £5 billion from capital receipts—a huge amount of money—to do precisely what he is calling for. What is more, the Chancellor has provided £800 million for the purpose.
Mr. John Gummer: Will the Deputy Prime Minister accept my congratulations on getting rid of his target of 50 per cent., which is what we achieved, and on accepting the target that we had, of 60 per cent? What part will the round table on sustainable development play in the whole issue? It has suggested that 75 per cent. would be possible.
Secondly, there is a way in which the right hon. Gentleman can go back on decisions that he has already made. West Sussex council is taking him to court. It would be quite possible for him to decline to offer any evidence. That would enable him to do in West Sussex what I understand he has already done in Dorset.
Thirdly, would it be possible for the right hon. Gentleman to devote a little more time to discussing mixed development? I noticed no reference to mixed development in what he said. The key to what we are dealing with is mixed development in our towns—not only social mix, but a mix of housing, shops and offices.
Finally, will the right hon. Gentleman do something for the people of Stevenage, who are to have foisted upon them a development that would not be allowed under his policy, and which I would not have allowed when I was doing his job?
Several hon. Members rose—
Madam Speaker: Order. Before the Deputy Prime Minister answers, may I appeal to hon. Members? Most hon. Members in the House are standing—only about six are not standing. I obviously cannot call them all. Therefore, there will be only one question each now; otherwise, I shall ask the Deputy Prime Minister to answer only the first question.
Mr. Prescott: The recommendation of the round table on sustainable development—75 per cent.—is a difficult target to achieve. I could not in all honesty recommend that to the House, although I am prepared to reassess those matters once we have far more information. I have set that in hand.

29
With regard to West Sussex, the matter is before the courts. The principle on which we disagreed was that the local authority wanted to cut its housing programme by 25 per cent. I was not prepared to accept such an extreme cut. Dorset's cut was 1 per cent. of the total. The record of the previous Administration, in which the right hon. Gentleman played some part, shows that he also forced higher targets on some local authorities, which they did not want to accept.
Mixed ownership and living together are closely identified with the millennium urban village concept. I could not go into all the details in my statement, so I shall send the right hon. Gentleman all the aims and objectives—which he has probably read—of that concept. He is right about that, and we are trying to secure it.
Mrs. Ann Cryer: I thank my right hon. Friend for his welcome statement. What immediate guidance can he give to Bradford metropolitan district council regarding its urban development programme, which allocates 1,500 spaces for houses at Silsden, in the green belt, in a beautiful part of the Aire valley in my constituency?
Mr. Prescott: Such matters are controversial. The plan in Bradford has been strongly contested and is, I think, still being contested. My hope is to provide a better system, so that we do not get into such situations, and so that local authorities will have a greater opportunity to determine the figures in a more decentralised way. I have set out the programme for that, and I hope that it will be more acceptable to the people in the regions.
Mr. Kenneth Clarke: I welcome the fact that the Deputy Prime Minister is re-examining policy, and I congratulate him on overruling the unhelpful remarks of his junior Ministers on previous occasions. That makes a practical difference. Will he consider the situation of counties where structure plans have already been settled, such as the county of Nottinghamshire, where the bulk of the development is being allocated to the countryside in the south, and far less of it to the old coalfield sites in the north, which need the regeneration? Will he allow the public inquiries on those structure plans to be reopened? It cannot be right for one policy to apply in some counties, and a new policy, if he has one, to be applied in others.
Mr. Prescott: If the Opposition spokesman was at the Dispatch Box answering for the Government, I am sure that he would give the same reply as I shall give: those matters cannot be reopened at this stage. I have provided an opportunity for a review of projections that are set 25 years ahead. That process will allow us to reconsider those matters. All projections over that period will be taken into account in the structure plans and the long-term development. I am providing a far better process for people to influence growth and development in their areas.
Mr. Andrew Mackinlay: I welcome my right hon. Friend's statement on recycled land. Will he bear it in mind that many existing planning permissions have not been triggered by developers? In my borough, there are 5,500 planning permissions year after year that have not been activated. That should be the backdrop to
30
any decisions that he and his colleagues make when they receive inspectors' reports on planning applications. Will he be mindful of the need to ensure that where there is new residential development, particularly in the south-east of England, there is a penal tax on landfill and other measures? We must not resolve one problem of providing residential homes by creating an additional environmental problem that often results in land tipping, to the disadvantage of my constituents in Essex and those in other counties in the south-east of England, which is unacceptable.
Mr. Prescott: Those matters are very much under review at present. A conclusion will be arrived at shortly.
Mr. Peter Lilley: Is the right hon. Gentleman aware that my constituents were deeply disappointed when he approved—or said that he had no objection to—plans to build 10,000 houses in the green belt between Stevenage and Hitchin in my constituency? That is the biggest incursion into the green belt since any hon. Member has been in this place. Does the right hon. Gentleman realise that the whole country will view this as a litmus test of whether he has changed his rhetoric or his policies? Is he aware that Hertfordshire county council told me today that he could, without legal risk or the chance of incurring damages, reverse that decision and abort the plan? If he does so, my constituents and I will hail him as a hero. Does the right hon. Gentleman realise that no one will believe that he has changed his policies if he is not prepared to change that decision?
Mr. Prescott: I have some difficulty accepting the Opposition's arguments in this area. As I understand it, they would like local authorities to have more say on such matters and, in this case, the local authorities fully endorsed the proposal. For whatever reason, the local authorities have agreed to that proposal. Therefore, to that extent—
Mr. Lilley: Wrong.
Mr. Prescott: The local authorities agreed to the proposal. I accepted what the panel said about changes to the green-belt area because I felt that the transport corridor encouraged the movement of transport in an urban sense, rather than the pepperpot development that we have seen in rural areas. That is an important part of the environmental sustainability arguments. The previous Administration—in which the right hon. Gentleman was a major player—gave 500 hectares of green belt to a vehicle storage and distribution centre, corporate headquarters, automotive production and an airport runway.
Mr. Keith Vaz: May I congratulate my right hon. Friend on his clear and concise statement and on the excellent choice of Lord Rogers to head the task force? Does he agree that, in order to achieve his aims, we must take a grip on the archaic, inflexible, expensive and bureaucratic planning system that he inherited from the previous Government?
Mr. Prescott: There has been considerable criticism of the planning framework—although I think that every hon. Member would agree that such a framework can play a useful role. We are reviewing the matter at present and

31
taking account of the many criticisms that have been made. However, I believe that a planning framework is absolutely essential in this area.
Sir Peter Emery: Does the right hon. Gentleman realise that many people in the country, including Members of Parliament, believe that they have an absolute duty to protect the jewel of the British countryside? Once it is bulldozed, it can never be returned to us. Does the right hon. Gentleman realise that, under his present plans, more than 2.5 million new people will go to live in the countryside in the next 10 to 12 years? Does he really believe that that is acceptable?
Mr. Prescott: Whether or not it is acceptable, it happened for 10 years under the previous Administration.
Kate Hoey: I welcome the principles contained in my right hon. Friend's statement. Many of my constituents will now feel hopeful that they may not have to move out of London in order to provide homes for their families. Is my right hon. Friend absolutely certain that we shall find ways of providing affordable housing in London and in our inner cities?
Mr. Prescott: That is a very important matter. Recent information has shown that many people are leaving London, and I believe that they would stay if certain parts of the city were more attractive places in which to live. Improved housing, reduced crime and a better education system are influential factors in determining whether people leave an area. Social housing is a crucial part of the equation, and my hon. Friend knows that we have discussed such development in London. I want to see mixed ownership and different forms of financing house purchase, which would allow for good mixed development in all areas.
Mr. Nicholas Soames: Although the right hon. Gentleman's decision to recycle more brown-field sites is, of course, good news, does he accept that a deep sense of injustice remains in West Sussex about the fact that, even after his statement, he still intends to press ahead with his futile case in the High Court? In the context of his statement, how can he justify overturning his own inspector's decision that West Sussex county council had an impeccable case and that West Sussex could not physically take any more new housing?
Mr. Prescott: I am not taking West Sussex county council to court; the county council is taking the Government to court—that is its decision. Secretaries of State of all Governments have constantly faced such decisions. As the hon. Gentleman says, the matter is before the courts, but I did not believe—I have given some of the reasons why—that a 25 per cent. cut in the total amount of housing for the area was acceptable. I believe that local parties should determine the figures more flexibly in a regional context. West Sussex is a good example of why we need a new system.
Dr. Brian Iddon: I am sure that my right hon. Friend realises that, while the previous Administration lined the pockets of their friends in the
32
new house building industry, houses in areas such as I represent fell into dilapidation faster than we could improve them. Indeed, in Bolton in 1998, there are 5,000 to 6,000 irredeemably unfit homes. I welcome his statement, but please will he help us to carry out some clearance, so that these areas can be regenerated and people do not have to continue to live in these intolerable conditions?
Mr. Prescott: My hon. Friend makes an important point. The fact that there are some 700,000 empty properties today is a major problem for us. [Interruption.] It is private and public sector housing. I am bound to say that it does not help if hon. Members shout out ideological comments about whether the authorities are Labour or Tory. The House, if it is concerned about homelessness, should be united in dealing with empty properties, regardless of whether they are private or public. We should address the fact that many of those properties are on brown-field sites. The Government are also considering the refurbishment of estates and have started some of the programmes. We are committed to bringing more resources into play—when they become available—to improve and refurbish our estates.
Mr. Tom King: Whatever percentage is chosen for recycled land, there will be a substantial amount of development on green-field sites. Is not the key question how the right hon. Gentleman can ensure that priority is given to the development of recycled land? Did I understand him to say that he would consider further how that might be done? Will the outcome of such consideration be taken into account in the existing system of public examinations and structural plan reviews?
Mr. Prescott: Those are important questions; some of the answers may flow from the reviews that we are conducting. People have not properly addressed the question of the 75 per cent. figure. As the right hon. Gentleman suggests, 25 per cent.—or 1 million of the 4 million houses projected, which is an awful lot—will still have to be built on green-field sites. How we fit those houses into the green-field sites is debatable—both the Government and the previous Administration allowed the green belt to be cut for further housing—but we must address that difficult problem. The sequential test that I am introducing—which, as everyone should agree, is good common sense—already applies to out-of-town shopping centres. We should, therefore, be able to get a better idea of how much we can put on the brown-field sites before we deal with the green-field sites.
Ms Julia Drown: My right hon. Friend's statement will be welcomed by my constituents, whether they live in rural or urban areas. Will he assure the House that he will consider giving local councils greater control over the density of housing to be built in an area, so that developers cannot ride roughshod over local people's wishes and build fewer homes in an area than were intended, thus putting more pressure on our green fields?
Mr. Prescott: That is indeed an important point. The guidance notes will have regard to density of housing.
Mr. David Heath: I welcome what the Secretary of State has had to say, which is in marked contrast to the imperviousness of the previous Government when facing exactly the same arguments.

33
May I bring the right hon. Gentleman back to the county structure plans, which are key to the planning process in rural areas? Somerset, for example, is in the middle of the process. It has indicated that it does not believe in the figures that have been put forward and would like to see them revised downwards. The examination has been completed in public. Will Somerset be allowed to revisit the examination in public or to consider the Secretary of State's new policy in determining what to submit to Ministers in due course?
Mr. Prescott: I have made my statement. I have no doubt that the matters under discussion will be taken into account in all parts of the country. I am not able to comment on reviewing structure plans, because such issues may come before me. That being so, I cannot comment at this stage.
Mr. Chris Mullin: I welcome my right hon. Friend's statement. May I say, however, that 60 per cent. is not a very ambitious target for the north-east, where many acres are capable of being recycled? There is a good case for stopping all or most green-field developments, to force developers and planners to come up with ways of civilising our inner cities.
I invite my right hon. Friend to Sunderland, where there are acres of listed Victorian properties that are sliding towards ruin. Attempts to refurbish them are undermined, because local authorities are granting planning permissions on green-field sites.
Mr. Prescott: I recall my hon. Friend asking me a similar question about Newcastle a short while ago. I checked things out, and it appears that 77 per cent. of new houses are being built on brown-field sites. That is even better than the targets that we have talked about this afternoon. That achievement cannot be held as a criticism against Newcastle.
It is—[Interruption. There is an argument. I have said that at this stage 75 per cent. is too ambitious. It would be wrong to say that I believe that that percentage can be achieved. That would not be an honest approach. I think that 60 per cent. is possible, and that is the target that I have set the Government in 10 years' time. Within about 12 months, I shall make a statement on the review of brown-field sites, or recycled land, so that we can all make a judgment on the real possibilities. That is the proper approach.
We are talking about the provision of housing, and there is talk of council housing. The green-belt area in the north-east improved under the Durham county plan, involving about 15,000 hectares. That is a major extension of the green-belt area, and one of the reasons why we are doing so well.
Mr. David Curry: The right hon. Gentleman never mentioned the word "money" in his statement. What is his estimate of the additional costs of developing on used sites as opposed to unused sites? Is it his intention to direct additional resources to local government, the new regional development agencies or the apparently reprieved English Partnerships, to finance
34
the bringing of land into a condition that is fit for development? Is this the death knell for the proposed new town between Ripon and Thirsk, in open countryside?
Mr. Prescott: The right hon. Gentleman is wrong to say that I did not mention money in my statement. I mentioned more than £1 billion in regard to capital receipts, regeneration and estates renewal. If extra moneys are required—I well understand the argument that recycled land is much more expensive to build on than other land, and I have considerable sympathy for it—a judgment will have to be made at a later stage.
The sequential test will tell us how much money will be needed. I worry to some extent that extra pressure that is put on recycled land will have the effect of pushing up land prices. If owners are thinking about the target of 60 or 75 per cent., they may well feel, "Let's hang on to the land." If that is the position, local authorities and other bodies will find it difficult to afford recycled land on which to build.
That is one of the arguments of supply and demand. We must take account of those real problems, which have implications for public expenditure. I do not have sufficient information at present to make a judgment.
Mr. David Drew: I thank my right hon. Friend for his statement. I am sure that he is aware that Labour Members have been engaged with this issue for a long time. I ask my right hon. Friend to accept that villages are prepared to accept development. However, when the local plan is for 25 houses, that is what they want to end up with. Is my right hon. Friend prepared to consider means to ensure that the planning process is able to deliver that sort of development and not a great deal more housing?
Mr. Prescott: The judgment on how many houses will be in villages or in urban areas is best left to the new framework that I am proposing. The more flexible approach allows all the different bodies to reach agreement and decide on the areas. Whether it is 25 houses for a village or 1,000 for an urban area, the judgment will be made in the local area. The flexibility that I am introducing will make the system more effective than the existing arrangements.
Sir Paul Beresford: The house projection figures reflect social change over the years. Some of those changes are definitely desirable, but many would consider some to be undesirable. Will the Labour Government attempt to influence any of the undesirable ones?
Mr. Prescott: The hon. Gentleman should be more specific about what he feels to be undesirable.
Mr. Bill O'Brien: I thank my right hon. Friend for his statement, and in particular his reference to strengthening local responsibilities. Last year was the 50th anniversary of the Town and Country Planning Act 1947, and bringing responsibilities back to local areas is welcome. If he wants to develop a millennium village in West Yorkshire, I can offer him two sites. Horbury and the former mining village of Sharlston would make admirable sites for a millennium village.
Mr. Prescott: My hon. Friend has a long history of wishing to see the decentralisation of Government decisions, so I well understand why he welcomes the proposals that I announced today.

35
As regards making a bid for a millennium village, my hon. Friend's is the second application that I have received. The first was Hull.
Mr. John Bercow: The Deputy Prime Minister mentioned the possibility of a tax on green-field sites, which was originally trailed some time ago. Will he confirm that if such a tax goes ahead, he will ensure that the proceeds from it are reinvested exclusively for the betterment of rural areas and will not be confiscated by the Chancellor for his own nefarious purposes?
Mr. Prescott: I did not hear the last part. It did not sound as if it was worth while anyway.
On taxation arrangements, the decision will be made at the appropriate time by the Chancellor.
Mr. Neil Gerrard: My right hon. Friend was far too generous to the previous Government when he described their policies as "predict and provide". They may have predicted, but they certainly did not provide affordable social housing. I hope that he will ask regional planning conferences to set specific targets on social housing.
With regard to town centres, I ask my right hon. Friend to look at some of the schemes that were successful but grossly underfunded, such as living above the shop, and whether we can put more effort and money into such schemes.
Mr. Prescott: We are looking at those matters. The judgments on social housing will be made by the local authorities with the regional planning conferences. We have a major part to play, with our housing programmes. My hon. Friend mentioned the "predict and provide" policies of the previous Administration. During their time in government, the Conservatives produced 1 million fewer houses than the average building programme of a decade earlier.
Mr. Cynog Dafis: I am glad that the Deputy Prime Minister spoke about a living countryside and thriving communities in rural areas, but how does he reconcile that with the Government's apparent intention to use the current crisis in farming as a way to bring about a radical downsizing of employment in agriculture? Does he agree that if that downsizing occurs and if the crisis continues, we shall see a catastrophic decline in rural areas, and their economic viability will be pulled out from under them?
Mr. Prescott: I have a great deal of sympathy with what the hon. Gentleman says. There has been a massive change in the economic circumstances of rural areas, which is largely because of considerable changes in agriculture. The report that I mentioned shows the decline in essential services in rural areas. The solutions that we have put forward—to work with rural areas and to bring in regional development agencies—will play a major part in improving the situation in rural areas. It could not be worse than what happened under 18 years of Tory government.
Mr. Hilton Dawson: I commend my right hon. Friend's statement, which will be regarded
36
as enlightened by urban and rural communities, and thank him for his rational approach in the face of mischief making and misinformation. Will he assure me that under the new planning system, which will remove so much that was bad from the previous Government's system, parish and town councils will be able to estimate the housing needs and environmental capacity of the communities that they know so well?
Mr. Prescott: Under the new planning system, parish and town councils, while not making the decisions, will have greater influence through the regional conferences. Decisions will not be passed from top to bottom. Councils will be able to determine their own areas and decide, exercising greater flexibility, how they will be spread within the region.
Mr. James Paice: Does the Deputy Prime Minister accept that bragging about the size of the green belt is irrelevant and that what matters is where it is? Constantly removing green belt from the inside and expanding by greater percentages outside does not protect communities in the cities from sprawl or the countryside from development. Unless the green belt is inviolate, it fails in its principal purpose.
Mr. Prescott: It was not inviolate under the previous Administration. I can give the hon. Gentleman the figures, if he tables a parliamentary question. Previous Secretaries of State had to make balanced judgments. I do not criticise that. The green belt became an issue only because we were told that we were cutting it, and the record—[Interruption.] Every Government, including the previous one, built on green-belt areas. We have increased the green-belt area by more than 30,000 hectares in less than 10 months. That is a pretty good record.
The hon. Gentleman has a fair point, which Secretaries of State have to bear in mind when judging planning matters. I may allow house building on the edge of Stevenage's green belt, for example, and people may say that providing green belt elsewhere does not necessarily satisfy demand. I understand the point, but could be more sympathetic: people in urban areas, too, like green-field sites, but the Conservative Administration constantly sold such sites—school playing fields, for example—and were indifferent to green-belt considerations.
Mr. Mike Hall: I welcome my right hon. Friend's statement, because it signals a significant policy change. The previous Administration's planning approach was guided by a presumption in favour of development. Local authorities would refuse planning applications, only for decisions to be overturned on appeal and costs awarded against them. A more democratic approach to local decision making will allow the protection of green-field sites.
Mr. Prescott: How could I possibly disagree?
Mr. Bernard Jenkin: May I welcome the right hon. Gentleman's policy change on targeting recycled sites? I should be grateful if he enlightened me as to where that leaves Essex, which has already agreed in principle to an extra 85,000 homes. Will he shed light on these shadowy new organisations, regional planning conferences? Is he aware that he has changed his policy?

37
Will the conferences be accountable to the House or will they be in planning experts' limbo, and immune to accountability, which will allow the planners' cabal to proceed relatively unsupervised?
Mr. Prescott: As I said in my statement, the responsibilities of the Secretary of State have not changed.
Several hon. Members rose—
Madam Speaker: Order. I am bringing this debate to a close. We shall no doubt return to these matters very soon.

Points of Order
4.29 pm
Dr. Nick Palmer: On a point of order, Madam Speaker. I should like to correct a statistic that I gave the House two weeks ago. When I introduced the Acquisition and Possession of Air Weapons (Restriction) Bill, I said that 7,000 police officers had been injured and one had been killed by airguns in recent years. It turns out that that was the number of injuries sustained by the general public, whereas I interpreted it as injuries sustained by the police. I want to correct that. I am appreciative of the hon. Member for Blaby (Mr. Robathan), who drew the error to my attention. I apologise for unintentionally misinforming the House.
Madam Speaker: The House is grateful to the hon. Member.
Mr. John Swinney: On a point of order, Madam Speaker. I want to raise an issue relating to the Committee stage of the Scotland Bill, which we are about to commence.
Madam Speaker: Can the point of order wait for the Second Deputy Chairman of Ways and Means, who is in charge of the Committee stage and has the authority to deal with the hon. Member's point?
Mr. Tam Dalyell: On a point of order, Madam Speaker. You have been very generous with statements, private notice questions and points of order on Iraq. Have you had any request from the Attorney-General to make a statement on whether Her Majesty's Government are trying to build into a new Security Council resolution the authority, based on international law, for military action to be taken against Iraq in the event of a further breach of agreement? If so, that is, by implication, a recognition of the fact that any military action by the United States is illegal under international law. Have you received any such request from the Attorney-General, to whom I have spoken personally?
Madam Speaker: I have received no such request from the Attorney-General or from any other source on that matter.

SCOTLAND BILL (PROGRAMME)
Motion made, and Question put forthwith, pursuant to Order [13 January],
That the Order (13th January] relating to the Scotland Bill (Programme) be amended by inserting, after paragraph 1, the following paragraph—
'1A. On the fifth allotted day paragraph (1) of Standing Order No. 15 (Exempted business) shall apply to the proceedings on the Bill for one hour after Ten o'clock'.—[Mr. McFall.]
Question agreed to.
Motion made, and Question put forthwith, pursuant to Standing Order No. 82 (Business Committee),
That the further Report [19th February] from the Business Committee be now considered.—[Mr. McFall.]
Question agreed to.
Report considered accordingly.
Resolved,
That this House doth agree with the Committee in its Resolution.—[Mr. McFall.]
Following is the report of the Business Committee [19 February]:
That it had come to a Further Resolution [19th February] in respect of the Scotland Bill, which it had directed him to report to the House:
That the Resolution of the Committee reported to the House on 22nd January be varied so that—

(a) the fifth to eighth days allotted under the Order [13th January] to proceedings in Committee of the whole House shall be allotted in the manner shown in the Table set out below, and

(b) each part of the proceedings shall, if not previously brought to a conclusion, be brought to a conclusion (in accordance with the Order) at the time specified in the third column of the Table.

TABLE

Allotted day

Proceedings in Committee

Time for conclusion of proceedings

Fifth day

Clause 69

7.00 p.m.

Clause 70

7.45 p.m.

Clause 71

8.45 p.m.

Clauses 72 to 80

10.00 p.m.

Sixth day

Clause 81 and 82

5.30 p.m.

Clause 83

8.00 p.m.

Clauses 84 to 91

Schedule 6

Clauses 92 and 93

9.45 p.m.

Clauses 94 to 109

10.00 p.m.

Seventh and eighth days

Remaining proceedings (according to time limits to be determined by a further report or further reports of the Business Committee)

10.00 p.m. on the eighth day

ROYAL ASSENT
Madam Speaker: I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified Her Royal Assent to the following Act:
Greater London Authority (Referendum) Act 1998

Orders of the Day

  Scotland Bill
  [5TH ALLOTTED DAY]
  Considered in Committee [Progress, 12 February].
  MR. MICHAEL LORD in the Chair]
  4.31 pm
  Mr. John Swinney: On a point of order, Mr. Lord. I should like to draw your attention to a press announcement by the Scottish Office this afternoon. It announced a consultation paper on the details of the Scottish Parliament's tax-varying powers, which are the subject of our discussions. I called at the Vote Office at 4.15 pm to try to obtain a copy of that document, but it was not available. That is unusual, as it contains an interpretation of the contents of the clauses before us today, to which hon. Members have tabled amendments.
  The Second Deputy Chairman of Ways and Means (Mr. Michael Lord): I understand that the Minister would like to respond to that point.
  The Minister for Home Affairs and Devolution, Scottish Office (Mr. Henry McLeish): Copies of that documents can be obtained in the House of Commons Library, and I apologise for any inconvenience.
  Mr. James Wallace: Further to that point of order, Mr. Lord. I was unaware of this difficulty until the hon. Member for North Tayside (Mr Swinney) made his point of order. If the press have been informed, would it not have been a simple courtesy to send a fax message to hon. Members who are known to have an interest in these matters?
  The Second Deputy Chairman: I think that the Minister has made the matter clear.

  Scotland Bill
    Clause 69

      POWER TO FIX BASIC RATE FOR SCOTTISH TAXPAYERS
      Mr. Michael Ancram: I beg to move amendment No. 352, in page 29, line 7, after 'Scottish', insert 'income'.
      The Second Deputy Chairman: With this, it will be convenient to discuss the following amendments: No. 353, in page 29, line 16, after 'Scottish', insert 'income'.
      No. 354, in page 29, line 19, after 'Scottish', insert 'income'.
      No. 355, in page 29, line 20, after 'Scottish', insert 'income'.
      No. 358, in clause 70, page 29, line 36, leave out 'a' and insert 'an income'.
      No. 359, in page 29, line 39, after 'Scottish', insert 'income'.
      No. 360, in page 29, line 43, leave out 'a' and insert 'an income'.

      41
      No. 361, in page 30, line 5, leave out 'a' and insert 'an income'.
      No. 362, in page 30, line 13, after first 'the', insert 'income'.
      No. 363, in page 30, line 16, leave out second 'a' and insert 'an income'.
      No. 364, in page 30, line 26, leave out second 'a' and insert 'an income'.
      No. 365, in page 30, line 27, leave out 'a' and insert 'an income'.
      No. 369, in clause 71, page 30, line 31, after 'Scottish', insert 'income'.
      No. 383, in clause 72, page 31, line 36, after 'Parliament's', insert 'income'.
      No. 386, in page 31, line 42, after 'Parliament's', insert 'income'.
      No. 391, in page 32, line 14, after 'Parliament's', insert 'income'.
      No. 394, in page 32, line 19, after 'Parliament's', insert 'income'.
      No. 395, in page 32, line 21, after 'Scottish', insert 'income'.
      No. 398, in clause 73, page 32, line 33, after 'Scottish', insert 'income'.
      Mr. Ancram: Let me say first, with reference to the points of order, that I find it extraordinary that we should be told at the beginning of the debate that there are papers in the Library about which we have had no notification, the understanding being that we should sit at the Library door waiting to see what papers go in, lest any should be relevant to the debate. It is a disappointing start, and I hope that if there are any relevant issues in the paper—which I hope one of my hon. Friends has now gone to the Library to secure for me—the Minister will take the opportunity to highlight them, so that we can discuss them today.
      The amendments comprise the first of a number of groups that we shall debate today relating to part IV of the Bill. They deal with the tax-varying powers of the Scottish Parliament. Having read this part of the Bill a number of times since its publication, I consider it the most confused piece of legislation that I recall reading in a long time. It is muddled, it is obscure and it is a cause of uncertainty—and, therefore, a cause of concern—about a matter that is very important to many people in Scotland.
      I was surprised at what appears to be a general lack of interest among the other parties in a matter that was, after all, a central part of the referendum debate. I see from the amendment paper that the Liberal Democrats have tabled only one amendment to part IV, although they were never backward in coming forward to table amendments on the other parts. The Scottish National party has tabled eight amendments. That suggests that, having secured endorsement through the ballot box for the power to vary, those parties are now anxious to push on to the back burner the fact that the Scottish Parliament will almost certainly mean higher taxes for people living north of the border.
      I appreciate that the vote on 11 September settled the issue of whether there would be a tax-varying power, and we accept that the Scottish people wish the Parliament to
      42
      have the limited tax-raising power to which the Government referred in the White Paper. However, that cannot mean that the whole issue can now be swept under the carpet, in the hope that, in the run-up to the first elections to the Parliament, the electors of Scotland will not be aware of the potential effect on them. The issue will be of major importance when we come to the elections, and I hope that we can debate in detail today some of the uncertainties and concerns that have been voiced by people all over Scotland about this part of the Bill.
      It is essential to ensure that the legislation delivers a power that is no more and no less than what was endorsed in the referendum. As we all understood it, that was the marginal power to vary the standard rate of income tax up or down by a maximum of 3p—and nothing else. That is the question which I understood to have been put to the Scottish people, and they endorsed it. In the amendments, we seek to achieve such a position, and to do so in a way that is beyond peradventure.
      The amendments stem from a genuine suspicion that somewhere in the tangled legislative undergrowth are hidden taxation powers about which the people of Scotland were not told and do not know. The Minister shakes his head; as the debate progresses, we shall see whether he can give us the assurances that he and his colleagues have so far distinctly failed to give us. I must tell him that our suspicion is not without cause. During our debates on the Bill that became the Referendums (Scotland and Wales) Act 1997, in the summer of last year, we sought—unsuccessfully here, but successfully in the other place-to insert the word "income" before the word "tax" to make it clear beyond doubt that the power to vary would be limited to income tax alone.
      We were given bland answers by the Minister—bland answers which I fear may yet return to haunt him. When we tried to insert the word "income", he said:
      "If we are to add the word 'income', why not also include the 3p in the pound limit or a definition of who should pay the tax?"—[Official Report, 30 July 1997; Vol. 299, c. 409.]
      That was his reason for not inserting the word "income". However, the 3p in the pound limit is in the Bill, along with a rather unsuccessful attempt to define who should pay the tax. We have a right to be suspicious.
      Mr. McLeish: Will the right hon. Gentleman give way?
      Mr. Ancram: I shall finish the point and then give way to the Minister.
      We were met with a blanket refusal to accept the amendment, and an amendment from the other place was overturned here. So firm was the Government's opposition that it could be justified in logic only by the belief that there was a need to keep open the option to vary other taxes or introduce new ones. When the matter went back to the other place, Lord Sewel, the Minister responsible for the issue there, gave the reason for the word "income" not being in the Bill. He said:
      "To add the word 'income' would create a false sense of precision, because it is limited."—[Official Report, House of Lords, 31 July 1997; Vol. 582, c. 319.]
      Presumably that means that the definition that "income" would have given to the power was limited in a way that the Government found unacceptable because it would

      43
      have conferred a false sense of precision. That gives rise to the suspicion, not only in my mind but in the minds of many people in Scotland, that there is something behind this.
      Mr. McLeish: The only suspicion lurks in the right hon. Gentleman's mind. There are two issues. First, the referendum on 11 September contained two parts. The first related to the wording of the ballot paper, and the second was the reference to the White Paper. The two taken together meant that it was unequivocal in the sense that it was income tax. Secondly, clause 69(1) refers to "income tax" and the clause heading is
      "Power to fix basic rate for Scottish taxpayers".
      The word "income" is before the word "tax". Some 19 amendments have been tabled to make a point that is included in the second line of clause 69.
      Mr. Ancram: I have carefully read the Bill. Clause 69(1) refers merely to the section applying for any year of assessment for which income tax is charged. If the Minister is right and that means that every other reference to tax means income tax, he will have no difficulty accepting my amendment.
      Mr. Wallace: Will the right hon. Gentleman give way?
      Mr. Ancram: I shall give way in a moment. I want to return to this issue. I shall certainly give way to the Minister if he can explain what his noble Friend meant when he said that to add the word "income" would create a "false sense of precision". Those words were either meaningless or they meant that there was some limitation that the Government could not accept.
      Mr. Wallace: The right hon. Gentleman has said that he has looked carefully at the relevant part of the Bill. The Minister spoke about clause 69(1). There is a reference to the "Income Tax Acts" in clause 69(2). To what other taxes could the measure apply if the word "income" were not included? The Minister also spoke about 19 amendments being tabled, but that is easy to do when only one word is starred. What other taxes has the right hon. Gentleman identified?
      Mr. Ancram: It is not a question of taxes that I have identified.
      Mr. McLeish: Answer the question.
      Mr. Ancram: Perhaps the Minister would allow me to make my speech in my own way. He is not a great example of how to answer questions. I think that we have had only one answer from him in about six months.
      We have tabled the amendments so that we may be reassured that no taxes other than income tax are involved. I do not want to pre-empt a later debate on the guarantee in the White Paper about the £450 million that 3p could raise and how that would be achieved regardless of what happens to the tax base. Apparently that is outwith the 3p that is mentioned in the Bill.
      What form of tax will be used to raise that money? I hope that we shall get an answer to that, because I have been asking about it for a long time. I seek answers
      44
      because the Scottish people and Scottish business in particular require reassurance on this matter and I have not yet received it.
      Mr. Nick Hawkins: In pressing the Minister on the issue, my right hon. Friend quoted from the speech by Lord Sewel. Does he share my concern that, later in his speech, Lord Sewel spoke about what is and what is not covered in terms of savings and dividends? Does that not increase the suspicion not only of Opposition Members but of the business community and people in Scotland?
      4.45 pm
      Mr. Ancram: I am grateful to my hon. Friend for raising that point. The whole of Lord Sewel's response suggested that more than income tax was at issue. He went on to raise other hares which are still running, and the simplest way to put those hares to rest is to accept our amendments. We seek to ensure that, under the legislation, no tax other than income tax can be at issue, and that, without further primary legislation, and, indeed, probably further endorsement by referendum, no other taxes can be brought into play and no new taxes can be introduced. That was the understanding from the White Paper, and we seek reassurance on that.
      We are concerned that the Bill contains no provision to exclude other taxes. Clause 72(3) confines changes to the tax powers to income tax when the Treasury has altered the United Kingdom's tax system. It does not prevent extra taxes from being levied if 3p does not raise the sum to which I referred; nor does it prevent the Scottish Parliament from raising additional revenue indirectly through new local taxes.
      Some other taxes have been openly canvassed by various interests, and all of them are possible. A tourist tax has been suggested, and there has been talk of a local sales tax. Scottish business has been alarmed by rumours that the unified business rate might be reconstituted, thus placing an even higher burden on that sensitive and vital sector.
      This matter is not an academic concern which can be brushed aside with talk of agreements and understandings. Future prosperity under a Scottish Parliament will depend largely on the performance of the Scottish economy and the confidence of Scotland's business sector. The greatest enemy of business confidence is uncertainty, and the greatest cause of uncertainty is the possibility of sudden tax changes or tax rises. That is bad for inward investment, for enterprise and for jobs.
      There could be no more damaging background to the Scottish economy than for it to be thought of as a prospectively high-tax economy. That would not only be damaging in the borders, where great anomalies would immediately be created, but would affect the cost structure of Scottish business, which would damage competitiveness and undermine our ability to export. It would threaten to penalise people for working and living in Scotland, and would drive expertise and jobs southwards.
      The amendments are important because they replace uncertainty with certainty, and create confidence where, at the moment, there is a distinct lack of it. Their acceptance can make it clear that what was said during the referendum is still true and that Scotland is not about to become the high-tax centre of Europe.

      45
      All our amendments to part IV of the Bill are essentially designed to clarify the legislation and remove uncertainty, and we shall argue them in detail. They were tabled because of what clause 69 does, but also because of what it fails to do. It does not, in terms, exclude forms of direct taxation other than income tax. In the light of the White Paper, the £450 million that is guaranteed to the Scottish Parliament from the 3p—which is index linked against possible changes to the income tax structure or variations of the tax base as a result of changing economic conditions which could reduce the tax take—raises the almost certain possibility of some form of taxation other than the standard rate of income tax. We need an answer on that today. Indeed, the Government effectively admitted as much when, during the referendum campaign, the Chief Secretary to the Treasury, a Scottish Member, let slip on television that they would have to find a substitute—that was his word, I think—if those circumstances arose.
      The people of Scotland and, indeed, Scottish Members have a right to know what that substitute will be. We will deal with the question in detail under later amendments, but the principle behind it is germane to this clause and to these amendments. Restricting the clause's power to levy tax to income tax, as the White Paper did, but the Bill fails to do, will go a long way to achieving that.
      The Minister said that I was creating suspicions. He knows that the uncertainty about which I am talking is not exclusive to members of my party. That uncertainty is real. It exists throughout Scotland. The Government themselves had to reassure the Scottish Confederation of British Industry directly in a meeting some time ago—I think at the end of last month—and again last week during Scottish Question Time, that this provision will have no knock-on effect on capital gains tax.
      If the provision is so clear, why did the CBI, with all its expertise, say to the Minister, "Please ensure that this does not have a knock-on effect on capital gains tax"? Why was the Minister required to give that assurance? Why cannot the matter be cleared up by having the simple expedient of our amendments? Business men cannot find reassurance in the Bill. We want to give it to them, and I cannot understand why the Government wish to resist that.
      There are vicarious ways by which the Scottish Parliament could raise tax, but which, again, are not spelt out in the White Paper. We know that the Parliament will redistribute revenue support grant and will have the power to alter the business rate. We know, too, that, by withholding central resources, it could effectively force local government to raise tax for the Parliament, allowing itself the spending benefit of the resources retained in pushing local government to raise local taxes.
      The Scottish business community's greatest fear about the Scottish Parliament is still the abolition of the uniform business rate and the return to the previous situation, whereby councils set business rates and Jenner's in Princes street paid more in business rates than Harrods in Knightsbridge. Those are genuine uncertainties and worries, which the Government have a duty to resolve.
      Mr. Dominic Grieve: I had the opportunity today of reading the Government's press release dealing with capital gains tax. It makes it clear that the tax on capital gains is computed by reference to
      46
      income tax rates, but that the Government have chosen not to treat capital gains tax as taxable under the Scottish variable rate scheme. Is it not true that if this is simply a Government administrative decision in relation to that form of taxation, it can be equally easily administratively changed, unless they clarify the position?
      Mr. Ancram: I am grateful to my hon. Friend for pointing that out. That is another reason why Scotland's businesses are uncertain, doubtful, worried and not taking investment decisions until they have clarification. The ambiguity of language appears time and again from the Minister, Lord Sewel and Government press releases. I hope that the Minister will take this opportunity to clarify the issue and to create confidence where, at the moment, there is doubt.
      The Government fought the referendum proclaiming that business in Scotland had nothing to fear from devolution. Indeed, the White Paper was clear in its desire to exclude business from a punitive tax regime, but there is nothing in the Bill to rule that out. That is where the fear of the business community lies.
      It is not a good enough answer to say that the Government in a Scottish Parliament would not be so unwise as to introduce such taxes. Last July, this Government taxed pensions and, as we saw in last week's Scottish revenue support grant debate, the Secretary of State for Scotland is, Uriah-Heep like, wringing his hands at the consequences of that tax.
      Mr. Wallace: The right hon. Gentleman has referred to non-domestic rates, as he did during the referendum. What I have never understood is how they would be any more secure under the current system, whereby Westminster continues to run them—particularly when Labour has a majority of 179 and said in its manifesto that it would return those rates to local government—than they would be if we put in the sort of safeguards that he seeks. In any case, no party in the Scottish Parliament is likely to have an overall majority, so any change to business rates would require considerable consensus throughout the political spectrum.
      Mr. Ancram: The hon. and learned Gentleman loves to talk about consensus, but if I were to base my business decisions on the hope that there would be political consensus—or a lack of it, as the case may be—my shareholders might ask whether I was taking those decisions on a correct basis. If we have a doubt, surely it is right that that doubt is answered in this legislation. What is the point of having legislation, which does create limitations and safeguards, if we do not use it to create those necessary areas of confidence?
      It is the failure to do that and to rule out vicarious tax raising which has given rise to fears of other taxes. I think it was the president of the Convention of Scottish Local Authorities who proposed a tourist tax. It is hardly surprising, therefore, when people in Scotland, not least those in the tourist industry, sit up. A local sales tax strikes dread into the hearts of retailers and consumers alike, not least in the borders, where people would be most importuned by it.
      Whether the Government like it or not, the picture of paying for devolution over and beyond the 3p exists and serves Scotland ill. Our amendments would cure that

      47
      simply by ruling those fears out once and for all, and by establishing in statute that, rather than just in the mouth of the Secretary of State and his colleagues, the restriction on the standard income tax rate that was presaged in the White Paper and on which the Scottish people voted is genuine and is in the legislation. The amendments seek to shine light on the darker recesses of this part of the Bill. They are constructive and I commend them to the Committee.
      Mr. Tam Dalyell: This is a complex and difficult matter. Like my hon. Friend the Minister, I have served in opposition and, indeed, in government on Finance Bills. I do not make a party point, but if we see in action these very able and clever tax accountants—including my noble Friend Lord Barnett and the Opposition spokesman's colleague Peter Rees, now Lord Rees, a former Member for Dover—one has to ensure that legislation is crystal clear; otherwise, they will run amok and that would be to no one's benefit, including Holyrood.
      Therefore, I should like to ask certain questions. What additional taxes can be raised by the Parliament over and above the specified income tax power—I should like the Minister to answer that question in his winding-up speech—particularly where the Treasury restricts the amount of additional revenue that is available to the Scottish Parliament as a result of possible future changes in the United Kingdom tax structure?
      I hope that Ministers will take into account what the right hon. Member for Devizes (Mr. Ancram), the Opposition Front-Bench spokesman, said about uncertainty and the lack of clarity, because, bluntly, unless these matters are cleared up before the Bill becomes law, business and individual taxpayers will be condemned to perpetual uncertainty. Nowhere is that more important than in relation to the uniform business rate.
      My second question concerns the life companies, where many of my constituents work, as do those of Edinburgh Members. As I understand it, the life companies that pay pensions are in the dark about some of their responsibilities. Are they to make payments and to charge on the basis of a whole year or just time spent in Scotland, and what effect will that have on the Scottish rate? If an English taxpayer moves to Scotland, will the adjustments have to be made by the pension companies and the life offices, or will it be the responsibility of the Inland Revenue?
      Under clause 69(3), if a widow received the life rent of her husband's estate, she would not have to pay Scottish tax on the savings income of the trust. However, if that same widow received an annuity from the trust, she would have to pay Scottish tax, would she not? If I am wrong, doubtless I shall be told so; if I am right, is it fair?
      5 pm
      Again in respect of clause 69, will payments to charity be under a Scottish or a United Kingdom rate? The Bill defines a Scottish taxpayer as someone who, in any tax year, is resident in the United Kingdom, and
      "Scotland is the part of the United Kingdom with which he has the closest connection".
      That description appears in a number of clauses. However, generally speaking, "the closest connection"—[Interruption.] It is no good my hon. Friends getting
      48
      impatient. We are dealing with matters of great importance to the lawyers' firms that will have to operate the system. This is the Committee stage of the Bill—[Interruption.] I must tell my hon. Friend the Member for Paisley, North (Mrs. Adams) that if these matters are not clarified there will be endless trouble and difficulties later. It is for the benefit of all of us that they are clarified as soon as possible.
      Generally speaking, will "the closest connection" be interpreted as someone who has his principal home in Scotland and spends more of the year in Scotland than elsewhere in the United Kingdom? Will there be separate provision for Members of the Scottish, Westminster and European Parliaments? What will be the status of the time spent at those institutions by Scottish Members? That point should be clarified.
      My understanding is that the price of property in Berwick would rise dramatically because people would live on the English side of the border to avoid tax, but work in Scotland. It is said that the Inland Revenue often forces people claiming to be resident outside the UK for tax purposes to produce proof of travel. That would be more difficult if a land border had to be policed. There would be no way properly to monitor the border—we would have to rely on people's integrity. I do not know whether that point is more properly raised under the amendment or on clause stand part, but it certainly arises under clause 69.
      Following the introduction of income tax self-assessment, the possibility of tax avoidance by claiming not to be a Scottish resident could affect many tens of thousands of people. A limit on the level of tax would mean that, in practice, there was too little incentive to make avoidance worth while. If the maximum bill was £660, someone would have to be a little penny pinching to object. However, lawyers know that these matters can be cumulative.
      The Bill limits the amount of Scottish tax that anyone will pay by confining it to a premium of up to 3p in the pound on only basic rate tax. That means that higher-rate taxpayers will pay only an additional 3 per cent. on income up to the point at which the top rate of tax, 40 per cent., starts to operate. Thus, on current rates, the maximum liability would be £660 a year. Scottish Office calculations show that the average Bill for about two thirds of those expected to be liable would be £230. Does the Scottish Office believe that those figures are roughly accurate?
      There are many other things to be said, but, as we are time limited, I shall leave the matter there.
      Mr. Wallace: I am sure that you will keep me in order, Mr. Lord. I want to raise points about the details of charges and the definition of "taxpayers", but it may be more appropriate to do so when we reach the amendments dealing with those matters—
      Mr. Dalyell: If we ever reach them.
      Mr. Wallace: I have just received my timetable; I am sure that the amendments will be reached.
      I intend to confine my remarks at this stage to the more political points made by the right hon. Member for Devizes (Mr. Ancram). My Liberal Democrat colleagues and I argued in the Scottish Constitutional Convention for

      49
      tax-varying powers—and they were agreed to as part of the convention's package. We thought it to be a very important issue. It is one of the more significant changes from the 1979 referendum and the 1978 legislation.
      It is interesting to recall that one of the criticisms made by the Conservative party in 1978–79 was that a Scottish Parliament would not have tax-varying powers and therefore would be a toothless tiger and unaccountable. When we tried to address that problem, the Conservative party changed its tune and raised all sorts of fears and scares. The right hon. Member for Devizes said that it is the Government's duty to dispel all the myths and scares, but it was his colleagues—more than any others—who went around Scotland stirring them up in the first place.
      The hon. Member for Linlithgow (Mr. Dalyell) accurately pointed out that the 3p variation would apply only to the basic rate tax band. Some people put it about that it would apply to all income—so that if someone were earning £200,000 a year, the variation would apply to all of that £200,000. Some amazing figures were produced on that basis.
      It is fundamental that the Scottish Parliament should have a tax-varying power. After all, taxation makes an elected body accountable to its electorate. The fear—which was actually well expressed by some Conservatives at the last referendum—is that, if there is not some scope for tax variation, every time a project is frustrated—be it a hospital, school or pedestrian crossing—people will blame Westminster for not allowing us more money. That would then fuel friction.
      In fact, the Scottish Parliament will have a tax-varying power. If it chooses not to exercise it, it will be as answerable to its electorate as it will be if it chooses to exercise it at the rate of 1p, 2p or 3p. That is why it is as much an issue of democracy as it is of taxation.
      The right hon. Member for Devizes has tabled many amendments to add the word, "income", but when I challenged him he was unable to name one other tax that could fall within the definition of this part of the Bill—
      Mr. Ancram rose—
      Mr. Wallace: If the right hon. Gentleman has found one in the meantime, I shall happily give way.
      Mr. Ancram: I want to ask the hon. and learned Gentleman a question, as he asked one of me. If the tax-varying power is restricted to 3p, and if the tax base does not achieve the necessary £450 million, where will the Government find the extra tax?
      Mr. Wallace: We shall deal with that question when we come to the appropriate part of the Bill. I have never understood the position to be anything other than using the income tax mechanism. When we have all had an opportunity to read the consultation document that has been placed in the Library, more light may be shed on the matter. It has never been claimed that anything other than the income tax mechanism would be used.
      We heard again today that the great danger of having a separate rate for Scotland, which would lead to great differences between Scotland and England, would be that people flocked across the border to set up home in England. If the relative rate of taxation were so vital in choosing where to live or work, why do not people flock to Shetland,
      50
      which has the lowest council tax in Scotland? [Interruption.] I accept that there are many reasons why people choose a particular place to live or to locate a business.
      The Conservative Government introduced banding in council tax. In 1996—the latest year for which I have figures—the occupant of a £85,000 house in Scotland would have paid, on average, £8 a week more than the occupant of a similarly valued house in England. I have looked at the relative differences between Dumfries and Galloway, and Cumbria. The occupant of a £50,000 house in Dumfries pays substantially more council tax than the occupant of a similarly valued house only 30 miles away in Carlisle, yet we have not seen removal vans trundling across the border because people want to relocate. There is more behind people's decisions on where to live than the myths and scares that we have heard from the Conservatives during the referendum campaign and since.
      Mr. John Home Robertson rose—
      Mr. Wallace: I shall give way to the hon. Gentleman, who has a constituency near the border.
      Mr. Home Robertson: My constituency is not near the border, but my home is. I confirm that there is no sign of people flocking across the border. The good citizens of the Scottish Borders region voted both for the establishment of a Scottish Parliament and—along with almost every other region of Scotland—for the tax-varying powers. I do not understand what the fuss is about.
      Mr. Wallace: I agree with the hon. Gentleman. The islands area of my home and the region of my birth were the two places that did not vote for the tax-varying powers, but, considering the negative approach to the Scottish Parliament in 1979, which was our starting point, we were not far away. All Members of the Scottish Parliament will have to exercise those powers sensitively, if they exercise them at all. The no vote to tax-varying powers in some areas and the fact that the yes vote was only marginally over 50 per cent. in some others should remind Scottish parliamentarians that the powers should be used sensitively.
      The powers in the Bill do not justify the scares that we have heard today. If businesses are confused, the fault cannot lie with those of us who have been arguing the case for those powers since the Scottish Constitutional Convention reached its agreement in November 1995. The Conservatives are seeking to create further confusion today. If these unnecessary amendments are defeated or withdrawn, no doubt they will conjure up other mythical creatures that are about to do down the Scottish business community. That is not the intention of those of us who agreed the powers in the convention. The most important point is that we want the Scottish Parliament to work. We want Scotland to prosper and flourish. No one wants to put unnecessary blocks in the way of prosperity in Scotland.
      Mr. Ancram: Why is the hon. and learned Gentleman not prepared to accept our amendments, which would merely put the word "income" in front of the word "tax"? That is apparently what he wants.
      Mr. Wallace: Because they are superfluous and are designed to make a political point, continuing the case that the right hon. Gentleman and his hon. Friends lost so decisively on 11 September.
      Mr. Swinney: The Government have got themselves into difficulties over the technicalities of the tax-varying powers. I have already referred to the difficulties over the availability of the consultation paper on aspects of the tax-varying powers. I was intrigued by the Government's press statement on that. It said that the Government were publishing the technical paper
      "to inform taxpayers of the Government's intention, to assist Parliament as it continues its scrutiny of the Scotland Bill and to seek views from those with an interest in the operation of the new tax system on how detailed aspects of the new arrangement might best be handled."
      It is strange that the Government publish a document
      "to assist Parliament as it continues its scrutiny of the Scotland Bill"
      on the day that we are considering the relevant amendments. None of us has had a chance to read the document. My hon. Friend the Member for Banff and Buchan (Mr. Salmond) went to the Library earlier this afternoon to obtain a copy, at the Minister's suggestion. A bewildered librarian tried to find the paper. Two copies were found, both of which had been sent to the Library for information and reference only. It is unsatisfactory that the Government's announcement has put such a question mark over the tax-varying powers.
      I have tabled amendments to clause 71 on the definition of Scottish taxpayers. When I came to London this morning, I was excited by one newspaper comment, which I thought showed a great reflection by the Government on some of the aspects of the proposals before us. The Daily Mail said:
      "The Government appeared to bow to ferocious criticism of its tartan tax plans last night by saying that it would be willing to rethink certain key areas."
      None of us expected such a rethink to be tabled in the House of Commons Library this afternoon.
      Talk of movement on such issues is welcome. I hope that the Minister will have something positive to say about the substantial issues that we have raised on clause 71. However, I do not want to talk about those amendments yet. I want to concentrate on the proposals of the right hon. Member for Devizes (Mr. Ancram). I shall not be surprised if the Minister is not positive about those amendments. I suspect from his body language that he will not be. The Secretary of State may have had the right hon. Member for Devizes in his sights when he made his speech about destabilisation on Saturday evening. The further litany of scaremongering that the right hon. Member for Devizes has put forward, to compound what he said during the referendum campaign, will probably destabilise the Scottish Parliament and the parliamentary passage of the Bill more than anything else.
      The evidence of the debate so far is that the Tories have failed to learn the lessons of the general election or the referendum. The people of Scotland gave clear assent to the tax-varying powers. It is incumbent on us to reflect the views expressed in that referendum. That does not prevent us from bringing forward constructive amendments designed to help the passage of the Bill and enhance the clarity of its details. That is what we want to do in clause 71.
      5.15 pm
      Dr. Liam Fox: Does the hon. Gentleman agree that, if the practical effect of the Bill, particularly the contradictions inherent between clause 69 and subsequent clauses, resulted in an increase of more than 3p in the basic rate, the Scottish voters would feel that they had been conned in the referendum?
      Mr. Swinney: My reading of clause 69 is that the Parliament will have the power to vary tax by 3p. If that does not add up to £450 million—I suspect that that is what the hon. Gentleman is getting at—it will be tough on the Scottish Parliament. The Government tried to produce an illustrative figure in the White Paper of what the tax might raise. That is for the Government to answer, not me. I have enough numbers to defend without defending the Government's.
      The official Opposition cannot grasp two main points. First, the power to raise at least part of its finances is a basic requirement of any Parliament. Secondly, the people of Scotland still have discretion on how the powers should be used. The referendum was a vote not to put up taxes but to give the Parliament the power to put up taxes or reduce them. If the careful-budgeting, money-conscious Conservative party is about to re-emerge in Scotland, able to exercise financial prudence, as it did when doubling the national debt in the past few years, we shall be intrigued to discover what it will offer the Scottish people in a general election. The people of Scotland have a choice on whether the powers are exercised.
      Dr. Fox: The hon. Gentleman says that if the 3p does not raise £450 million, it is tough for the Scottish Parliament. The White Paper explicitly says:
      "the Parliament's ability to raise or forgo up to £450 million through the tax system will be preserved. This sum will be index linked to maintain its real value."
      Mr. Swinney: The Government can reconcile their calculations between 3p in the pound and £450 million. My reading of the clause is that the Parliament will have the right to vary the basic rate of income tax by 3p in the pound. That is for the Government to defend.
      The Committee will not be surprised to hear that, unlike the Conservatives, I believe that the Scottish Parliament should have wider tax-varying powers. Quebec and the Spanish autonomous regions have far more extensive tax powers which can be used not only to raise a few million pounds here and there but fundamentally to alter the economies of those areas. The Quebec and Catalonia Parliaments can raise around 40 per cent. of their finance. By contrast, Scottish local government can raise a mere 15 per cent. of its own finance. The Scottish Parliament is being given the opportunity separately to raise about 3 per cent. of its taxation and, in the context of the examples that I have just cited, the powers being suggested by the Government are very restrictive.
      The Tories are keen to restrict the tax role of the Parliament. I certainly have problems with the extent of its tax powers, because they do not give the Parliament the opportunity to take some of the more imaginative decisions that would be required to improve the Scottish economy and deliver a fair tax system that is more in the interests of the people of Scotland. Nor will the powers generate much flexibility. Some of the interesting examples of varying

      53
      taxation, whether in the form of lower business rates, tax incentives for entrepreneurs, tax breaks for those on low incomes or adjustments in allowances to protect people who are persistently hammered by the tax system in this country, are all opportunities that are lost by the limited nature of the powers. Therefore, the Conservatives are making a mountain out of a molehill in relation as to the substance and significance of the powers.
      The tone of the Conservatives' amendments is that the Parliament's powers should be fixed in stone. They are very limiting and Westminster-focused amendments, which will simply entrench some of the rhetoric that we have heard all too often from the Conservatives. They put Scotland second and demonstrate beyond doubt that the Tories do not trust the people of Scotland to be imaginative and responsible in the use of those powers. There is a democratic issue at stake—if the people of Scotland wish to use the powers, they will vote for those who are prepared to use them. A separate election contest will determine that point.
      Clearly, the Government are going to defend staunchly the 3p in the pound power. I have mentioned some of the limitations, but another that I find quite frustrating is that the power will have a disproportionate effect on middle-income earners. For someone earning about £19,000, the application of the full 3p in the pound increase will account for about 10 per cent. of his tax bill. For someone earning £100,000, it will account for only 2 per cent. of his tax bill. Again, middle-income earners will be disproportionately hit by potential tax increases while people earning a phenomenal sum of money will benefit from a tax system that has lost its progression and equity.
      If the Government were to surprise us all later tonight by saying that part of the current consultation exercise is a proposal to give the Parliament the power to abolish the ceiling on employees' national insurance contributions, I should not be able to get into the Lobby fast enough. It would bring some equity back into the tax system, but I suspect that I am allowing my optimism to run away with me.
      The Scottish National party has argued for fiscal autonomy, for the Parliament to have more responsibility for its financing, but the Committee rejected our arguments at an earlier stage. Given that the Government now have some doubts about the application of the tax-varying powers, and that what looks like a hurried consultation paper has been typed up in the past few days to be issued in advance of this debate, I think that we shall have to return to those arguments on Report because some of the substance of the powers and the details of the financing of the Parliament are clearly not as securely founded as we should have liked. My colleagues and I shall examine the details of the tax powers extremely carefully to ensure that some of our arguments on fiscal autonomy are redeployed on Report.
      Mr. Hawkins: I shall be brief, but I wish first to take up one point made by the hon. Member for North Tayside (Mr. Swinney)—the extraordinary situation in which we have found ourselves this afternoon.
      A paper has been rushed out, but hon. Members have not had access to it. The Minister for Home Affairs and Devolution has been good enough to apologise to hon. Members, so I shall not blame him personally, but this is yet another example of a certain combination that we have witnessed all too often from Government Departments—
      54
      the combination of arrogance and incompetence. Arrogance leads to paperwork appearing only on the day of the debate to which it is relevant, so that we do not have the opportunity to study it, and incompetence leads to it not being available in the Library when the Minister thinks that it is. Hon. Members are having to rush out of a debate on taxation matters, which are of great interest to the Scottish people. I hope that the Minister will give us an undertaking that we shall never again have to put up with official Government papers coming out on the very afternoon of the debate. It is simply not good enough.
      The debate began with the Minister, and, indeed, the hon. and learned Member for Orkney and Shetland (Mr. Wallace), suggesting that there is nothing to worry about, and that the Conservatives' amendments are not necessary. However, we have just heard about the Scottish National party's plans from the hon. Member for North Tayside. He said that it has always been the SNP's position that, the minute that it had the chance to change things, it would rather have much wider powers to vary taxes. That is precisely what the Conservative party and many Scottish people are worried about.
      In May last year, Sir Donald Pattullo, Governor of the Bank of Scotland, was expressing concern—
      Mr. Swinney: On a point of information, the gentleman is in fact Sir Bruce Pattullo.
      Mr. Hawkins: Of course, I meant Sir Bruce Pattullo. The concern that he was raising about the possible need for a sales tax, and the plans of the Convention of Scottish Local Authorities for a tourist tax, which is of great concern to the people in the tourism industry with whom I have worked over the years, are signs of why we are rightly suspicious about the fact that this part of the Bill is entitled not "The Income Tax-Varying Power" but simply "The Tax-Varying Power".
      The hon. and learned Member for Orkney and Shetland suggested that there was something inconsistent in the tabling of our amendments today by my right hon. Friend the Member for Devizes (Mr. Ancram) and our original opposition to tax-varying powers, but that is not the case. There is no inconsistency. We were against the Scottish Parliament having tax-varying powers; now that it is to be given those powers, we want them to be as limited as possible, and we want them clarified.
      Sir Robert Smith: My hon. and learned Friend the Member for Orkney and Shetland (Mr. Wallace) also said that the inconsistency went back to the Conservatives' previous incarnation, when they were extremely critical of another Bill relating to Scotland for providing no tax-varying powers.
      Mr. Hawkins: The hon. Gentleman is right—the hon. and learned Member for Orkney and Shetland made that point as well, but he also said specifically that there was some inconsistency in our opposition to tax-varying powers in the referendum campaign and our amendments today. My point is that our position has been entirely consistent.
      We want to ensure that the powers are as limited as possible. I am sure that that is what the Scottish people want, too. They do not want a Pandora's box open for future

      55
      development by people such as the hon. Member for North Tayside and his colleagues. We want to ensure that the powers clearly relate only to income tax.
      Mr. John McAllion: Will the hon. Gentleman concede that, if the hon. Member for North Tayside (Mr. Swinney) and his colleagues were in a position to influence matters on their own, Scotland would at that stage be independent, so his argument would be redundant?
      Mr. Hawkins: The hon. Gentleman is right to draw attention to the fact that our concern about the Bill and the whole process is that the Government are leading us down the slippery slope towards complete independence and the break-up of the United Kingdom. That is my party's fundamental objection to what the Government are doing. Our amendments draw attention to the vagueness of the Bill. There are great dangers unless the amendments, which limit and clarify the powers, are accepted.
      I want to draw the Committee's attention to some of the concerns about the tax proposals that were outlined in an article in The Independent on 8 January last year. The particularly appropriate headline, in the context of this debate, was "Tax Shocks for Jocks". The article highlighted the comparisons that the Labour party was then seeking to make, and the fact that it was saying that there was nothing to worry about, that there could be differential rates of tax between Scotland and England and that it would be just like the United States. The article also pointed out:
      "The new Labour Scottish tax would be working against the framework of there being a tax haven next door."
      Accountants, business men and the Governor of the Bank of Scotland have expressed concern about the plans of the Scottish National party and the Labour-dominated Convention of Scottish Local Authorities. Unless the Government accept the Conservative amendments, there will be no clarity at all.
      5.30 pm
      Mrs. Eleanor Laing: Why are the Government afraid to accept our perfectly reasonable amendments that would insert the word "income" in front of the word "tax" at various points in the Bill? If, as the Government have consistently said, they have no intention of varying any other tax, what is wrong with accepting the amendments? They would add only clarity to the Bill. They would not take anything away from the Bill. If it is truly the Government's intention that only income tax would be affected—as they said in the White Paper and told the Scottish people before the referendum—why do they oppose the amendments?
      Is it not time that the Scottish people knew with clarity what they voted for in the referendum? I shall continue to argue that it is a pity that they did not know before the referendum, but at least they should know before the legislation comes into force—if indeed it does. As the amendments are purely for the sake of clarity, who could possibly object to them on any reasonable grounds?
      56
      As the Government and hon. Members on my left representing the Liberal Democrats and the Scottish National party—[Interruption.] They are certainly on my left.
      Mr. Swinney: We are pleased about that.
      Mrs. Laing: I am pleased, too, because I am on their right. Some of us are Scottish Tories, and always will be.
      Liberal Democrat and SNP Members frequently insist that it is important that the new Scottish Parliament should have autonomy and that it is vital that the Westminster Parliament trusts the Scottish Parliament and does not treat it like a child and restrict it too much. Hon. Members are always saying that trust is of the essence in setting up the new Scottish Parliament. If that is indeed the case and the Government believe in the autonomy of the Scottish Parliament, it is inconsistent to argue that any tax-varying powers should be limited to 3 per cent. Why should it be 3 per cent.—why not 2.5, 3.5, or 4.25 per cent.? We have never had a proper explanation of why the Scottish Parliament, as an autonomous body, should have its tax-raising powers limited to exactly 3 per cent.
      Mr. Andrew Welsh: Local authorities have 15 per cent. revenue-raising powers, yet the Scottish Parliament is to be given only 3 per cent. revenue-raising powers. What kind of Parliament has fewer revenue-raising powers than a Scottish local council? The Tories have just apologised for what they did to Scottish local government. Should not the hon. Lady be apologising in advance for what she is doing to the Scottish Parliament?
      Mrs. Laing: It is not what I am doing; it is what the Scottish people voted for in the referendum. The hon. Gentleman is right to point out that local authorities have more autonomy in respect of raising and varying tax than the Parliament will have. So where is the trust? I put it to the Committee that the reason for inserting the figure of 3 per cent. is that it is a wolf in sheep's clothing. It was done simply to make sure that the Scottish people were not frightened.
      Mr. McAllion: Thank God for that. I was beginning to worry about the powers of the Scottish Parliament.
      Mrs. Laing: I know that the hon. Gentleman is worried about the powers of the Scottish Parliament and that he and many of the hon. Members on my left would like the Scottish Parliament to have far more powers.
      The Temporary Chairman (Mr. John Maxton): Order. The hon. Lady is going rather wide of the subject. I wish that she would return to the amendment.
      Mrs. Laing: I apologise, Mr. Maxton. It is too much of a temptation to reply to the hon. Member for Dundee, East (Mr. McAllion).
      If the Westminster Parliament truly trusts the body that is being set up in Edinburgh, why is it not willing to give it more autonomy in its tax-raising powers and to accept the amendment, which would simply provide clarity? Whatever other havoc is caused when the Parliament is set up in Edinburgh and whatever uncertainty is created, especially for small businesses in Scotland, at least the

      57
      Scottish people will know that only income tax can be varied. If it is truly the Government's intention to allow only income tax to be varied, why can they not accept our very reasonable amendments? The hon. Member for North Tayside (Mr. Swinney) said earlier, in respect of the level of taxes that can be raised, that, if certain things did not happen, it would be tough on the Scottish Parliament. It would not be tough on the Scottish Parliament; it would be tough on the Scottish people.
      Mr. David Prior: I have read clause 69 very carefully in conjunction with clause 72 and I agree with my right hon. Friend the Member for Devizes (Mr. Ancram): it is extremely confused. However many times I read it, it became no clearer. My right hon. Friend described it as obscure and incomprehensible. The fact that it is incomprehensible and the Government do not seem to want to clarify it creates doubt, uncertainty and a suspicion that there may be some hidden taxes lurking beneath the surface—not least because the basic rate of 3p in the pound, to which the tax is supposed to be limited, does not seem to fit with the £450 million that they talk about raising from it.
      Clause 69 is obscure, but it is nothing compared with clause 72, and the two together cause doubt and confusion among Opposition Members. It is important that clause 69 should be clear and certain for three particular reasons. First, despite what was said earlier, taxation is extremely important when it comes to locating and running businesses. Parts of the world that have low taxation are doing well. If hon. Members are in any doubt about that, they should ask Sir Bruce Pattullo, Governor of the Bank of Scotland.
      Secondly, the tax-raising power in Scotland drives a significant wedge between the various parts of the United Kingdom. Why should Scotland be able to raise or lower income tax when other parts of the United Kingdom cannot? It is therefore doubly important that we know the exact extent of the tax-raising powers.
      Mr. Swinney: The hon. Gentleman is in effect arguing that all taxes should be the same throughout the United Kingdom. Can he tell me why council tax for the average household is about £200 in the City of Westminster, but may be five times as much in Scotland?
      Mr. Prior: I am arguing not that taxes should be the same throughout the United Kingdom, but that taxation should not be structured in such a way as to break up the United Kingdom. Local government is correctly financed through locally raised taxes—indeed, I wish that it was financed to a greater extent through locally raised taxes.
      The third reason we need clarity and certainty in clause 69 is illustrated by the argument advanced by the hon. Member for North Tayside (Mr. Swinney), in that his party wishes to extend the right of the Scottish Parliament to tax and will use every chance available and every piece of ambiguity and uncertainty in the clause to argue for higher and greater tax-raising powers. Our amendments would clarify the Bill; they would not make any fundamental changes, but they would add certainty. That is why I support them.
      Mr. Tim Collins: The amendments invite the Committee to consider the
      58
      important provision that gives the Scottish Parliament the power to vary income tax up or down. I shall follow up my right hon. and hon. Friends' remarks about the lack of clarity in the Bill later. First, I should like to pick up on some of the remarks made by the hon. and learned Member for Orkney and Shetland (Mr. Wallace).
      The hon. and learned Gentleman said that our amendments should not be accepted because, in his view, they are superfluous. If the worst that can be said of the amendments is that they merely clarify or lengthen the Bill, that is not a sufficient argument for striking them out, given the importance of clarity in this matter.
      Secondly, the hon. and learned Gentleman said that the Conservative party has no right to table the amendments because they express a position different from that taken by the Conservative party in 1978–79. That seems a rather strange view from the spokesman for a party which, since 1978–79, has changed its view on the right to buy, nuclear weapons and privatisation or nationalisation and which has allied itself, merged itself, split itself and changed its name countless times. An argument based on consistency with 1978–79 comes ill from a Liberal Democrat.
      Thirdly, the hon. and learned Gentleman pooh-poohed the proposition that anyone would ever move from Scotland to Cumbria. Although I understand and respect his natural love for his country—Scotland is a beautiful country—as one who represents a Cumbrian constituency I have to tell him that there are people in my constituency who have moved there from Scotland. They have moved both themselves and their businesses and one of the many factors they took into account was the difference in taxation, which the hon. and learned Gentleman said was irrelevant and not a matter of concern.
      Ms Roseanna Cunningham: Name them.
      Mr. Collins: I name Mr. Melvin Mackie, who is the entirely splendid landlord of The Pheasant Inn in my constituency and who moved from Scotland to Cumbria. I thank the hon. Lady for that invitation to name and praise that splendid gentleman and his splendid pub.
      Mr. Russell Brown: I live on the border and I can assure the hon. Gentleman that everything he is arguing was argued before 1 May. Scotland's businesses are not flocking to relocate across the border. Relocation is far too expensive: the hon. Gentleman should know that.
      Mr. Collins: I hear what the hon. Gentleman says, but we do not yet have a Scottish Parliament—or differing levels of income tax, which is what the Bill is all about. We shall see what happens. I was invited to give an example of someone who has moved from Scotland to Cumbria and I have done so, so I have proved my point.
      Scottish National party Members have said that they think the problem with the tax provision is that 3 per cent. is not enough and that the figure should be far higher. The 15 per cent. for local authority financing was quoted—and that was clearly the opening bid in an upward process. That proposition is difficult to reconcile with the argument of the hon. and learned Member for Orkney and Shetland, who said that because Members of the Scottish Parliament will be elected by proportional representation a cross-party consensus will be needed before there can be any tax increases, so no one needs to worry.

      59
      Which parties will apply the brake to ambitions to shove up taxes harboured by a Labour party short of a majority in the Scottish Parliament? First, there will be the Liberal Democrats, whose constant refrain at Prime Minister's questions is to ask why he will not shove up taxes more, so as to be able to spend more public money. Secondly, there will be the Scottish National party, which says its only problem with the tax-raising powers of the Scottish Parliament is that they do not go far enough and do not enable taxes in Scotland to rise yet further. It seems unlikely that the Scottish Parliament will apply a brake to any of Labour's ambitions to raise taxes. It is clear that, unless there is a clear and overwhelming Conservative majority—as we hope there will be, although it will be difficult to achieve under a system of proportional representation—all the other parties will be instinctive tax-raising parties which, sooner or later, will try to use the powers to increase taxes to the detriment of the Scottish people.
      The point of the amendments is simply to establish what was put before the Scottish people in the referendum.
      5.45 pm
      Mr. Swinney: Does the hon. Gentleman accept that if, in a Scottish general election, the people of Scotland were given a clear choice between the different tax proposals offered by the parties and they opted for certain proposals that might, lead to an increase in taxation, that would be the expressed will of the Scottish people and that they are entitled to express that opinion democratically?
      Mr. Collins: The interesting question is whether those propositions would be honestly put to the Scottish people. It is significant that the Government have established a pattern whereby they ask people to look at the rabbit of income tax while they do all sorts of other things in the background. Some of us remember that, before the general election, the present Prime Minister went around signing posters in his own fair hand saying that he would not put up income tax. As I found on doorsteps in my constituency and elsewhere, many people interpreted that as a pledge not to put up taxes at all, but, as we have already seen, taxes were increased in the first Budget of the Labour Administration and it is threatened that they will rise extensively.
      It is likely that the same will happen in Scotland: there will be an attempt to focus all attention on income tax, as though that is the only tax that can be levied. We should ensure that what the Scottish people were asked to vote on in the referendum—that a Scottish Parliament should have the power to vary only income tax rates, and that by a limited amount—should be written on the face of the Bill. Without that and the amendments, the technique constantly used by the Government—inviting people to focus solely on income tax, thus enabling the Government to make all sorts of other tax increases that they believe have a lower profile but which are every bit as painful—will be used again.
      The amendments are important because they provide clarity and would establish on the face of the Bill the proposition that the Scottish people were invited to endorse. They would prevent a sneaky, but particularly
      60
      poignant and oft-repeated, trick of the current Administration that has already been played on the people of the United Kingdom as a whole being perpetrated on the Scottish people.
      Mr. Robert Syms: I support the amendments, which would insert the word "income". It was explicit throughout the White Paper, the referendum and the debate on devolution that what the amendments would write into the Bill was what was intended and I cannot understand why the Government do not accept them—after all, they are in the spirit of the debate. The amendments would clarify and make more specific the powers of the Parliament. There will always be those who worry that, if income tax is not specified, other taxes may appear. In the press, we have read of concerns about a tourist tax or a sales tax, and various members of the Scottish business establishment are concerned about how other forms of taxation may impact on them.
      Having read the press release and the various prospective clauses that were put in the Library earlier, I am pleased to see that the Government have clarified many points. The complexity of the income tax system becomes clear when one starts to read through those complicated documents. It is easy to see why tax lawyers make such a good living at the Bar when they deal with issues relating to income tax.
      I doubt whether a 3p rise would raise £450 million. That may be an issue for another day. I oppose the principle of varying tax within the United Kingdom because I believe that it will be detrimental to Scotland. Scotland may wish to make that choice, but the debate about crossing borders shows that it will be a difficult issue. As the hon. Member for Dumfries (Mr. Brown) told my hon. Friend the Member for Westmorland and Lonsdale (Mr. Collins), companies will not move from Scotland, but the decisions of many international businesses and businesses based throughout the United Kingdom about where to expand could be determined by tax structures.
      The Library document brings out the issue of the setting-up costs of the Scottish Parliament that will fall on the Inland Revenue and social services. For the Inland Revenue, a setting-up cost of £10 million, with perhaps £8 million a year running costs, was mentioned. For social security, the figures are £6 million setting-up costs and perhaps £1 million running costs. It is inevitable that a Parliament with the power to levy ½p or 1p will not choose the lower figure because of the substantial setting-up and initial running costs.
      With a £16 million setting-up cost and a £9 million running cost, the Parliament will not go for a ½p rate, which may raise only £75 million. That would not be efficient. In practice, the Parliament will not have much choice between ½p, 1p or 3p because, with the cost of collecting the tax, it will go for the top level from day one. That will affect business and employment north of the border.
      Mr. Welsh: While raising the spectre of international companies rushing to leave Scotland or not coming at all, can the hon. Gentleman give an example of companies

      61
      being deterred? To prove his point, the hon. Member for Westmorland and Lonsdale (Mr. Collins) could offer only a publican rushing from Scotland to Cumbria.
      Mr. Syms: It would take a while; the Parliament has not yet been set up and the tax has not yet been levied.
      Mr. Swinney: Assuming that it will be.
      Mr. Syms: It is a realistic point. High-tax countries do not attract jobs. Scotland will be competing against England and Wales, which will have lower taxes.
      Sir Robert Smith: I cannot understand why Conservative Members do not understand the logic. The matter would be dealt with as an issue in the election to the Scottish Parliament. The hon. Gentleman said that the Parliament would have to raise the tax by 3p, but it could get away with that only if the electorate was willing to forgive it.
      Mr. Syms: The hon. Gentleman makes a good point. I am sure that that will be a key issue. The principal point of the amendments is to insert the word "income" to make the provision specific. I do not believe that that would change the Government's intent, but it would reassure many people who are worried that other forms of taxation might be raised. I support the amendment.
      Mr. Gerald Howarth: This is an important debate. It is a great shame that there are so few members of the media in the Gallery to listen to a debate that has profound implications for all the people of the United Kingdom and not only for the people of Scotland.
      I support the amendments tabled by my right hon. Friend the Member for Devizes (Mr. Ancram) to insert the word "income" so that there is no doubt, not only in the House but in the country at large, that we are talking about powers to vary income tax, not powers that relate to any other form of taxation.
      If the hon. and learned Member for Orkney and Shetland (Mr. Wallace) believes that the word "income" is superfluous, let him put it in the Bill. It is not as if we are asking for a series of new clauses that make lengthy insertions. We propose a one-word insertion at a number of points that would mean that no one, least of all the courts—to whom the Government are handing more powers under the Human Rights Bill, which we debated last week—should be able to interpret the will of Parliament as extending beyond income tax to other forms of taxation.
      I remind the Minister for Home Affairs and Devolution that, on Second Reading, the Secretary of State referred to safeguards that had been built into the system and said:
      "First, income from savings and dividends will not be affected by the tax-varying powers. We were influenced heavily in reaching that decision by the need to have a level playing field for the financial services industry in Scotland, which is particularly important in insurance and pensions."—[Official Report, 31 July 1997; Vol. 299, c. 465.]
      I wonder how much those industries gave to the Labour party. Bernie Ecclestone gave £1 million to secure changes in the tobacco regime. The Government have
      62
      clearly had representations from the insurance and financial sector, which is concerned about the impact on its businesses.
      Mr. McLeish: On a point of order, Mr. Maxton. The comments that my right hon. Friend the Secretary of State made on Second Reading have been linked to the suggestion that the Labour party may have received income from financial services companies. I hope that that was not the inference that was being drawn.
      The Temporary Chairman: That is not a point of order but a matter for debate.
      Mr. Howarth: I note your ruling that that was not a point of order, Mr. Maxton. The Minister is a decent chap, but he was remarkably sensitive to my point. Perhaps he might like to check with Walworth road to make sure.
      The point that I was making for the benefit of the Minister and in answer to the Scottish nationalist lot was about a specific case of an industry that has made representations to the Government about the potential impact of the Bill on its business. The industry wanted to ensure that it would not be prejudiced by an extension of tax-raising powers beyond income tax. If the Minister wishes to score a few brownie points with the insurance and financial services industry, which plays a big part in the Scottish economy, he should accede to our small but important amendment.
      Mr. Oliver Heald: Has my hon. Friend noticed that the largesse directed to savings is not being directed towards charitable gifts, in respect of which the amount of Scottish tax supplement will not be grossed up in the usual way? It will be restricted to only the United Kingdom basic rate. Is that not a particularly mean decision?
      Mr. Howarth: I was not aware of that and I am grateful to my hon. Friend for drawing it to our attention. It seems that it is a one-way ratchet—and not a good example of the good faith to which the people of Scotland might like to look forward in their dealings with a Scottish Parliament.
      The Temporary Chairman: Order. The hon. Gentleman is straying a little far from the amendment. I would be grateful if he returned to it.
      Mr. Howarth: I was seeking only to respond to my hon. Friend's intervention.
      As a matter of principle, I believe that national taxation should be decided by this place for the whole United Kingdom. This part of the Bill is one of the axes falling on the unity of the United Kingdom. I agree with my hon. Friend the Member for Poole (Mr. Syms) that it is a matter of principle that taxation should be determined nationally in this Parliament at Westminster.
      There has been some discussion of people moving. I noted the nervousness of the insurance and financial services industry about the Bill's impact on their business. Much mirth was had by the Scottish nationalist lot about the suggestion that my hon. Friend the Member for Westmorland and Lonsdale (Mr. Collins) could not name people who had moved to Westmorland. They ought to

      63
      take note of the fact that, even in advance of the Bill reaching the statute book, a Scottish business man has realised that he can read the runes only too clearly and has decided to up sticks in order to ensure that there is no way that he can be affected. I am quite sure that the habitues of his hostelry will be grateful for his move.
      Mr. Wallace: Will the hon. Gentleman inform the House how many international companies have announced over the six months since the referendum that they are about to make inward investment in Scotland?
      Mr. Howarth: I am not aware of the answer off the top of my head. The hon. and learned Gentleman makes a fair point. Many businesses have gone to Scotland. That is one of the features of 18 years of a Conservative Government. Thanks to our policies—
      The Temporary Chairman: Order. The amendment says: "after 'the', insert 'Income'." I wish that the hon. Member would refer to it.
      6 pm
      Mr. Howarth: I was, Mr. Maxton. I was referring to income—income in Scotland from all the new businesses that were encouraged by the Conservative Government.
      I say to those who have questioned whether the Bill will have an impact on where business locates that, generally, business does not make a decision until it has seen how individual bits of legislation take effect. In that respect, it is very instructive to look at what is going on in Kent, where people have been able to see the impact of different rates of taxation. There, they have voted with their feet—
      Mr. Frank Roy: They voted Labour.
      Mr. Howarth: If the hon. Gentleman thinks that this matter is anything to do with there being a Labour Government, I remind him that it probably has more to do with the Labour Government sticking to the spending limits set by the previous Conservative Government, giving people some reassurance. Once the Bill comes into effect, we are likely to see businesses trying to escape the extra burdens of a Scottish income tax. Scottish nationalists say that it will not make a difference.
      In the White Paper, the Government made clear that they
      "propose that the tax varying power should operate on income tax, because it is broadly based and easy to administer."
      I shall return to that point. They specifically ruled out VAT, stating:
      "different rates of VAT on different sides of the border would cause practical problems".
      I remind the Minister that the 1977 White Paper came to a very different conclusion. It noted that, of all the options, supplementary income tax
      "seems an attractive candidate at first sight because of its high yield and broad coverage"
      but it was ruled out primarily on the ground that it
      "would impose a heavy new burden on the PAYE system and would reduce its efficiency as the Government's main revenue collector. Furthermore, because a marginal tax would be at a low rate, the cost of collection could represent as much as 20 per cent. of the yield."
      64
      There we have it. It has been considered in the past that such a tax would impose a substantial burden. The Government are now asserting to the contrary.
      There will be a cost to business from the tax-varying powers conferred by the clause. There will be a cost to the Government. We do not know how much; the Bill is not explicit on that. I wonder how much the Government will make available to businesses to help them offset the additional cost of the income tax-varying powers that they are being asked to shoulder.
      Mr. Syms: Is my hon. Friend aware that, from some estimates, it could cost business upwards of £50 million to set up the running of the additional tax?
      Mr. Howarth: That is a very substantial amount of money—but cost is not the only issue. For a large business, £1 million may not be a large amount, but £10,000 in costs could be a substantial burden on a very small business. My hon. Friend mentions a substantial figure, which could fall disproportionately and particularly harm small businesses.
      I give the Minister a word of advice. All Conservative Members are clear that much of the Bill comes from a dispute between the Scottish nationalists and the Labour party, as they vie to outdo each other on winning the nationalist vote. The Minister had better beware, because it is perfectly apparent—we shall come to this issue in a later debate—that the 3p income tax-varying power may not raise enough for the Scottish nationalists' designs, and they will be back.
      I say to you, Mr. Maxton, as a Scottish Member, that the Scottish nationalists will be back, seeking to persuade the Scottish people that such a sum is paltry and that the only way in which they can implement their plans will be with a very much larger take. I support the amendment.
      Mr. McLeish: Some things change, but many do not. The speech of the hon. Member for Aldershot (Mr. Howarth) was breathtaking in its irrelevance to the fact that Scotland has moved on, the business community has moved on and the Scottish Conservative party has moved on. Conservatives in this House have simply not moved on.
      Before I briefly address the Opposition amendments, I shall refer to the consultation paper issued by the Inland Revenue. The paper sets out the Revenue's initial thinking on a range of second-order technical issues, which will have to be dealt with before April 2000. It has been sent to a range of representative organisations and invites their comments. It is very much a working document, but, for hon. Members' information, the Chief Secretary to the Treasury and I have arranged for copies to be placed in the Library. I shall come to points made about that in a second. The paper is intended only as a step along the road to sorting out all the various detailed technical aspects of the tax. I anticipate, however, that it will meet some of the concerns that have been expressed to us and will encourage constructive comment in other areas.
      May I repeat that I apologise for the inconvenience that has been caused to hon. Members? The paper is part of the on-going debate, but it would have been courteous to

      65
      have informed at least the party leaders about its availability. It could then have been accessed a little earlier. On that basis, I hope that I can leave that point.
      Mr. Ancram: I am grateful to the Minister for his apology, which I certainly accept. Will he pay the fees of the tax adviser whom I shall need to explain the paper to me?
      Mr. McLeish: As they say in the legal profession, I shall reflect on that matter.
      Mr. Wallace: I, too, am grateful to the Minister for his apology. On a cursory glance at the paper, one of the things that cause me some concern is a reference to clause 75 and how many of the responses to the consultation may be made by subordinate legislation. Will the Minister give an undertaking that, if substantive points come up, he will be prepared to reconsider amendments either on Report or in another place?
      Mr. McLeish: That is for the procedures of the Committee. If hon. Members want to raise further items at a later stage, they can obviously be discussed. The Inland Revenue will have prepared the paper for the purposes of consultation with employers and others. As a courtesy, the paper was placed in the Library. I have already referred to the administrative convenience.
      Mr. Swinney: I accept the Minister's remarks about the arrangements for the paper. Will there be more papers of that nature? From a cursory glance, the paper does not seem to cover all the issues that concern me in relation to clause 71 and the definition of Scottish taxpayers. Although the Minister may have more to say in a later debate, I seek his reassurance on that point.
      Mr. McLeish: I shall indeed have something further to say about that. I hope for continuing consultations, in addition to the paper that is being published. Moreover, the Revenue intends to call in employers to discuss implementation of the tax. I anticipate further papers clarifying some of the issues that will be involved.
      There is something synthetic about the concern expressed by Conservative Members this evening. Since 11 September, many people have taken the result very seriously—the result being a Scottish Parliament. The result also meant, however, a tax-varying power. Despite the ringing endorsement by the Scottish people, by a ratio of 2:1, I detect at best a grudging acceptance of their decision by the Conservative Opposition.
      It does little good to distort and exaggerate. The Conservatives' grudging acceptance is cloaked in further attacks on the democratic wishes of the Scottish people. It is always very dangerous for democracy when people seemingly insult a decision arrived at in this way. It is the business of this Committee to scrutinise the technicalities, not to revisit old arguments—yet that is what the Tories
      66
      have done under the guise of apparently supporting the measure. They actually harbour deep misgivings about what is happening—
      Several hon. Members rose—
      Mr. McLeish: I see that they are getting edgy.
      Dr. Fox: What are the Prime Minister's economic reasons for saying that his party will not support the use of the tax-raising power?
      Mr. McLeish: The subject was well aired before publication of the White Paper on 24 July, and before the referendum of 11 September. It is no secret that we are committed to that for the lifetime of this Parliament.
      Mr. Desmond Swayne: Does the Minister accept that we tabled our amendments solely to ensure that the Scottish people get exactly what they voted for and nothing else?
      Mr. McLeish: Not at all. That is not the import of the amendments. There was a tax-varying question, linked to what the White Paper said, on the ballot paper. We made it clear that we were talking about income tax. The business community has moved on from these points already. Business people wanted fairness: that is what they have got. They wanted uncertainty cleared up; the business community is always rightly apprehensive of change. All that has formed the basis of the discussions between the Government and the business community. While that community has begun to look at the technicalities and the impact of the tax-varying power, Conservative Members have not moved an inch since the result was declared on 12 September.
      Mr. Heald: If the measure applies only to income tax, why not say so? Could it be because the Government, with their secret agenda, intend later to include capital gains tax?
      Mr. McLeish: Conservative Members should apply themselves to clause 69(1):
      "Subject to section 70, this section applies for any year of assessment for which income tax is charged".
      That is clear to every party in the House except the Conservative party. No matter how many times Conservatives are told that this concerns income tax, they will not acknowledge the fact—on political, not technical grounds.
      Mr. Dalyell: Is the business community completely satisfied with the Government's position on a uniform business rate?
      Mr. McLeish: I think the business community is satisfied with our openness and with the dialogue that we have had with business people. They have acknowledged that the power over the uniform business rate, linked as it is to the structure of local government, is being passed to the Parliament, not to local government itself. The Parliament will determine the matter. I am well pleased with our discussions so far. Recently the CBI met my right hon. Friend the Secretary of State and agreed to submit its

      67
      thoughts on some of the technical issues surrounding the tax. It has now done that; I believe that the Inland Revenue is to hold further discussions with the CBI to respond to its points. I am content with the process—
      Mr. Ancram: But are business people?
      Mr. McLeish: Conservative Members should do some reading about what industry and business are saying. The life companies, for instance, are allowing their staff to stand for the Scottish Parliament, protecting their jobs and interests in the meantime.
      Mr. Dalyell: I have said before that there is some concern about the responsibilities of the life offices. Will it be they or the Revenue which will be responsible for making information available?
      Mr. McLeish: It will be a matter for the Inland Revenue, which will notify the life companies of what needs to be done.
      6.15 pm
      At some point, Conservative Members will have to come clean on where they stand—not for the benefit of the Government, the Liberal Democrats or the nationalists, but for the benefit of the Conservative party in Scotland, which may be interested in participating in elections there. Conservative Members ask who will decide whether the tax-varying power is to be used. The answer is: possibly the Conservatives. They have no locus in this House when it comes to Scotland, following 1 May, but they should be careful when deciding whether to accept the verdict of 11 September. They should not undermine the efforts of Scottish Conservatives to be elected to the Scottish Parliament—an outcome most democrats would want, yet it could be jeopardised by what the Opposition say in this Committee.
      Amendments Nos. 352 to 355, 358 to 365, 369, 383, 386, 391, 394, 395 and 398 would replace each reference to tax-varying powers or taxpayers in the Bill with a reference to income tax-varying powers or income tax payers. The amendments are simply not necessary. Clause 69 makes it quite clear that the tax-varying power applies solely to income tax and thus to income tax payers. Clause 72(3) would confine any future replacement of the proposed tax-varying powers to income tax.
      There is nothing more I can say on the subject. The amendments are superfluous and should not be agreed to.
      Mr. Ancram: That was a most inadequate response. These days it seems that if we are told by the Minister that black is white, we need not see it on the face of the Bill. His whole argument is predicated on the idea that because he has said before that the provision relates to income tax, that need not be stated in the Bill. Certainly, from the point of view of Scottish business, that is inadequate.
      The Minister keeps saying that clause 69 makes it clear that this is about income tax. I have read it again. It refers to
      "any year of assessment for which income tax is charged".
      68
      If that is indeed about income tax, why does the Minister resist the simple addition of the word "income" to make the measure clear beyond peradventure?
      We are only trying to bring about some confidence and stability. I would expect the nationalists to attack us, but when even the Liberal Democrats suggest that we have a hidden agenda, it becomes disappointingly clear to me that they have not understood the depth of concern in Scotland. My hon. Friends have admirably highlighted the uncertainties generated by these provisions; the Minister has not begun to answer any of them.
      Once again, we have heard the protests that this is a wrecking group of amendments tabled by the Opposition. The Minister has given no serious consideration to them. He says that the Government do not need to clarify, yet when he introduced the paper from the Inland Revenue today, he said that it was the first of a number of papers whose purpose will be to clarify these issues. Those were his words—to clarify these issues. In saying that, he is accepting that there are doubts, that there are questions that need to be answered, and that clarification is required, yet when we seek to make a simple clarification in the Bill, he throws his hands in the air and says that he cannot accept it. Then he wonders why we are suspicious.
      The Minister says that the business community in Scotland has moved on, that it is satisfied with the provisions, and that our need for clarification is not the need of the business community. Why, then, did representatives of the CBI go to see him on 30 January to ask for clarification and to get an assurance that capital gains tax would not be affected by the provision?
      If the Bill and the arguments are so clear and so patent, and the Scottish people have seen and heard them for the past eight months, why does a senior organisation representing Scottish business take a different view and feel the need to ask for that reassurance? Why was the Minister so keen to give us that reassurance from the Dispatch Box again last week at Scottish questions? Because he, too, knows that there are doubts in Scotland, and that those doubts are dangerous and destabilising. He wants to offer reassurance not in the Bill, but from the Dispatch Box.
      The Minister's attitude is breathtaking in its complacency. He was asked by the hon. Member for Linlithgow (Mr. Dalyell) whether he was satisfied that the Scottish business community was reassured about the uniform business rate. If I understood his answer, which was not easy to understand, he seemed to say that the business community was pathetically grateful that he had been prepared to talk to its representatives.
      There are real business decisions—investment decisions—to be taken, all of which will be taken on the basis of the confidence that Scottish business has in the Government's proposals in relation to tax, but we have again heard nothing that creates any more confidence in that regard.
      Mr. Wallace: Does the right hon. Gentleman accept that even if all his amendments were accepted, it would make no difference to the powers of the Scottish Parliament in relation to the uniform business rate?
      Mr. Ancram: Not these particular amendments—
      Mr. Wallace: Those are the ones that we are discussing.
      Mr. Ancram: I said earlier that the entire clause relates to confidence in tax varying. We have tabled new clauses

      69
      that we shall discuss later, which deal with that specific problem, so the hon. and learned Gentleman will see that we are consistent in our approach.
      I am sorry about the view that the Minister has taken. These were useful amendments, which could have created confidence. Throughout our consideration of the Bill, his reaction to any amendments tabled by the Opposition—even by the Government's friends, the Liberal Democrats, who are now protesting about not having any amendments accepted—has been arrogant resistance to any constructive suggestion. That is disappointing, but I shall not press the matter. I beg to ask leave to withdraw the amendment.
      Amendment, by leave, withdrawn.
      Mr. Heald: I beg to move amendment No. 356, in page 29, line 23, at end insert—
      '(3A) The income mentioned in subsection (3) to which section 1A of the Income and Corporation Taxes Act 1988 applied for that year shall also be treated as income of that kind even where the taxpayer's total income from all sources exceeds £25,500 in that year.
      (3B) The income referred to in subsection (2) does not include income from any annuity purchased from a pension fund.'.
      The Temporary Chairman: With this, it will be convenient to take amendment No. 357, in page 29, line 35, at end add—
      '(6) Split year concessions shall apply to resolutions passed by the Scottish Parliament as they apply under the Income and Corporation Taxes Acts.'.
      Mr. Heald: Amendment No. 356 proposes adding two new subsections, (3A) and (3B), to clause 69. New subsection (3A) seeks to ensure that any tax supplement resolved on by the Scottish Parliament should not have effect as against income from savings and distributions, even if the Scottish taxpayer's income exceeds £25,500 in that year.
      To put that in context, clause 69(2) applies the income tax Acts to Scottish taxpayers so that the UK rate—the basic rate—is increased or reduced by the amount resolved by the Scottish Parliament. Clause 69(3) provides that income from savings and distributions is not to be considered for that purpose, but that is done by reference to section 1A of the Income and Corporation Taxes Act 1988.
      Section 1A provides that income from savings and distributions is to be taxed at the lower rate in the United Kingdom, but if a taxpayer's total income exceeds £25,500, tax is paid on the top slice at the higher rate, and income from savings and distributions is considered under subsection (5) as the highest part of his income and taxed at 40 per cent. less the 20 per cent. already deducted.
      The amendment seeks answers to two questions. For the purposes of the Scottish tax supplement, will income from savings and distributions be completely disregarded, or will such income be considered for tax as the highest part of the taxpayer's income and be brought into the Scottish tax supplement if the total income exceeds £25,500? In other words, will the tax supplement apply to basic rate taxpayers and those in receipt of savings and distributions income in so far as the total income exceeds £25,500, or does section 1A apply only to define the categories of income to be disregarded, and may subsection (1)(b) and subsection (5) of section 1A therefore be ignored for these purposes?
      70
      That was a fairly technical argument, but I can see that one or two Labour Members followed it closely. New subsection (3B) would remove pension income from the Scottish tax supplement. As at present drafted, clause 69, subject to my previous comments, would exempt savings and distributions income, but not pension income. It is an anomaly that senior citizens in receipt of a pension should pay the tax, while those who rely on other savings income should not.
      The Government may argue that savings are made out of taxed income and should therefore be exempt from further taxation, and that it would be wrong to tax twice. However, as we have seen, the income under section 1A of the 1988 Act is already taxed, albeit at a lower level. It is true that pension contributions attract tax relief and that pensions in payment are taxable, but the agreement between the Government and the taxpayer has been that tax relief will be at the current UK tax rate, and that pensions in payment will be taxed at the current UK tax rate.
      Pension scheme members have made their contributions, as have their employers, on the basis of the present situation, and have made their projections of the necessary required income for retirement on that basis. Is it fair to change the rules retrospectively and impose a new tax on those with fixed incomes—pensioners who have no opportunity to increase their income, because their working lives are over?
      For the past 18 years, the Conservative Government were anxious to increase the number of people who had pension provision. The number went up by more than 6 million. That was against a background of falling income tax rates. In recent years, Labour has given people taking out pension provision the idea that Labour would agree to the system where tax rates fall rather than rise. It is doubly cruel now to increase the rate of tax for pensioners while leaving other savers untouched, as pensioners cannot change their position, claw back the money, put it back into their pension schemes and save the situation for the future.
      Furthermore, is it right as a matter of policy to disadvantage pension scheme savers in comparison with other savers? Other savers have made their savings from taxed income, but at the current UK rate. They have not paid the Scottish tax supplement. If they are to be exempt from the tax supplement on the fruits of their investments, why should pensioners pay it?
      There is an imbalance between the way in which two kinds of savers, both possibly saving for their retirement, are treated. Is it right for a Government to discriminate against pensioners? Pensions are thought by many to be the best form of investment for retirement. The money is set aside permanently, and employers are prepared to make contributions to pension funds as part of their employment policy. Everyone recognises that good-quality pensions help the individual to meet his expectations of retirement.
      Until recently, all Governments have gone to great lengths to extol the benefits of pension provision, not least because it eases the burden on the public purse at a time when we face an increasing aging population. At present, there are three pensioners for every worker. By 2030, there will be five pensioners for every worker. Against that background, rather than abandoning that pension policy, should not the Government support those who

      71
      make provision in that way? We have already seen the £5 billion pensions raid and now we have this discrimination against Scottish pensioners. I ask the Government to think again and to accept amendment No. 356.
      There is a certain mean-spiritedness about this tax-varying power—grossing up charitable gifts not by the amount of the Scottish tax supplement but only by the United Kingdom basic rate; and not giving full relief for home income plans, which are restricted to the basic rate instead. There are 15,000 plans in the United Kingdom and no doubt there are many in Scotland. Do the Government wish to send the message, "Don't be a Scottish pensioner or a Scottish home income plan owner"? I do not think so. That is why the Government should consider the amendments seriously.
      6.30 pm
      Amendment No. 357 seeks to maintain the extra-statutory concession on split years for the Scottish tax supplement. Under United Kingdom tax law, anyone who is resident in the United Kingdom for part of a tax year is liable for tax for the whole year in respect of his whole income. In theory, if he is resident in the United Kingdom for a day and then moves to the United States, he is liable to pay tax for the whole year on his whole income. The Revenue has recognised the unfairness of that and has made an extra-statutory concession that involves splitting the tax year, so that income arising after departure is not subject to United Kingdom tax.
      It is not clear whether that concession applies to the Scottish tax supplement if a person moves to England or abroad to the United States, for example. It is important that the Government clarify their position. It would be wrong to discriminate against those who seek to exercise mobility of labour. I ask the Government to consider both amendments seriously, and I hope that the Minister will accept them.
      Mr. Dalyell: In the previous discussion, I asked whether donations to charities would be treated according to Scottish or United Kingdom taxation rules. I put that question then in the expectation that we might not reach these amendments, and I wonder whether it would be convenient for the Minister to answer now. I asked also about the treatment of annuities. The Minister did not touch on that issue in his winding-up speech, but that matter may be dealt with more properly now.
      I have one more question about pay-as-you-earn treatment—forgive me if it does not relate to the amendments, but I do not know when it will be appropriate to raise it. Would it not create less of a burden and be administratively easier if tax years could be split? For example, if someone arrives in Scotland from England on 1 September, the Scottish rate will affect PAYE for the whole year of assessment. That creates an additional burden for employers and employees, which may result in an employer paying an additional salary or in an employee seeking to postpone his arrival in Scotland. Now is probably as good a moment as any to ask about the treatment of PAYE.
      Mr. Wallace: I should declare an interest in the discussion, as I am the parliamentary adviser to the Institute of Chartered Accountants in Scotland. I have had discussions with the institute regarding some technical matters in the Bill—although obviously any political gloss I may put on them is entirely my own. I welcome the fact that the hon. Member for North-East Hertfordshire (Mr. Heald) has moved the amendments. This is the stuff of the Committee stage; we should examine the details of the legislation. The hon. Member for Linlithgow (Mr. Dalyell) also raised important detailed points.
      The amendments raise concerns about the way in which clause 69(1) and (2) will interact with the general operation of income tax as it affects Scottish taxpayers. I understand that clause 69(2) makes the provision part of income tax legislation, so it should apply the next time we have a consolidation.
      Given that the Scottish variable rate applies to income tax, does it apply also to tax relief? I note that the charitable deeds of covenant are covered by the consultation paper and that tax relief will continue to apply at the United Kingdom basic rate, regardless of the tax position of the donor. I am not 100 per cent. certain that the provisions in clause 69 will achieve that aim. We could have a political debate about whether they should achieve it—the hon. Member for North-East Hertfordshire said that the deeds of covenant should attract tax relief if someone pays a higher rate.
      Many charities have found that successive reductions in the rate of income tax have led to reductions in their income. Putting aside that political point, I seek an assurance from the Minister about precisely how the position that he sets out in the paper with regard to the deeds of covenant can be achieved by the structure of the changes to the Scottish rate of income tax as set out in clause 69.
      In terms of simplicity, there is much to commend the extra-statutory concession. We want simplicity, but I would hesitate to allow a Bill that deals with fundamental constitutional matters to make a major taxation change. There is much to be said for putting such extra-statutory concessions into taxation legislation. It is not satisfactory to achieve fundamental taxation change by way of extra-statutory concessions.
      My final point relates to annuities. I understand that we have different tax rates to which annuities from pension funds do not apply, principally because the Conservative party made that distinction. I think that the former Chancellor, the right hon. and learned Member for Rushcliffe (Mr. Clarke), introduced that provision. If there is a tax break going in, it is not unreasonable that there should be tax coming out. We seek confirmation from the Minister on that point. If, for the sake of argument, the tax rate in the Scottish Parliament is 24 per cent., would a contribution attract a tax break at 24 per cent? If that is so, it is not unreasonable that it should be taxed at the Scottish rate when the payment is taken out.
      Mr. Swinney: I wish to make a brief contribution to the consideration of amendments Nos. 356 and 357. I believe that amendment No. 357 is the better of the two. In the past few weeks, I have received several representations from specialist organisations in the financial services sector and from the business community about some of the details surrounding these provisions.

      73
      I take the point made by the hon. and learned Member for Orkney and Shetland (Mr. Wallace): there is concern about the publication of the consultation paper. It is felt that too many details about the application of the tax-varying powers will be settled by secondary provisions and do not form part of the Bill. A key concern that has been drawn to my attention is the definition of "Scottish taxpayer" in clause 71.
      Mr. Heald: I am rather surprised by the hon. Gentleman's comments. He spends a good deal of time telling us that details do not have to be on the face of the Bill, and now he says that they should. Can he not decide?
      Mr. Swinney: That is such a lot of rubbish that I will not even bother to respond.
      The Government have introduced in the Bill the concept of Scottish taxpayers. I understand their motivation for doing that, but I disagree with the method and the mechanism that they have proposed.
      This debate is similar to the one that I suspect we shall have on clause 71; the definition of Scottish taxpayers should be much more closely related to residence than the Government propose.
      I am particularly concerned about split-year concessions. I have anxieties about the bureaucracy and the administrative hassle and costs of gathering information for the proposed days test, and I believe that the Bill should make clearer the issues relating to the split-year concessions. If the Revenue can deliver a split-year concession for individuals who leave the United Kingdom for other tax jurisdictions, I am sure that a mechanism could be designed adequately to protect the right to a split-year concession for people who leave Scotland for another part of the United Kingdom.
      We need guarantees that such mechanisms will be implemented, but the days count is inadequate; it is cumbersome and unnecessary, and it does not provide sufficient clarity. I understand the Government's enthusiasm to maximise revenues, but they must do so through the consistent application of tax practice and definitions, which are sadly lacking in the Bill.
      Mr. Grieve: This is an interesting debate; it has become clear that, far from being simple, the 3p income tax variation is a matter of considerable complexity. Nothing illustrates that better than the preferential treatment that will be accorded to those who are in receipt of unearned income from stocks and shares, as opposed to those who have saved for their pensions. Given the Government's proclaimed interest in pensioners, the fact that they are making such a differentiation comes as something of a surprise.
      We hope that the Government will accept the amendments, which would ensure parity between those who receive unearned income and those who receive pensions. Pensioners tend to have nothing else to fall back on for their income, yet they will be unfairly penalised in comparison with those who enjoy unearned income from other sources.
      Another illustration of the measure's complexity is the split-year concession, about which the hon. Member for North Tayside (Mr. Swinney) and other hon. Members have spoken tellingly. If income tax rates differ in Scotland and England, the concession will be of great
      74
      importance to those who work in and out of Scotland, and the Government should take that into account when they consider how the income tax mechanism will work.
      As I understand the Government's thinking, they have moved from the principle that tax variation will occur only in relation to income tax to the position that it will affect only taxed, earned income. If so, they would be wise to nail their colours to the mast and leave it at that; otherwise, we shall end up with a series of bizarre anomalies—one need only look, for example, at the wording of the Inland Revenue's detailed statement to realise that some items that would normally be treated as income will be exempt. That is a recipe for the system to be considered unfair. If tax variation will apply only to the income earned by those who are earning, so be it; if not, the Government should consider the whole matter again.
      Mr. Collins: Again, this is an important debate, as it enables us to flush out the Government's intentions. Amendment No. 357 deals with split-year concessions, and we should be aware that it is somewhat naive to operate a system on the assumption that most people—or even a significant number—will move from Scotland to England or vice versa just as one tax year ends and another begins. The Bill should make clear provision to take account of the fact that most people will move at other times of the year.
      It is important to note that, once again, more Conservative Members are present than Labour Members, even though there are, sadly, two and a half times as many Labour Members as Conservative Members. The Scottish Parliament is supposed to be the flagship of the Government's programme, but in this debate on a matter of great significance—taxation—the Labour Benches are not filled. Is that because Labour Members do not believe that these matters are important, or do they think that the Government's case is difficult to support?
      With the honourable exception of the hon. Member for Linlithgow (Mr. Dalyell), Labour Back Benchers have been entirely silent all afternoon. That needs to be noted; it betrays not only the contempt in which many Labour Members hold the House, but their indifference to matters of taxation, income and the management of the Scottish economy, which are of great importance to the people of Scotland and to all those who want every part of the United Kingdom to operate a strong and prosperous economy under a clear financial framework.
      6.45 pm
      Amendment No. 356 is important; we want the Government's attitude to people whose income is greater than £25,500 per year to be put on the record. Those who were around in the run-up to the 1992 general election—I was in a very junior capacity—will remember the Labour party's immense difficulties over whether someone who earned £21,000 or £22,000 per year was affluent. At a famous dinner at an Italian restaurant, which was attended by journalists, the then leader of the Labour party, Mr. Neil Kinnock, changed policy on the treatment of employers' national insurance contributions.
      That was as significant then as it is now, as we need to know what the Government's rhetoric means. They talk about people who are prosperous, who can afford to pay

      75
      and who should be encouraged to make sacrifices for the wider community, but at what income will the affluence test start to bite?
      As we learned during the debate on the previous group of amendments, the Government are reluctant to specify in the Bill the assurances that they gave during the referendum campaign and on other occasions—that the Scottish Parliament will be given powers to vary only income tax. If they reject the amendments, there will be a suspicion that the Labour party is pursuing an agenda in which people of a certain income—it may be £20,000, £25,000 or £30,000—should pay more.
      The amendments were tabled to find out how much the Minister believes people's income should be before it is reasonable to expect them to pay more towards services, whether they are in Scotland or the rest of the United Kingdom. I should be interested to hear his definition of the affluence test—an idea that the Secretary of State for Social Security floated during a famous "Today" programme interview, but which was denounced a few hours later by Mr. Alastair Campbell from No. 10 Downing street, who—unconstitutionally—holds much greater power than any member of the Cabinet, with the possible exception of the Prime Minister.
      I hope that the Minister will make clear the Government's position on pensioners. The pensions tax that was imposed in last year's Budget gave us some idea, but we want the Minister to put it on the record whether the Government are interested in the concerns of pensioners, particularly those with private pension provision.
      I hope that, in the Minister's response to amendment No. 356, he will also clarify the Government's position on the key question of people with middle incomes, to which many people below them aspire. Does he believe that they should be asked to delve deep into their pockets to pay for socialist spending plans, whether they be from Holyrood or Westminster?
      Mr. Syms: I listened to my hon. Friend the Member for North-East Hertfordshire (Mr. Heald) eloquently introducing the amendments. I think that all of us have been impressed by the technicality of the clauses that we are discussing. We have had to listen carefully to explanations of what they mean.
      The arguments behind amendment No. 356 are telling. Unearned income will not be taxed, but pensioners will find themselves under a tax burden. We all know that many pensioners are on a fixed income. Many have planned for their retirement for many years, only to find that the burden of the proposed taxation will diminish their living standards in retirement. I support the amendment.
      I support also amendment No. 357. As the hon. Member for Linlithgow (Mr. Dalyell) said, split years are an important issue. People are moving from one address to another and changing jobs all the time. Many of those moves and changes take place within the United Kingdom and many are international. If we can have recognition of split years under our income tax and corporation tax arrangements for people who go abroad, it seems not
      76
      unreasonable that we should have such arrangements for people who move between Scotland and England or from Scotland to any other part of the United Kingdom.
      Mr. McLeish: The hon. and learned Member for Orkney and Shetland (Mr. Wallace) asked about the tax treatment of pensions. If the Scottish rate were to be 24 per cent., would contributions attract relief at 24 per cent? The answer is yes.
      The hon. and learned Gentleman referred also to the treatment of charities and asked how that would be achieved in the Bill. That will be done by invoking the powers in clause 75(2) by regulation in so far as that is necessary. That is one of the issues on which the Inland Revenue is consulting.
      My hon. Friend the Member for Linlithgow (Mr. Dalyell) raised the issue of pay-as-you-earn treatment. I can tell my hon. Friend that PAYE will operate as normal. Indeed, that was made clear in the White Paper. The Inland Revenue will be consulting employers on detailed operational matters, covering such issues as how best to deal with people who move to and from Scotland in any one year.
      Mr. Dalyell: Is the Inland Revenue considering a split year?
      Mr. McLeish: I shall take up that question in response to the amendments.
      The hon. Member for North-East Hertfordshire (Mr. Heald) asked whether it is fair to tax pension payments at the higher rate at which the contributor obtained tax relief in contributing to his or her pension fund. If a Government committed themselves to tax pensions only at the same rate at which they gave relief on pension contributions, it would not be possible to alter tax rates, including lowering them.
      I shall take up some of the substantial points that were made by the hon. Member for North-East Hertfordshire. Amendment No. 356 is clearly based on a paper produced by Deloitte and Touche. The argument seems to be that section 1A of the Income and Corporation Taxes Act 1988 is a form of allowance and that, after that slice of income is, in effect, cut out, the next slice can fall into the gap. But that is not quite right. Sections 1 and 1A of the 1988 Act and clause 69 work together.
      The rules take account of a person's total income, as arranged in a certain way, which basically puts savings income on top. From this are deducted personal allowances, and what income is left is divided into rate bands. For 1997–98, the first £4,100 is taxed at the lower rate of 20 per cent. Income from £4,101 to £26,099 is taxed at the basic rate of 23 per cent. The balance is taxed at the higher rate of 40 per cent.
      Mr. Dalyell: My hon. Friend will be aware of the concern of the Institute of Chartered Accountants in Scotland, which is asking whether income tax is to be withheld at 23 or 26 per cent. Thereafter, will the payer be given tax relief for an annual charge of 23 or 26 per cent? Are there special rules for cross-border annual payments? That refers to the Income and Corporation Taxes Act 1988.
      Mr. McLeish: I intend to deal with the cross-border issue. However, at this stage I refer my hon. Friend to the answer I gave to the hon. and learned Member for Orkney and Shetland a few minutes ago.

      77
      The Scottish variable rate can apply only to the £4,101 to £26,099 band, which is taxed at 23 per cent. According to section 1A of the 1988 Act, the 23 per cent. charge cannot apply to savings income. Thus, the SVR does not apply to savings income. Contrary to what seems to be implied by the amendment, part of the balance of income in excess of £26,100 does not drop down into the space to be taxed at the SVR. In our view, the first half of the amendment is unnecessary.
      There are two types of annuity to which the second half of the amendment might conceivably apply. They are what are termed as PAYE annuities, which are taxed under schedule E—that is income from employment—and payments to holders of retirement annuity contracts, which are annual payments taxed under schedule D. Basically, we are talking about pension income, and that has been alluded to by Opposition Members.
      In the proposed terms of new subsection (3A), the amendment is unnecessary. Current legislation already achieves what is intended. As Deloitte and Touche made clear in its paper, even it is not sure whether there is a problem with the definition of savings income in the Bill. All that it wanted was an assurance, and I am happy to give that.
      The amendment is not so attractive when we come to new subsection (3B). The sort of annuity to which it refers is essentially a form of deferred income. There is no reason why it should not be within the ambit of the tax-gathering power, along with other earned income.
      Excluding certain pension income would produce a mismatch with the relief given to Scottish taxpayers on pension contributions. That seems wrong and would arguably be to the disadvantage of other UK-resident taxpayers.
      Mr. Heald: Is it not the point that contributions attract tax relief at the current UK rate? The same is not true of the pension in payment, which will be taxed at the current UK rate plus whatever the Scottish tax supplement is. How can that be consistent with the treatment that the Government are giving to savers, which is entirely different? They paid the money in tax at the UK rate, yet they are being exempted from the Scottish tax supplement. The two approaches are unequal. Why are the Government discriminating against pensioners, of all people?
      Mr. McLeish: If we take the two annuities that have been implied in the amendments, they would be regarded as pensions. However, the Deloitte and Touche report refers to purchased life annuities. As premiums do not carry tax relief, they are considered as savings and will be excluded.
      In Scotland, pensioners will be subject to the powers on deferred income. However, fewer than 15 per cent. of over-65s will be affected and the average impact is £140 for aged taxpayers where the basic rate will be their marginal rate. There is a distinction that we are declaring openly and honestly in relation to savings as against deferred income. We believe that deferred income should be subject to the SVR.
      I move on to the question of Inland Revenue extra-statutory concession—that is ESC A11—which is raised by amendment No. 357. It will apply in the normal way, notwithstanding the Bill's provisions. I can give the
      78
      Committee that assurance. The argument that has been advanced this evening differs from the general issue of the extra-statutory concession.
      If the intention is to apply the principles in the ESC to those who move between Scotland and elsewhere in the UK during any tax year, I am not prepared to accept it. It would be an administrative nightmare for employers and the Inland Revenue alike. It would be necessary to revisit Scottish taxpayers' status part way through the tax year. The only fair way to operate the rules in relation to in-year movers is to determine where in the UK they have spent most of the tax year, or where their UK principal home was for most of the tax year. We shall soon be discussing that matter. Clause 71 provides appropriate and fair rules, and nothing more is needed.
      Mr. Swinney: How much more of an administrative burden does the Minister believe the information for a split-year concession would be, as measured against the colossal bureaucracy of the days test for every Scottish taxpayer?
      Mr. McLeish: I would not accept that proposition. We shall have a chance to respond to it when we come to the specific question. We advise the Committee to vote against the amendments.
      Mr. Heald: The Minister's reply was a disappointment. The Opposition have pointed to a gross discrimination against pensioners. People who paid tax at the UK rate will have their position on savings entirely protected, whereas pensioners who have made their contributions on the basis of tax relief for the UK rate are being discriminated against. There is no equality between the two.
      As my hon. Friend the Member for Beaconsfield (Mr. Grieve) said, we are dealing with a complex matter, but one of justice. As my hon. Friend the Member for Westmorland and Lonsdale (Mr. Collins) said, we are faced with an attack on pensioners. It is, indeed, a breach of faith. As my hon. Friend the Member for Poole (Mr. Syms) said, an individual pensioner living on a fixed income will be discriminated against when he has set his arrangements for retirement on the basis of certain knowledge that the current UK tax rate will be the contribution tax relief and the basis on which he is taxed. It is a breach of that agreement. We are dissatisfied with the Minister's answer. The answer on split years is equally wrong, giving no consideration to those who wish to exercise mobility of labour. On that basis, we shall press the amendment to a Division.
      Question put, That the amendment be made:—
      The Committee divided: Ayes 130, Noes 339.

      Division No. 175]

      [6.59 pm

      AYES

      Ainsworth, Peter (E Surrey)

      Bottomley, Peter (Worthing W)

      Amess, David

      Bottomley, Rt Hon Mrs Virginia

      Ancram, Rt Hon Michael

      Brooke, Rt Hon Peter

      Arbuthnot, James

      Browning, Mrs Angela

      Atkinson, Peter (Hexham)

      Bruce, Ian (S Dorset)

      Baldry, Tony

      Butterfill, John

      Bercow, John

      Cash, William

      Beresford, Sir Paul

      Chapman, Sir Sydney (Chipping Barnet)

      Body, Sir Richard

      Boswell, Tim

      Chope, Christopher

      79

      Clappison, James

      Loughton, Tim

      Clark, Rt Hon Alan (Kensington)

      Luff, Peter

      Clark, Dr Michael (Rayleigh)

      Lyell, Rt Hon Sir Nicholas

      Clarke, Rt Hon Kenneth (Rushcliffe)

      McIntosh, Miss Anne

      Maclean, Rt Hon David

      Clifton—Brown, Geoffrey

      McLoughlin, Patrick

      Collins, Tim

      Madel, Sir David

      Cormack, Sir Patrick

      Malins, Humfrey

      Curry, Rt Hon David

      Maples, John

      Davies, Quentin (Grantham)

      Maude, Rt Hon Francis

      Davis, Rt Hon David (Haltemprice)

      Mawhinney, Rt Hon Sir Brian

      Duncan, Alan

      May, Mrs Theresa

      Duncan Smith, Iain

      Moss, Malcolm

      Emery, Rt Hon Sir Peter

      Nicholls, Patrick

      Evans, Nigel

      Ottaway, Richard

      Faber, David

      Page, Richard

      Fabricant, Michael

      Paice, James

      Fallon, Michael

      Paterson, Owen

      Forth, Rt Hon Eric

      Pickles, Eric

      Fowler, Rt Hon Sir Norman

      Prior, David

      Fox, Dr Liam

      Randall, John

      Fraser, Christopher

      Redwood, Rt Hon John

      Garnier, Edward

      Robertson, Laurence (Tewk'b'ry)

      Gibb, Nick

      Roe, Mrs Marion (Broxbourne)

      Gill, Christopher

      St Aubyn, Nick

      Gillan, Mrs Cheryl

      Sayeed, Jonathan

      Gorman, Mrs Teresa

      Shephard, Rt Hon Mrs Gillian

      Gray, James

      Shepherd, Richard

      Greenway, John

      Simpson, Keith (Mid—Norfolk)

      Grieve, Dominic

      Soames, Nicholas

      Gummer, Rt Hon John

      Spelman, Mrs Caroline

      Hague, Rt Hon William

      Spicer, Sir Michael

      Hamilton, Rt Hon Sir Archie

      Spring, Richard

      Hammond, Philip

      Stanley, Rt Hon Sir John

      Hawkins, Nick

      Steen, Anthony

      Hayes, John

      Streeter, Gary

      Heald, Oliver

      Swayne, Desmond

      Heathcoat-Amory, Rt Hon David

      Syms, Robert

      Tapsell, Sir Peter

      Hogg, Rt Hon Douglas

      Taylor, Ian (Esher & Walton)

      Horam, John

      Howard Rt Hon Michael

      Taylor, John M (Solihull)

      Howarth, Gerald (Aldershot)

      Taylor, Sir Teddy

      Jack, Rt Hon Michael

      Tredinnick, David

      Jack, Rt Hon Michael

      Trend, Michael

      Jackson, Robert (Wantage)

      Tyrie, Andrew

      Jenkin, Bernard

      Viggers, Peter

      Johnson Smith, Rt Hon Sir Geoffrey

      Wardle, Charles

      Waterson, Nigel

      Key, Robert

      Whittingdale, John

      King, Rt Hon Tom (Bridgwater)

      Widdecombe, Rt Hon Miss Ann

      Kirkbride, Miss Julie

      Wilkinson, John

      Laing, Mrs Eleanor

      Willetts, David

      Lait, Mrs Jacqui

      Woodward, Shaun

      Lansley, Andrew

      Yeo, Tim

      Leigh, Edward

      Young, Rt Hon Sir George

      Letwin, Oliver

      Lidington, David

      Tellers for the Ayes:

      Lilley, Rt Hon Peter

      Mr. Stephen Day and

      Lloyd, Rt Hon Sir Peter (Fareham)

      Mr. James Cran.

      NOES

      Adams, Mrs Irene (Paisley N)

      Beard, Nigel

      Ainger, Nick

      Beith, Rt Hon A J

      Ainsworth, Robert (Cov'try NE)

      Bell, Martin (Tatton)

      Alexander, Douglas

      Bell, Stuart (Middlesbrough)

      Allan, Richard

      Benn, Rt Hon Tony

      Anderson, Donald (Swansea E)

      Bennett, Andrew F

      Anderson, Janet (Rossendale)

      Benton, Joe

      Armstrong, Ms Hilary

      Bermingham, Gerald

      Ashton, Joe

      Berry, Roger

      Atkins, Charlotte

      Betts, Clive

      Austin, John

      Blizzard, Bob

      Ballard, Mrs Jackie

      Blunkett, Rt Hon David

      Barnes, Harry

      Boateng, Paul

      Barron, Kevin

      Borrow, David

      Bayley, Hugh

      Bradshaw, Ben

      80

      Brake, Tom

      Fitzsimons, Lorna

      Brand, Dr Peter

      Flint, Caroline

      Breed, Colin

      Flynn, Paul

      Brinton, Mrs Helen

      Follett, Barbara

      Brown, Rt Hon Nick (Newcastle E)

      Foster, Rt Hon Derek

      Brown, Russell (Dumfries)

      Foster, Michael Jabez (Hastings)

      Browne, Desmond

      Foster, Michael J (Worcester)

      Buck, Ms Karen

      Foulkes, George

      Burden, Richard

      Fyfe, Maria

      Burgon, Colin

      Galbraith, Sam

      Butler, Mrs Christine

      Galloway, George

      Byers, Stephen

      Gapes, Mike

      Caborn, Richard

      Gardiner, Barry

      Campbell, Alan (Tynemouth)

      Gerrard, Neil

      Campbell, Mrs Anne (C'bridge)

      Gibson, Dr Ian

      Campbell, Menzies (NE Fife)

      Gilroy, Mrs Linda

      Caplin, Ivor

      Godsiff, Roger

      Casale, Roger

      Goggins, Paul

      Caton, Martin

      Gordon, Mrs Eileen

      Cawsey, Ian

      Gorrie, Donald

      Chapman, Ben (Wirral S)

      Griffiths, Nigel (Edinburgh S)

      Chaytor, David

      Griffiths, Win (Bridgend)

      Chidgey, David

      Grocott, Bruce

      Chisholm, Malcolm

      Grogan, John

      Clapham, Michael

      Hain, Peter

      Clark, Rt Hon Dr David (S Shields)

      Hall, Mike (Weaver Vale)

      Clarke, Eric (Midlothian)

      Hall, Patrick (Bedford)

      Clarke, Rt Hon Tom (Coatbridge)

      Hamilton, Fabian (Leeds NE)

      Clarke, Tony (Northampton S)

      Hancock, Mike

      Clelland, David

      Hanson, David

      Coaker, Vernon

      Harvey, Nick

      Coffey, Ms Ann

      Heal, Mrs Sylvia

      Coleman, Iain

      Healey, John

      Colman, Tony

      Heath, David (Somerton & Frome)

      Connarty, Michael

      Henderson, Ivan (Harwich)

      Cook, Frank (Stockton N)

      Hepburn, Stephen

      Corbett, Robin

      Heppell, John

      Corbyn, Jeremy

      Hesford, Stephen

      Corston, Ms Jean

      Hill, Keith

      Cousins, Jim

      Hinchliffe, David

      Crausby, David

      Hodge, Ms Margaret

      Cryer, Mrs Ann (Keighley)

      Home Robertson, John

      Cryer, John (Hornchurch)

      Hoon, Geoffrey

      Cummings, John

      Hope, Phil

      Cunningham, Rt Hon Dr John (Copeland)

      Hopkins, Kelvin

      Howarth, Alan (Newport E)

      Cunningham, Jim (Cov'try S)

      Howarth, George (Knowsley N)

      Cunningham, Ms Roseanna (Perth)

      Howells, Dr Kim

      Hughes, Ms Beverley (Stretford)

      Dafis, Cynog

      Hughes, Kevin (Doncaster N)

      Dalyell, Tam

      Hughes, Simon (Southwark N)

      Darling, Rt Hon Alistair

      Humble, Mrs Joan

      Darvill, Keith

      Hurst, Alan

      Davidson, Ian

      Hutton, John

      Davies, Rt Hon Denzil (Llanelli)

      Iddon, Dr Brian

      Dawson, Hilton

      Jackson, Ms Glenda (Hampstead)

      Dean, Mrs Janet

      Jackson, Helen (Hillsborough)

      Denham, John

      Jamieson, David

      Dewar, Rt Hon Donald

      Jenkins, Brian

      Dobbin, Jim

      Johnson, Alan (Hull W & Hessle)

      Dobson, Rt Hon Frank

      Jones, Helen (Warrington N)

      Donohoe, Brian H

      Jones, Ms Jenny (Wolverh'ton SW)

      Doran, Frank

      Dowd, Jim

      Jones, Dr Lynne (Selly Oak)

      Drew, David

      Jones, Martyn (Clwyd S)

      Drown, Ms Julia

      Keeble, Ms Sally

      Eagle, Maria (L'pool Garston)

      Keen, Alan (Feltham & Heston)

      Edwards, Huw

      Keen, Ann (Brentford & Isleworth)

      Efford, Clive

      Keetch, Paul

      Ennis, Jeff

      Kelly, Ms Ruth

      Etherington, Bill

      Kidney, David

      Ewing, Mrs Margaret

      Kilfoyle, Peter

      Fearn, Ronnie

      King, Andy (Rugby & Kenilworth)

      Field, Rt Hon Frank

      Kirkwood, Archy

      Fisher, Mark

      Kumar, Dr Ashok

      Fitzpatrick, Jim

      Laxton, Bob

      81

      Lepper, David

      Rendel, David

      Leslie, Christopher

      Robinson, Geoffrey (Cov'try NW)

      Lewis, Ivan (Bury S)

      Roche, Mrs Barbara

      Lewis, Terry (Worsley)

      Rogers, Allan

      Liddell, Mrs Helen

      Rooker, Jeff

      Linton, Martin

      Rooney, Terry

      Livingstone, Ken

      Rowlands, Ted

      Lloyd, Tony (Manchester C)

      Roy, Frank

      Lock, David

      Ruane, Chris

      Love, Andrew

      Ruddock, Ms Joan

      McAllion, John

      Russell, Ms Christine (Chester)

      McAvoy, Thomas

      Ryan, Ms Joan

      McCabe, Steve

      Salmond, Alex

      McCafferty, Ms Chris

      Salter, Martin

      McCartney, Ian (Makerfield)

      Sanders, Adrian

      McDonnell, John

      Sarwar, Mohammad

      McFall, John

      Savidge, Malcolm

      McGuire, Mrs Anne

      Sawford, Phil

      McIsaac, Shona

      Sedgemore, Brian

      Mackinlay, Andrew

      Shaw, Jonathan

      McLeish, Henry

      McNamara, Kevin

      Sheerman, Barry

      McNulty, Tony

      Sheldon, Rt Hon Robert

      MacShane, Denis

      Shipley, Ms Debra

      McWalter, Tony

      Short, Rt Hon Clare

      Mahon, Mrs Alice

      Simpson, Alan (Nottingham S)

      Mandelson, Peter

      Singh, Marsha

      Marsden, Gordon (Blackpool S)

      Skinner, Dennis

      Marsden, Paul (Shrewsbury)

      Smith, Rt Hon Andrew (Oxford E)

      Marshall, David (Shettleston)

      Smith, Angela (Basildon)

      Marshall, Jim (Leicester S)

      Smith, Rt Hon Chris (Islington S)

      Martlew, Eric

      Smith, Jacqui (Redditch)

      Meacher, Rt Hon Michael

      Smith, John (Glamorgan)

      Meale, Alan

      Smith, Llew (Blaenau Gwent)

      Merron, Gillian

      Smith, Sir Robert (W Ab'd'ns)

      Michael, Alun

      Snape, Peter

      Michie, Bill (Shef'ld Heeley)

      Soley, Clive

      Michie, Mrs Ray (Argyll & Bute)

      Southworth, Ms Helen

      Milburn, Alan

      Squire, Ms Rachel

      Miller, Andrew

      Starkey, Dr Phyllis

      Mitchell, Austin

      Steinberg, Gerry

      Moonie, Dr Lewis

      Stevenson, George

      Moran, Ms Margaret

      Stewart, David (Inverness E)

      Morgan, Alasdair (Galloway)

      Stewart, Ian (Eccles)

      Morgan, Ms Julie (Cardiff N)

      Stinchcombe, Paul

      Morley, Elliot

      Stoate, Dr Howard

      Morris, Ms Estelle (B'ham Yardley)

      Stott, Roger

      Morris, Rt Hon John (Aberavon)

      Stringer, Graham

      Mountford, Kali

      Stuart, Ms Gisela

      Mudie, George

      Stunell, Andrew

      Mullin, Chris

      Sutcliffe, Gerry

      Naysmith, Dr Doug

      Swinney, John

      O'Brien, Bill (Normanton)

      Taylor, Rt Hon Mrs Ann (Dewsbury)

      O'Hara, Eddie

      Olner, Bill

      Taylor, David (NW Leics)

      O'Neill Martin

      Palmer Dr Nick

      Temple—Morris, Peter

      Pearson Ian

      Thomas, Gareth R (Harrow W)

      Pendry, Tom

      Timms, Stephen

      Pike, Peter L

      Tipping, Paddy

      Plaskitt, James

      Todd, Mark

      Pollard, Kerry

      Touhig, Don

      Pope, Greg

      Trickett, Jon

      Pound, Stephen

      Turner, Dr Desmond (Kemptown)

      Prentice, Ms Bridget (Lewisham E)

      Turner, Dr George (NW Norfolk)

      Prentice, Gordon (Pendle)

      Twigg, Derek (Halton)

      Prescott, Rt Hon John

      Twigg, Stephen (Enfield)

      Primarolo, Dawn

      Tyler, Paul

      Prosser, Gwyn

      Vaz, Keith

      Purchase, Ken

      Wallace, James

      Quin, Ms Joyce

      Ward, Ms Claire

      Quinn, Lawrie

      Wareing, Robert N

      Radice, Giles

      Watts, David

      Rammell, Bill

      Welsh, Andrew

      Raynsford, Nick

      White, Brian

      Reed, Andrew (Loughborough)

      Whitehead, Dr Alan

      82

      Wicks, Malcolm

      Wood, Mike

      Williams, Rt Hon Alan (Swansea W)

      Wray, James

      Wright, Anthony D (Gt Yarmouth)

      Williams, Alan W (E Carmarthen)

      Wyatt, Derek

      Willis, Phil

      Wills, Michael

      Tellers for the Noes:

      Winnick, David

      Jane Kennedy and

      Winterton, Ms Rosie (Doncaster C)

      Mr. Jon Owen Jones.

      Question accordingly negatived.
      It being after Seven o'clock, THE CHAIRMAN, pursuant to the Order [13 January] and the Resolution [this day], put forthwith the Question necessary for the disposal of the business to be concluded at that hour.
      Clause 69 ordered to stand part of the Bill.

    Clause 70

      SUPPLEMENTAL PROVISION WITH RESPECT TO RESOLUTIONS
      Mr. Donald Gorrie: I beg to move amendment No. 408, in page 30, line 26, leave out 'tax-varying' and insert 'tax-increasing'.
      The Chairman of Ways and Means (Sir Alan Haselhurst): With this, it will be convenient to discuss amendment No. 366, in page 30, line 28, leave out '2000–01' and insert '2002–03'.
      Mr. Gorrie: Our amendment would replace "tax-varying" with "tax-increasing". Opposition Members in the Scottish Parliament could propose a reduction in taxes, but only members of the Government could propose increased taxes. According to my hon. Friends, who are more experienced than I, that is the practice in this House. In giving Opposition Members as much freedom as possible, it would be reasonable to allow them to propose tax-reducing measures.
      The amendment might appeal to Conservatives in particular. They are concerned about tax raising. If they succeed in having Members elected to the Scottish Parliament, they could propose tax-reducing measures. I am confused about where the Conservatives are coming from. Leaks to the press suggest that their leader is taking them in a new direction and that devolution and all associated with it is a good thing, although it should apply to the English as well as to the Scots. But today we are hearing the same old story: anything that the Scottish Parliament will be able to do must be bad.
      Dr. Fox: The hon. Gentleman was not even here.
      Mr. Gorrie: I beg your pardon.
      The Chairman: Order. The hon. Gentleman is addressing the Chair in all remarks.
      Mr. Gorrie: I beg your pardon, Sir Alan. I was being interrupted.
      The amendment is straightforward. It is not of huge moment, but the conduct of the Scottish Parliament would be improved marginally if Opposition Members were allowed to propose a reduction in taxation.

      83
      7.15 pm
      We do not support the Conservatives' proposal which would deny the Scottish Parliament the right to introduce tax-varying powers as soon as it wished. If it is to be a serious Parliament and is to have those powers, it should be allowed to use them.
      Mr. Dalyell: I should like to ask about retrospection. What will be the combined effect of subsections (3) and (4) of clause 70? Subsection (3)(a) suggests that a determination of the UK Parliament may be made after the beginning of the year without it expressly being stated that such determination is necessarily to be effected in the year in question. Will not that have the consequence that, in theory, the tax-varying power could be applied retrospectively? In the hands of lawyers, that would be more than an arcane point.
      I should also like to ask about double tax treaty relief. The vast majority of UK double tax treaties specifically refer to UK income tax. The provision that Scottish income tax will also qualify for double tax relief must be clarified. Clauses 69, 70 and 71 appear to replace the non-varied rate with a varied rate for Scottish taxpayers, but would the UK income tax rate still apply? Those two questions are rather significant.
      Mr. Grieve: I was surprised at the comments of the hon. Member for Edinburgh, West (Mr. Gorrie). I understood that the amendment would limit the power of the Scottish Executive to move a motion to increase taxes. That perhaps was not a total surprise because of the reality in which the Bill will operate, but it was still a considerable surprise in the light of the representations made by the Government in the referendum campaign.
      Many hon. Members will have no difficulty in agreeing that in the Scottish Parliament the Opposition should be able to table motions to reduce taxation, but that is not what would be achieved. I stand to be corrected, but my reading of this simple alteration is that the Scottish Executive would be allowed to move a motion to vary tax only upwards.
      Mr. Wallace: It would mean that only a member of the Scottish Executive could propose a tax-increasing measure whereas any Member of the Scottish Parliament could propose a tax-reducing measure, which is precisely the position in this House.
      Mr. Grieve: If that is what the Liberal Democrats seek, a further amendment is required.
      Mr. Wallace: The hon. Gentleman has not read the amendment properly.
      Mr. Grieve: I beg to differ.
      Amendment No. 366 would postpone for one year the implementation of the tax-varying powers. It is not an attempt to curb the power of the Scottish Parliament: it reflects the debate that we have had this evening. It is abundantly clear that if the tax-varying powers are to operate successfully, they will require careful attention. The people in Scotland who will have to pay will need to prepare carefully, and may decide to save into pensions or into equities. Given the minutiae that the Inland
      84
      Revenue has presented us with, it is abundantly clear that accountants and tax lawyers will have a field day interpreting these provisions.
      I hope that the Minister recognises that I have accepted that we must smooth the way for these changes. The provisions must be seen in the context of the real changes in the relationship between Edinburgh and Westminster. These tax measures add an extra and complex layer to what is already an extremely complex period of change.
      It is clear from the White Paper on devolution that the Scottish Parliament is intended to be up and running over a period from May 1999 onwards. In those circumstances, the tax-varying powers should be postponed for 12 months, so that we can experience how the relationship between the Scottish Parliament and the United Kingdom Parliament and Government operates in practice. We trust that the Scottish Parliament will have a long life, so that seems a small concession to prudence. It would be a worthwhile concession, given the burden that will have to be borne by those in office.
      Mr. Alex Salmond: I am puzzled about amendment No. 366, which would delay the change in the Scottish taxation provisions. Does it mean that the Conservative party has abandoned any attempt to lower the level of taxation that the Scottish Parliament can raise? Has it merely abandoned its attempt to do so until 2002–03, or has it abandoned any hope of doing so at any time?
      Mr. Grieve: The hon. Member for Banff and Buchan (Mr. Salmond) misunderstands the position. We may argue in the future for a reduction in taxes in Scotland. We are concerned about the transitional period when these complex constitutional measures are being introduced. They will undoubtedly need to be smoothed through. I realise that the hon. Gentleman may not want them to be smoothed through, although he often argues to the contrary.
      On a number of occasions, the hon. Gentlemen the has told the House that it is particularly important that the Scottish Parliament works for the benefit of the Scottish people. Assuming that he wants it to be up and running effectively, it may be more sensible for the stages to be introduced gradually. The hon. Gentleman has attended some of the debate, but not all of it, and if he had listened to the details of the tax principles, he would realise that there will be complex problems.
      We take the view that there is no point adding to those problems. It may benefit the operation of the Scottish Parliament and smooth its relations with the House if, when it is up and running, there are no tax-varying powers for 12 months and those changes are held over until the following year.
      Mr. McAllion: I congratulate the hon. Gentleman on his elevation to the Opposition Front Bench. He certainly improves the quality, although that is not very difficult. If he wants to postpone the tax-varying powers of the Scottish Parliament for 12 months, why does amendment

      85
      No. 366 postpone it for 24 months, from 2000–01 to 2002–03? Surely, if that is what he is trying to achieve, the amendment is wrong.
      Mr. Grieve: I think not. The amendment would leave out 2000–01 and would insert 2002–03.
      Mr. McAllion: That is two years.
      Mr. Grieve: If that is the case, all the better. The purpose of the amendment is to allow a transitional period during which there would be no tax-varying powers.
      Mr. McAllion: How long is that period?
      Mr. Grieve: The amendment would introduce the powers in 2002–03.
      Mr. McAllion: How long is that?
      Mr. Grieve: If I may say to the hon. Gentleman, we have still not had complete clarity from the Government on how the transitional period from 1999 will operate.
      I ask the Minister to consider the desirability of a transitional period before the tax-varying powers are introduced. I suggest that postponing the introduction of those powers until 2002 would be a valuable change.
      Mr. Swinney: Before the hon. Member for Dundee, East (Mr. McAllion) intervened, I was going to welcome the hon. Member for Beaconsfield (Mr. Grieve) to the Opposition Front Bench. As a result of his rapid promotion to the Front Bench, I thought that my hon. Friends the Members for Moray (Mrs. Ewing) and for Banff and Buchan (Mr. Salmond) may think that it was time for young men to be put into the limelight of debate, but perhaps they were not paying careful attention. Having heard the hon. Gentleman's contribution, I do not think that he is a threat to some of his right hon. and hon. Friends on the Front Bench.
      The hon. Member for Edinburgh, West (Mr. Gorrie) referred to the ability of Back Benchers to propose a motion to reduce taxation. That is a sensible measure and reflects the established procedure of the House. It would enable Back Benchers outwith the Scottish Executive to utilise the powers that are given to the Parliament. In a strange way, it may give Conservatives something to do and on which to focus when they get into the Scottish Parliament. They could try to challenge the other parties, which they think are determined to use the tax-varying powers only to increase taxation.
      Amendment No. 366 would delay the implementation of these powers. We must bear in mind some practical realities. The Parliament will be elected in May 1999, and it will assume its responsibilities in 2000. A party making a tax-varying proposal at the election in May 1999 should be confident of delivering that proposal in the time scale offered by the legislation. Such a proposal in an election manifesto would not stand up to scrutiny on the hustings if it could not be delivered in the time scale provided by the Bill.
      The legislation enables parties to formulate their proposals and to judge whether they are able to implement them in the proposed time scale. I am not clear whether
      86
      the Conservatives want to delay the implementation of these powers for 12 months or 24 months, but it seems to be more than 12. The amendment is symptomatic of the arguments that we have heard from Conservatives recently. They want to put obstacles in the way of the Parliament assuming the powers in the Bill, and to delay the Scottish people assuming responsibility for a proportion of their own affairs. The sooner the Scottish people are able to exercise their discretion over these matters of policy the better. I have no time for amendment No. 366.
      The hon. Member for Beaconsfield referred to the need for gradual change. Some of us are concerned that gradual change has been slow in coming. The people of Scotland have decisively voted for the Parliament to be set up on this basis, so we should not impede it from assuming the powers that it was promised.
      Mr. McAllion: I did not want to speak in this short debate, but I felt that the Conservative Front-Bench contribution required a response from Back Benchers. I regard the hon. Member for Beaconsfield (Mr. Grieve), who has been elevated to the Front Bench, as one of the brightest and best Opposition Members—certainly given what he has said during our debates on the Bill—but, when he cannot even tell the difference between the year 2000 and the year 2002, assuming that it is 12 months, we have to worry about the quality of the Conservative party and the likelihood of its returning to office. It is clear that even the brightest and best cannot count. But perhaps the Conservatives have an aversion to counting following the last general election, when results went badly against them.
      Let us consider the substance of the debate. Hon. Members want the elected Scottish Parliament to be able to introduce a Budget in the first year in which it takes over—a distinctive Budget: the Budget of the Scottish Parliament, rather than simply a Scottish Office block that is decided here and handed down. They want a definite budget, which will draw its strength from the mandate received by Members of the Scottish Parliament from the Scottish people.
      I cannot see the purpose of the amendment, other than dog-in-the-manger opposition to what the Scottish people have already voted for. A referendum has taken place, and a huge number of Scottish people voted to give the Parliament a tax-varying power. The Parliament will be elected in May 1999; there will be almost a "shadow" year during which it can come to terms with the new responsibilities that it will take. In that time, accountants and tax lawyers will be able to engage in consultations with the Parliament on what its first Budget may entail. But if the parties elected to that Parliament have been elected on the basis of a manifesto that states that it should vary the rate of income tax in Scotland—whether by 1p, 2p or 3p—by increasing it, that is democracy, and the Scottish Administration will have the right to introduce such a measure in their first Budget.
      7.30 pm
      Mr. Grieve: I take in good part the hon. Gentleman's views about my mathematical abilities, but let us confine ourselves to the principle for a moment. Surely the issue is not the Scottish Parliament's ability to deal with the matter; surely it is the fact that all the other associated

      87
      bodies in Scotland—and the people, and the accountants, and everyone else—will have to prepare for the change. That is not a political but a practical issue, and that is why we sought the postponement.
      Mr. McAllion: I understand that, since 11 September 1997, it has been clear to everyone in Scotland that the change is about to happen. That means that there are two and a half years in which to prepare for the change before the Scottish Administration introduce their first Budget in April 2000. I do not see the need for us to allow the extra two years that the Conservatives are suggesting. The fact is that they do not like the change: they would prefer the Scottish people not to have voted for it, and they would prefer the Scottish people to elect to the Scottish Parliament a party committed to not implementing it. That, however, is up to the Scottish people. It is not up to amendments tabled in the House of Commons to prevent the Scottish people from electing a party that will introduce the changes contained in its manifesto.
      In an earlier debate, someone said that the proportional representation election system—which might lead to a coalition Government here—would lead to taxes being increased through the back door against the wishes of the Scottish people. Hon. Members seem to misunderstand the nature of that system. It means that, unless more than 50 per cent. of people back the Administration, that Administration will not be able to increase taxes in the Scottish Parliament.
      It is almost like the old ladies in the Carlton club who said, when they heard in 1951 that a Labour Government had been elected with an overwhelming majority, "The country will not stand for this." They did not understand that the country had just voted for a Labour Government. The Tories have not yet understood that Scotland as a country has voted for a Scottish Parliament with tax-varying powers, and may well vote for parties that will use those powers when they are in government. There is no reason on God's earth why any hon. Member should stop or delay the exercise of democracy in Scotland. That is what devolution is all about.
      Mr. Ancram: The hon. Gentleman is always very keen to bring my hon. Friends and me to task when we get things wrong. Will he tell us again who were elected to office in 1951?
      Mr. McAllion: I believe that the Conservative party was elected, following the policies that a Labour Government had produced in 1945. If I remember rightly, the Conservatives adopted those policies lock, stock and barrel—much as new Labour has done with Tory policies.
      The point that I am trying to make is that, under a system of democracy, the people decide how taxes should be levied in their country. That is why I am keen for my hon. Friend the Minister to oppose amendment No. 366, which I consider anti-democratic and very much in the nature of the Conservative party as it has been for the past 25 years. Sooner or later, the Conservatives will have to learn the lesson that they cannot continue to preach to the Scottish people that they do not know what they are doing, and that if they vote for tax-varying powers there is something wrong with them. Of course there is not; there is something wrong with the Conservative party,
      88
      if it cannot accept the decision of the Scottish people and continues to try to oppose it in the House of Commons with useless amendments such as this.
      As for amendment No. 408, I do not agree that a Scottish Parliament should operate in the same way as this Parliament. Here, the Executive has the right to raise taxes, but the Opposition can move motions only for reductions in taxes. I did not know before that that was the position here, but it is, and I hope that it will not apply in the Scottish Parliament. I feel that Committees in the Scottish Parliament should be very different from Committees in the House of Commons, and that the nature of sovereignty in the Scottish Parliament should be very different from the operation of sovereignty here. I do not want an all-powerful Executive in the Scottish Parliament that will do much as it pleases, like the Executive here. I want powerful Committees that have the right to initiate legislation.
      I do not see why the Finance Committee, or its Chairman, should not be able to propose an alternative Budget. If the Budget can gain the support of Members of the Scottish Parliament, what is wrong with that? It is a different way of working from the way in which this Parliament works, but surely, for goodness sake, as we enter the next millennium we can move away from the 19th-century ideas that dominate the operation of this Parliament. Surely we can move into the new millennium along with the rest of the world, rather than being locked in the 19th century.
      I do not think that my hon. Friend the Minister should accept either amendment. Both are intended to interfere with the rights of the Scottish people to govern themselves.
      Sir Robert Smith: Yet again, the hon. Gentleman fails to understand that, without our amendment, the arrangements will be even more restrictive than those governing this place. The Government propose that only the Executive can do anything when it comes to tax powers; we seek, at least in part, to widen that ability to the whole Parliament.
      Mr. McAllion: I did not understand that. I am grateful to the hon. Gentleman for drawing it to my attention: if I had known that that was what the Government were about, I might have made a very different speech. [Interruption.] My hon. Friend the Minister, however, assures me that that is not the case, and, as he is such a nice man, I am prepared to trust him, if not others.
      Mr. Salmond: The hon. Gentleman keeps referring to 19th-century practices in this place. Does he not think that that is a bit unfair? I cannot remember anything quite as modern as the 19th century here.
      Mr. McAllion: I think that this place had its heyday in the 19th century. In those days, there was a coherent set of principles to which both Government and Opposition adhered—liberal capitalism. The 20th century produced different views about how society should be organised, and the emergence of the Labour party. I rejoice in such differences, however, because they continue to divide

      89
      Government and Opposition. I resent the idea that we should all come together again in one big consensus and accept the new world order, the new capitalism and so on.
      The Chairman: Order. The hon. Gentleman is going well wide of the amendment, in a debate that allows a limited amount of time.
      Mr. McAllion: I am indeed going dangerously wide of the amendment, so I shall return to it.
      If amendment No. 408 increases the powers of the Scottish Parliament over the Executive, I ask my hon. Friend the Minister to accept it. If it does not, I ask him to reject it.
      Mrs. Laing: First, let me correct something that was said by the hon. Member for Dundee, East (Mr. McAllion).
      The Chairman: I hope that it is something that was in order.
      Mrs. Laing: It was not absolutely in order, Sir Alan, but the hon. Gentleman is way ahead of his time if he thinks that there are any ladies in the Carlton club.
      The Chairman: Order. I gave the hon. Lady a hint, and I think that she should have taken it.
      Mr. Salmond: There are women in the Tory party.
      Mrs. Laing: The hon. Gentleman makes the point very well.
      Let me turn to clause 70(5). With all due respect to my hon. Friend the Member for Beaconsfield (Mr. Grieve), I must agree with the interpretation of the hon. Member for Edinburgh, West (Mr. Gorrie) of his amendment. It seems to me that to change the words
      "only a member of the Scottish Executive may move a motion for a tax-varying resolution"
      to
      "only a member of the Scottish Executive may move a motion for a tax-increasing resolution"
      is a good idea, because it suggests that any other Member of the Scottish Parliament can propose a tax-reducing resolution. The amendment is good because only a Conservative Member of the Scottish Parliament is likely to move a tax-reducing resolution. History shows that only Conservatives aim at reducing taxes. Of course the amendment will be irrelevant when Conservatives control the Scottish Executive, and I am confident that they will.
      Mr. Salmond: The Tory amendment delays any attempt to reduce taxes for another two years, and, in opposing the Liberal Democrat amendment, the Conservatives seek to delay a Conservative Opposition's ability to reduce taxes. It seems that Conservative Front-Bench spokesmen do not think that they will reduce taxes in government or in opposition and that implies that they do not think that they will be there at all.
      Mrs. Laing: I understand the hon. Gentleman's point, but his interpretation is wrong. There is complete consistency in our attitude to the two amendments.
      90
      Amendment No. 366 to change 2000–01 to 2002–03 aims to give a degree of certainty and stability to the Scottish people. Despite the way in which they voted in the referendum, the Scottish people do not deserve to have their tax and financial affairs and their political background changed every month or so.
      Mr. Ancram: My hon. Friend makes interesting comments. I have some difficulty working my way through the double negative in the Liberal amendment. Does my hon. Friend agree that it is a typical example of a woolly Liberal Democrat amendment? Would not it have been much easier to say that Standing Orders shall ensure that any Member of the Scottish Parliament may move a motion for a tax-decreasing resolution? That would have been totally clear.
      Mrs. Laing: I entirely agree with my right hon. Friend; it would have been much clearer. However, I give the Liberal Democrats some credit for doing the best that they can in the circumstances. Perhaps they do not have the faith to imagine that anyone will ever want to propose a tax-decreasing resolution. I certainly cannot imagine any Liberal Democrat introducing such a measure.
      Mr. McLeish: I shall respond first to the questions that were posed by my hon. Friend the Member for Linlithgow (Mr. Dalyell). He asked about the combined effect of clause 70(3) and (4) to allow a Scottish rate to be applied retrospectively. The Law Society of Scotland made that point and the degree of retrospection that it suggested is not possible. I want to give my hon. Friend and the Law Society of Scotland a more detailed answer. My hon. Friend also asked about double tax treaty relief. Double tax relief credits will be allowed against income tax that is paid by Scottish taxpayers at any varied rate that has been determined by the Scottish Parliament.
      Amendment No. 408 would indirectly, through the mechanism of Standing Orders, allow a resolution to lower income tax in Scotland to be moved by any Member of the Scottish Parliament while any tax-increasing resolution could be moved only by a member of the Scottish Executive. I do not accept that there is any logic in distinguishing between the process of moving tax-increasing or tax-reducing resolutions. The key point of principle is whether tax resolutions that are to be considered by the Scottish Parliament should be moved only by members of the Executive or whether it should be open to any Member of the Scottish Parliament to move such a resolution.
      In reaching a decision on these matters, we have been guided by the Westminster model and by the need for the Executive to maintain control over the sources of their income. For example, the Bill does nothing to prevent general tax relief motions being discussed and voted on in the Parliament. I have had to truncate my response, but what I have outlined seems a sensible, pragmatic approach while the proposal in amendment No. 408 would be less so. I ask the Committee to reject that amendment.
      Amendment No. 366 would effectively prevent the tax-varying power being exercised before the financial year 2001–02. If Labour were the governing party in the Scottish Parliament it would not use the tax-varying power during the lifetime of the current UK Parliament, which may take us to 2002–03. However, that is not a reason for statutorily preventing the Parliament from

      91
      exercising the power in its first full year of operation, not least because I am not prepared to pre-judge the Scottish electorate's decision in the forthcoming Scottish parliamentary elections. It will be for each of the Scottish parties to make its proposals on tax and it will be for the voters to decide on which party and, therefore, which tax policy they wish to see. The Westminster Government should not deny the Scottish electorate that choice until 2002. I urge the Committee to reject the amendment. The Government are on target to make sure that the requisite provision is in place by 6 April 2000.
      Mr. Gorrie: We do not accept the Minister's argument, but the issue is not of such substance that we wish to push the amendment to a vote. Perhaps the hon. Member for Dundee, East (Mr. McAllion) is right and we should have had a more far-reaching amendment.
      It being a quarter to Eight o'clock, THE CHAIRMAN, pursuant to the Order [13 January] and the Resolution [this day], put forthwith the Question already proposed from the Chair.
      Amendment negatived.
      THE CHAIRMAN then proceeded to put forthwith the Question necessary for the disposal of the business to be concluded at that hour.
      Clause 70 ordered to stand part of the Bill.

    Clause 71

      SCOTTISH TAXPAYERS
      Mr. Swinney: I beg to move amendment No. 344, in page 30, line 32, leave out 'year of assessment' and insert
      'complete year of assessment following the passing of this Act.'.
      The Chairman: With this, it will be convenient to discuss the following amendments: No. 370, in page 30, line 33, after 'individual', insert
      'other than an unincorporated small business'.
      No. 336, in page 30, line 35, leave out from 'Kingdom' to end of line 36 and insert
      'in which he has his principal United Kingdom home'.
      No. 337, in page 30, line 37, leave out 'who'.
      No. 338, in page 30, line 39, leave out
      'has his closest connection with Scotland during that year'.
      No. 339, in page 30, leave out lines 42 to 44.
      No. 371, in page 31, line 6, leave out 'principal'.
      No. 372, in page 31, line 6, leave out from 'Scotland' to end of line 7.
      No. 340, in page 31, leave out lines 8 to 11.
      No. 373, in page 31, line 8, leave out 'principal'.
      No. 374, in page 31, line 10, leave out 'principal'.
      No. 341, in page 31, leave out lines 12 to 17.
      No. 376, in page 31, leave out lines 13 and 14.
      No. 343, in page 31, line 17, at end insert-
      '(c) an individual whose principal home is not in Scotland, but whose work shift patterns require him to be habitually working through the night in Scotland, shall not be deemed to have spent a day or days in Scotland for the purposes of this section.'.
      92
      No. 377, in page 31, line 18, leave out 'principal'.
      No. 378, in page 31, leave out lines 21 to 24.
      No. 342, in page 31, line 24, at end insert—
      '(5A) In subsection 5(b) above, "main place of residence" in relation to an individual is defined as being the place which is his habitual or family abode, his permanent home, or the residence with which he has the closest personal or economic relations.
      (5B) In determining any issue arising from the definition of an individual's main place of residence, reference shall be made by the Board or by any court or tribunal to the OECD model double taxation treaty.'.
      No. 379, in page 31, leave out lines 25 and 26.
      No. 414, in page 31, line 26, at end insert 'but excludes an oil rig'.
      Mr. Swinney: I notice that the right hon. Member for Devizes (Mr. Ancram) and his hon. Friends support amendment No. 341. As a member of a minority party in this place, but not a minority party in Scotland, I am always grateful for support, but the right hon. Gentleman can speak to that amendment for himself.
      I heard over the weekend that the Secretary of State for Scotland is worried that some people may want to destabilise the Scottish Parliament. I also have concerns that the Parliament may be destabilised, not by forces from within my party, because we want the Parliament to succeed, but by the Government not taking full and genuine account of the real difficulties that the legislation will create. Our amendments in this group are designed to strengthen the Parliament by creating a clear and uncomplicated base on which it can found its actions.
      The clause and the amendments seek to define who should pay any different rate of taxation that is applied by the Scottish Parliament. The Government propose that those who are resident in the UK for tax purposes and have their closest connections to Scotland should pay any different taxation that is levied by the Scottish Parliament. To define that closest connection, the Government propose to establish a days test that sets out to determine how many days a person spends in Scotland. If he spends more days in Scotland than in the rest of the UK, he will be eligible to pay any different rate of tax.
      In addition, the Government rightly propose that Scottish Members of the Westminster Parliament, Scottish Members of the European Parliament and Members of the Scottish Parliament will also have to pay. It might be worth trying to add to the net Members of this Parliament who speak repeatedly on Scottish matters. By that device, Scotland might at least receive some modest compensation for some of the things that are said by the right hon. Member for Devizes and his hon. Friends.
      My concern with the Government's proposals is that they are a sledgehammer to crack a nut. It is difficult to work out exactly why they are taking the steps that are set out in the clause. I assume that they are trying to create a clear mechanism that can withstand attack either politically or by tax avoidance. The Government are prepared to countenance different tax regimes in the United Kingdom and should bear in mind the fact that there is likely to be uncertainty about who pays.
      That is nothing new. Each year, band D council tax payers in the village of Meigle in my constituency pay £730 in council tax to Perth and Kinross council. A couple of miles along the road, band D council tax payers in the first farm cottages in the Angus part of my constituency

      93
      pay £670 in council tax. I do not detect many of my constituents contemplating moving that short distance to be relieved of a higher band D council tax, and the Government are perfectly happy to have a situation where different council tax rates are part of the fabric of decision making in the UK.
      Mr. Wallace: Is the hon. Gentleman absolutely sure that some of his constituents in Perth and Kinross have not moved into Angus to set up a pub, on the same basis as people seem to be teeming into the constituency of the hon. Member for Westmorland and Lonsdale (Mr. Collins)?
      Mr. Swinney: In the tradition of hon. Members representing North Tayside, I do not spend much time in pubs, so I cannot substantiate the hon. and learned Gentleman's point, but I shall certainly devote considerable time to finding out whether there is any demand.
      The Government may be trying to create a mechanism by which any leakage of taxation due to the Scottish Parliament is obstructed. I suspect that they are trying to put obstacles in the way of individuals who move home from south Scotland to north England to avoid any additional taxation that is levied in Scotland, where they continue to be in employment. If so—I should be interested in the Minister's argument about the Government's motivation—the Government are using a sledgehammer to crack a nut.
      The maximum additional tax burden that is envisaged under clause 69 is £660 per person in each tax year of assessment. Conveyancing, transportation and refurbishment costs of moving from Scotland to England to avoid any additional tax burden seem fairly excessive when placed alongside a maximum additional tax burden of £660. The number of cases—this is an absolutely fundamental point—to which the exercise of tabulating the days spent here and there will be relevant, will be utterly insignificant, but I fear that, in setting the legislation off in that direction, the Government will place a substantial burden on many, if not all, businesses and individuals, who will be asked to establish for themselves the means, methods and, inevitably, costs of proving that they are, or are not, affected by the test.
      A very small number of people are likely to be affected, but I suspect that, invariably, all potential Scottish taxpayers will have to have sufficient information and documentation to prove whether they are eligible for the test. I therefore hope that the Government will think again about the provision and accept that there is a simpler way in which to define who should be in the Scottish Parliament's tax net.
      The amendments that have been tabled by my hon. Friends and me are designed to change the test on whether an individual is liable to pay any additional taxation, based on the individual's principal UK residence. We aim to make the test fairly easy to undertake. We have included in our amendments, specifically in amendment No. 342, the characteristics of the definition that could be formulated. We suggest that terminology such as
      "habitual or family abode, his permanent home or the residence with which he has the closest personal or economic relations"
      would be of benefit in establishing the rules that lay down the meaning of principal UK residence.
      94
      Amendment No. 342 also refers to the Organisation for Economic Co-operation and Development model double taxation treaty. That reference is designed to give the authorities that are responsible for determining the collection of any tax that is separately set by the Scottish Parliament appropriate guidance on definitions and when they have to seek alternative opinions on whether individual cases comply with the legislation's definitions. In that respect, I should fully accept it if the Government wished to take away the amendments, to reflect on their contents and to discuss them more widely with the industry to arrive at an absolutely watertight definition, but our amendments try to reach the best possible definition.
      One of the problems with the Government's proposal of "closest economic connection" is that it is a new tax term which has no established standing in the body of tax law. Having worked my way through many of those definitions during a previous life with Scottish Amicable and having ploughed through the double taxation treaties between the UK and various European states, I am thoroughly of the opinion that we do not need any new tax terms to add to the litany of others in policy and guidance.
      On amendment No. 343, in the event that the Minister is not persuaded by my arguments about removing the days test, I raise one particular anomaly that must be addressed by the Government. According to the definitions in the Bill, an individual who lives in Carlisle but who works in Dumfries—I am glad to see the hon. Member for Dumfries (Mr. Brown) in the Chamber—will not be eligible to pay any additional taxation in Scotland because he or she will be deemed not to have spent a day in Scotland, according to the rules of the Bill.
      According to my understanding of the clause, that analysis is okay so long as the person is a day-shift worker. If the person is a night-shift worker, he or she will start and finish the day in Scotland and, according to the rules, will be eligible to pay additional taxation, if it is levied. I am sure that the Minister will ask me to give the number of cases to which I refer, along with an explanation of the number of publicans in Scotland who are planning to reside in Westmorland, but I do not have an answer. However, I respectfully ask the Minister if he has an answer to my question: how many people will be in the net of the days test?
      Amendment No. 343 would expressly deal with the anomaly that I have raised. It may not seem like a big issue, but I doubt whether it is of any less significance than the scope of the days test that has been constructed by the Government as a unique part of this legislation.
      I hope that the Minister will thoroughly address the issues that I have raised and which will, I am sure, be raised by others. In doing so, will he specifically set out the position of offshore workers in relation to the days test? I simply cannot work out the answer to that point.
      There is a danger that the Government, in their zeal to close loopholes, to answer every dilemma, understandably, to knock back every pedantic Conservative attack on their Bill and to ensure that they have thought of everything, pass into law some points that have the sniff of complexity and bureaucracy around them. This clause is an example of that. I hope that the Government will recognise that the amendments have been tabled to assist in addressing practical difficulties in implementing the Bill. They are designed to try to

      95
      minimise needless bureaucracy that will be faced by individuals or businesses in trying to comply with the Government's tests. The amendments have been tabled to strengthen and to clarify the legislation and I hope that the Government are able to respond to them in that way.
      Mr. Dalyell: The hon. Member for North Tayside (Mr. Swinney) and his Scottish National party colleagues have done the Committee and the discussion of the Bill a service by tabling these important amendments on the tax net. Following up immediately his point about the North sea, I shall ask a direct question. What about the person who works on an oil rig? Will the North sea be considered, in terms of clause 111, as "adjacent to Scotland"? There is a legal problem here, and perhaps tonight would be the time to clarify it.
      What is the position of a Scottish soldier who has married quarters, let us say, in Arbroath but who served six months in Northern Ireland and three months in Catterick, Pirbright or somewhere else in England? What are the implications for him in terms of tax-raising powers? The whole issue of service men, who, by the very nature of their job, move around, has to be clarified.
      There is the question of holidays. If a person takes his or her holidays abroad in the first part of the year, that could make that person into a Scottish rather than a UK taxpayer, if there is no principal home in England. It may seem that I am being pedantic about all this, but may I refer the House to my question to a former Prime Minister? I asked him to
      "ensure that legislation presented to this House is not drafted in obscure language."
      He replied:
      "I have every sympathy with the hon. Member's objective. However, I am afraid that, in order to achieve precision in legislation which is complex and often technical, it is not always possible to avoid an impression of obscurity."
      To which I replied:
      "I accept the fact that the Parliamentary draftsmen must try to prevent those who would pretend to misunderstand from doing so, but is it not also important that we laity should understand legislation?"
      The Prime Minister—Harold Macmillan—gave a classic and well-remembered reply, which gave me my comeuppance:
      "I know that this is a difficult problem. I would remind the House of the very wise words of Sir James Stephen, one of our greatest authorities, who pointed out that since legislation is often the subject of litigation it is absolutely necessary not only that it should appear to be simple to those who read it in good faith, but actually precise. That is a very difficult art. Many things are simple. Let us take the sentence: 'When John met his uncle in the street he took off his hat.' That is a clear sentence, but it is capable of at least six different meanings."
      Those were the days when Prime Minister's questions were heard in total silence. He continued:
      "The point about legislation is that the courts have to interpret it in litigation based upon it, and it is therefore essential that it should be not so much simple as precise."
      I think that that is the difficulty with clause 71.
      96
      8 pm
      My friend—and he really was my friend—the late Brian O'Malley followed up my question with a question on the explanatory memorandum to a Finance Bill. The Prime Minister replied:
      "I have every sympathy with the purpose of the hon. Gentleman. I think that Finance Bills dealing with a large number of subjects and sometimes fairly simple provisions seem very complicated. What we tried to do in 1962, where there was a fairly complicated provision, was to issue a special White Paper to explain that particular part. Other Finance Bills are fairly simple and involve the raising or reduction of the Income Tax or something of the kind. Therefore, I take account of what the hon. Member says."
      So it went on, with a final question from the then shadow Chancellor, James Callaghan:
      "Has the Prime Minister looked at the Finance Bill this year to see that it took us nearly 20 Clauses and seven Schedules to get rid of Schedule A? Would not that have been a very appropriate subject for an explanatory memorandum?"—[Official Report, 4 July 1963; Vol. 680, c. 583‒85.]
      The reason I have gone into such detail is that things have not altered all that much. We must take into account the fact that lawyers will try to extract every single penny possible from legislation. My fear is that the interaction between Holyrood and Westminster will be a lawyers' paradise.
      I want to ask the Minister about the briefing that his advisers will have had from the Law Society. It states:
      "With regard to Clause 71(1) the present position for UK tax is that strictly an individual should be taxed in the UK on the whole income of a year of assessment although only present in the UK for part of the year but under Extra Statutory Concession (A11) such a person is only taxed on income for the part of the year during which he is actually resident in the UK. There is, however, no provision for splitting the tax year in the Bill and it is submitted that this would be helpful since, without such a provision, for example, it appears necessary for an English employer of a Scot moving to England, say, in the second half of the tax year to operate PAYE at the Scottish basic rate for the whole year or if moved from England to Scotland after 1 month of the tax year would have to collect the Scots tax on English earnings of that month."
      That may seem very dry, but in reality it is basic and very important. The Scottish Office has had notice of the matter from the Law Society and I expect some sort of response this evening.
      The briefing continues:
      "In respect of Clause 71(2)(b) it is suggested that time spent in Scotland alone is not a sufficient test if someone has his or her principal residence in other parts of the UK. For example, if a tax payer, having his own principal residence in England, but living in the Borders with family a few miles away, but across the Border, visits Scotland each weekend, arriving Friday and departing early Monday, and all public holidays and annual leave were spent in Scotland it might only require a fairly short additional period (say, 15 weeks) of work, perhaps as a Sales Representative or otherwise in Scotland to be subject to Scottish tax and vice versa in reverse for Scottish residents. It is suggested that there could be a number of people in this situation, e.g. professional sportsmen, particularly in the Borders area. who might, somewhat inadvertently, find themselves subject to Scottish tax and might not realise that were the case, which could have penalty consequences under the Self Assessment regime."
      Those matters are nuts and bolts, but they are not unusual nuts and bolts; they are practical.
      The briefing continued:
      "In relation to Clause 71(2)(b) and (3), Inland Revenue leaflet (IR20) states that a visitor to the UK is treated as resident in the UK if physically present in the UK for 183 days of any tax year. The

      97
      result of Clause 71(2)(b) and 71(3) could be that a foreign visitor might be subject to Scottish tax if in Scotland for only 92 days out of that 183 test period, whereas a permanent resident of another part of the UK coming to Scotland would have to spend 183 days in Scotland before being subject to Scottish tax.
      It is suggested, therefore, that the definition of 'Scottish tax payer' should exclude persons ordinarily resident abroad unless in Scotland for 183 days to prevent foreign visitors being discriminated against."
      Do the Government accept the Law Society's view? If not, why not?
      I have spoken at length to both the Law Society and the Institute of Chartered Accountants. The ICA says:
      "Clause 71(1) indicates the requirements to be met by a 'Scottish taxpayer' and hence who is liable to pay the Scots income tax. This is based upon the test of 'residence' which is a recognised test in deciding whether an individual has a liability to UK income tax. If the test of residence is met, a taxpayer will be liable to Scots income tax throughout the fiscal year. However, if a 'Scottish taxpayer' moves permanently to, say, Wales in October should his new Welsh employer be required to withhold Scottish tax under PAYE?"
      The ICA thinks not. It recommends that
      "the existing Extra Statutory Concession A11 should be included in the law to ensure that a person is only taxed on income for the part of the year during which he is actually resident in Scotland."
      What do the Government say about that?
      The ICA continues:
      "Although it may be simpler to apply the 'Scottish taxpayer' test of residence for a whole fiscal year, it will add to the complexities of PAYE for those who move to other regions. To this end we trust that proposed guidance on the operation of an 'S' code for PAYE will be issued at an early stage for consultation with employers and other interested parties.
      As a matter of interest in 71(1)(a) is 'an individual who … is treated as resident in the UK' the same as an individual who is actually resident? We do not think so."
      I want to know what the Government think. This will be a matter for litigation; it will be a field day for lawyers unless the issue is clarified.
      On clause 71(3)(b), the ICA says:
      "One test in defining residence in clause 71 is whether an individual has his 'principal UK home' located in Scotland. This does not fit particularly well with the capital gains tax definition of principal or main residence."
      People who are subject to capital gains tax legislation can afford very good tax lawyers. Tax lawyers will make a meal of the provisions unless they are cleared up.
      Mr. Wallace: Does the hon. Gentleman think that people will engage tax lawyers to make a meal for, at most, £660 a year?
      Mr. Dalyell: From my experience of Finance Bills, what tax lawyers and their lobbies can do is amazing. I am a relative layman in such matters, but I have experience of several Finance Bills. I do not know whether the hon. and learned Gentleman has served on Finance Bill Committees.
      Mr. Wallace: I have.
      Mr. Dalyell: Then the hon. and learned Gentlemen must know what difficulties can be raised.
      The ICA brief continues:
      98
      "Equally clause 71(4)(a) uses a test for an individual's day of presence which is not the same as that used for a UK test of residence and other related tests. The UK test is whether one is present at midnight whereas this test would treat one nonetheless as being present in Scotland. For example, if a person takes a morning flight to Brussels and stays there for two nights, then returning to Scotland using this test the person is out of Scotland for 1 day but in terms of s. 193 ICTA 1988 out of the UK for 2 days."
      How are definitions to be made the same as those used in tax legislation to prevent unnecessary disputes?
      The final point covered by the ICA brief is appeals. It says:
      "Under the existing residence rules questions about a taxpayer's status can frequently take considerable time and expertise to negotiate. This involves both the Inland Revenue and the taxpayer in a relatively expensive process. To ensure as efficient a process as possible, particularly when only 3 per cent. of some income is at stake, we trust the Inland Revenue will establish a central processing unit at, for example, FICO Scotland."
      Those are all seemingly dry details. They amount to what some of us have called the dewiring of the United Kingdom. During the debates on Welsh devolution, my right hon. Friend the Member for Llanelli (Mr. Davies) has repeatedly talked of the unbundling of the United Kingdom. They are the difficult issues that have to be dealt with. They may seem dry, but they are very important and will be the source of endless litigation and trouble if we do not sort them out.
      Mr. Ancram: The details that the hon. Member for Linlithgow (Mr. Dalyell) has referred to may sound dry, but they are vital. He revisited a kinder, gentler time in the House of Commons when questions were answered and debate was real. If he is looking for a lack of obscurity in legislation after 34 years, I fear that he will have to wait a lot longer.
      The points that the hon. Gentleman has made are important because the arguments about whether someone is liable to pay tax are centred not on how many people will pay but on whether it is fair that they should pay. The hon. and learned Member for Orkney and Shetland (Mr. Wallace) asked whether anyone would go to a tax lawyer over a sum as small as £630 or so. That is an extraordinary suggestion. We cannot decide whether someone is being rightly or wrongly taxed on the amount that they are being asked to pay. That is the Leona Helmsley line—only the little people pay taxes.
      The hon. Member for North Tayside (Mr. Swinney) said that he thought that we support one of his amendments. He may find that we are supporting part of his amendment. We are not on all fours with him. I have also found that the amendment paper describes me as a doctor in some places. I assure the Committee that I have not taken medical qualifications. I leave that expertise to my hon. Friend the Member for Woodspring (Dr. Fox).
      The hon. Members for Linlithgow and for North Tayside have rightly pointed out that the issues that we are debating will determine whether the system of taxation will work fairly. We talked earlier about the complexities of collection. We must have a clear definition of who pays. There must be no areas of doubt or confusion. I have told the Minister of my disappointment at his knocking back of every amendment. I hope that he can cast aside his prejudice on these amendments and think seriously about the impact on the Bill of leaving the confusion that exists at the moment.

      99
      8.15 pm
      Amendment No. 370 is slightly different from the other Conservative amendments in the group. It would prevent businesses in Scotland from facing a different tax regime from those in the rest of the United Kingdom. That was the clear aim of the White Paper. If I have read the complicated Inland Revenue paper lodged in the Library this afternoon correctly, it confirms the impression given in the Bill that unincorporated small businesses would be liable to pay any additional tax raised by the Parliament. The Inland Revenue paper refers to partnerships in particular. Sole traders and partnerships appear to receive different treatment from incorporated businesses. It cannot be fair that payment of the tax depends on whether a trader is incorporated. I hope that the Minister will consider the amendment carefully and will be able to accept it in principle. I am always prepared to accept that my drafting may not be perfect, but I should be delighted if he is able to promise serious consideration of it.
      We run into difficulties with the definitions of the terms used in the Bill. Phrases in clause 1 such as "principal home", "places of residence" and "main place of residence" have not been used before in United Kingdom income tax legislation. A recent paper by Deloitte and Touche confirmed that. There are uncertainties about definitions. We can all pull out examples. Under the Bill, an employee of a Scottish company who owned a house in Edinburgh but was seconded to London for one year, where he stayed in a rented flat, would presumably be considered a Scottish taxpayer because his principal home was in Edinburgh, even though he performed no duties of employment in Scotland during that period. That immediately raises a substantial question about fairness and the grounds for taxation. I hope that the Minister will look closely at the terms.
      Amendments Nos. 371, 373, 374, 377, 372 and 378 are probing amendments. We are trying to find out what is meant by the terms, to understand how the tax will impact on individuals. I hope that the Minister will explain why new terminology has been sought. If ever there has been a field day for lawyers, it is when legislation uses new terms of which there are no definitions in existing law. I suspect that lawyers are rubbing their hands in anticipation and planning their holidays in exotic parts of the world as a result of the work that will stem from the Bill.
      Let us consider the example of a Scot whose family home is in Scotland but who is transferred to the London office of his company. Not wanting to move his family south, he spends his weekends in Scotland. Those of us who travel on the aeroplane see such people flying down to London on a Monday morning and returning on a Friday evening. Under the Bill, the Monday and the Friday will be counted as days in Scotland, even though the man is working in London on those days. He will be deemed to have spent four of the seven days of the week in Scotland, even though he spent five days of the week working in London. Even though his work is entirely outside Scotland, he will be liable to pay Scottish tax. Amendment No. 376 is an attempt to deal with what we regard as a patently unfair situation.
      Mr. Swinney: The right hon. Gentleman is citing a number of examples of what could loosely be characterised as a fancy life style, which involves flying to London every week. Construction workers, for example,
      100
      might live in the north of England and travel to work every week on a site in Glasgow or on the A74, if it is ever improved. They would be liable for the Scottish tax if they worked there for a prolonged period.
      Mr. Ancram: I take the hon. Gentleman's point. If they were working on a construction site in Lanarkshire but travelling home to England every night, they would not pay unless they were working the night shift, in which case they would.
      Mr. Swinney: But if they were living in digs?
      Mr. Ancram: That is the sort of anomaly that arises, and it is important to highlight such examples. These cases may not be many, but the Minister would surely want to prevent even one case of the tax being wrongly or unfairly levied.
      I do not travel to Scotland as often as I used to when I was a Scottish Member of Parliament—I sometimes used to go up two or three times a week—but I came down on an early morning flight today. It was packed with people coming to earn their living in London during the week who will travel back on Friday evening. Although they spend five days of the week in London, they will be deemed to be resident in Scotland and as having spent four out of seven days there. That seems to defy logic, and I hope that the Minister will consider the problem.
      Let us consider the issue of multiple presence. The Deloitte and Touche paper produced two examples in this regard, both of which are relevant. The first related to someone who had a home in England but spent 121 days in Scotland, 121 days in England and 123 days in France. Such a person would be liable to Scottish tax because he would be a UK resident and would have spent as much time in Scotland as in another part of the United Kingdom, although he had in fact spent 244 days outside Scotland. Again, that seems to create extraordinary anomalies.
      The second example is perhaps even more graphic. It involves someone who lives in Glasgow and has a house there for 180 days of the tax year. He then moves to London where he lives for the rest of the tax year. He will not be liable to Scottish tax because his period of residence in England exceeds that in Scotland. However, if instead of moving to London he moves to France, he will be liable for Scottish tax because the number of days spent in Scotland will exceed the days spent elsewhere in the United Kingdom. That is an enormous anomaly for which there is no logical explanation.
      The hon. Member for North Tayside mentioned day and night shifts and movements across the border. As I understand it, it is common in Europe to have special rules for cross-border workers, yet there is nothing in the Bill to provide for that. I hope that the Minister will consider the point. We believe that the amendment would solve the problem.
      Mr. Wallace: The right hon. Gentleman is making some important points, and it is important to tease out some answers. He cited the example of someone who moves to France rather than London. If that person has spent only 180 days in the UK, would he be treated as a UK taxpayer at all in that year? If not, the question of paying Scottish taxation would surely not arise.
      Mr. Ancram: I am not a tax expert, which is why I said the amendments were probing. I cannot answer the

      101
      hon. and learned Gentleman, but it is an interesting question because there might perhaps be a conflict between the Bill and the usual tax rules. It is important to avoid that conflict if we are to avoid the complications to which the hon. Member for Linlithgow referred. I appreciate that no legislation is ever perfect—if it were, there would be no lawyers—but it is important to examine such patent anomalies.
      Deloitte and Touche also point out that, for overseas workers who are brought into Scotland, the tax may result in considerable extra costs for inward investment companies because those workers are paid on a net pay basis. In other words, a Japanese worker who has a certain net pay after tax in Japan will be guaranteed the same net pay after tax in the United Kingdom. The Japanese company will therefore pay him sufficient gross pay in the United Kingdom to result in the desired net pay after taxes. Were Scotland to have an additional 3p on the basic rate, the gross pay would have to be higher than in England to arrive at the same net amount.
      As we know, Scotland is always looking for inward investment and I suggest that the cost to a major new investor bringing in, say, 40 Japanese workers paid on average £25,000 a year could be as much as £40,000. That might he taken into consideration if an inward investment decision were in the balance.
      Mr. Swinney: I have studied very closely the material from Deloitte and Touche; I thought that that example was rather weak. I accept that choices will be made at the margin but, in the great scheme of an inward investment decision, £40,000 as the difference between one bid and another will probably not be a major factor.
      Mr. Ancram: The hon. Gentleman may be right. It may not be a major factor, but with bids from various parts of the United Kingdom for inward investment becoming increasingly competitive, if £40,000 were the difference, I suspect that it could tip the balance. These matters have to be considered. It is terribly important that we do not pass clause 71 without consideration. When I said at the beginning of today's proceedings that I find this part of the Bill confusing and obscure, I was in large part referring to this clause. It is important that we try to cast some light on it, which is the purpose of the amendments.
      Amendments Nos. 379 and 414 refer to employees and passengers on oil rigs and ships and trains. Under clause 71(6), offshore workers on oil rigs, fishing boats and other things will still be liable to pay the tax. Clause 111(1) defines Scotland as including
      "so much of the internal waters and territorial sea of the United Kingdom as are adjacent to Scotland".
      The hon. Member for Linlithgow also made this point. None of us know—at least I do not know—what is meant by "adjacent". Perhaps the Minister will tell us, because it will be crucial to any assessment of whether an oil rig worker or someone who is a passenger on or working on a ship is liable for the tax. It may be a question of a line very carefully drawn somewhere in the North sea.
      In the old days of international law, I seem to remember talking about how to draw international boundaries; taking a point from one side of the border to the other and continuing it across the water. Hon. Members who represent Aberdeen—I see at least one here—were,
      102
      at least in those days, very interested in where such lines were drawn. Now, however, one's eligibility for tax may depend on something as esoteric as that.
      If amendments Nos. 379 and 414 were accepted, they would remove ship and oil rig workers from the tax provision. Indeed, amendment No. 414 deliberately excludes an oil rig in order to achieve that. For many people who work on oil rigs, their only connection with Scotland is flying through Aberdeen airport on their way to the platform, and they could well be coming from elsewhere in the United Kingdom.
      The final example that I want to cite highlights the difficulties caused by clause 71. There is a problem in defining what constitutes being in Scotland if one is on a lorry, bus or train. Those of us who occasionally travel on the sleeper know that it leaves Edinburgh at 11.55 pm. Passengers will certainly be liable for tax on the day they board the train, because they will be regarded as having been in Scotland that day, but, under clause 71, I think that they will also be liable for the following day—the train will have left only five minutes before midnight and, for at least 25 minutes afterwards it will be travelling through Scotland on its way to London. Someone who gets on the night train may find that for the day he gets on the train and for the next day he is counted as being in Scotland although he is on the sleeper and is going to work in London.
      If the Committee thinks that that is difficult, let us consider the case of the late-night lorry driver who starts his journey from Scotland to the south before midnight. Is he liable for the following day if his vehicle is still in Scotland?
      Mr. Swinney: On a point of order, Mr. Lord. I do not want to interrupt the interesting flow of the right hon. Gentleman's speech, but many substantial issues have been raised to which I certainly would appreciate answers from the Minister. I wonder whether we shall have an appropriate opportunity to hear those answers.
      The Second Deputy Chairman of Ways and Means (Mr. Michael Lord): It is for the right hon. Gentleman himself to decide what are and what are not substantial issues.
      Mr. Ancram: The hon. Gentleman spoke for quite some time at the beginning of the debate and he has just taken a little bit more. I am sure that the Minister realises that these are not just serious issues, but real ones which will arise in future if the Bill is not amended. When they do, they will cause a great deal of consternation and, if we are not careful, there will be much derision about the way in which the system works. We have a genuine chance to clean up the Bill, get it right and make the tax work, so I ask the Minister to examine our amendments closely.
      8.30 pm
      Mr. Wallace: I echo the point that the right hon. Member for Devizes (Mr. Ancram) has just made; it is important that there is as much clarification as possible of who will be liable to tax. However, he may have misinterpreted what I said. The hon. Member for Linlithgow (Mr. Dalyell) created a vision of the courts regularly being filled with huge, expensive litigation.

      103
      I did not suggest that that would be the case in respect of individual taxpayers, although that is not to say that it is not an important issue for the individual taxpayers concerned—and there should be as much clarity as possible.
      I shall not elaborate on points that have already been raised, but I plead with the Minister to respond positively to the debate and to indicate his willingness to go away and think again about certain points. The one that I would emphasise is that the same test of residence should apply to Scotland as to the rest of the United Kingdom.
      I understand that the test of residence in the United Kingdom is whether one is present at midnight. That may not be the case in respect of the Bill. As in the example mentioned by the hon. Member for Linlithgow, someone taking a morning flight to Brussels and staying away for two nights before returning to Scotland would be out of Scotland for one day under the Bill, but out of the United Kingdom for two days in terms of United Kingdom tax legislation. That anomaly will give the tax powers in the Bill a bad name. It is important for those of us who want the tax powers that there is as much clarity as possible.
      Mr. Gerald Howarth: I rise briefly to address one of the issues that has given rise to the huge complexities that will result from the Bill. The hon. Member for North Tayside (Mr. Swinney) has done the Committee a service by trying to expose some of the issues, as has my right hon. Friend the Member for Devizes (Mr. Ancram).
      I should like to pursue a point raised by the hon. Member for Linlithgow (Mr. Dalyell) in respect of service men, as I represent the home of the British Army at Aldershot and quite a large number of Scots serve in the British Army in various parts of England. The hon. Member for Linlithgow raised an important point about the time that they might spend either at home in Scotland or on duty there. I hope the Minister will address that in his reply to the debate. I shall not trespass too much on his time so that he can answer the detailed questions that have been raised.
      Clause 71 raises some important points of law. It will be a lawyers' paradise and there is a grave risk that lawyers will play it off against sections in the Income and Corporation Taxes Act 1988. That will create considerable difficulty for the Inland Revenue and it will certainly add to the costs that the Bill will impose on the body of taxpayers. I shall be interested to hear what the Minister has to say about which law will prevail if there is a conflict and how the courts and judges will interpret between the Bill and that other body of law which already deals with Inland Revenue issues and residence location for tax purposes.
      Finally, I return to the point that my right hon. Friend the Member for Devizes made about the train departing at 11.55 pm. That provision could also affect airline pilots who are often required to work away from home. Given that it is a particular feature of the clause that one is caught at the beginning or the end of the day—rather than at a specified hour, such as midnight—the airlines could also be affected. For instance, a shuttle pilot on the route between Heathrow and Edinburgh or Glasgow could find himself spending quite a lot of time in Scotland although his principal residence might be in England. The opposite
      104
      could also arise. There should be some consistency, and I hope that the Minister will be able to clear up some of the points that have been raised by Members on both sides of the Committee.
      Mr. McLeish: In the 10 minutes that remain, I shall attempt to respond to some of the points that have been raised in an important debate. My hon. Friend the Member for Linlithgow (Mr. Dalyell) asked a number of specific questions. He referred to the Law Society. The Scottish Office and Inland Revenue officials have had a number of useful meetings with the Law Society at which all the main points raised by hon. Members were covered, in most cases satisfactorily.
      Professional sportsmen have been mentioned. The example seems a bit far-fetched in my judgment, but in the circumstances described the individual would be a Scottish taxpayer. As far as possible, taxpayers will be informed of their status by the Inland Revenue.
      Service men with married quarters—and, possibly, a principal home—in Scotland, who spend six months in Northern Ireland and three months in England might be liable to pay tax on the "principal home" test, depending on the circumstances. However, we are aware of the particular circumstances of military personnel and I am discussing the issues with colleagues.
      The point about splitting tax years was addressed when we discussed amendment No. 357. My hon. Friend the Member for Linlithgow also raised the question of the North sea adjacent to Scotland as described in clause 111. Clause 111 confines the boundaries of Scotland for purposes of the Bill to the
      "internal waters or territorial sea … adjacent to Scotland."
      Much of the North sea is outside the 12-mile limit and is not adjacent to Scotland. Further to that, the Government plan to make available to hon. Members during the passage of the Bill a working draft order defining Scottish adjacent waters under clause 111.
      Mr. Dalyell: Will my hon. Friend give way?
      Mr. McLeish: No. I have very little time in which to respond.
      Chartered accountants' comments about individuals being treated as United Kingdom residents under clause 71(1) have been mentioned. We are quite certain that it means the same thing in that context.
      The right hon. Member for Devizes (Mr. Ancram) mentioned the example of the business man who flies to London on Monday morning and returns to Scotland on Friday. Such an individual would be a Scottish taxpayer as his family home is in Scotland. The number of days test would not apply.
      The substantive amendments relate to the critical issue of who should be liable to pay tax at the varied rate proposed by the Scottish Parliament. Before I deal with them, I should say that the long experience of the Inland Revenue in income tax matters dating back to 1849 has proved invaluable in terms of negotiating us through particularly tricky policy issues.
      Drawing up tax proposals is seldom, if ever, a simple matter. Judgments have to be exercised, weighing up and balancing issues of fairness, workability, scope for avoidance, cost of administration and, of course, tax take.

      105
      Those judgments have to be informed by in-depth experience and I remain convinced that the Government's conclusions, properly informed by the Inland Revenue, stand up to scrutiny.
      Amendment No. 344 aims to link the definition of who will be a Scottish taxpayer to a complete year of assessment and to have it apply only for the tax year 1999–2000—the first full year of the Bill being enacted—and beyond. The amendment is unnecessary on both counts because clause 71 already relates the definition of who will be a Scottish taxpayer to whole tax years and because clause 70(6) makes it clear that the tax-varying power will not be available for use before the tax year 2000‒01.
      Amendment No. 370 would appear to be trying to exclude small, unincorporated businesses from the definition of Scottish taxpayers. I do not think that it succeeds, but, in any case, I am not persuaded that unincorporated businesses should be exempt from the tax-varying power. They do, after all, pay income tax at present and, since the maximum extra tax any individual will pay is £660, exercise of the tax-varying power will not damage small businesses. There is no reason why the self-employed and partnerships should not pay their fair share if others pay income tax in Scotland. They will benefit from exactly the same services provided by the Parliament as employees and other Scottish taxpayers.
      Amendments Nos. 336 to 339 and 341 are all aimed at deleting the test whereby a UK resident would be a Scottish taxpayer if he or she spent at least half the tax year in Scotland. There has been a fair amount of comment about the test recently—not all of it, by any means, well informed. We have looked carefully at the test and concluded that it fully meets the requirements of fairness, practicability and cost effectiveness.
      Taking into account time spent in Scotland is a fair way of ensuring that all those who might benefit from what the Scottish Parliament has to offer—including how it applies the proceeds of a resolution that increases the basic rate of income tax—should pay the appropriate share of the tax. It is only right that those who spend most of their time in Scotland should therefore pay at the Scottish rate.
      Mr. Swinney: Will the Minister give way?
      Mr. McLeish: I am reluctant to give way, partly because I want to address some of the important amendments tabled by the hon. Gentleman.
      A test based on days spent in Scotland is consistent with tests of residence for UK tax purposes generally. I accept that the test involves decisions about where precisely its boundaries should lie—all residence-based tests do—but most of the examples I have seen quoted, in the Deloitte and Touche paper and elsewhere, are quite clear cut. The clause as drafted already gives the most equitable and practical solution in those cases and I would not wish to change it.
      Treating someone as spending a day in Scotland if they are there at the beginning or the end of the day is a necessarily strict test to deter avoidance. The transaction costs of avoidance in the "within UK" context are relatively low and have to be guarded against. Better that than a test with glaring loopholes.
      106
      I should stress that there will be no extra costs for employers in operating the "days spent" test. No employer will deduct tax at the Scottish rate unless the Inland Revenue tells them to. As is usual, the onus will be on the taxpayer to get his tax affairs right. That again is consistent with other tax law, including UK residence rules. The costs for the Inland Revenue of ensuring compliance with the rules have been taken into account. The number of taxpayers likely to be caught solely by that test is thought to be relatively small.
      Amendments Nos. 371 to 374, 377 and 378 would, when taken together, mean that a person would be a Scottish taxpayer if he had his UK home in Scotland, regardless of whether he lived there at all. Amendment No. 378 would remove the provision that decides which property, if a person has two or more homes, should be regarded as the person's residence for the purposes of the Scottish tax. That could mean that anyone with a place of residence in Scotland, such as a holiday home, could be a Scottish taxpayer.
      I hesitate to suggest it, but it smacks uncomfortably of an attempt by the Conservative party to reintroduce by the back door the poll tax on holiday homes—a matter in which the right hon. Member for Devizes is well versed. I am not prepared to countenance that. In practice, however, there must be sensible rules to deal with individuals who have homes in Scotland and elsewhere in the UK. It would not be fair that everyone who had a place of residence in Scotland should automatically be a Scottish taxpayer.
      Amendment No. 340 would widen significantly the "principal home" criterion whereby a person could be adjudged to be a Scottish taxpayer. Although I understand that the amendment is linked to the SNP's concern to remove the criterion of "days spent in Scotland" from the Bill, it would in practice create bizarre and unfair effects, and should be resisted. The effect of the amendment can best be illustrated by an example. If the amendment were accepted, a person moving with his family to Scotland on the very last day of a tax year, 5 April, would be adjudged to be a Scottish taxpayer for the whole of that year on the basis of the test at clause 71(3)(a) and (b), because he would have spent part of the year—one day—in Scotland and, for at least part of that year, his principal UK residence would have been in Scotland.
      Amendment No. 343 picks up a point raised in the paper published by Deloitte and Touche about the potential liability for the Scottish tax of cross-border night shift workers. That situation was one we had identified when drawing up the proposals, but we reluctantly concluded that the balance of advantage lay with living with it rather than with trying to resolve what may in practice be a non-problem. I shall briefly explain why.
      A night shift worker living in England but working in Scotland could become liable for the Scottish tax if he or she clocked up, under the "days spent in Scotland" rule, at least 183 days in Scotland. We have, however, to put that point into some sort of context: we are talking about a very small number of people who commute daily between England and Scotland; very few of these few daily commuters will be night shift workers; and very few night shift workers will spend 183 days, as defined in the Bill, in Scotland. Most night workers do not spend all their year working nights and most have significant time off which, when added to holidays, means that they would fall below the 183 day limit.

      107
      I accept that that is not a reason to leave matters as they stand.
      Mr. Swinney: Will the Minister give way?
      Mr. McLeish: I want to come to the specific point. The question of night shift workers is extraordinarily difficult, but I can tell the hon. Gentleman that the Inland Revenue continues to work on this specific point. We want to discover the extent of the problem as it exists in reality and to find out whether there is a problem to be addressed. I give the hon. Gentleman an assurance that the matter will be examined.
      Mr. Swinney: The Minister has said that it is likely that the number of people who will fall into the "days spent" category will be small, but that contradicts his central argument. It is no answer to my amendment about night shift workers—I find his response inadequate.
      Mr. McLeish: If one takes a specific group, large or small, and starts to look for potential anomalies in the system, one may find that there are knock-on consequences—
      It being a quarter to Nine o'clock, THE CHAIRMAN, pursuant to the Order [13 January] and the Resolution [this day], put forthwith the Question already proposed from the Chair.
      Question put, That the amendment be made:—
      The Committee divided: Ayes 32, Noes 307.

      Division No. 176]

      [8.45 pm

      AYES

      Allan, Richard

      Hughes, Simon (Southwark N)

      Ashdown, Rt Hon Paddy

      Keetch, Paul

      Beith, Rt Hon A J

      Kirkwood, Archy

      Bell, Martin (Tatton)

      Michie, Mrs Ray (Argyll & Bute)

      Brake, Tom

      Öpik, Lembit

      Brand, Dr Peter

      Rendel, David

      Breed, Colin

      Salmond, Alex

      Burnett, John

      Sanders, Adrian

      Campbell, Menzies (NE Fife)

      Smith, Sir Robert (W Ab'd'ns)

      Stunell, Andrew

      Chidgey, David

      Swinney, John

      Cunningham, Ms Roseanna (Perth)

      Tyler, Paul

      Wallace, James

      Dafis, Cynog

      Welsh, Andrew

      Ewing, Mrs Margaret

      Willis, Phil

      Feam, Ronnie

      Hancock, Mike

      Tellers for the Ayes:

      Harvey, Nick

      Mr. Alasdair Morgan and

      Heath, David (Somerton & Frome)

      Mr. Donald Gorrie.

      NOES

      Adams, Mrs Irene (Paisley N)

      Bell, Stuart (Middlesbrough)

      Ainger, Nick

      Benn, Rt Hon Tony

      Alexander, Douglas

      Bennett, Andrew F

      Anderson, Donald (Swansea E)

      Benton, Joe

      Anderson, Janet (Rossendale)

      Bermingham, Gerald

      Armstrong, Ms Hilary

      Berry, Roger

      Ashton, Joe

      Betts, Clive

      Atkins, Charlotte

      Blizzard, Bob

      Barnes, Harry

      Blunkett, Rt Hon David

      Barron, Kevin

      Boateng, Paul

      Bayley, Hugh

      Borrow, David

      Beard, Nigel

      Bradshaw, Ben

      Beckett, Rt Hon Mrs Margaret

      Brown, Rt Hon Nick (Newcastle E)

      108

      Brown, Russell (Dumfries)

      Galbraith, Sam

      Browne, Desmond

      Galloway, George

      Buck, Ms Karen

      Gapes, Mike

      Burden, Richard

      Gardiner, Barry

      Burgon, Colin

      Gerrard, Neil

      Butler, Mrs Christine

      Gibson, Dr Ian

      Byers, Stephen

      Gilroy, Mrs Linda

      Caborn, Richard

      Godsiff, Roger

      Campbell, Alan (Tynemouth)

      Goggins, Paul

      Campbell, Mrs Anne (C'bridge)

      Gordon, Mrs Eileen

      Campbell—Savours, Dale

      Griffiths, Win (Bridgend)

      Caplin, Ivor

      Grocott, Bruce

      Casale, Roger

      Grogan, John

      Caton, Martin

      Hain, Peter

      Cawsey, Ian

      Hall, Mike (Weaver Vale)

      Chapman, Ben (Wirral S)

      Hall, Patrick (Bedford)

      Chaytor, David

      Hamilton, Fabian (Leeds NE)

      Chisholm, Malcolm

      Hanson, David

      Clapham, Michael

      Heal, Mrs Sylvia

      Clark, Rt Hon Dr David (S Shields)

      Healey, John

      Clark, Paul (Gillingham)

      Henderson, Ivan (Harwich)

      Clarke, Eric (Midlothian)

      Hepburn, Stephen

      Clarke, Rt Hon Tom (Coatbridge)

      Heppell, John

      Clarke, Tony (Northampton S)

      Hesford, Stephen

      Clelland, David

      Hill, Keith

      Coaker, Vernon

      Hinchliffe, David

      Coffey, Ms Ann

      Hodge, Ms Margaret

      Coleman, Iain

      Home Robertson, John

      Colman, Tony

      Hoon, Geoffrey

      Connarty, Michael

      Hope, Phil

      Cook, Frank (Stockton N)

      Hopkins, Kelvin

      Cooper, Yvette

      Howarth, Alan (Newport E)

      Corbett, Robin

      Howarth, George (Knowsley N)

      Corbyn, Jeremy

      Howells, Dr Kim

      Corston, Ms Jean

      Hughes, Ms Beverley (Stretford)

      Cousins, Jim

      Hughes, Kevin (Doncaster N)

      Crausby, David

      Humble, Mrs Joan

      Cryer, Mrs Ann (Keighley)

      Hurst, Alan

      Cryer, John (Hornchurch)

      Hutton, John

      Cummings, John

      Iddon, Dr Brian

      Cunningham, Rt Hon Dr John (Copeland)

      Ingram, Adam

      Jackson, Ms Glenda (Hampstead)

      Cunningham, Jim (Cov'try S)

      Jackson, Helen (Hillsborough)

      Dalyell, Tam

      Jenkins, Brian

      Darling, Rt Hon Alistair

      Johnson, Alan (Hull W & Hessle)

      Darvill, Keith

      Jones, Barry (Alyn & Deeside)

      Davey, Valerie (Bristol W)

      Jones, Helen (Warrington N)

      Davidson, Ian

      Jones, Ms Jenny (Wolverh'ton SW)

      Davies, Rt Hon Denzil (Llanelli)

      Dawson, Hilton

      Jones, Jon Owen (Cardiff C)

      Dean, Mrs Janet

      Jones, Dr Lynne (Selly Oak)

      Denham, John

      Jones, Martyn (Clwyd S)

      Dewar, Rt Hon Donald

      Keeble, Ms Sally

      Dobbin, Jim

      Keen, Alan (Feltham & Heston)

      Donohoe, Brian H

      Keen, Ann (Brentford & Isleworth)

      Doran, Frank

      Kelly, Ms Ruth

      Dowd, Jim

      Kennedy, Jane (Wavertree)

      Drew, David

      Kidney, David

      Drown, Ms Julia

      Kilfoyle, Peter

      Eagle, Maria (L'pool Garston)

      King, Andy (Rugby & Kenilworth)

      Edwards, Huw

      Kumar, Dr Ashok

      Efford, Clive

      Laxton, Bob

      Ennis, Jeff

      Lepper, David

      Etherington, Bill

      Leslie, Christopher

      Fatchett, Derek

      Lewis, Ivan (Bury S)

      Field, Rt Hon Frank

      Lewis, Terry (Worsley)

      Fisher, Mark

      Liddell, Mrs Helen

      Fitzsimons, Loma

      Linton, Martin

      Flint, Caroline

      Livingstone, Ken

      Flynn, Paul

      Lloyd, Tony (Manchester C)

      Follett, Barbara

      Lock, David

      Foster, Rt Hon Derek

      Love, Andrew

      Foster, Michael Jabez (Hastings)

      McAllion, John

      Foster, Michael J (Worcester)

      McAvoy, Thomas

      Foulkes, George

      McCabe, Steve

      Fyfe, Maria

      McCafferty, Ms Chris

      109

      McCartney, Ian (Makerfield)

      Russell, Ms Christine (Chester)

      McDonnell, John

      Ryan, Ms Joan

      McFall, John

      Salter, Martin

      McGuire, Mrs Anne

      Sarwar, Mohammad

      Mackinlay, Andrew

      Savidge, Malcolm

      McLeish, Henry

      Sawford, Phil

      McNamara, Kevin

      Sedgemore, Brian

      McNulty, Tony

      Shaw, Jonathan

      McWalter, Tony

      Sheerman, Barry

      Mahon, Mrs Alice

      Sheldon, Rt Hon Robert

      Mandelson, Peter

      Shipley, Ms Debra

      Marsden, Gordon (Blackpool S)

      Short, Rt Hon Clare

      Marsden, Paul (Shrewsbury)

      Simpson, Alan (Nottingham S)

      Marshall, David (Shettleston)

      Singh, Marsha

      Marshall, Jim (Leicester S)

      Skinner, Dennis

      Marshall—Andrews, Robert

      Smith, Rt Hon Andrew (Oxford E)

      Martlew, Eric

      Smith, Angela (Basildon)

      Meacher, Rt Hon Michael

      Smith, Rt Hon Chris (Islington S)

      Meale, Alan

      Smith, Jacqui (Redditch)

      Merron, Gillian

      Smith, John (Glamorgan)

      Michael, Alun

      Smith, Llew (Blaenau Gwent)

      Michie, Bill (Shef'ld Heeley)

      Snape, Peter

      Milburn, Alan

      Soley, Clive

      Miller, Andrew

      Southworth, Ms Helen

      Mitchell, Austin

      Squire, Ms Rachel

      Moonie, Dr Lewis

      Steinberg, Gerry

      Moran, Ms Margaret

      Stevenson, George

      Morgan, Ms Julie (Cardiff N)

      Stewart, David (Inverness E)

      Morley, Elliot

      Stewart, Ian (Eccles)

      Morris, Ms Estelle (B'ham Yardley)

      Stinchcombe, Paul

      Morris, Rt Hon John (Aberavon)

      Stoate, Dr Howard

      Mountford, Kali

      Stott, Roger

      Mudie, George

      Stringer, Graham

      Mullin, Chris

      Stuart, Ms Gisela

      Naysmith, Dr Doug

      Sutcliffe, Gerry

      O'Hara, Eddie

      Taylor, Rt Hon Mrs Ann (Dewsbury)

      Olner, Bill

      O'Neill, Martin

      Taylor, David (NW Leics)

      Palmer, Dr Nick

      Thomas, Gareth R (Harrow W)

      Pearson, Ian

      Timms, Stephen

      Pendry, Tom

      Tipping, Paddy

      Pike, Peter L

      Todd, Mark

      Plaskitt, James

      Touhig, Don

      Pollard, Kerry

      Trickett, Jon

      Pond, Chris

      Turner, Dr Desmond (Kemptown)

      Pope, Greg

      Turner, Dr George (NW Norfolk)

      Pound, Stephen

      Twigg, Derek (Halton)

      Powell, Sir Raymond

      Twigg, Stephen (Enfield)

      Prentice, Ms Bridget (Lewisham E)

      Vis, Dr Rudi

      Prentice, Gordon (Pendle)

      Ward, Ms Claire

      Primarolo, Dawn

      Wareing, Robert N

      Prosser, Gwyn

      Watts, David

      Purchase, Ken

      White, Brian

      Quin, Ms Joyce

      Whitehead, Dr Alan

      Quinn, Lawrie

      Wicks, Malcolm

      Radice, Giles

      Williams, Rt Hon Alan (Swansea W)

      Rammell, Bill

      Raynsford, Nick

      Williams, Alan W (E Carmarthen)

      Reed, Andrew (Loughborough)

      Wills, Michael

      Robertson, Rt Hon George (Hamilton S)

      Winnick, David

      Winterton, Ms Rosie (Doncaster C)

      Roche, Mrs Barbara

      Wood, Mike

      Rogers, Allan

      Wray, James

      Rooker, Jeff

      Wright, Anthony D (Gt Yarmouth)

      Rooney, Terry

      Wyatt, Derek

      Rowlands, Ted

      Roy, Frank

      Tellers for the Noes:

      Ruane, Chris

      Mr. David Jamieson and

      Ruddock, Ms Joan

      Mr. Robert Ainsworth.

      Question accordingly negatived.
      THE CHAIRMAN then proceeded to put forthwith the Question necessary for the disposal of the business to be concluded at that hour.
      Clause 71 ordered to stand part of the Bill.

    Clause 72

      CHANGES TO INCOME TAX STRUCTURE
      Dr. Fox: I beg to move amendment No. 381, in page 31, line 31, leave out from 'Board,' to 'and' in line 33.
      The Second Deputy Chairman: With this, it will be convenient to discuss the following amendments: No. 382, in page 31, line 34, leave out
      'have a significant effect on the practical extent'
      and insert
      'increase or decrease the revenue available to the Parliament by more than 5 per cent. of the amount available had the maximum tax power been used in the 1997–98 tax year,'.
      No. 384, in page 31, line 37, leave out
      'as soon as reasonably practical'
      and insert 'within one calendar month'.
      No. 409, in page 31, line 38, leave out from 'proposal' to second 'to' in line 40'.
      No. 385, in page 31, line 38, leave out
      'as soon as reasonably practical'
      and insert 'within one calendar month'.
      No. 387, in page 32, line 3, after 'to,' insert 'basic rate'.
      No. 388, in page 32, line 4, leave out 'conditions' and insert 'condition'.
      No. 389, in page 32, line 5, leave out 'subsections (4) and (5)' and insert 'subsection (5)'.
      No. 390, in page 32, leave out lines 9 to 17.
      No. 392, in page 32, line 14, leave out from 'would' to end of line 17 and insert
      'be to raise or forego £450 million in 1997–98 prices, increased in line with the general government implied deflator.'.
      No. 393, in page 32, line 15, leave out
      'broadly the same from year to year as'
      and insert
      'within 5 per cent. of the amount'.
      No. 396, in page 32, line 21, leave out 'generally'.
      No. 397, in page 32, line 21, leave out 'significantly different from' and insert
      'within 5 per cent. of.
      Dr. Fox: It will take me about as long to deliver this speech as it took you, Mr. Lord, to read out that long list of amendments.
      Clause 72 is one of the most important in the Bill and, as anyone who has read the Bill will know, one of the most complex. It was an essential part of the referendum that the Parliament should be able to raise, in the words of the White Paper, £450 million or an index-linked equivalent sum, but that is not in the Bill; it is couched in different terms. Why is there no reference in the Bill to the £450 million? Why was it left out? The clause is more loosely drafted, imprecise and unclear than most in the Bill. Indeed, it is contradictory. We therefore need to ask two questions at the outset: what did the electorate believe they were voting for in the referendum; and what are they getting in the Bill as a result?

      111
      I shall begin with the clause's imprecise nature. Subsection (1)(b) is a clear example of the problem. It says:
      "that proposal is one made and published by the Treasury or the Board, or (without having been so made and publicised) appears to the Treasury to be a proposal to which effect is likely to be given by Act of Parliament."
      That would hardly get a plain English award.
      More important, we are concerned about some of the terms in the clause. What are we to make of terms such as "significant effect",
      "as soon as reasonably practicable",
      and "likely"? Amendment No. 382 would define "significant effect" as varying revenue by 5 per cent. As the Bill stands, the Treasury alone will decide what is significant. What if the Scottish Parliament decides that changes to income tax Acts are significant? Will that count? Even if there were some sort of arbitration, "significant" is ill defined. It would be far better to stipulate it in the Bill, so that there was no question of friction as a result of imprecision. I readily confess that the figure of 5 per cent. is arbitrary, but I hope that the Minister will think about the matter again and table an amendment at a later stage so that we shall be rid of such extremely unhelpful imprecision.
      9 pm
      The main issue in clause 72 is whether and how the Scottish Parliament's extra revenue would be maintained in the light of changing economic circumstances. We must consider the clause in conjunction with clause 69, which leads Scottish voters—as did the referendum campaign—to believe that 3p would be the limit of the Scottish Parliament's tax-raising power, but, in two potential situations, major changes may occur. Either a United Kingdom Chancellor of the Exchequer raises thresholds and, as a result, produces a decreased number of basic rate taxpayers, or, as a result of a recession or adverse economic circumstances, the number of taxpayers falls. How, then, would revenue be maintained? It would not, as the hon. Member for North Tayside (Mr. Swinney) said in an earlier debate, just be tough for a Scottish Parliament, because the Bill appears to make provision for just such circumstances.
      Under clause 72(2)(a), if
      "in the Treasury's opinion, an amendment of the Parliament's tax-varying powers is required as a consequence of the proposal",
      the Treasury would act to make up the amount of money that might be lost. It must take account of subsection (4)(b), which says:
      "after making due allowance for annual changes in the retail prices index,
      that the practical extent of the Parliament's tax-varying powers would remain broadly the same from year to year as it would be if … the law relating to income tax were the same from year to year as it was in relation to the year 1997–98."
      As I understand it, that part of the Bill is to protect the Parliament's revenue-raising powers and ensure that it works with a consistently similar sum of money. I can draw only two conclusions from the two paragraphs when they are taken together. First, the Treasury could produce a situation that might result in the need to raise more
      112
      money from fewer income tax payers, as it is committed to making the "practical extent" of tax-raising powers consistent. Secondly, that could require a rise in income tax of more than 3p.
      It is only common sense that, if the Parliament has to raise the same amount of money—index-linked—and the number of taxpayers who are paying it shrinks, the amount that has to be raised from each taxpayer must rise. Unless there is something fundamentally amiss with my arithmetic, every hon. Member should accept that. That means that what voters thought they were voting for in the referendum—a 3p ceiling on tax-raising powers—is not in fact a ceiling. Especially as the Minister has consistently said today that the changes must be confined to income tax, I can see no way of maintaining income other than a rise of more than 3p.
      The Opposition tabled amendment No. 387 to provide protection for taxpayers and to clarify the Government's intentions. Making the basic rate explicit will stop exactly what the hon. Member for North Tayside seemed to want: to be able look at other areas of income tax, such as raising the top rate, moving other income taxes around or even introducing new income taxes in Scotland. All that would be allowed if the words "basic rate" were not stipulated in clause 72(3)(a).
      Mr. Dalyell: Is not that what the hon. Member for North Tayside (Mr. Swinney) and his colleagues are quite legitimately and honourably all about? They do want that.
      Dr. Fox: It might be legitimate, but I am not sure whether it is particularly honourable to campaign in favour of one economic change in a referendum but knowingly to want to introduce quite a different one.
      As we have said from the outset, we want to minimise potential points of friction. It is far better to include such stipulations in the Bill than to leave it open to vague interpretation. I whole-heartedly entreat the Minister to consider amendment No. 387. If the Government intend any changes to be limited to the basic rate, they must say so. Otherwise, various income taxes may be changed.
      If clause 72(4) is to protect against loss of revenue, subsection (5) is clearly designed to reassure taxpayers. It states that
      "the effect on the levels of the after-tax income of Scottish taxpayers generally"
      will be much the same as in previous years of assessment. That is quite different from the notes on clauses. The question is how we interpret subsection (5). If basic rate taxpayers are to be protected, how could subsections (2) or (4) be put into effect? They would become contradictory. Do the Government not intend "taxpayers" to mean "basic rate taxpayers"?
      The Opposition's suspicion begins to rise given that the notes on clauses say:
      "the proposed revised powers must, if exercised, have broadly the same impact on the after-tax income levels of individual tax payers as the existing powers".
      Which taxpayers are we talking about? Are we talking about all taxpayers, basic rate taxpayers, or could the word "generally" in subsection (5) mean average, across-the-board Scottish taxpayers? Therefore, if some taxpayers are taken out of the tax bands, others' taxes will have to rise to keep the general level of income the same.

      113
      That would be open season on basic rate taxpayers. It is what we have warned of all along. We have always said that the danger would be that the Bill was not watertight; that it would be so loosely drafted that it would open the door to those who wanted to set higher basic rates for those in the middle bracket in Scotland than elsewhere in the United Kingdom. That means that if the Chancellor of the Exchequer reduced taxation by raising thresholds, the burden would immediately fall on Scottish basic rate taxpayers, by virtue of this clause.
      Mr. Alasdair Morgan: Does the hon. Gentleman agree with my interpretation of the clause, which is that it gives the power to change these arrangements in future to the Westminster Parliament, not the Scottish Parliament? Given his views, the hon. Gentleman should be happy to see the Scottish Parliament's powers of taxation being regulated by this House.
      Dr. Fox: A neat try—but we want any changes made explicit in the Bill. The hon. Member for Linlithgow (Mr. Dalyell) rightly pointed out just now that this is exactly the sort of friction that the nationalists want in the Scottish Parliament. They want the Bill left vague, because that maximises the possibilities of future trouble-making. They want nothing fixed in statute. The hon. Member for Galloway and Upper Nithsdale (Mr. Morgan) said during the referendum campaign that he wanted £450 million to be the limit; now, he does not want it to be the limit. He wants the clause to be unamended, because that maximises the chances of making trouble once the Parliament is set up.
      We believe that the clause is dangerously drafted, confusing and contradictory. Many of our amendments are designed to probe, but amendment No. 390 is extremely important in its own right. If we get no satisfactory answer on it from the Minister, we shall push it to a Division to show that we understand the dangers that basic rate taxpayers could be up against if these plans come to fruition. We warned about an open season on Scottish taxpayers; unfortunately, that is what the Bill provides for.
      Mr. Dalyell: Clause 72 presents real problems. First, I should like to ask a technical question posed by Martin Jones of Maclay, Murray and Spens, Glasgow tax experts. I talked to him at some length this morning about subsection (1)(b). He wants to know about the cumulative effect of modifications as distinct, first, from each modification separately; or secondly, the modifications of each year taken separately. What happens about three years of changes to the lower band, or about capital allowance changes? Serious lawyers would like an answer to that question.
      My true concern has to do with the delineation of devolved functions. The delineation of functions is always a challenging task. There are, of course, many existing federations which, by definition, have such delineations in place; but most of them—at least the developed states with a political and public culture broadly comparable with ours—have been federations for a century or more. Their basic delineations were accordingly established at times when governmental functions were usually much less dense, extensive and interactive than they are now.
      114
      The dividing lines have, by and large, evolved gradually and pragmatically within cultures familiar with acceptance of the federal concept.
      Here, however, we are not talking about a federal concept; we are talking about a unique kind of semi-federal concept. Leading examples of the genre such as Australia, Canada and the United States stretch across large territories, so cheek-by-jowl comparison is less intense. It is without parallel anywhere else in the world to try to draw an entirely new legislative and financial boundary through a complex governmental scene, in a relatively small and densely populated island, with a powerful culture and an unusually strong nationwide media structure, giving rise to expectations of consistent treatment right across the UK.
      Two basic questions arise in consideration of the crucial problem of delineation. Should the line be drawn by describing what is devolved and what is not devolved? In 1974–77, the former route was taken. Furthermore, should the line be drawn by broad description of subject or by detailed mapping according to current statutes? In 1974–77, the latter route again was taken. The 1974–77 approach produced long, complex Bills and was accordingly much criticised at the time and afterwards. The White Paper and the Bill indicate the opposite approach, but it should be recognised that there are considerable practical difficulties in regard to both approaches, whichever course is preferred. There is no logical reason why the difficulties would be removed simply by reversing the approach adopted in the 1998 Bill.
      The problem is policing the delineation. The choice of approach to delineation on financial and legal matters interacts with the question of how the delineation is to be policed. Who is to decide whether the Scottish Parliament has overstepped its powers? During the 1974–77 saga, that was a matter of considerable argument in the Government, centring on the issue of judicial review.
      That bring us to the question of judicial review and who is to decide when the Scottish Parliament asks whether it is to have more taxation. It is absolutely certain that that will come up soon after Holyrood is established. The expectations have been raised out of all recognition. All sorts of problems—lone parents, tuition fees; you name it—will be solved when there is a Scottish Parliament. It is not laws, let alone speeches in that Parliament, that will deal with those matters, but resources. The demand for resources will be huge. That is why delineation is crucial. This is the point in the Bill at which to ask questions about it.
      9.15 pm
      One argument, advanced virtually as a matter of basic legal and constitutional principle, is that it would be wrong to deny citizens the right to argue in the courts that a Scottish Parliament Act disadvantaging them exceeded the powers granted by Westminster in a devolution statute. The other argument, arising partly from an awareness of the boundary complexity problem, is that it would be unreasonable in practice and politically objectionable in Scotland that primary legislation and financial regulations of the Parliament should be liable at any time, perhaps long after enactment, to be struck down by the courts as ultra vires. The more broadly drawn the delineation, the greater the risks.

      115
      If this argument prevails, the question still arises as to who is to police the boundary. At some point, somebody must. If there is no general right of post-enactment judicial review of the vires of primary legislation or financial legislation, there must be some procedure—legal or Westminster parliamentary—for providing a nihil obstat at the time of enactment. We come back to the lawyers. The procedure for considering vires and resolving disputes must be clarified before the Bill passes into law.
      No course is free from difficulty. It is fair to acknowledge that in the past 20 years public opinion has become more accustomed—because of the operation of the European Court—to the idea that the legal system might be able to overrule statute passed by a democratically elected body. That does not make the experience politically comfortable. The scale and weight of those incidents might—depending on the quality and style of the devolutionary delineation, the political climate, and how widely any right of challenge to vires extends—be a good deal more onerous than in the European dimension, as it would be additional to that dimension.
      Dr. Fox: Does the hon. Gentleman accept that with the spectre of judicial review looming at any time, it would be far better for terms in the clause such as "significant effect", "likely" or "reasonably practicable" to be defined much more closely? Are we not asking for trouble with judicial review later by leaving the Bill so loosely phrased?
      Mr. Dalyell: I shall reply to that by asking the Minister a question. What is the legal advice on all this? I agree with the views expressed from the Opposition Front Bench on this matter. The terms are very loose. That is also the view of the Law Society and other lawyers who have studied the Bill. Are the Government saying that, according to their legal advice, the Bill is sufficiently watertight to avoid a challenge in the courts such as Jarndyce v. Jarndyce?
      Incidentally, that would lead to tremendous political discontent on the part of all Members of the Holyrood Parliament, including Conservative Members. Let us not assume that the Conservatives would avoid those pressures. They would face the same problems because of the expectations that have been raised in Scotland. The entire Parliament would create those pressures.
      I conclude with this question: what legal advice have the Government received about these very delicate and important matters?
      Mr. Laurence Robertson: I support what my hon. Friend the Member for Woodspring (Dr. Fox) said about the possibility of the Treasury's changing the rules so that the Scottish Parliament could levy a higher taxation rate than 3p in the pound. My hon. Friend has covered that point, but it is extremely important as regards democracy.
      Mr. Alasdair Morgan: The Bill does not give the Treasury the power to change any rule: the Treasury is given the power to suggest changes to the House.
      Mr. Robertson: The Scottish people were asked to vote on whether they wanted the Scottish Parliament to have tax-varying powers. They understood that the rate would be no more than 3p in the pound, but it could well be more than that.
      I refer to the constraints that might be placed on the Treasury. The Chancellor of the Exchequer has said—I believe very reasonably—that he might want to introduce a taxation rate of 10p in the pound. What effect will that have on the Scottish Parliament's ability to raise £450 million? Will it not place the most enormous constraints on the Treasury's ability to act for the whole United Kingdom? I ask the Minister to reply to those two points.
      Mrs. Laing: Once again, I agree with the remarks of the hon. Member for Linlithgow (Mr. Dalyell). He has made some serious points tonight that are often overlooked in the public debate about the Bill. He referred, in particular, to the difficulties of delineation and the problems arising from it. It is an understatement to say that the confusion and conflict that the problems will create are a lawyer's paradise. I know many lawyers, both north and south of the border, who must be rubbing their hands with glee at the thought of the business that will come their way in the next few years.
      We begin to suspect that the Government have no wish to clear up the confusion in the Bill. We offer clarity through our amendments. The Bill would become clearer if the Government accepted the amendments. However, they will not, so we must assume that they wish to preserve the conflicts and the uncertainties that we have pointed out time and again.
      This warning has been issued many times: if the conflicts that exist on the face of the Bill are not resolved, the Scottish people will not get what they voted for in September. They voted for a limited amount of devolution and a little variance on tax. If the conflicts are not solved now and the Bill is not clarified, devolution will not work. If devolution does not work, the Scottish people will get what Scottish National party Members want them to have: a separate Parliament and a separate Scotland. The Government have been warned about that time and again, but they constantly ignore our warnings.
      Mr. Prior: It is likely that, in the not-too-distant future, a Budget will raise thresholds for paying basic rate income tax, so that the tax base in Scotland will fall. If it falls from £450 million to £350 million, for example, the Westminster Parliament will have to decide whether to extend the tax base in Scotland—that will be a clear example of the problem of delineation that the hon. Member for Linlithgow (Mr. Dalyell) mentioned. Until delineation between the two Parliaments is sorted out, problems over taxation will continue each year.
      Mr. McLeish: It would be helpful to remind Conservative Members in particular of the intention behind the clause—to provide protection from the erosion of the tax base. Conservative Members have claimed that the clause is imprecise, but it is important to be flexible in these

      117
      matters. We cannot be precise, as the future shape of the United Kingdom tax structure, in the context of which any change to present arrangements would be made, is not known. Any changes would be to the income tax system, not to any other form of taxation; they would maintain, as far as possible, the tax's current distributional effects—the same people will pay roughly the same amount of tax as they will under the proposals in clause 72.
      It may also help if I briefly outline how what I regard as the fall-back power in clause 72 will work. The clause falls into two parts. Subsections (1) and (2) set out the process whereby any fall-back power would be introduced. In effect, what will happen in most foreseeable circumstances is that, first, the Treasury would internally develop a proposal to change UK tax arrangements. Secondly, if the Treasury assessed that that would significantly reduce or increase the Scottish tax take, it would, if it thought it necessary, again draw up internally proposals for changing the Bill's powers.
      Thirdly, when the UK tax changes became public on Budget day or possibly in a Green Budget, the Treasury would be obliged, as soon as reasonably practicable, to lay before the House in a statement whether it believed that the Scottish power needed to be changed and what the changes, if any, should be.
      In practice, the Treasury would be expected to consult the Scottish Executive before laying revised proposals before the House as soon as was reasonably practicable. Once a proposal had been laid before the House, it would be incorporated into the Finance Bill as an amendment to the Scotland Bill's powers.
      Subsections (3) to (7) set parameters to any revised power—in effect, that roughly the same people should pay roughly the same amount of income tax as they would under the power that is currently proposed. Once any new power had been implemented, the Scottish Parliament would either stick with any tax resolution that it had already made under its formal powers or make a new in-year resolution under the new power.
      Of course, we should note that the new power would need to include provision allowing an in-year resolution to be made in these circumstances. Under clause 70, such an in-year resolution would be considered.
      I understand from the Conservative party's hostility to the referendum result in favour of a Scottish Parliament that it will exaggerate and distort; it can never regard an issue such as the one covered by the clause as simple and straightforward.
      Mr. John Hayes: Will the Minister give way?
      Mr. McLeish: I shall not give way just now.
      I respect what my hon. Friend the Member for Linlithgow (Mr. Dalyell) said; it was principled, and he, at least, has been consistent in his opposition over many years. However, on this and other clauses, the Opposition have tried to hide behind a smokescreen of distortions and exaggerated claims about a lawyer's paradise; in fact, their basic hostility creeps through on every possible occasion.
      118
      The Committee's objective is to scrutinise the Bill and it is, of course, acceptable for hon. Members to make political points. However, let us not pretend that those are the same things.
      Dr. Fox: Under the Bill, as drafted, would it be possible for the Treasury to increase Scottish tax-raising powers by more than 3p in the pound?
      9.30 pm
      Mr. McLeish: I repeat that the key purpose of the provision is to protect the tax take. It does not need a great deal of imagination or intellect to appreciate what that is. The Bill, which will become an Act, will have the ability to raise or lower the basic rate of income tax by 3p. In future, however, changes made by any Government or any Treasury could have an impact on the tax take. The clause provides an important fall-back mechanism for the Westminster-based Parliament and the Treasury to ensure that the level of tax take that we try to build into the Bill is taken forward in subsequent years. That is straightforward and common sense.
      There must be flexibility, and that is provided by a fall-back power. Where would flexibility lie if the Chancellor of the Exchequer, in this place, changed the basic tax system? A fall-back power is essential because it will protect the Parliament, the tax take and the integrity of the tax-varying power. In addition, it will protect the taxpayer.
      Mr. Gerald Howarth: Does not the clause and everything that the Minister has said confirm that we are talking about tax-raising powers? We are not talking about tax-varying powers. The clause, and the Bill in general, is geared towards increasing the tax burden on the Scottish people. Will the Minister not come clean about that?
      It is not only the hon. Member for Linlithgow (Mr. Dalyell) who has principles about these issues. It is the duty of the Committee to point out to the Minister the practical consequences of what could arise for the Scottish people, as drawn from a detailed study of the Bill.
      Mr. McLeish: With great respect, that is complete and utter nonsense. The situation has been well discussed in Scotland, in the publication of the White Paper, in the referendum and in the publication of the Bill. It is interesting that the Conservative party used to help the business community through some of its difficulties. Nowadays, however, only the Conservative Opposition see the perceived dangers—they make them up as they go along—as we consider the Bill in Committee.
      Mr. Hayes: Will the Minister give way?
      Mr. McLeish: No. I am not giving way at this stage.
      No self-respecting Parliament with a working tax-varying power could avoid a fall-back position. That having been said, I shall deal with the specific amendments.
      Mr. Dalyell: Neither my hon. Friend the Minister nor I is a tax lawyer. Rather than asking my hon. Friend to answer the question that I posed on cumulative accumulation of tax, may I suggest that a tax expert from

      119
      the Scottish Office gets together with Martin Jones of Maclay Murray and Spens and the Law Society's tax committee to sort out this issue? I suggest that my hon. Friend writes to us or returns to the House with a closer definition on Report.
      Mr. McLeish: Inland Revenue and Scottish Office officials are in consultation with many groups about the rules and duties that will be taken on board through the tax-varying power. I take my hon. Friend's suggestion on board, but consultation is taking place.
      The group of amendments is concerned with what, for convenience, I shall term the fall-back power. Amendments Nos. 381 and 409 would remove from the Treasury the duty to start taking steps to consider a replacement tax-varying power in circumstances where it was obvious that it should be doing so. The circumstances in question would be where it looked likely that a major change to the UK tax structure was likely to be enacted, but, for some reason, that had not been formally proposed or published by the Treasury or Inland Revenue. Thus, for example, the Treasury would not be under an obligation to act when, as has happened, the Government accepted an amendment to income tax provisions during the passage of a Finance Bill, but had not formally proposed or published the policy enshrined in that amendment. That would plainly be absurd, and I hope that the amendments will be withdrawn.
      The purpose behind amendment No. 382 is to put a figure on the trigger for clause 72 coming into play. The Bill as drafted leaves that undefined; this is deliberate. If we were to determine a particular figure, whether a 5 per cent. increase or decrease in potential tax take, or some other figure, that could easily trigger the clause when it was in the interests of nobody to trigger it. Alternatively, it could deprive the Scottish Parliament of an important opportunity to enter negotiations with the UK Government.
      I simply do not accept arguments that a lack of definition will lead to conflict. Of course, there may have to be negotiation in particular circumstances, and I have no doubt that those negotiations may sometimes be tough, but I would argue that is a much more stable and mature arrangement than sticking an arbitrary, non-negotiable statutory marker in the ground. Therefore, I do not accept the need for the amendment.
      Amendments Nos. 384 and 385 bring those of us who are accustomed to the work of Standing Committees on to familiar territory—the respective merits of a requirement to do something as soon as "reasonably practicable" or within a particular, specified time frame. Amendment No. 384 at least has the merit of making sense, although I do not accept that, in all circumstances, it would be desirable to require the Treasury to lay material before the House within a month of publishing or proposing a tax change. Amendment No. 385 should be rejected.
      Amendments Nos. 387 and 390 are an attempt to provide that any replacement power should apply only to the basic rate of income tax. The deletion by amendment No. 390 of one of the particular conditions that any replacement tax would have to meet is, I assume, intended as being consequential, but that requirement is itself
      120
      potentially completely unworkable. It is precisely for that reason that we have not limited the replacement power, but nevertheless have included the detailed provisions at clause 72(4) and (5) to ensure that, under any future power, broadly the same people would end up having broadly the same liability for the Scottish variable tax.
      Amendments Nos. 392 and 393 are not acceptable. Amendment No. 392 seeks to put a precise figure on the tax that any replacement tax power should be capable of raising.
      Amendment No. 393 attempts to provide relative precision in an area where a more broad-brush approach is the only practical way forward. The design of any replacement tax system will inevitably have to take into account a whole range of factors.
      Amendment No. 396 strives for too great a degree of precision. The clause makes it quite clear that Parliament expects the effect of any new tax power generally to be broadly similar, as it affects individuals, to the power currently in the Bill. Again, precision is the enemy of the setting of sensible, workable parameters. The amendment should not be accepted.
      Amendment No. 397 attempts to establish 5 per cent. parameters—this time on the effect of any replacement tax power on individuals' income after tax. Because of the way in which it has been drafted, it would prevent any new after-tax income level coming within 5 per cent. of previous levels. I suspect that that is not something any of us want.
      This has proved to be a wide-ranging group of amendments, testing the fall-back power provisions. The Government's approach in relation to that power has been to put into statute the general framework of how any replacement power would be designed, in accordance with the undertakings that we gave in the White Paper. I am convinced that that is the right approach, given that we cannot begin to predict the specific circumstances in which the power will operate. Therefore, I ask the Committee not to accept the amendments.
      Dr. Fox: Anyone who has read the clause or heard the Minister's response to the debate will realise why we had a pre-legislative and not a post-legislative referendum: people might have recognised what recipe the Government had for them. The Minister's inability to accept any amendment, or even the arguments made in good faith by Opposition Members, is sad. The Government's ability to speak with a forked tongue on these matters is extraordinary, and their condescension staggering. The Bill is loosely drafted.
      The Minister paid tribute to the integrity of the hon. Member for Linlithgow (Mr. Dalyell) and then proceeded to disregard all his arguments about the potential for judicial review, and the terms in which the Bill is drafted. The Secretary of State urged us on Second Reading to look at everything on a worst case scenario. Now the Government ask us to welcome a situation in which Westminster will decide any changes to Scotland's taxes, which will be different from the position in England. That is what they used to complain about when the poll tax came into operation. They now suggest that it will be all right; that it will not be exploited by the nationalists; that we have nothing to fear from this process, and that we are scaremongering by bringing up these subjects.

      121
      This is a recipe for friction. That is one of the many reasons why we cannot accept the Minister's arguments, which are contradictory. Clause 72(4) seeks to protect the Parliament's income. Clause 72(5) seeks to protect the taxpayer's income. In the Minister's words, roughly the same people should pay roughly the same tax-how precise for a financial measure. We simply cannot accept that, but I guess that we should not be upset about contradictions from a Government who are introducing a tax-raising power, with a Prime Minister who says when he goes overseas that raising tax is a threat to jobs but thinks that it is all right to introduce it in Scotland, where, apparently, the laws of economics will be suspended. I shall seek to withdraw amendment No. 381, but press amendment No. 390 to the vote.
      I beg to ask leave to withdraw the amendment.
      Amendment, by leave, withdrawn.
      Amendment proposed: No. 390, in page 32, leave out lines 9 to 17.—[Dr. Fox.]
      Question put, That the amendment be made:—
      The Committee divided: Ayes 126, Noes 328.

      Division No. 177]

      [9.39 pm

      AYES

      Ainsworth, Peter (E Surrey)

      Gorman, Mrs Teresa

      Amess, David

      Gray, James

      Ancram, Rt Hon Michael

      Grieve, Dominic

      Arbuthnot, James

      Hamilton, Rt Hon Sir Archie

      Atkinson, Peter (Hexham)

      Hawkins, Nick

      Baldry, Tony

      Hayes, John

      Bercow, John

      Heald, Oliver

      Beresford, Sir Paul

      Heathcoat-Amory, Rt Hon David

      Body, Sir Richard

      Hogg, Rt Hon Douglas

      Boswell, Tim

      Horam, John

      Bottomley, Peter (Worthing W)

      Howarth, Gerald (Aldershot)

      Bottomley, Rt Hon Mrs Virginia

      Hunter, Andrew

      Brooke, Rt Hon Peter

      Jack, Rt Hon Michael

      Browning, Mrs Angela

      Jenkin, Bernard

      Bruce, Ian (S Dorset)

      Johnson Smith, Rt Hon Sir Geoffrey

      Butterfill, John

      Cash, William

      Key, Robert

      Chapman, Sir Sydney (Chipping Barnet)

      Kirkbride, Miss Julie

      Laing, Mrs Eleanor

      Chope, Christopher

      Lait, Mrs Jacqui

      Clappison, James

      Lansley, Andrew

      Clark, Rt Hon Alan (Kensington)

      Leigh, Edward

      Clark, Dr Michael (Rayleigh)

      Letwin, Oliver

      Clarke, Rt Hon Kenneth (Rushcliffe)

      Lidington, David

      Lilley, Rt Hon Peter

      Clifton—Brown, Geoffrey

      Lloyd, Rt Hon Sir Peter (Fareham)

      Collins, Tim

      Loughton, Tim

      Cormack, Sir Patrick

      Luff, Peter

      Curry, Rt Hon David

      Lyell, Rt Hon Sir Nicholas

      Davis, Rt Hon David (Haltemprice)

      McIntosh, Miss Anne

      Duncan, Alan

      Maclean, Rt Hon David

      Duncan Smith, Iain

      McLoughlin, Patrick

      Emery, Rt Hon Sir Peter

      Madel, Sir David

      Evans, Nigel

      Malins, Humfrey

      Faber, David

      Maples, John

      Fabricant, Michael

      Mates, Michael

      Fallon, Michael

      Maude, Rt Hon Francis

      Flight, Howard

      Mawhinney, Rt Hon Sir Brian

      Forth, Rt Hon Eric

      May, Mrs Theresa

      Fowler, Rt Hon Sir Norman

      Moss, Malcolm

      Fox, Dr Liam

      Nicholls, Patrick

      Fraser, Christopher

      Ottaway, Richard

      Garnier, Edward

      Page, Richard

      Gibb, Nick

      Paice, James

      Gill, Christopher

      Paterson, Owen

      Gillan, Mrs Cheryl

      Pickles, Eric

      122

      Prior, David

      Taylor, John M (Solihull)

      Randall, John

      Taylor, Sir Teddy

      Redwood, Rt Hon John

      Tredinnick, David

      Robertson, Laurence (Tewk'b'ry)

      Trend, Michael

      Roe, Mrs Marion (Broxbourne)

      Tyrie, Andrew

      St Aubyn, Nick

      Viggers, Peter

      Sayeed, Jonathan

      Wardle, Charles

      Shephard, Rt Hon Mrs Gillian

      Waterson, Nigel

      Shepherd, Richard

      Whittingdale, John

      Simpson, Keith (Mid—Norfolk)

      Widdecombe, Rt Hon Miss Ann

      Soames, Nicholas

      Wilkinson, John

      Spelman, Mrs Caroline

      Willetts, David

      Winterton, Mrs Ann (Congleton)

      Spicer, Sir Michael

      Winterton, Nicholas (Macclesfield)

      Spring, Richard

      Woodward, Shaun

      Stanley, Rt Hon Sir John

      Yeo, Tim

      Steen, Anthony

      Young, Rt Hon Sir George

      Streeter, Gary

      Swayne, Desmond

      Tellers for the Ayes:

      Syms, Robert

      Mr. James Cran and

      Taylor, Ian (Esher & Walton)

      Mr. Stephen Day.

      NOES

      Adams, Mrs Irene (Paisley N)

      Coaker, Vernon

      Ainger, Nick

      Coffey, Ms Ann

      Alexander, Douglas

      Coleman, Iain

      Allan, Richard

      Colman, Tony

      Anderson, Donald (Swansea E)

      Connarty, Michael

      Anderson, Janet (Rossendale)

      Cook, Frank (Stockton N)

      Armstrong, Ms Hilary

      Cooper, Yvette

      Ashton, Joe

      Corbett, Robin

      Atkins, Charlotte

      Corbyn, Jeremy

      Barnes, Harry

      Corston, Ms Jean

      Barron, Kevin

      Cousins, Jim

      Bayley, Hugh

      Crausby, David

      Beard, Nigel

      Cryer, Mrs Ann (Keighley)

      Beckett, Rt Hon Mrs Margaret

      Cryer, John (Hornchurch)

      Bell, Stuart (Middlesbrough)

      Cummings, John

      Benn, Rt Hon Tony

      Cunningham, Rt Hon Dr John (Copeland)

      Bennett, Andrew F

      Benton, Joe

      Cunningham, Jim (Cov'try S)

      Bermingham, Gerald

      Cunningham, Ms Roseanna (Perth)

      Berry, Roger

      Betts, Clive

      Dafis, Cynog

      Blizzard, Bob

      Dalyell, Tam

      Blunkett, Rt Hon David

      Darling, Rt Hon Alistair

      Boateng, Paul

      Darvill, Keith

      Borrow, David

      Davey, Valerie (Bristol W)

      Bradshaw, Ben

      Davidson, Ian

      Brown, Rt Hon Nick (Newcastle E)

      Davies, Rt Hon Denzil (Llanelli)

      Brown, Russell (Dumfries)

      Dawson, Hilton

      Browne, Desmond

      Dean, Mrs Janet

      Buck, Ms Karen

      Denham, John

      Burden, Richard

      Dewar, Rt Hon Donald

      Burgon, Colin

      Dobbin, Jim

      Burnett, John

      Donohoe, Brian H

      Butler, Mrs Christine

      Doran, Frank

      Byers, Stephen

      Dowd, Jim

      Campbell, Alan (Tynemouth)

      Drew, David

      Campbell, Mrs Anne (C'bridge)

      Drown, Ms Julia

      Campbell, Menzies (NE Fife)

      Eagle, Maria (L'pool Garston)

      Campbell—Savours, Dale

      Edwards, Huw

      Caplin, Ivor

      Efford, Clive

      Caton, Martin

      Ennis, Jeff

      Cawsey, Ian

      Etherington, Bill

      Chapman, Ben (Wirral S)

      Ewing, Mrs Margaret

      Chaytor, David

      Fatchett, Derek

      Chidgey, David

      Feam, Ronnie

      Chisholm, Malcolm

      Field, Rt Hon Frank

      Clapham, Michael

      Fisher, Mark

      Clark, Rt Hon Dr David (S Shields)

      Fitzsimons, Lorna

      Clark, Paul (Gillingham)

      Flint, Caroline

      Clarke, Eric (Midlothian)

      Flynn, Paul

      Clarke, Rt Hon Tom (Coatbridge)

      Follett, Barbara

      Clarke, Tony (Northampton S)

      Foster, Rt Hon Derek

      Clelland, David

      Foster, Michael Jabez (Hastings)

      123

      Foster, Michael J (Worcester)

      Lewis, Terry (Worsley)

      Foulkes, George

      Liddell, Mrs Helen

      Fyfe, Maria

      Linton, Martin

      Galbraith, Sam

      Livingstone, Ken

      Galloway, George

      Lloyd, Tony (Manchester C)

      Gapes, Mike

      Lock, David

      Gardiner, Barry

      Love, Andrew

      Gerrard, Neil

      McAllion, John

      Gibson, Dr Ian

      McAvoy, Thomas

      Gilroy, Mrs Linda

      McCabe, Steve

      Godsiff, Roger

      McCafferty, Ms Chris

      Goggins, Paul

      McCartney, Ian (Makerfield)

      Gordon, Mrs Eileen

      McDonnell, John

      Gorrie, Donald

      McFall, John

      Griffiths, Nigel (Edinburgh S)

      McGuire, Mrs Anne

      Griffiths, Win (Bridgend)

      Mackinlay, Andrew

      Grocott, Bruce

      McLeish, Henry

      Grogan, John

      McNamara, Kevin

      Hall, Mike (Weaver Vale)

      McNulty, Tony

      Hall, Patrick (Bedford)

      McWalter, Tony

      Hamilton, Fabian (Leeds NE)

      Mahon, Mrs Alice

      Hancock, Mike

      Mandelson, Peter

      Hanson, David

      Marsden, Gordon (Blackpool S)

      Harris, Dr Evan

      Marsden, Paul (Shrewsbury)

      Harvey, Nick

      Marshall, Jim (Leicester S)

      Heal, Mrs Sylvia

      Martlew, Eric

      Healey, John

      Meacher, Rt Hon Michael

      Heath, David (Somerton & Frome)

      Meale, Alan

      Henderson, Ivan (Harwich)

      Merron, Gillian

      Hepburn, Stephen

      Michael, Alun

      Heppell, John

      Michie, Bill (Shef'ld Heeley)

      Hesford, Stephen

      Michie, Mrs Ray (Argyll & Bute)

      Hill, Keith

      Milburn, Alan

      Hinchliffe, David

      Miller, Andrew

      Hodge, Ms Margaret

      Mitchell, Austin

      Home Robertson, John

      Moonie, Dr Lewis

      Hoon, Geoffrey

      Moran, Ms Margaret

      Hope, Phil

      Morgan, Alasdair (Galloway)

      Hopkins, Kelvin

      Morgan, Ms Julie (Cardiff N)

      Howarth, Alan (Newport E)

      Morris, Ms Estelle (B'ham Yardley)

      Howarth, George (Knowsley N)

      Morris, Rt Hon John (Aberavon)

      Howells, Dr Kim

      Mountford, Kali

      Hughes, Ms Beverley (Stretford)

      Mudie, George

      Hughes, Kevin (Doncaster N)

      Mullin, Chris

      Hughes, Simon (Southwark N)

      Naysmith, Dr Doug

      Humble, Mrs Joan

      O'Hara, Eddie

      Hurst, Alan

      Olner, Bill

      Hutton, John

      O'Neill, Martin

      Iddon, Dr Brian

      Öpik; Lembit

      Ingram, Adam

      Palmer, Dr Nick

      Jackson, Ms Glenda (Hampstead)

      Pearson, Ian

      Jackson, Helen (Hillsborough)

      Pendry, Tom

      Jenkins, Brian

      Pike, Peter L

      Johnson, Alan (Hull W & Hessle)

      Plaskitt, James

      Jones, Barry (Alyn & Deeside)

      Pollard, Kerry

      Jones, Helen (Warrington N)

      Pond, Chris

      Jones, Ms Jenny (Wolverh'ton SW)

      Pope, Greg

      Pound, Stephen

      Jones, Jon Owen (Cardiff C)

      Powell, Sir Raymond

      Jones, Dr Lynne (Selly Oak)

      Prentice, Ms Bridget (Lewisham E)

      Jones, Martyn (Clwyd S)

      Prentice, Gordon (Pendle)

      Keeble, Ms Sally

      Primarolo, Dawn

      Keen, Alan (Feltham & Heston)

      Prosser, Gwyn

      Keen, Ann (Brentford & Isleworth)

      Purchase, Ken

      Keetch, Paul

      Quin, Ms Joyce

      Kelly, Ms Ruth

      Quinn, Lawrie

      Kennedy, Jane (Wavertree)

      Radice, Giles

      Kidney, David

      Rammell, Bill

      Kilfoyle, Peter

      Raynsford, Nick

      King, Andy (Rugby & Kenilworth)

      Reed, Andrew (Loughborough)

      Kirkwood, Archy

      Rendel, David

      Kumar, Dr Ashok

      Robertson, Rt Hon George (Hamilton S)

      Laxton, Bob

      Lepper, David

      Roche, Mrs Barbara

      Leslie, Christopher

      Rogers, Allan

      Lewis, Ivan (Bury S)

      Rooker, Jeff

      124

      Rooney, Terry

      Stringer, Graham

      Rowlands, Ted

      Stuart, Ms Gisela

      Roy, Frank

      Stunell, Andrew

      Ruane, Chris

      Sutcliffe, Gerry

      Ruddock, Ms Joan

      Swinney, John

      Russell, Ms Christine (Chester)

      Taylor, Rt Hon Mrs Ann (Dewsbury)

      Ryan, Ms Joan

      Salmond, Alex

      Taylor, David (NW Leics)

      Salter, Martin

      Thomas, Gareth R (Harrow W)

      Sanders, Adrian

      Timms, Stephen

      Sarwar, Mohammad

      Tipping, Paddy

      Savidge, Malcolm

      Todd, Mark

      Sawford, Phil

      Touhig, Don

      Sedgemore, Brian

      Trickett, Jon

      Shaw, Jonathan

      Turner, Dr Desmond (Kemptown)

      Sheerman, Barry

      Turner, Dr George (NW Norfolk)

      Sheldon, Rt Hon Robert

      Twigg, Derek (Halton)

      Shipley, Ms Debra

      Twigg, Stephen (Enfield)

      Simpson, Alan (Nottingham S)

      Vis, Dr Rudi

      Singh, Marsha

      Wallace, James

      Skinner, Dennis

      Ward, Ms Claire

      Smith, Rt Hon Andrew (Oxford E)

      Wareing, Robert N

      Watts, David

      Smith, Angela (Basildon)

      Welsh, Andrew

      Smith, Rt Hon Chris (Islington S)

      White, Brian

      Smith, Miss Geraldine (Morecambe & Lunesdale)

      Whitehead, Dr Alan

      Williams, Rt Hon Alan (Swansea W)

      Smith, Jacqui (Redditch)

      Smith, John (Glamorgan)

      Williams, Alan W (E Carmarthen)

      Smith, Llew (Blaenau Gwent)

      Willis, Phil

      Smith, Sir Robert (W Ab'd'ns)

      Wills, Michael

      Snape, Peter

      Winnick, David

      Soley, Clive

      Winterton, Ms Rosie (Doncaster C)

      Southworth, Ms Helen

      Wood, Mike

      Squire, Ms Rachel

      Wray, James

      Steinberg, Gerry

      Wright, Anthony D (Gt Yarmouth)

      Stewart, David (Inverness E)

      Wyatt, Derek

      Stewart, Ian (Eccles)

      Stinchcombe, Paul

      Tellers for the Noes:

      Stoate, Dr Howard

      Mr. David Jamieson and

      Stott, Roger

      Mr. Robert Ainsworth.

      Question accordingly negatived.
      Clause 72 ordered to stand part of the Bill.

    Clause 73

      ACCOUNTING FOR ADDITIONAL SCOTTISH TAX
      Mr. Bernard Jenkin: I beg to move amendment No. 399, in page 32, line 35, at end insert
      'provided that all costs incurred by the Board and the Inland Revenue in collecting such amounts shall be defrayed from the Scottish Consolidated Fund.'.
      The Chairman of Ways and Means (Sir Alan Haselhurst): With this, it will be convenient to discuss the following amendments: No. 400, in page 33, line 13, leave out 'may' and insert 'shall'.
      No. 401, in page 33, line 17, at end insert—
      '(5A) Arrangements under subsection (4) shall not include provision for the adjustment of the amounts paid into the Scottish Consolidated Fund under this section on the basis of changes in the taxable income of the generality of Scottish income tax payers deriving from economic fluctuations in the United Kingdom as a whole.
      (5B) Arrangements under subsection (4) shall include provision for the adjustment of the amounts paid into the Scottish Consolidated Fund under this section on the basis of changes in the taxable income of the generality of Scottish income tax-payers deriving from economic fluctuations attributable to previous resolutions of the Parliament.'.

      125
      No. 402, clause 74, page 33, line 37, at end insert,
      'together with all costs incurred by the Board and the Inland Revenue in receiving such payments.'.
      No. 403, in page 34, line 13, leave out 'may' and insert 'shall'.
      No. 404, in page 34, line 17, at end insert—
      '(5A) Arrangements under subsection (4) shall not include provision for the adjustment of the amounts paid from the Scottish Consolidated Fund under this section on the basis of changes in the taxable income of the generality of Scottish income tax—payers deriving from economic fluctuations in the United Kingdom as a whole.
      (5B) Arrangements under subsection (4) shall include provision for the adjustment of the amounts paid from the Scottish Consolidated Fund under this section on the basis of changes in the taxable income of the generality of Scottish income tax—payers deriving from economic fluctuations attributable to previous resolutions of the Parliament.'.
      Mr. Jenkin: Clause 73 concerns the treatment of the revenue raised from the SVR—or Scottish variable rate, as we must now learn to call it. Amendment No. 399 merely clarifies the fact that the costs of collecting the tax should fall not on the United Kingdom taxpayer but on the Scottish consolidated fund, in line with paragraph 7.18 of the White Paper. The substance of the amendment may lie elsewhere in the Bill; we merely ask for clarification.
      The other amendments, including Nos. 400 and 401, are much more substantive. They are probing, but they are for serious consideration. Clause 73(3) specifies that the Inland Revenue should pay into the Scottish consolidated fund an amount equal to the estimated yield from the additional tax to be paid by Scottish taxpayers. I am bound to say that that cannot have been the expectation of people reading the White Paper, which clearly guaranteed £450 million. The main burden of the clause, however, is to ensure that the yield from the tax is paid into the consolidated fund.
      Clause 73 leads to the need for the legislative gyrations in clause 72. Clause 73 on its own would not guarantee the £450 million promised from the full yield of the tax referred to in paragraph 7.13 of the White Paper. Should the £450 million guarantee apply in all cases? Clause 73(5) says that the Treasury may make adjustments to estimates of the tax yield in the light of the initial estimate being wide of the mark. The operative word is "may". Our amendment No. 400 suggests that the word should be "shall".
      The Bill establishes the principle that the extra revenue that is gained or forgone by the Scottish Parliament should reflect the tax yield. If it emerges that the Treasury or the Board has made a mistake, whichever is responsible should put it right. It would not be right for the Scottish consolidated fund to collect money that has not been raised for it, just as it would be wrong for the Parliament to forgo funding that has been raised on its behalf. That is the principle that the amendments seek to establish.
      Amendment No. 401 proposes an exception. The White Paper was clear about the effects of changes in the tax system, but not clear about the effects of changes in economic circumstances. The amendment proposes two new subsections. Where possible, the Scottish Parliament deserves stability in its funding because it is not to be given the kind of borrowing powers that will enable it to deal with cyclical fluctuations in economic activity.
      126
      Our proposed subsection (5A) is intended to protect the Scottish variable rate tax yield from the effects of economic fluctuations in the UK economy.
      We do not think that the Scottish Parliament should be immune from the effects of its own decisions. Our proposed subsection (5B) would mean that any increase or decrease in the yield from the Scottish variable rate as a result of the Parliament's decisions would be reflected in payments to the Scottish consolidated fund. For example, if there were a big increase in the business rate poundage in Scotland or if the tartan tax drove people away from Scotland or was levied at the higher marginal rate, as suggested in clause 72, it could have a detrimental effect on Scotland's economic activity. It would reduce the tax yield in line with what is called the Laffer curve and that loss of revenue should be borne by the Scottish Parliament.
      There is an alternative scenario. If the policies of the Scottish Parliament took Scotland well ahead of the rest of the UK so that employment rates were higher there, the yield from tax increases would be greater and the Scottish Parliament would be able to collect the dividend of its policies or perhaps levy for the same yield with a lower SVR rate. I commend the amendments to the Committee.
      Mr. Dalyell: I have a short question. What happens if there is a shortfall in relation to the yield and the estimates of the Scottish Treasury or the Treasury in London are not achieved? It is a question of contingency planning for a shortfall and for what happens thereafter.
      Mr. McLeish: Amendments Nos. 399 and 402 seek to ensure that the costs that are incurred by the Board and the Inland Revenue of running the tax-varying power are met by payments from the Scottish consolidated fund. I give the Committee the absolute assurance that the Inland Revenue's costs will be met by the Scottish Executive. However, it is a matter for administrative arrangement rather than for statutory provision.
      Amendments Nos. 400 and 403 seek to strengthen the provision to review the arrangements for estimating what income tax receipts should be paid by or to the Board if the tax-varying power is applied. No such strengthening is needed, as the current wording permits the Board to take into account any adjustments to those arrangements that may be necessary.
      Amendments Nos. 401 and 404 seek to ensure that the estimate of income tax receipts paid into the Scottish consolidated fund is not affected by changing economic conditions unless those changed conditions are the result of previous applications of the tax power. The amendments are at odds with all the principles of the overall income tax system of which the Scottish Parliament's tax-varying powers are an integral part. There is no convincing argument for making the proposed adjustments. Even if there were, it would be impossible to disentangle economic effects from other effects on tax take or, more particularly, from the effects on the economy of past Scottish tax changes or from a welter of other influences. The amendments are unhelpful and unworkable. I hope that they will not be pressed.
      Mr. Jenkin: The Minister's reply leaves the question of the £450 million guarantee more confused than ever, but, in view of the pressure of time, I beg to ask leave to withdraw the amendment.
      Amendment, by leave, withdrawn.
      Clause 73 ordered to stand part of the Bill.
      Clauses 74 and 75 ordered to stand part of the Bill.

    Clause 76

      REMUNERATION OF MEMBERS OF THE PARLIAMENT AND EXECUTIVE
      Mr. Jenkin: I beg to move amendment No. 415, in page 35, line 13, at end insert—
      '(1A) Salaries paid to a member of the Parliament under subsection (1) shall not exceed those for the time being paid to members of the House of Commons.
      (1B) The salary paid to the First Minister shall not exceed the average salary for the time being paid to a Secretary of State in the United Kingdom Cabinet.
      (1C) The salary paid to a member of the Scottish Executive other than the First Minister shall not exceed the salary for the time being paid to a Minister of State in the United Kingdom Government.'.
      The Chairman: With this, it will be convenient to discuss the following amendments: No. 416, in page 35, line 14, after `allowances', insert `and expenses'.
      No. 417, in page 35, line 15, at end insert—
      '(2A) Allowances paid to members of the Parliament or members of the Scottish Executive under subsection 2 shall not exceed the allowances for the time being paid to members of the House of Commons.'.
      No. 418, in clause 77, clause 77, page 35, line 35, after 'salary', insert 'or allowance'.
      No. 419, in page 35, line 37, after 'salary', insert 'or allowance'.
      No. 420, in page 36, line 1, leave out 'salary' and insert 'allowance'.
      No. 421, in page 36, line 4, after 'salary', insert `or allowance'.
      No. 422, in page 36, line 6, at end add—
      '(3) The Parliament shall ensure that the amount of salary is reduced by the amount of salary payable to the member as mentioned in subsection (1) (a) or (b).'.
      Mr. Jenkin: The purpose of the amendments is to establish reasonable limits to the salaries of Scottish Ministers and Scottish Members of Parliament, and to their allowances, and to provide—
      It being Ten o'clock, THE CHAIRMAN, pursuant to the Order [13 January] and the Resolution [this day], put forthwith the Questions necessary for the disposal of the business to be concluded at that hour.
      Clause 76 ordered to stand part of the Bill.
      Clauses 77 to 80 ordered to stand part of the Bill.
      Mr. Dalyell: On a point of order, Sir Alan. As I have spoken at some length on important matters in previous debates, it is as much my fault as anyone's, but it is unfortunate that the Government have not had the opportunity to make a statement on the salaries, remunerations and conditions of Members of the Holyrood
      128
      Parliament because it is a matter of considerable interest. [Interruption.] Not personal interest—I chose the word delicately. I do not think that anyone would select me.
      The Chairman: I think that the hon. Gentleman has made his point. He knows that, as a result of the motion that has been agreed by the House, that is not something over which the occupant of the Chair has any control.

    Clause 81

      SCOTTISH REPRESENTATION AT WESTMINSTER
      Dr. Fox: I beg to move amendment No. 258, in page 37, line 32, leave out from 'is' to end of line 33 and insert
      '120 per cent. of the electoral quota for England.'.
      The Chairman: With this, it will be convenient to discuss clause 81 stand part and the following: amendment No. 259, in clause 114, page 52, line 13, at beginning insert—
      'Subject to subsection (3) below,'.
      No. 260, in page 52, line 17, at end add—
      '(3) With the exception of an order relating to section 81, no order may be made under subsection (1) until each House of Parliament has approved any draft Order in Council which may be required to give effect to the first report of the Boundary Commission for Scotland to be submitted after 31st December 1997 under section 3(2) of the Parliamentary Constituencies Act 1986.'.
      New clause 6—Restrictions on voting rights of Scottish members of House of Commons—
      'As from the day on which the Parliament first meets, no member of the House of Commons representing a constituency in Scotland shall be entitled to vote in that House on any matter certified by the Speaker as relating solely to another part, or other parts, of the United Kingdom.'.
      New clause 16—Restrictions on voting rights of Scottish members of House of Commons (No. 2)—
      'Members of the House of Commons representing constituencies in Scotland may continue to participate in any vote in that House unless the Speaker deems the vote to relate to matters exclusive to England, or to England and Wales.'.
      New clause 19—Restriction on voting rights of Scottish Members (Committees on English Affairs)—
      '.—No member of the House of Commons representing a constituency in Scotland shall be entitled to vote in, or participate in any other proceedings of, any committee of that House established under any enactment or by the Standing Orders of that House, the functions of which are to consider matters exclusively in relation to England which are not reserved matters within the terms of Schedule 5 to this Act.'.
      Dr. Fox: In this, the off-peak part of the debate, some of us will have a chance to delineate arguments that will, no doubt, be taken further by hon. Members who wish to star in the peak viewing time part of the debate on the next day that we consider the Bill, but a few points need to be made at the outset.
      We shall debate what has come to be known as the West Lothian question. It is worth pointing out at the outset that we have to get one thing into perspective. Despite what I think is often a distortion in the Scottish media, when we discuss constitutional relationships between Scotland and the rest of the UK, we in this House have to remember that Scotland constitutes 10 per cent. of the UK population and it is unacceptable to force a

      129
      constitutional change on the rest of the UK because of what 10 per cent. of the population may want, however much it is their right to have that. We have to keep that in mind when we consider the possible alternatives and answers to that question.
      There are two reasons for tabling this group of amendments. The first is to deal, or at least to address, the West Lothian question. It is not possible to deal with, or to answer, that question within the constitutional relationships that we are being asked to discuss. The second reason is to ensure that the Scottish Parliament is set up in the most practical way possible.
      As I have mentioned in a previous debate, the Secretary of State for Scotland has asked us to imagine the worst case scenario in all our considerations. That is what we seek to do in all our amendments—to minimise potential friction when the Scottish Parliament is set up.
      There are two different parts to the West Lothian question. The first involves Scottish Members of Parliament of this House affecting and voting on English issues, where English Members of Parliament cannot affect the same issues in Scotland. The second part involves Scottish Members of Parliament in this House affecting English issues, when they themselves cannot affect Scottish issues in their constituencies, as a result of a devolved Parliament having been set up.
      Mr. Swinney: Will the hon. Gentleman give way?
      Dr. Fox: I have hardly said anything yet. However, I shall give way to the hon. Gentleman, whose intervention will be as relevant when I have said nothing as when I have said something.
      Mr. Swinney: I am grateful to the hon. Gentleman for his generosity. Will his arguments tonight be the same arguments deployed by the Conservative party at the next sitting of the Committee when this debate will be continued, bearing in mind that the Leader of the Opposition is making a landmark speech on this subject tomorrow evening?
      Dr. Fox: There is obviously some confusion of terms if "generosity" is how the hon. Gentleman sees me registering despair—but, having heard the hon. Gentleman's intervention, I understand why. If the hon. Gentleman reads my right hon. Friend's speech, he will realise that the Conservative party has moved on. We have done so because events have moved on. We did not seek to have a debate on the changing constitutional relationships within the United Kingdom, but that debate has come about because of the result of the referendum. We campaigned, I believe honourably, for our point of view—that is what one does in a democracy—but that view was rejected and instead the Scottish electorate voted for the establishment of a Parliament, with tax-raising powers. That is where the debate now starts.
      I say to one or two of my hon. Friends on the Conservative Benches and to some in my party outside the House that to talk of an evolutionary approach to the constitution, when the Government's agenda is to throw up the pieces of the jigsaw of constitution and hope that they fall down in something like a coherent manner, is no longer on the menu for our party. We must move on and address the issues as they are presented, and do so within
      130
      the Government's time scale. However, that does not mean that we should not deal with the issues in an intellectually coherent manner. The debate that we are having is an inevitable result of what has happened in recent months, not least the election of a new Government.
      The are several ways in which we can respond to the West Lothian question, but we cannot answer it. As I have said previously, there is no answer to the West Lothian question within devolution, because devolution pretends, wrongly, that we can change the constitutional relationship between Scotland and the remainder of the United Kingdom without changing the relationship within the remainder of the United Kingdom.
      We must do what we can to deal with the question, and several options are open to us. There is the option to do precisely nothing—to make no change to our arrangements here or to our other constitutional arrangements, and just wait and see what happens. That is not a particularly constructive approach.
      There is the possibility of developing English regional assemblies, moving down the federal path. The small problem with that, and something I find rather interesting when studying the Scottish media, is that it appears to be of no importance to certain political traits in Scotland that there is no demand for English regional government. Indeed, there is so little appetite for the proposed regional development agencies—the precursors for English regional government—that we wonder whether, if regional government will ever come.
      A third option would be to set up an English Parliament, a separate body elected in the same way as the Scottish Parliament and with devolved powers set out in the same manner as the devolved powers for the Scottish Parliament are set out in the Bill. We could also have designated English legislation—which is dealt with in new clause 16—but there are drawbacks to that proposal, which is favoured by many. Who will decide what is to be a designated English Bill? Should it be left to the discretion of Madam Speaker? It would be a heavy burden for any constitutional politician. If it is to be decided by a resolution of the House, would Scottish Members vote on what should be an English-designated Bill? The practical difficulties would be enormous.
      Mr. Wallace: The hon. Gentleman will be aware that the decision on whether Bills should be sent, for example, to the Scottish Grand Committee, is made by Madam Speaker, who has to determine whether a Bill relates exclusively to Scotland. Why should Madam Speaker have any greater difficulty in determining whether a Bill relates exclusively to England?
      Dr. Fox: That is a matter of degree. We have a Scottish Grand Committee. There could be an argument for an English Grand Committee operating in the same way, but there would be a problem of scale with such a Committee. That is not an insurmountable difficulty, but it is not sensible to pretend that it does not exist if we are to have a rational debate on how to proceed. We could have English only—or English and Welsh only—sessions in the House, which would effectively be an English Grand Committee, as is suggested in new clause 19. All the options will have to be considered. If the hon. Member for North Tayside (Mr. Swinney), who is about to leave, would like a copy

      131
      of the speech to be made tomorrow night by my right hon. Friend the Leader of the Opposition, I shall send him one, so that he does not feel that he has missed anything from the rest of the debate.
      Mr. Edward Leigh: As the principal Opposition spokesman on the amendment, my hon. Friend is rightly posing a series of questions. Is he aware that most Conservative Members of Parliament have a forthright view on the issue? We are not prepared to accept Scottish Members being able to come here to vote on matters over which we have no control in Scotland. They must accept either that such Bills should be marked or that their representation should be reduced. There is increasing anger on the Conservative Benches about that. We want the Government to address those issues firmly, properly and fairly.
      Dr. Fox: My hon. Friend makes the points more clearly than I could. Devolution will inevitably create tension in the House and the United Kingdom unless the West Lothian question is addressed swiftly. There will be a feeling that Scottish Members have undue influence over affairs in England, with no reciprocal arrangement.
      Mr. Ian Davidson: Does the hon. Gentleman recall the poll tax? A majority of English Members voted through a tax that at one time applied only to Scotland. Does he recognise that at no time will Scots form a majority in this Chamber, as the English Tories did when they voted for the poll tax to operate in Scotland? Does he not accept that such behaviour, not the anomalies that we might have now, threatens the Union?
      Dr. Fox: Several responses immediately come to mind. England accounts for around 90 per cent. of the UK population. It will inevitably provide the largest number of Members in a united Parliament. The hon. Gentleman would do well to remember that, in recent weeks and again tonight, he has voted for clauses that give the English Parliament the same rights to impose legislation like the poll tax that he so abhors. Clause 27(7) made that clear—
      Mr. McAllion: Does the hon. Gentleman realise what he has just said? He said that we voted to give the English Parliament the right to legislate over Scotland. I hope that, as a Scotsman, he will retract that abhorrent statement and remind himself that this is the United Kingdom Parliament, not an English Parliament.
      Dr. Fox: I meant the Union Parliament. One of the things that I hate most, particularly when I am watching football, is for the United Kingdom to be referred to as England. Even worse is Scotland being referred to as England.
      Clause 27(7), which we debated recently, gives this House a right to legislate on all matters, including economic matters. The hon. Member for Glasgow, Pollok (Mr. Davidson) voted for that power. If it is ever used, he should remember that. Even if I accepted what he said about undue influence in one direction—which I do not—there is no excuse for similar influence in the other direction. We must have a clear relationship with no
      132
      potential for English Members of Parliament to feel that they have too little influence over affairs in other parts of the United Kingdom when Members of Parliament from that area have an influence over their constituencies. It is simply a matter of fairness, given that we have already started down the road of devolution. It is a matter of balance—[Interruption.] Hon. Members talk about fairness, but if they are as stubborn as those who refuse to accept that we have now entered a new constitutional landscape, it will lead to the break-up of the United Kingdom and play directly into the hands of the nationalists who seek to maximise friction through the Bill.
      Mr. Salmond: Will the hon. Gentleman give way?
      Dr. Fox: How could I mention Scottish nationalists without giving way to their current personification?
      10.15 pm
      Mr. Salmond: Personification—that is good; I quite like that. On the subject of friction, Sir Malcolm Rifkind, one of the hon. Gentleman's former—defeated—colleagues, said yesterday that if an English Grand Committee were set up and if the House overruled that Committee, he could see that leading to a constitutional crisis. Does the hon. Gentleman think that if clause 27(7) were used to overrule a Scottish Parliament, that would lead to a constitutional crisis?
      Dr. Fox: We remain a Union Parliament, and clause 27(7) simply states what we are—the supreme law-making body in the United Kingdom. My former colleagues, like my current colleagues, are entitled to their views. It is a testament to the current resurgent intellectual health of the Conservative party that we are having such a wide-ranging and fruitful debate. [Interruption.] Of course I am smiling; I am looking forward to the future when, as a resurgent, intellectual Conservative party, we take more than a large share of seats in the Scottish Parliament.
      Amendment No. 258 deals with the relative size of electorates.
      Mr. Dalyell: It is just a thought, but would the hon. Gentleman have said that when he was a junior Foreign Office Minister?
      Dr. Fox: As a junior Foreign Office Minister, I would not have presumed to say anything about Scotland. Given my departmental remit, I was happy to comment on the constitutional relationships in Sri Lanka and Nepal, but I would not have dared to stray on to the territory of the Scottish Office.
      Amendment No. 258 deals with the relative size of the electorates who will return Members to this House. We have to ask in all seriousness why Scottish Members of Parliament should have the same size of electorate as proposed in the Bill to come to this House when they will not be dealing with the same work load as Members representing seats in England and Wales. The Scottish Members who come to this House will not be dealing with health or education, but, as the hon. Member for Dundee, East (Mr. McAllion) said, those issues take up two thirds of his work load. To tell the electorate that they must send

      133
      a Member of Parliament to the House of Commons to do a third of the work that Members in England are doing would smack very much of snouts in the trough. I admit that that mentality is currently the hallmark of the Government, but it is not a sound constitutional model for the future.
      Mr. William Cash: My hon. Friend is deploying some very profound arguments. He has dealt with the West Lothian question, representation at Westminster, and the relationship between ourselves and the proposed Scottish Parliament. Will he explain why we are on a one-line Whip, given that we are debating a fundamental matter that affects the very future of the United Kingdom?
      Dr. Fox: I think that it would be out of order to discuss such matters, and the party's internal organisation is not a matter for me at this point. or, with respect, for the Committee.
      Amendments Nos. 259 and 260—[Interruption.] I have not eyes to see.
      Mr. Salmond: Within the sight of the Committee, an hon. Member made an intervention and is now being spoken to by a Conservative Whip. I hope that no restraining influence is being used, against the procedures and wishes of the House.
      The Chairman: Order. I think the hon. Gentleman is in danger of compounding a felony.
      Dr. Fox: I always thought that the hon. Gentleman was fully in favour of rehabilitation.
      Amendments Nos. 259 and 260 deal with the timetable for the implementation of the Bill and the setting up the Scottish Parliament. We feel that it should not commence until the next report of the boundary commission as it affects Scotland. There is a simple, practical reason for that. The Scottish Parliament will be set up with about 129 MSPs. Yet, under clause 81, within the first term of the Scottish Parliament their number will be reduced. It does not seem a stable, practical basis for setting up a Parliament to say to the newly elected MSPs, "Off you go to Parliament, all 129 of you but, by the way, in the first term your numbers will be cut and some of you won't be there the second time around." That is hardly a recipe for harmony. Surely it makes sense to set up the Parliament with the numbers that will run for several terms. Would that not be a far more stable and sustainable basis on which to set up any new legislative body?
      Sir Robert Smith: Does the hon. Gentleman not realise that the previous Government established a principle of exactly the opposite only a few years ago when they set up Aberdeenshire council with 47 councillors, only to inflict a boundary commission review increasing that number to 68?
      Dr. Fox: If the hon. Gentleman found that so unpalatable, I am sure that he will support our amendment. Having experienced something that he did not like, he should try to avoid it happening again. That is what we are seeking to do. It is typical of the Liberal Democrats with their recent defector recruits—if I said
      134
      defective, I apologise—the party for whom the Bells toll, that they should try to apply something that they do not like out of some bizarre sense of consistency, irrespective of the damage that it might do.
      We are making a sound and practical proposal. As there will be a problem of relative over-representation in Scotland, why can we not have a single boundary change to establish the number of MSPs after the first election? Our amendments seek to introduce equality that does not exist in current legislation.
      I am conscious of the time and I know that other hon. Members wish to speak as there are important issues to be considered. I know that my hon. Friends want to discuss some of the specific options in detail, but what is not on offer is that we do not address the West Lothian question. Some Labour Members profess themselves to be Unionists and I take no issue with their integrity on that, but if they wish to preserve the Union and want the new constitutional relationship to work, the problem must be addressed. Not addressing it will trigger a residual English nationalism which is just as potentially destructive for the Union as Scottish nationalism.
      We all want to see patriotism in our politics, but we should avoid nationalism tinged with xenophobia. That is the issue which the House has to discuss and, if we get the arrangement wrong, it is not we who are doomed, but the Union itself.
      Mr. McAllion: I shall be brief to allow the European experts to try to channel the debate into European byways, but I have to quarrel with the final sentiments of the hon. Member for Woodspring(Dr. Fox), who tried to draw a distinction between patriotism, which was wholly good, and nationalism, which was wholly bad. The hon. Gentleman knows very well that it was a false distinction.
      Nationalism is not a single beast. There are different varieties of nationalism. It can be well argued that some of the speeches by Conservative Members—particularly those who regard themselves as Eurosceptic—are nationalistic. It seems that British nationalism is fine, but any other nationalism—Scottish, Welsh or Irish—is bad. That is not an acceptable distinction. If I were to draw such a distinction, it would be between ethnic nationalism, which is bad and should be rejected wherever it raises its ugly head, and civic nationalism, which is a good and progressive force that can be found all over the world spreading democracy and increasing the rights of ordinary people whatever their ethnic background. It is civic nationalism which is wound up in the Bill—a nationalism that gives the people who live in Scotland, no matter who they are, the same democratic rights as can be expected by people living in any other democratic society.
      I strongly oppose the Conservative amendments because, if they have a unifying theme, it is to punish the Scots—to have a go at the Scottish Members of Parliament who remain here after a devolved Parliament is established in Scotland. In one way or another, the amendments punish Scottish Members. Their constituencies have to be bigger than the constituencies of other Members of Parliament—the figure produced is 120 per cent. The Opposition do not want parity between Scottish, English and Welsh constituencies; they want Scottish constituencies to be bigger than those elsewhere

      135
      in the United Kingdom; and they want the Scots to be treated differently from people living anywhere in the United Kingdom.
      Mr. Collins: The hon. Gentleman is making a case for parity between all parts of the United Kingdom, but that is what we have now in the United Kingdom Parliament. It is Labour which seeks to break that parity by establishing a separate Parliament in one part of the United Kingdom.
      Mr. McAllion: We do not have parity: nor am I arguing for parity. But neither are the Opposition arguing for parity. They want to discriminate against Scotland. They want Scottish constituencies to be bigger than any other constituencies in this Parliament. I regard that as punitive against Scottish Members of this Parliament in that it treats them differently from any other Member of the United Kingdom Parliament. That is not a constructive attitude to be taken by the official Opposition at a time when they do not have a single Member representing a Scottish constituency.
      Mr. Grieve: I appreciate the hon. Gentleman's point, but several amendments have been tabled and they would have different effects. Is not one of the central issues that although the Government have accepted that there will have to be a change in the number of Scottish Members of Parliament, they will not accept that that change should be made at the same time as the Scottish Parliament at Holyrood starts? Does the hon. Gentleman think that that is justified and that the over-representation thereafter should continue?
      Mr. McAllion: I do not think that the change is justified at all. I remember that, for a long time when we were in opposition, we argued against any change in the constituencies and said that it was completely irrelevant to change the size of Scottish constituencies, because Scottish Members would still have a role to play in this Parliament.
      In any case, changing the size of Scottish constituencies does not affect what the Conservatives identify as the West Lothian question. What does it matter whether there are 73, 58 or 49 Scottish Members of Parliament? They will still be doing the same thing to which the Opposition object—voting on English and Welsh matters. Changing their number is neither here nor there.
      Mrs. Laing: The hon. Gentleman just said that Scottish Members of Parliament after the formation of the Scottish Parliament will be doing the same thing, but that is not true. They will not have nearly as many duties to perform on behalf on their constituencies as Members of Parliament currently have or as Members of Parliament who are not Scottish Members will continue to have after the Scottish Parliament has started, because so many matters will have been devolved to the Edinburgh Parliament.
      Mr. McAllion: The hon. Lady completely misunderstands. Whichever Members get sent down from Scotland to represent Scottish constituencies in this Parliament will do exactly the same sort of work as other
      136
      Members of Parliament. They will be here every night, voting in the Lobbies on every single issue and it is their right to do so, because this is a United Kingdom Parliament.
      If the English people choose to have their domestic legislation dealt with in the United Kingdom Parliament, there is a price to pay for that choice. The price is this: whichever Members of that United Kingdom Parliament are here have a right to vote on that legislation. If the English Members do not like that, they have an alternative: they can go down the Scottish road, go back to their constituencies and around the country and argue for English devolution within a federal set-up. None of the Opposition Members have ever made any attempt whatsoever to do that. They have simply come here and whined and pined about how their rights as individual Back Benchers will be different from those of Scottish Members of Parliament. They should go back and talk to their constituents, because I do not detect anywhere in England the upsurge of feeling against Scotland that they talk about.
      Mrs. Teresa Gorman: Will the hon. Gentleman give way?
      Mr. McAllion: The hon. Lady is on her own—we all know that she is a bit benighted, but she is the only one who continually froths at the mouth about Scottish devolution. Even her own constituents are not that concerned about it, but I shall give way so as to allow her to froth once more.
      Mrs. Gorman: I thank the hon. Gentleman for stopping frothing at the mouth for a moment. I rise only to point out that I have made the case in the House on a private Member's Bill for an English Parliament to mirror the powers, privileges and exemptions that the Scottish Parliament will have.
      Mr. McAllion: I know that the hon. Lady has made the case in the House but how much campaigning has she done out on the stump around England? [Interruption.] The hon. Member for Rochford and Southend, East (Sir T. Taylor), who used to represent Glasgow, Cathcart, made some comment from a sedentary position that I could not hear. He paid the price for not listening to the campaign for Scottish devolution. He was kicked by his Scottish constituents. His was the first Tory head to roll because the Tories would not listen to what the Scottish people were saying. If they had paid attention when he lost his seat they might still have a presence in Scotland.
      10.30 pm
      The continual refusal to listen to what the Scottish people want explains why the Conservatives have collapsed in my country. I remember, or rather I have read in history books, that 60 or 70 years ago, Scottish Members moved legislation for a Scottish Parliament in this House. They were laughed at. No one paid any attention to them but that did not stop them. They campaigned, kept up the fight, spoke to others and kept the idea alive. At the end of the trail, we are debating what they fought for all those years ago. It is the absence

      137
      of that sort of fight in England which means that the Tories have no right to tell us that we cannot have our Parliament now.
      Mr. Salmond: Is not the hon. Gentleman underestimating the intellectual ferment that we were assured the Conservative party was in?
      Mr. McAllion: I never underestimate the Conservatives; I thought that they might win some seats at the general election. I was proved wrong then and I am sure that I would be proved wrong now if I said that there was intellectual ferment among Conservative Members. They are all just sitting there like dummies. [Interruption.] Well, they are. I can only say what I can see, though I am not wearing my glasses.
      Mr. Gerald Howarth rose—
      Mr. McAllion: The top dummy is up.
      Mr. Howarth: I will see the hon. Gentleman outside afterwards, after that profoundly offensive remark. If he had not been such a dummy himself, sitting in the Tea Room or wherever it was—
      The Chairman: Order. I think that a bad example has been set. I do not think that such words add to the dignity of Parliament.
      Mr. Howarth: I am sure that they do not.
      If the hon. Member for Dundee, East (Mr. McAllion) had been here throughout our earlier proceedings, he would have seen that many of my hon. Friends participated in the debates and that the expression that he used was therefore wholly inappropriate.
      Mr. McAllion: I was not here earlier because I was attending a meeting in Committee Room 10. I was not sitting in the Tea Room but was carrying out my duties as a constituency Member of Parliament, looking after foreign affairs and trying to stop the war in the Gulf. There are other issues that affect Scottish Members that would require them to come here to debate after we have our own Parliament in Scotland.
      Dr. Fox: I hate to bring the hon. Gentleman back to real world, however temporarily, but when he says that he thinks that the demand for Scottish constitutional change was overlooked for too long in England, he is making exactly the same mistake in thinking that he can impose a view of constitutional change on the English without their having anything to say about it. It is a grave mistake to think that the English, who constitute 90 per cent. of the UK population, will not have a view. He is in danger, through his comments, of putting the Union at risk.
      Mr. McAllion: It is an oxymoron to talk about bringing me back to the real world in a debate in this place. Nothing could be further from the real word than our debates. Labour Members are not imposing anything on the English people. It is for the English people to articulate their demand for English home rule. Conservative Members can sit here all night saying what
      138
      they think, but they must remember that, at the general election, they were defeated in England, just as they were in Scotland. They do not represent the voice of the English people. What they call for is not what the English people are calling for. When the English people legitimately call for their own Parliament and home rule, the Labour party and Government will support it; they would be mad not to.
      Mr. Hayes: Will the hon. Gentleman or, failing that, perhaps the Minister later comment on the issue first raised in the House on 1 February 1977 by the hon. Member for Linlithgow (Mr. Dalyell), then the hon. Member for West Lothian, about whether following devolution, Members of this House would have the right to raise questions that are within the jurisdiction of a Scottish Parliament? If the hon. Member for Dundee, East (Mr. McAllion) cannot answer that, he is imposing significant restrictions on the rights of English Members.
      Mr. McAllion: Any hon. Member would be entirely free to write to their equivalent Member of the Scottish Parliament and ask them to raise such issues in the Scottish Parliament. I am not trying to stop them doing that.
      Devolution is a response to the democratic demands of the Scottish people. They have asked for their own home rule parliament. This Parliament, in its wisdom, has decided to honour the Labour party's manifesto commitment following the election of the Labour Government. There is nothing untoward in that. Conservative Members keep pointing out anomalies because a Scottish Parliament will exist in what used to be a unitary United Kingdom. Of course there are anomalies—but what about the anomalies before? When did we hear Conservative Members complaining about the way in which the poll tax and local government reorganisation were imposed on Scotland when nobody in Scotland wanted it? In the general election in 1992, 75 per cent. of the Scottish people voted against a Tory Government, but had one imposed on them. What about the sensibilities of Conservative Members then? There was not a whisper from them about any anomaly or inconsistency or anything being intolerable to the Scottish people.
      I return to the point that I made at the beginning of my speech. The amendments' unifying theme is very much in line with what the Tories did for the past 18 years in Scotland. It is against the Scottish people and against their interests. Their constituencies would have to be bigger, and when their MSPs were sent down here they would be stopped from taking part or voting in certain debates. That is not as bad as the poll tax and local government reorganisation, but it is in the same vein. The Conservative Opposition have yet to learn the lesson of the general election defeat. It is time that they started listening to people in the constituencies in which they are trying to be elected, instead of telling them what they should be thinking.
      Mr. Cash: Does the hon. Gentleman accept that a vast amount of money is being paid to the Scottish people as a result of the United Kingdom Parliament's decisions? Whether or not that is justified, it blows a hole in his argument. Furthermore, the amount of money that is being paid as a result of the Bill—the effect of giving

      139
      jurisdiction to the Scottish Parliament with regard to education and all the range of reserved matters—indicates the huge gulf that the Government are creating between the Scottish people and those in the rest of the United Kingdom. The hon. Gentleman's argument is completely flawed because, on one hand, money is largely being provided by taxpayers south of the border, and on the other, jurisdiction is being given to the Scottish parliament. Is not that the very reason why the West Lothian question is so important and why Scottish Members should not be allowed to vote twice?
      Mr. McAllion: That is simply not true. The hon. Gentleman is simply wrong when he says that the English are subsidising Scottish public expenditure. Earlier debates on the Bill have patently shown that to be false. He does not include in the calculations all the non-identifiable expenditure largely spent in the south-east of England, or North sea oil revenue, which has been used by the people in the south to subsidise mass unemployment for 20 years. There are all kinds of arguments. The West Lothian question is a problem only because it is a problem for the Conservative party. That is the nub of the argument.
      Somebody mentioned that there was likely to be a speech tomorrow night by the Leader of the Opposition in which he will advocate that an English Grand Committee should be set up to deal—[HON. MEMBERS: "How do you know?"] How do I know? The spin doctors are writing in the press. How do I know what my own party is saying? I have to read it in the papers. It is the only way I know what is happening in this world.
      The Leader of the Opposition's speech brings into question the remarks made by Mr. Malcolm Rifkind, who used to be a very senior figure in the previous Government.
      Hon. Members: Sir Malcolm.
      Mr. Davidson: He did not beat his wife.
      Mr. McAllion: The last thing that I want to do is to involve Sean Connery.
      Malcolm Rifkind argued that were this Parliament to overrule the decisions of an English Grand Committee, it would lead to a constitutional crisis. I remember Malcolm Rifkind, Mr. Forsyth and others in the previous Parliament arguing that the answer to the Scottish problem was to set up a Scottish Grand Committee, which would be overruled when it suited the House of Commons. They did not see any constitutional crisis when they were in government. They only see constitutional crises when they are not in government. When will the Conservative party stop being an English nationalist party? There is no constituency even in England for such a party. The English people rumbled the Tories a long time ago. When will they begin a productive relationship with the peoples of this United Kingdom?
      There is one amendment that I do not completely rule out—the one dealing with changing the boundaries for a Scottish Parliament. In the constitutional convention, there was a clear commitment on the part of all its members that there would be a separate boundary review
      140
      for the 129 Members of the Scottish Parliament. I will never accept that, just because the number of Scottish Members at Westminster is reduced, the number at the Scottish Parliament must automatically be reduced, too. We in the convention committed ourselves to honouring the 129 Members of the Scottish Parliament by allowing them a separate boundary review. I hope that the Government will remain true to that commitment.
      Mr. Ancram: The hon. Gentleman has reached an important point in his speech—[Laughter.] It is about the only important point in it. What he suggests is not, in fact, in the Bill. However many Scottish MPs are removed by the boundary review from this House, there will, under the Bill, be a commensurate reduction in directly elected seats and regional seats in the Scottish Parliament. That is what the Bill says: will the hon. Gentleman support the Bill?
      Mr. McAllion: The clauses dealing with that were not debated tonight owing to the timetable, but it is a serious issue which will have to be debated. What the right hon. Gentleman describes does not tally with the commitment that the Labour party gave in the constitutional convention. We rightly make great play of honouring the commitments that we gave in that convention. Here is one commitment that we should honour; I shall continue to support it.
      The Opposition are for ever saying that the English people are Unionists. Being Unionist is not the same as being anti-Scottish. That is a distinction which they fail to make. The Opposition seem to think it impossible to be a good Unionist without being prepared to put the boot into Scotland and Scottish interests. They cannot conceive of a kind of Unionism that operates with Scotland and England being partners in a reformed relationship, a very different one from the sort of Unionism that they used to represent many years ago. Their type of Unionism died at the 1997 general election.
      If there is to be a Unionist future, it will be very different from anything the Opposition recognise. The sooner they understand that, the better.
      Sir Teddy Taylor: Although we should all be grateful to the hon. Member for Dundee, East (Mr. McAllion) for preventing war in the Gulf, as he apparently did in a Committee Room this evening, he may have made some mistakes when assessing the current situation. For instance, he made a vicious personal attack on me, saying that I had lost my seat in Scotland because I had failed to listen to people's views on devolution.
      There are probably many reasons why I was thrown out of my seat, but, in 1979, there was a vigorous Conservative party in Scotland which was absolutely opposed to devolution. We fought the battle hard and wiped out the SNP from the House of Commons. The SNP's 11 Members of Parliament were knocked for six. Unfortunately, because the nationalist vote collapsed on that occasion, and because I depended on an adequate SNP vote, I was thrown out at the same time.
      I had warned the Prime Minister, Lady Thatcher, who had told me to eradicate the SNP, that that would mean eradicating me, too. It appears that she, having considered the bargain, was willing to take the risk.
      Mr. Salmond: The hon. Gentleman has cheered me up a great deal. I now realise that there was a silver lining to

      141
      the 1979 general election result. He speaks of the SNP being eradicated at that election. True, we did not do very well; we had only two seats left. But eradication means having no seats, as the Conservatives in Scotland have now.
      Sir Teddy Taylor: The hon. Gentleman is right. Losing nine of 11 seats is a substantial reduction, shall we say? The lesson presumably was that supporting the nonsense of devolution does not necessarily knock the SNP for six.
      I was also astonished by what the hon. Member for Dundee, East said about the size of constituencies. He said that we should not change the arrangements and have larger Scottish constituencies. I tried to understand the logic of that assertion. He seemed to be saying that my constituents who live in multi-storey flats are not as important as his constituents who might live in bungalows with big gardens. Trying to calculate an hon. Member's significance according to size of constituency or size of property would lead to constitutional madness.
      10.45 pm
      The hon. Gentleman said, finally, that if the English do not like the Bill, they can have their devolved Parliament too. Can there be a sillier answer? I know that my hon. Friend the Member for Billericay (Mrs. Gorman) has tabled an extremely sensible private Member's Bill that has made many people think about the issue, but why should we land ourselves with a separate assembly with lots of extra Members of Parliament all of whom want secretaries and researchers and to go on trips to the United States and Canada to study devolution there? Why should we undertake the huge responsibility of paying for all that?
      One of these days, the hon. Gentleman will have to tell the people of Scotland what he has done to them, and the cost that they must pay for it.
      Mr. McAllion: The hon. Gentleman is missing an important part of the scenario for England, which is the massive reduction of seats in this place. That would be warmly welcomed by people across the United Kingdom. The House of Lords could be turned into the House of 200, and that could be the federal Parliament, so we could do away with this House entirely.
      Sir Teddy Taylor: I am trying to present a logical argument. I do not understand what the hon. Gentleman is getting at. I am told that the House of Lords has 1,500 members and is the cheapest assembly in the world. It may not be the most logical one, but it works, which the Scottish Parliament will not do for the United Kingdom.
      I have noticed in the debates on Scottish devolution that every minute there is less enthusiasm for the idea. When we started, there was a huge amount of enthusiasm for a devolved Parliament, but now we see it fading away. Those who think about the matter seriously—there are some hon. Members on all Benches who think about it seriously—have suddenly realised the significance of clause 33.
      The first time a Secretary of State tells the Scottish Parliament, "I'm sorry, that law is dead," that will be the beginning, as Scottish National party Members are well
      142
      aware, of a deep division. When the Scottish Parliament says, "We believe that this is okay constitutionally," and the English Parliament says, "No, the legislation is dead," there will be a terrible problem. Having lived in Scotland for most of my life, I know what that will mean.
      We have just been talking about taxes and the problems that will arise. Hon. Members on the Government Front Bench are well aware, as the Conservatives learnt to their cost, that the problem of SNP-ism—the problem of the desire for independence—is not solved by offering a halfway house. It does not work and it will not work.
      Mr. Salmond: Is the hon. Gentleman's conclusion, then, that this Parliament cannot overrule a Scottish Parliament without division? Presumably this Parliament could not abolish a Scottish Parliament without division, so what is his conclusion?
      Sir Teddy Taylor: My conclusion is that the structure of the devolved Parliament is such that, as the hon. Gentleman is well aware, it will lead to bitter division between Westminster and Edinburgh and will lead to the kind of fracas that will destroy our nation. The evidence is clear. The hon. Gentleman knows that, when devolution gets going, his party will have a great future. It may be good for Scotland; it may not. People should wake up to what will happen.
      Mr. Hayes: Is not my hon. Friend drawing attention to what has been described as the balkanisation of Britain? It was described as such by John Strachey, who was the Member of Parliament for Dundee, West, I think. Perhaps that suggests that the west of Dundee has a greater propensity for intellectualism than the east.
      Sir Teddy Taylor: John Strachey was in charge of food rationing and ran an admirable system whereby he saved public expenditure by making the food coupons so small that people who did not have glasses could not read them. That certainly saved expenditure, which was important.
      If we are to proceed with the Bill, we must sort out the problem in a sensible way. My hon. Friend the Member for Aldridge-Brownhills (Mr. Shepherd) and I have put forward a suggestion. If hon. Members do not like our idea, what do they suggest? In the old days—I am one of the oldest Members here—people used to face up to problems. A great chap called Gladstone was a wonderful Prime Minister and a Liberal Democrat. He introduced a Bill about Ireland in 1893. He wrote clearly and precisely in the Bill that the answer to his devolution proposal was to have no Irish Members in this Parliament. That caused a great deal of distress and concern in Ireland, but at least he faced up to the issue and said, "This is my idea."
      Another great chap was Harold Wilson from the Labour party—in fact, he is one of my favourite Prime Ministers. He was not terribly popular with some, but I thought that he was a gem. He faced up to the situation. Unlike many in the Labour party, Harold Wilson was a gentleman. He said that the devolution problem could be solved if people "considered their position." Basically, he told the Members of Parliament from Northern Ireland that, if they were to get devolution—which he thought was a good idea at the time—they must consider their position when issues are raised in this place that related not to Northern Ireland, but to England, Scotland or Wales.

      143
      Harold Wilson suggested tackling the problem through honour. He wanted all Northern Ireland Members to say, "This is not our business, so we will go home and study other matters or serve on a Committee and see if we can improve the situation in Northern Ireland." If everyone had been as honourable as Harold Wilson, there would have been no problem. Sadly, things do not work out like that. We simply cannot solve constitutional problems by appealing to people's honour—particularly in a narrow situation such as this.
      So what can we do? My hon. Friend the Member for Aldridge-Brownhills and I have made a suggestion in proposed new clause 6.
      Mr. Dalyell: As the hon. Gentleman can imagine, I had several meetings in the middle 1970s with Harold Wilson about the devolution question. The difficulty—as he would eloquently put it—was that the Irish never failed to ask for certain favours in return, especially when it came to the nationalisation of steel and problems with the late Woodrow Wyatt and the late Desmond Donnelly. There is a price to pay for playing that game.
      Sir Teddy Taylor: The hon. Gentleman is absolutely right. He points out the logic of the situation: if we rely on people being gentlemanly, we sometimes find that the so-called gentlemen will exact their price. There was no steel in Northern Ireland, so the Irish Members of Parliament said, "If we are to act like gentlemen, we want something for it; if the Government have a narrow majority, we want something in return." That is the trouble with running things on the basis of all being gentlemen together. There will always be rascals: someone will say, "I'll be a gentleman if you pay my price"—which might be a trip to South America, a place on the Front Bench or dinner with one of the party Whips. There are many prices, and we cannot pay them all. That would prove very expensive indeed.
      So what shall we do if we are not going to try to solve our problems by having dinner with the Chief Whip? The answer is simply that we must do something. My hon. Friend the Member for Aldridge-Brownhills and I have made a simple suggestion. New clause 6 says that, from the beginning of the new Scottish Parliament:
      "no member of the House of Commons representing a constituency in Scotland"—
      whether it has multi-storey flats, bungalows or anything else—
      "shall be entitled to vote in that House on any matter … relating solely to another part … of the United Kingdom."
      That is a sensible suggestion.
      Sir Robert Smith: While I appreciate that the principle behind the proposed new clause is sensible, does the hon. Gentleman realise that, for the first year, the Scottish Parliament will meet as a shadow Parliament with no responsibility for Scottish affairs, so the consequence of his new clause would be to allow English Members to have a say in Scottish affairs for one year while denying members of the Scottish Parliament any say in English affairs? Perhaps the hon. Gentleman might think about
      144
      withdrawing his proposed new clause, which is flawed, while recognising that the Government may accept the principle behind it.
      Sir Teddy Taylor: That is a very sensible and helpful suggestion. If, like the Liberal Democrats, the Government can respond positively, I shall be happy to withdraw the new clause. If the Government say that my hon. Friend the Member for Aldridge-Brownhills and I have not got it exactly right, but that they accept the principle behind new clause 6 and promise to introduce an even more sensible measure that takes account of the problem, I shall happily withdraw it.
      Mr. Davidson: Would the hon. Gentleman intend to apply the same principle to the Natonal Assembly for Wales, to London because of the London authority and to any northern assembly that might come about, or are we faced simply with an anti-Scottish measure?
      Sir Teddy Taylor: In no sense is the amendment anti-Scottish. I am trying to protect the United Kingdom. I am trying to safeguard the people of Scotland and the people of England because I love them both equally. I can assure the hon. Gentleman that there is no question of my being anti-Scottish.
      I say to the hon. Gentleman honestly and seriously that if he thinks that we can have a similar answer for the regions, he is living in cloud cuckoo land. I know that he is a busy person who takes an interest in many things—perhaps helping the hon. Member for Dundee, East to stop war in the Gulf—but he should think about the English regions. No one wants them, apart from people in the north-east of England, who seem to think that a regional system will help them to receive the same Euro-subsidies as they get in Scotland.
      Mr. Davidson: The hon. Gentleman says that no one, apart from people in the north of England, wants regional assemblies. Has he taken London into account? I am not clear whether his answer is a yes or a no. Would he extend the principle to other areas that might have a form of devolved structure?
      Sir Teddy Taylor: If people do not want regional government, cannot afford it and see no benefit in it, given the limited amount of certainty that is left we shall not find the answer by following that course. No one is suggesting that regional authorities should have the same powers as the Scottish Parliament. Those who follow these matters carefully will understand that these proposals are being shoved on us because of pressure from the European Union, which wants regions established throughout Europe and the abolition of democratic national Parliaments.
      We must face the problem. If my suggestion is unacceptable, what should we do instead? We cannot look forward to the future with an Assembly that will do huge damage to the present Government and to Scotland, but if we are to have such an Assembly, let us not turn it into a constitutional nightmare. Unfortunately, we shall face such a nightmare if something is not done along the lines that I have suggested.
      I appeal to the House of Commons to realise that something must be done. My hon. Friend the Member for Aldridge-Brownhills and I have openly, fairly and clearly

      145
      made a suggestion. If we are wrong, what suggestion should take its place? If nothing is done the foreseeable nightmare will become even worse.
      Mr. Dalyell: I shall reply in some detail and seriousness to the hon. Member for Rochford and Southend, East (Sir T. Taylor). He said at the beginning of his speech that we are confronted with a problem that faced a man called Gladstone. That certainly was the case. Morley's biography of Gladstone describes in detail the problem that Morley called the problem of the ins and outs. Joseph Chamberlain followed, with similar results. The proposed answer was unworkable for a simple reason—there is such a thing as the Treasury.
      It is all very well having dispensations and people acting honourably and saying, "All right, we won't vote on certain matters." If there is a Government with a large majority, that may be possible, but if there is a Government with anything like the majorities of the 1970s and the mid-1960s, that response is impossible because it becomes impossible to run any sort of economic policy.
      So it was in Ireland. The hon. Member for Rochford and Southend, East knows his history. What about Carson? Carson said that it would be impossible in terms of Dublin government—this was in 1912—because the ins and outs would not work. One listens seriously to the hon. Gentleman, but if his proposal had been a possibility and if it had been workable, those clever men John Smith and Bruce Milian, and those equally clever men Sir John Garlick and Sir Michael Quinlan, would surely have alighted on it in the mid-1970s, but they turned it down as unworkable.
      I shall not insult the hon. Gentleman by saying that it is an old chestnut—[Interruption.] It is not often that a Whip comes to sit beside me. I have to say that I am wearing the wrong glasses. I cannot read what the Whip was indicating.
      I am in the position of the night watchman. The truth is that the enterprise on which we are embarked remains one of peculiar and, perhaps, unique difficulty. It is hard to find any significant example of an established semi-federal state—one in which a substantial proportion of the population are governed—
      It being Eleven o'clock, THE CHAIRMAN left the Chair to report progress and ask leave to sit again.
      To report progress and ask leave to sit again.—[Mr. Clelland.]
      Committee report progress; to sit again tomorrow.

    EUROPEAN COMMUNITY DOCUMENTS
    Motion made, and Question put forthwith, pursuant to Standing Order No. 119(9) (European Standing Committees),
    EUROPEAN COMMUNITY DOCUMENTS

      COURT OF AUDITORS REPORT FOR 1996
      That this House takes note of Official Journal No. C348 of 18th November 1997, the Annual Report and Statements of Assurance of the European Court of Auditors concerning the
      146
      financial year 1996, on activities financed from the general budget and of the sixth and seventh European Development Funds, together with the Institutions' replies; and of European Commission Document No. SEM 2000/3(97) Doc. 5, the SEM 2000 Stage III Second Report on the Implementation of the Recommendations of the Personal Representatives Group on Sound Financial Management; endorses the Government's determination to ensure that taxpayers' money is spent efficiently and effectively in the EC budget; and welcomes the priority which the current British Presidency of the EU is giving to this subject.[Mr. Clelland.]
      Question agreed to.

    DELEGATED LEGISLATION
    Mr. Deputy Speaker (Sir Alan Haselhurst): With permission, I shall put together the motions relating to delegated legislation.
    Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Standing Committees on Delegated Legislation),

    DELEGATED LEGISLATION

      LOCAL GOVERNMENT FINANCE
      That the Special Grant Report (No. 28): Persons from Abroad Children's Grant (HC 478), which was laid before this House on 26th January, be approved.
      That the Special Grant Report (No. 29): Unaccompanied Asylum-Seeking Children (HC 479), which was laid before this House on 26th January, be approved.
      That the Special Grant Report (No. 30): Asylum Seekers' Accommodation (HC 480), which was laid before this House on 26th January, be approved.

      LOCAL GOVERNMENT FINANCE (SCOTLAND)
      That the Special Grant Report for Unaccompanied Asylum-Seeking Children and Children of Asylum Seekers (No. 98/4) (HC 491), which was laid before this House on 26th January, be approved.
      That the Special Grant Report for Adult Asylum Seekers' Assistance (No. 98/3) (HC 490), which was laid before this House on 26th January, be approved.

      LOCAL GOVERNMENT FINANCE (WALES)
      That the Special Grant Report (Wales) (HC 457), which was laid before this House on 26th January, be approved.—[Mr. Clelland.]
      Question agreed to.

    SELECT COMMITTEE ON MODERNISATION OF THE HOUSE OF COMMONS
    Ordered,
    That Mr. Joe Ashton be discharged from the Select Committee on Modernisation of the House of Commons and Mr. Stephen Twigg be added to the Committee.[Mr. Clelland.]

    Ordered,
    That Mr. Oliver Letwin be added to the Deregulation Committee.—[Mr. Clelland.]

  Multilateral Agreement on Investments
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Clelland.]
  11.1 pm
  Dr. Nick Palmer: I should declare a general interest: I act as consultant for my former employer, Novartis, a multinational company. However, I do not know its view on the multilateral agreement on investment, if it has one. It is perhaps also relevant to mention that I am a member of the World Development Movement, which has taken a critical view of the MAI.
  I requested this Adjournment debate in view of the rather striking discrepancies between the official view of the MAI, as expressed by the negotiating Governments, and the fears expressed by the World Development Movement and other non-governmental organisations. I have the draft agreement, which is available in the Library for any hon. Member who would like a copy, and it contains both positive and negative potential. I should like to identify the areas of concern and ask the Minister either to dispel them or, where she agrees that there is a potential problem, to tell us whether the Government will fight for improvements.
  The basic principle of the multilateral agreement—that there should be a common basis for attracting investment—is not necessarily controversial. The present patchwork of conditions and special arrangements around the world is profoundly unhelpful to companies with foreign investments, for companies that invest around the world, and, therefore, is particularly unsatisfactory for Britain, with its numerous major international investors.
  Conversely, most of us on the left feel that multinational companies increasingly escape from all forms of control. If the agreement were to balance rights and responsibilities, it could be profoundly helpful. In fact, it could be more helpful than many national policies, to which we devote much more attention. I note that the Conservative Benches are entirely empty.
  The usual objection to constraints on multinational behaviour is that companies may take their business elsewhere. With a potentially global agreement, and with a balance of rights and responsibilities, we could be less constrained, as we would have to worry about losing business only to little green men from Mars. Furthermore, the requirement that domestic companies should not be given unfair preference, although previously controversial, has now become the norm in most sectors in the developed world.
  However, there are a number of matters of concern that, if true, would be major obstacles to acceptance in Britain and in most other countries. First, is it true that local authorities and national Governments will be prohibited not only from discrimination against foreign firms, but from certain types of ethical restriction, even if that ethical restriction is also applied to domestic firms? Could they refuse to give a contract to a firm believed to have used slave labour elsewhere, or to have treated unacceptably the work force, the environment or animals?
  The disputed paragraph 4 in the draft treaty would explicitly allow such a restriction, at least for local behaviour: that is to say, behaviour within Britain. Will the Government fight for the retention of the wording of that passage, as it is clear that a number of delegations still oppose it?
  148
  Secondly, is it true that if developing countries later sign up, they will not be allowed to claim exemptions? If it would be by negotiation, will the Government commit themselves to ensuring that developing countries get a fair deal in those negotiations and are not forced to expose their fledgling industries to instant, massive competition? It is not 20 or 30 years since we in Britain felt the need to protect our industries by special legislation, and we should not expect less from developing countries.
  Thirdly, given that multinationals receive considerable benefits from such a level playing field, would it not be reasonable to impose certain responsibilities? In particular, will the Government insist on the retention of the strict formulation of the section "Not Lowering Standards", including a ban on countries waiving labour and environmental laws to attract investment? Will there be any obligation to respect agreed international standards from other treaties, such as environmental treaties, and not just local treaties? If the Philippines wanted to attract investment to Manila, would it be able to say, "If you invest with us, you don't have to worry about that law. We'll waive it for you"? If the section that would rule out such behaviour retains its teeth, it will go a fair way towards making the treaty more balanced between rights and responsibilities.
  Fourthly, France has said that it will not sign if the United States is given an exemption for the Helms-Burton law with its illegal boycott of Cuba. Given Britain's strong opposition to Helms-Burton, will we support the French stance? I see reports that President Clinton is seeking ways to soften the boycott. If we take him at his word, this agreement could give him useful ammunition. The boycott seems to be in clear contravention of the draft article on secondary investment boycotts, and if the multilateral agreement on investment will help us get rid of it, it would be an important point in its favour.
  Fifthly, under that article would it still be possible to boycott countries that the United Nations agreed were violating international standards? That approach was effective against apartheid, and is currently being applied to Iraq. If South Africa still had apartheid, would it be illegal under the MAI for a local authority or government to campaign against the importing of South African wine?
  The draft article on secondary investment boycotts prevents authorities in Britain from taking any account of how companies behave outside Britain, as long as the behaviour is locally legal and is not in conflict with international law. If that is so, the position needs to be modified to allow objections to companies that are violating not just international law, but United Nations resolutions. Otherwise, we should be in the absurd position of being suddenly forbidden to enforce the sanctions on Iraq in so far as they affected movements of capital. I cannot imagine that that would be the intention of most of the likely signatories.
  Sixthly, is it true that trading pollution quotas for environmentally friendly technology, as envisaged at Kyoto, would be an illegal anti-competitive subsidy?
  Seventhly, I understand that the United States is resisting the draft clause allowing increasing European Union integration, while insisting that US state Governments be allowed to maintain discriminatory practices indefinitely without any commitment to ever rolling them back. What is the Government's position on that?

  149
  Finally, it has been suggested that a partial agreement may be signed in April covering only some of the issues. Will the Government insist that that should not implement the free-trade aspects, while postponing the labour and environmental safeguards to a nebulous future?
  Mr. David Heath: I am following the hon. Gentleman's argument closely, and agree with much of what he is saying.
  The environmental study by the Organisation for Economic Co-operation and Development, commissioned at the behest of the British Government, was not discussed at the January OECD meeting. The Secretary of State for International Development has commissioned a study of the impact on developing countries, but we are told that it will not be presented until 23 March. Given those facts, does the hon. Gentleman agree that there is some logic in the Government's withholding signature in April, and delaying it until we have secured an agreement that satisfies us that all the impacts on the developing world and the environment can be properly addressed?
  Dr. Palmer: I am grateful for that interesting intervention, but I think it is more a question for my hon. Friend the Minister, so I shall not attempt to deal with it.
  I am aware that other hon. Members want to speak briefly before the Minister's reply, so I shall conclude my speech. If my hon. Friend can cast light on the issues that I have raised, she will have done a real service to a great many concerned individuals and groups and reinforced our commitment as a Government to an ethical foreign policy. This agreement has real potential. I hope that we shall make the most of it, and will not allow ourselves to be trapped into making an agreement that does not give the benefits for which we all hope.
  Mr. Jeremy Corbyn rose—
  Mr. Deputy Speaker (Mr. Michael Lord): Order. It is normal in Adjournment debates for Members who wish to speak to have obtained the permission of both the hon. Member who has secured the debate and the Minister. Do I take it that that applies in this case?
  The Minister for Small Firms, Trade and Industry (Mrs. Barbara Roche): Yes.
  11.12 pm
  Mr. Jeremy Corbyn: I shall be brief.
  The House is indebted to my hon. Friend the Member for Broxtowe (Dr. Palmer) for securing the debate, and for putting his case.
  When the Minister replies, I should be grateful if she would acknowledge some serious concerns about the MAI. First, the agreement promotes the unfettered power of multinational corporations—many of which are larger than national Governments, can move capital around the world at whim and yet can deny the movement of labour around the world at whim. That should be contrasted with the attempts of the International Labour Organisation to impose minimum standards around the world, with the welcome steps taken at Rio a few years ago in setting a worldwide environmental agenda, and with what was achieved at the Kyoto conference on climate change.
  150
  The MAI will increase world trade and the amount of transport of goods world wide, and I believe it will be very damaging to economies in the poorest developing countries in the world.
  It appears to many people—not just those lobbying on behalf of aid agencies and others—that all the aces are being stacked in favour of the OECD members that are busy negotiating all kinds of get-out clauses and protections for themselves, while the world's poorest countries have no alternative but to sign the agreement, knowing that they will have no control over what multinational capital does in their countries about land ownership, import substitution or anything else that those countries may wish to impose in order to protect themselves and encourage development of the living standards of their people.
  We are debating serious matters. The Minister should say that Britain will not sign the agreement until we are sure that it is environmentally sustainable and will not destroy the ability of poor countries to develop themselves rather than hand their economic development to international capital.
  11.14 pm
  Ms Joan Walley: I congratulate my hon. Friend the Member for Broxtowe (Dr. Palmer) on securing the debate, for which many hon. Members are present. Perhaps the Minister will say whether we can have more time to apply the full parliamentary scrutiny that the subject of the debate requires. We would all appreciate that. Perhaps through our Select Committee procedure we could find an opportunity to investigate the matter in even greater detail. Hon. Members in all parts of the House are anxious to ensure that agreements are environmentally sustainable, and I emphasise that in this important debate.
  11.15 pm
  The Minister for Small Firms, Trade and Industry (Mrs. Barbara Roche): I apologise to the House and to my hon. Friend the Member for Broxtowe (Dr. Palmer) for my late arrival. I missed his opening comments and my excuse is the vagaries of the House in Committee.
  I thank my hon. Friend for raising the topic of the multilateral agreement on investment. He has done the House a great service, and the debate gives me an opportunity to bring hon. Members up to date on the agreement since our previous debate on the matter on 23 July last year. In that debate, I outlined the background and, I hope, corrected some of the misunderstandings about the MAI, which is currently being negotiated within the Organisation for Economic Co-operation and Development.
  In the Government's view, the flow of investment across national borders is an integral and usually a welcome part of global economic reality. Britain has a particularly large stake in that in both directions, and it is difficult to imagine what the British economy would be like without the contributions of European, American and Asian companies. My hon. Friend spoke about that. We are second only to the United States in outward direct investment to developed and developing countries throughout the globe.
  The United Kingdom has a strong interest in creating a framework in which foreign investment can prosper and make its full contribution to the global economy.

  151
  Above all, we must bear it in mind that the MAI is about non-discrimination. The idea is that foreign investors should be treated no less well than domestic investors or each other. Another key feature that is planned for it is a binding dispute settlement system that will cover state-to-state and investor-to-state disputes. The Government support those basic principles, although there are some important issues in the agreement on which we are not yet fully satisfied. I shall return to those.
  If an agreement can be reached that increases the confidence and security of foreign investors, and if the detailed terms are right and our specific concerns are properly addressed, we shall want to sign it. However, I make no bones about the fact that there is some way to go. It might be useful to explain the state of the negotiations, to clarify some confused recent press coverage. In late May last year, which was the original deadline for completing the negotiations, OECD Ministers unanimously decided to extend the time limit to the next OECD ministerial meeting on 27 and 28 April this year. However, at a high-level meeting last week to prepare for the April event, the United States stated that it would not be ready to reach an agreement by April. All OECD countries accepted that they should intensify their efforts to resolve outstanding issues, with a view to making as much progress as possible by April, and that, in the light of that progress, it was for OECD Ministers at the April meeting to decide what to do next.
  At this stage, the most important outstanding issues for the UK are the treatment of environmental and other regulatory issues, labour standards and the listing of "exceptions", by which countries may reserve the right not to accept MAI obligations in full in particular sectors or in relation to categories of governmental activity. On environmental and labour matters, there has been a distinct change of policy by the UK. This Government have been taking the lead in ensuring that the MAI will not undermine regulation in those sectors, as some people claimed it might. It is essential that we avoid that, and I am confident that we shall, as all participants in the negotiations recognise the need to do so.
  In addition, we have pressed hard for unambiguous reaffirmation in the MAI of commitments to sustainable development and core labour standards; for close association with the MAI of OECD guidelines for multinational enterprises, which are collective recommendations by OECD Governments to multinationals on good corporate behaviour; and for a strong and binding provision on not waiving environmental or labour standards to attract particular investments. That is one of the important questions that my hon. Friend has put to me. The majority now share our strong line on those points, although some remain to be persuaded.
  It was this UK Government who proposed a review of the MAI and environmental policy. The first part, an overview of the literature on foreign direct investment and the environment, is on the internet. The second part, on the relationship between the MAI and multilateral environmental agreements, is under discussion and should be available shortly.
  152
  In short, the Government are absolutely determined to ensure that there is no risk that the MAI will undermine environmental protection and labour standards.
  Dr. Lynne Jones: Will my hon. Friend give way?
  Mrs. Roche: May I finish this point?
  We have said it many times before and I say it again: if there were such a risk, we would not sign the agreement.
  Dr. Jones: The Minister has answered my question. I was going to seek the assurances that she has just given.
  Mrs. Roche: I am grateful to my hon. Friend.
  The Government believe that, far from being a threat to environmental and other standards, the MAI provides a useful opportunity to encourage all participants to raise their standards, but we do not believe that it would be either right or practicable to make the MAI an instrument by which to impose particular labour or environmental standards on other countries. There would be a danger of deterring potential members from joining, without achieving any improvement in standards. The Government are working hard in the appropriate forums to raise international labour and environmental standards.
  I hope that I can allay other anxieties that have been expressed. The idea that an investor should be allowed to challenge the state has been received with horror in some quarters. It has been suggested that that is a threat even to democracy, but private interests can and do mount legal challenges to state decisions in the UK and in other democracies, and binding international arbitration for investor-to-state disputes has existed for many years in the UK's numerous bilateral investment treaties. What is new in the MAI is binding international arbitration for investor-to-state disputes, over a wider range of issues than in existing bilateral treaties.
  My hon. Friend the Member for Broxtowe mentioned local government. The agreement will apply to all levels of government, including local government, but it will not obstruct local government or interfere with programmes that are aimed at increasing employment opportunities for local people. We would not expect nationality of ownership to be a factor in local government decisions, but we have consulted local authorities. They have not identified any problems or any need for exceptions. If any do come to light, we shall, of course, consider them.
  Ms Julia Drown: I understand that the USA has sought exemption for its states and local government. If so, surely that should ring warning bells for us to protect our national and local government.
  Mrs. Roche: As part of the negotiations, countries will try to get exemptions. I am stating the position, as we understand it, from the UK's viewpoint and giving an assurance that we have consulted local government. If it raises objections, we shall certainly consider them.
  My hon. Friend the Member for Broxtowe asked about developing countries. The agreement will not be forced on reluctant developing countries. Many have attended seminars in Latin America, Asia and Africa to learn more about the MAI. For many of the more advanced

  153
  developing countries, the MAI is an attractive opportunity. Argentina, Brazil, Chile, Hong Kong, China and Slovakia are already observers at the negotiations and are keen to join at the earliest possible stage. Others are queueing up for the same treatment. The reason is, of course, that inward investment is a key element in their development plans. Naturally, we recognise that many of the least developed countries may have difficulty taking on the full range of obligations immediately. Negotiations are progressing on how to tackle that. It is important to do that.
  Whatever the solution, the British Government will be determined to ensure that the agreement does not damage the interests of the poorest countries. If possible, it should offer opportunities to the developing world as a whole. As has already been mentioned, the Department for International Development has commissioned a review of any implications that the MAI may have for poorer developing countries. That will be made public upon completion.
  Mr. Corbyn: Will my hon. Friend give way on that point?
  Mrs. Roche: I should like to make progress. I would usually give way, but I am anxious—
  Mr. Corbyn: Will my hon. Friend give way?
  Mrs. Roche: Yes, but very briefly.
  Mr. Corbyn: When will the report be ready?
  Mrs. Roche: It will certainly be ready before April and will be available for consideration.
  One persistent complaint in the press and in documents from the non-governmental organisations is that the MAI negotiations have been secret. That was mentioned by my hon. Friend the Member for Stoke-on-Trent, North (Ms Walley). That is simply not the case, either in the UK or in the OECD. The start of the negotiations was announced, as were other milestones. Representatives of labour and business have been kept in close touch, as have trade unions and local government.
  154
  More recently, in response to legitimate NGO interest, many groups have had discussions with officials and with my noble Friend Lord Clinton-Davis. There have been various public events. In the OECD, there have been briefings after meetings of the negotiating group, consultations with non-member countries and consultations with NGOs. The current draft text is available on the internet. My hon. Friend the Member for Stoke-on-Trent, North raised a point about parliamentary scrutiny. All the appropriate parliamentary scrutiny processes will be adhered to.
  The next major stage in the process will be the ministerial meeting in April, at which OECD Ministers collectively can review progress and the prospects for achieving a satisfactory agreement.
  Ms Walley: Have the opportunities for detailed parliamentary scrutiny by Select Committees passed by? How can we have influence before a decision is made?
  Mrs. Roche: The opportunity has not gone by. All the European scrutiny processes of Select Committees and Standing Committees will have to be undertaken.
  My hon. Friend the Member for Broxtowe raised a number of other points. The United Kingdom strongly supports the European Union-wide position against Helms-Burton. He asked about sanctions. Any United Nations sanctions would prevail over MAI obligations. He also raised an important question about trading pollution quotas. That would not be prohibited.
  We do not think that there is a possibility of even a partial agreement in April, but, even if there were, we would not postpone our aims on environmental and labour standards.
  This has been a welcome opportunity to hear hon. Members' views. It is important that we consult widely during our presidency of the European Union and beyond. We shall ensure that the consultation process is as wide as possible.
  I hope that I have explained the Government's position in the short time available. Our stance is balanced. The MAI is potentially a useful agreement, but we must get it right. We shall keep the House informed.
  Question put and agreed to.
  Adjourned accordingly at twenty-nine minutes to Twelve midnight.

CHURCH COMMISSIONERS
  Surplus Property and Land
  Surplus Property and Land
ATTORNEY-GENERAL
  Crown Prosecution Service
  Crown Prosecution Service
PRESIDENT OF THE COUNCIL
  Cash Limits
  Cash Limits
PRIME MINISTER
  Cabinet Posts
  Cabinet Posts
  Overseas Visits
  Overseas Visits
  Single Currency
  Single Currency
  Cash Limits
  Cash Limits
  Departmental Child Care
  Departmental Child Care
  Official Residence
  Official Residence
INTERNATIONAL DEVELOPMENT
  India
  India
  Multilateral Agreement on Investment
  Multilateral Agreement on Investment
  Enterprise Development
  Enterprise Development
  Advertising Contracts
  Advertising Contracts
  Sierra Leone
  Sierra Leone
  Surplus Property and Land
  Surplus Property and Land
  Cash Limits
  Cash Limits
  Commonwealth Development Corporation
  Commonwealth Development Corporation
ENVIRONMENT, TRANSPORT AND THE REGIONS
  Council House Rents
  Council House Rents
  Millennium Dome
  Millennium Dome
  Oil Spills
  Oil Spills
  Motorways
  Motorways
  Driving Licences
  Driving Licences
  Waste Recovery
  Waste Recovery
  Air Traffic Control
  Air Traffic Control
  Aircraft Fuel
  Aircraft Fuel
  Toxic Chemicals
  Toxic Chemicals
  Cash Limits
  Cash Limits
  Roundabouts
  Roundabouts
  Housing
  Housing
  Deaf Travellers
  Deaf Travellers
  Genetically Modified Organisms
  Genetically Modified Organisms
  Water Conservation
  Water Conservation
  Water Resources
  Water Resources
  Sustainable Development
  Sustainable Development
  Heavy Goods Vehicles
  Heavy Goods Vehicles
  Cannabis
  Cannabis
  Pavement Cleaning
  Pavement Cleaning
  Clean Vehicle Technology
  Clean Vehicle Technology
  Road Fatalities and Injuries
  Road Fatalities and Injuries
  Road Accidents (Children)
  Road Accidents (Children)
  Sulphur Dioxide Emissions
  Sulphur Dioxide Emissions
  Gilberts Animal By-Products
  Gilberts Animal By-Products
  Surplus Property and Land
  Surplus Property and Land
  Canals
  Canals
  Departmental Pay
  Departmental Pay
  Japanese Cars
  Japanese Cars
  Ecolabelling
  Ecolabelling
  Regional Development Agencies
  Regional Development Agencies
DUCHY OF LANCASTER
  Cash Limits
  Cash Limits
  Freedom of Information
  Freedom of Information
  Ministerial Visits
  Ministerial Visits
MINISTER WITHOUT PORTFOLIO
  Millennium Dome (Contents)
  Millennium Dome (Contents)
  Millennium Dome (Faith Communities)
  Millennium Dome (Faith Communities)
CULTURE, MEDIA AND SPORT
  New Opportunities Fund
  New Opportunities Fund
  Television Licences
  Television Licences
  East Midlands Arts
  East Midlands Arts
  National Lottery
  National Lottery
  Millennium Tower (Portsmouth Harbour)
  Millennium Tower (Portsmouth Harbour)
FOREIGN AND COMMONWEALTH AFFAIRS
  European Union
  European Union
  Cash Limits
  Cash Limits
  Embassies (Furniture)
  Embassies (Furniture)
  China
  China
  Russia
  Russia
  Ministerial Visits
  Ministerial Visits
  Iraq
  Iraq
  Mr. Azil Nadir
  Mr. Azil Nadir
  Correspondence
  Correspondence
  Entry Clearance
  Entry Clearance
  Surplus Property and Land
  Surplus Property and Land
  Advertising Contracts
  Advertising Contracts
  Sierra Leone
  Sierra Leone
  Ethical Foreign Policy
  Ethical Foreign Policy
DEFENCE
  Iraq
  Iraq
  Advertising Contracts
  Advertising Contracts
  Cash Limits
  Cash Limits
  Overseas Travel
  Overseas Travel
  Strategic Defence Review
  Strategic Defence Review
  Low Flying
  Low Flying
  Departmental Pay
  Departmental Pay
  Firing Ranges
  Firing Ranges
  Tomahawks
  Tomahawks
  Furniture Purchases
  Furniture Purchases
  Departmental Buildings
  Departmental Buildings
  Indian Ocean
  Indian Ocean
  Service Personnel (Asbestos Exposure)
  Service Personnel (Asbestos Exposure)
  Widows' Pensions
  Widows' Pensions
  Exercise Senator 97
  Exercise Senator 97
  Defence Council Instructions
  Defence Council Instructions
  Surplus Property and Land
  Surplus Property and Land
  Vermin Control
  Vermin Control
  Casualties
  Casualties
  Explosives Theft (Brecon)
  Explosives Theft (Brecon)
  Second Division
  Second Division
  RAF Coltishall
  RAF Coltishall
HOME DEPARTMENT
  Cash Limits
  Cash Limits
  ID Cards
  ID Cards
  Police Road Blocks
  Police Road Blocks
  Farmers (Devon and Cornwall)
  Farmers (Devon and Cornwall)
  Prisoners (Prescriptions)
  Prisoners (Prescriptions)
  Learning Difficulties (Crime Victims)
  Learning Difficulties (Crime Victims)
  Racial Incidents
  Racial Incidents
  Electoral Procedures
  Electoral Procedures
  Death Penalty
  Death Penalty
  Prison Service
  Prison Service
  Advertising Contracts
  Advertising Contracts
  Prisoner Releases
  Prisoner Releases
  Security Industry
  Security Industry
  Child Sex Abuse
  Child Sex Abuse
  "In Excelsis" Manuscript
  "In Excelsis" Manuscript
  Wild Mammals (Hunting with Dogs) Bill
  Wild Mammals (Hunting with Dogs) Bill
  Private Members' Bills
  Private Members' Bills
  Correspondence
  Correspondence
  Market Research
  Market Research
LORD CHANCELLOR'S DEPARTMENT
  Surplus Property and Land
  Surplus Property and Land
  Advertising Contracts
  Advertising Contracts
  County Courts
  County Courts
  Cash Limits
  Cash Limits
TREASURY
  Cash Limits
  Cash Limits
  Amusement Machines
  Amusement Machines
  Inheritance Tax
  Inheritance Tax
  Mortgage Tax Relief
  Mortgage Tax Relief
  Child Benefit
  Child Benefit
  Lost and Stolen Items
  Lost and Stolen Items
  Surplus Property and Land
  Surplus Property and Land
  Spending Review
  Spending Review
  VAT (House Renovations)
  VAT (House Renovations)
  Workless Households
  Workless Households
  Fast Food Companies
  Fast Food Companies
  Valuation Office
  Valuation Office
  VAT (Energy Use)
  VAT (Energy Use)
  Working Families Tax Credit Scheme
  Working Families Tax Credit Scheme
  Pensions
  Pensions
  Public Corporations (Borrowing)
  Public Corporations (Borrowing)
  IMF (Nicaragua)
  IMF (Nicaragua)
  Hairdressers
  Hairdressers
  Freeholders
  Freeholders
  Official Residence
  Official Residence
NORTHERN IRELAND
  Personal Protection Weapons
  Personal Protection Weapons
  Summonses
  Summonses
  Maze Prison Inquiry
  Maze Prison Inquiry
  Oil and Gas Industry
  Oil and Gas Industry
  Police Authority
  Police Authority
  Cash Limits
  Cash Limits
  Periodicals
  Periodicals
  Lost and Stolen Items
  Lost and Stolen Items
  Official Hospitality
  Official Hospitality
  Shootings (Forensic Evidence)
  Shootings (Forensic Evidence)
  Publications
  Publications
  Royal Ulster Constabulary
  Royal Ulster Constabulary
  Blood Service
  Blood Service
  Music Industry
  Music Industry
WALES
  Gross Domestic Product
  Gross Domestic Product
  Cash Limits
  Cash Limits
  NHS Trusts
  NHS Trusts
  Surplus Property and Land
  Surplus Property and Land
  Advertising Contracts
  Advertising Contracts
SCOTLAND
  Cancer Surgery
  Cancer Surgery
  Publications
  Publications
  Rural Watch
  Rural Watch
  Further Education
  Further Education
  Soccer Facilities
  Soccer Facilities
  Epilepsy
  Epilepsy
  Hill Farming
  Hill Farming
  Anti-knife Legislation
  Anti-knife Legislation
  Student Awards Agency
  Student Awards Agency
  Cash Limits
  Cash Limits
  Advertising Contracts
  Advertising Contracts
  Hyundai Project
  Hyundai Project
  Lynebank Hospital
  Lynebank Hospital
HEALTH
  New Variant CJD
  New Variant CJD
  NHS Dentists
  NHS Dentists
  Labour Party Donations
  Labour Party Donations
  GP Fundholders
  GP Fundholders
  Hepatitis C
  Hepatitis C
  Smoking
  Smoking
  Secure Mental Health Units
  Secure Mental Health Units
  Health Education
  Health Education
  Diabetes
  Diabetes
  Cash Limits
  Cash Limits
  Care in the Community
  Care in the Community
  Aricept
  Aricept
  Surplus Property and Land
  Surplus Property and Land
  Dental Services
  Dental Services
  Absenteeism
  Absenteeism
  Millennium Compliance
  Millennium Compliance
AGRICULTURE, FISHERIES AND FOOD
  Waste Materials
  Waste Materials
  Certified Herd Scheme
  Certified Herd Scheme
  Beef on the Bone
  Beef on the Bone
  Brazilian Mahogany
  Brazilian Mahogany
  Milk Quotas (Italy)
  Milk Quotas (Italy)
  Food Safety
  Food Safety
  Farm Incomes
  Farm Incomes
  Correspondence
  Correspondence
  Ministerial Visits
  Ministerial Visits
  Flood Defences (Sussex)
  Flood Defences (Sussex)
  Sheep Dip
  Sheep Dip
  Herbicide-tolerant Crops
  Herbicide-tolerant Crops
  Food Labelling
  Food Labelling
  Milk Products
  Milk Products
  Poultry Meat
  Poultry Meat
  Cash Limits
  Cash Limits
TRADE AND INDUSTRY
  Second-hand Cars
  Second-hand Cars
  Hawk Jets (Indonesia)
  Hawk Jets (Indonesia)
  Exchange Rate
  Exchange Rate
  Official Entertainment
  Official Entertainment
  Nuclear Safety
  Nuclear Safety
  Oil Exploration
  Oil Exploration
  Television Broadcasting
  Television Broadcasting
  Minimum Wage
  Minimum Wage
  Export Licences
  Export Licences
  Tractor Production and Exports
  Tractor Production and Exports
  Cash Limits
  Cash Limits
  Millennium Compliance
  Millennium Compliance
  Industrial Development Advisory Board
  Industrial Development Advisory Board
  Trade Missions
  Trade Missions
  Export Credit Guarantees (Far East)
  Export Credit Guarantees (Far East)
  British Investments
  British Investments
  Brazilian Mahogany
  Brazilian Mahogany
  Correspondence
  Correspondence
  Dietary Supplements
  Dietary Supplements
  Oil and Gas Industry
  Oil and Gas Industry
  Mumbai Airport
  Mumbai Airport
  Transco
  Transco
  Overhead Power Line (Lune Valley)
  Overhead Power Line (Lune Valley)
  Social Dialogue
  Social Dialogue
  Wealth Warnings
  Wealth Warnings
EDUCATION AND EMPLOYMENT
  Cash Limits
  Cash Limits
  Salaries
  Salaries
  Advertising and Publicity
  Advertising and Publicity
  Non-teaching Staff
  Non-teaching Staff
  Surplus Property and Land
  Surplus Property and Land
  Advertising Contracts
  Advertising Contracts
  National Child Care Strategy
  National Child Care Strategy
  Health and Safety
  Health and Safety
SOCIAL SECURITY
  Family Credit
  Family Credit
  Lone Parents
  Lone Parents
  Welfare Reform
  Welfare Reform
  Absent Fathers
  Absent Fathers
  Long-term Sick and Disabled
  Long-term Sick and Disabled
  Disability Benefits
  Disability Benefits
  Benefits (Information)
  Benefits (Information)
  Teenagers and Pensioners
  Teenagers and Pensioners
  Pension Sharing
  Pension Sharing
  Occupational Pensions
  Occupational Pensions
  Housing Benefit
  Housing Benefit
  Taxation and Social Security Benefits
  Taxation and Social Security Benefits
  Benefit Levels (London)
  Benefit Levels (London)
  State Pensions
  State Pensions
  Disability Living Allowance
  Disability Living Allowance
  Child Support Agency
  Child Support Agency
  Family-friendly Employment Policies
  Family-friendly Employment Policies
  Cash Limits
  Cash Limits
  Benefit Integrity Project
  Benefit Integrity Project
  Mrs. Carol Preston
  Mrs. Carol Preston
  Miss A. Steed
  Miss A. Steed
  Surplus Property and Land
  Surplus Property and Land
  Disabled Workers
  Disabled Workers
  Child Support
  Child Support
  Advertising Contracts
  Advertising Contracts
  Carers
  Carers
  Social Fund Loans
  Social Fund Loans

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Ripon.
Viscount Younger of Leckie (Lord Younger of Prestwick)—Presented his writ as Viscount Younger of Leckie, and took the Oath.

Royal Assent
The Lord Chancellor (Lord Irvine of Lairg): My Lords, I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified her Royal Assent to the following Act:
Greater London Authority (Referendum) Act.

Gas and Electricity: Deregulation Proposals
Lord Ezraasked Her Majesty's Government:
When the domestic markets for gas and electricity are likely to be deregulated and under what conditions.
The Minister of State, Department of Trade and Industry (Lord Clinton-Davis): My Lords, the timetables for opening the domestic markets for gas and electricity to competition are published by Ofgas and Offer respectively. In each case the market is being opened as soon as the relevant authorities are confident that the arrangements for administering the market will work reliably.
In the gas market, trials have been carried out in the South West, Kent and East and West Sussex. The remainder of the market is being opened in tranches across the country.
It is intended that the electricity market will open area by area, starting in September 1998. In the first areas to open, approximately 10 per cent. of customers will be free to choose their supplier straightaway; approximately half the customers will be free after three months and all customers after six months.
Lord Ezra: My Lords, is the noble Lord aware that a certain amount of confusion and concern has been created in the marketplace and among consumers at the delay in the opening-up of the electricity market, and is he satisfied that there will be no further delays? Furthermore, can he give an assurance that those customers who are disadvantaged for financial reasons,
396
particularly those with prepayment meters, will be suitably safeguarded, as they were in the past, when the markets are opened up?
Lord Clinton-Davis: My Lords, before coming to those difficult points, perhaps I may take this opportunity, on behalf of the whole House, to congratulate the noble Lord on his birthday.
Noble Lords: Hear, hear!
Lord Clinton-Davis: My Lords, we thank him for his long devotion to the House and his unrestrained interest in energy matters.
The Government are not happy about the delay in opening the electricity market. However, the important thing is to get the answer right, as my honourable friend Mr. John Battle has made plain in the other place. We remain committed to seeing competition in electricity so that consumers can benefit. It would not be helpful to attempt to apportion responsibility for the delay.
We are carrying out a review with regard to help for poorer customers in the competitive market. There will be a consultation period in which all interested parties will have a role to play. So far as concerns electricity, the position of customers with prepayment meters has been protected by measures in the electricity price controls, which will run from 1st April until 31st March 2000. Under those controls prepayment customers should benefit to a broadly similar degree as should other customers from reductions in public electricity supply tariffs. The matter will be kept under review by Offer.
Lord Evans of Parkside: My Lords, is my noble friend aware that in the North West, where the gas market is soon to be deregulated, considerable confusion is being created among consumers by the high pressure salesmanship of certain companies and the conflicting claims about how much the consumer will benefit if he or she signs up with a different company? Will my noble friend give an undertaking that the Government will ensure, through the regulator, that customers will at least be able to compare like with like regarding the claims of different companies?
Lord Clinton-Davis: My Lords, I am aware of the difficulty that has arisen over the marketing tactics of a number of companies and rogue salesmen. This issue is being actively addressed by Ofgas through a new marketing condition in the licences of all gas supply companies. This will put responsibility where it lies—with the companies concerned.
Baroness Miller of Hendon: My Lords, do the Government agree that if the gas and electricity industries continue to make profits, whether by deregulation when it comes, increased capital investment or greater efficiency, those profits should not be confiscated by way of selective penal taxation?
Lord Clinton-Davis: My Lords, with respect to the noble Baroness, whom the House greatly admires,

397
I believe that she has got this wrong. There was a case for a windfall tax, and that tax has been levied. It led to no proclamations of undue dissent, even from those who were required to pay it.
Lord Ezra: My Lords, I thank the Minister for his kind felicitations. However, can he say, in connection with the review that the Government are undertaking in relation to the position of those on low incomes—particularly with regard to electricity—whether he is aware of the proposal made by the electricity companies for raising a levy from all users of electricity which could then be used for the benefit of poorer users?
Lord Clinton-Davis: My Lords, I am aware of that proposal. It is a consideration which will be taken into account in the review to which I referred. I thank the noble Lord for raising that matter.
Lord Stoddart of Swindon: My Lords, is my noble friend aware that that is a dangerous road down which to go? Poverty should be relieved through general taxation and not taxation on one specific industry. If we do that for one, where will we stop?
Lord Clinton-Davis: My Lords, I am not sure whether my noble friend is referring to the supplementary raised by the noble Baroness, Lady Miller of Hendon, or to that raised by the noble Lord, Lord Ezra. I have not said that the Government will accept the proposition; I said that it will come within their deliberations in the review being undertaken and I go no further than that.

Bus Lanes: Motorcycle Use
2.45 p.m.
Lord Rotherwickasked Her Majesty's Government:
What measures they are taking to encourage local authorities to make bus lanes available to motorcycles.
The Parliamentary Under-Secretary of State, Department for the Environment, Transport and the Regions (Baroness Hayman): My Lords, the Government do not believe that allowing motorcyclists to use bus lanes is something that they could or should generally encourage at present. We are concerned that the disadvantages, particularly to other vulnerable road users such as pedal cyclists and pedestrians, may outweigh any benefits to motorcyclists. However, pilot schemes are operating in Bristol and Reading. We are watching those with interest and welcome further proposals for fully monitored trials.
Lord Rotherwick: My Lords, I thank the noble Baroness for her reply, though it disappoints me. The review has been ongoing for a long time. Can the Minister say when the Bristol bus lane scheme, which has been ongoing since 1995, will produce results? Further, can she say what other proposals her Government intend to bring forward in light of the fact
398
that they have been reviewing the situation for over a year and those reviews have shown what a wonderful means of transport a powered two-wheeler vehicle is?
Baroness Hayman: My Lords, I am not sure that any government review said what a wonderful means of transport a powered two-wheeler is. We said that we are anxious, first, to make sure that those who use powered two-wheelers do so safely and, secondly, to improve the safety of their chosen means of transport. We have also said that we will look, in the context of an integrated transport policy, at the potential that exists in terms of reducing congestion and pollution and improving safety for the powered two-wheeler.
I stress to the House that we must assess that proposal as rigorously as we assess any other claims to contribute towards those aims. It is difficult fully to assess the specific schemes in Bristol and Reading because no monitoring was undertaken before the shared bus lanes were introduced. It is difficult therefore to know what effects they have had on safety and the speed of buses. That is why some fully monitored trials with before and after studies would be extremely helpful.
Lord Berkeley: My Lords, given the proven success of bus lanes in encouraging people to leave their cars and take the bus, does the Minister share my concern that the increase in bus lanes in London of only 10 per cent. in four years is much lower than she would like? Does she agree that the first priority is to provide more bus lanes before adding motorcycles or any other type of vehicle to the existing ones?
Baroness Hayman: My Lords, we are committed to enhancing the role of the bus as part of the balanced transport policy and development of quality public transport systems. That means that we have to look at the role that bus lanes can play in making sure that bus services are reliable and speedy. The department encourages local highway authorities, which are responsible for deciding whether or not to introduce bus lanes, to consider using them to ensure just that.
Baroness MacLeod of Borve: My Lords, perhaps I should declare an interest in this Question in that I can drive a double decker or a single decker bus. I can assure the House that any move in the direction of this Question will make it almost impossible for a bus driver to see a motorcyclist behind him. To allow that situation on our roads would be a great disadvantage not only to the bus drivers, but also to the motorcyclists.
Baroness Hayman: My Lords, I note the comments of the noble Baroness and particularly the expertise from which she draws them. It is important to maintain the credibility of bus lanes for their primary purpose; that is, enhancing bus journeys. That is why we have to look rigorously at the proposals for extending the use of bus lanes to any other vehicles.
Baroness Nicol: My Lords, does my noble friend accept that pedal cyclists would be dismayed and alarmed at any suggestion that motorcycles should use

399
bus lanes? It is already extremely difficult to cycle safely on our roads. Pedal cyclists would be competing with motorcycles for the left hand edge of the road and would be overtaken by them. I hope the Government will resist any such suggestion.
Baroness Hayman: My Lords, I am very well aware of the concerns of pedal cyclists about this possibility. They feel as strongly as those who use powered two-wheelers and who feel that this would be an advantage. That is one of the reasons why we have to be careful in this area and make certain that we do not take any steps without having evidence that to allow motorcyclists into bus lanes would be to the advantage of all the travelling public.
Lord Strathcarron: My Lords, does the noble Baroness agree that motorcycles should be encouraged, particularly in urban areas, because they are efficient, practical and very economical? Furthermore, three motorcycles take up the space of one car. As by the nature of things there have to be three people on three motorcycles, and as there is likely to be one driver in perhaps quite a large car, motorcyclists are doing a service in helping to prevent traffic congestion.
Baroness Hayman: My Lords, the noble Lord uncovers a number of interesting areas. The effect that increased motorcycle usage has on congestion and on pollution depends on a number of factors, including how highly powered the two-wheeler is. There is a vast difference between low powered scooter-type vehicles, which can be useful in urban settings, and very highly powered vehicles. It also depends very much on how many people are in the car and whether the motorcyclist is transferring from a car or transferring from walking, cycling or public transport.
Lord Stoddart of Swindon: My Lords, is my noble friend aware that I live on the Bath Road in Reading and that we have a bus lane along that road? We are most concerned that, as bus lanes are clear of other traffic, there is a great temptation for motorcyclists to use them as race tracks, which they often do. Since there are side roads off the bus lanes in most cases, the danger to motor vehicles coming from the side roads is very great indeed. I hope my noble friend will utterly reject the proposal that bus lanes should be used by motorcyclists.
Baroness Hayman: My Lords, I note the comments of my noble friend, again from personal experience. One of the points his comments highlight is the need for proper and effective enforcement regarding the use of bus lanes if they are to carry out their proper purpose.
Lord Rotherwick: My Lords, is the Minister aware that no adverse effects were caused by the motorcycles being in those bus lanes and no accidents were caused in the bus lanes in Bristol during that six-month period?
Baroness Hayman: My Lords, I cannot comment specifically on the factors to which the noble Lord
400
referred. However, it comes back to the issue of evidence. It is particularly important that we have evidence not just of what happened during the trial, but that we are able to contrast the situation before and after the trial.

CFSP: High Representative
2.53 p.m.
Lord Wallace of Saltaireasked Her Majesty's Government:
What consultations they are undertaking on the method of appointment, and the potential functions, of the secretary-general of the council as high representative for the common foreign and security policy, as agreed in the Treaty of Amsterdam, and on the establishment of a policy planning and early warning unit responsible to the secretary-general.
Lord Whitty: My Lords, the method of appointment and functions of the secretary-general and the high representative are set out in the treaties. Under Article 151.2 of the treaty establishing the European Community, the secretary-general of the council is appointed by unanimity by the council. That has not changed in the draft Amsterdam treaty. However, Articles J.8.3 and J.16 of the Amsterdam treaty define the new functions of the secretary-general as high representative as contributing to the formulation and preparation of common foreign and security policy decisions, and assisting the council and the presidency in implementing and representing them. The broad functions of the policy planning and early warning unit are set out in a separate declaration adopted by the Amsterdam European Council. The UK presidency is actively taking forward in the political committee consultations on its implementation. The objective is to ensure that the unit is operational when the Amsterdam treaty comes into force.
Lord Wallace of Saltaire: My Lords, I thank the Minister for that Answer. Can he confirm that the Government see this as a constructive step forward and that we should be thinking of someone of the same calibre and quality as the secretary-general of NATO for this appointment? Can he also confirm that the British Government do not see the policy planning unit as something which should be kept as small as possible and as long term as possible but as something which should be adequately staffed to serve its function in assisting the high representative?
Lord Whitty: My Lords, I would agree with the noble Lord that this appointment is an important one for the co-ordination within the European Union of common foreign and security policy. As far as concerns the size of the unit, the key issue is its effectiveness rather than the size of its staffing. We are very keen to see an effective unit performing this function.
Lord Garel-Jones: My Lords, given that common foreign and security policy remains an intergovernmental activity, can the Minister assure the House that those who will be manning this secretariat and advising the secretary-general will, as a general principle, be diplomats on secondment from national governments for three to five years rather than full-time functionaries from the European Union?
Lord Whitty: My Lords, there will no doubt be an element of such people. The key issue is to appoint the best people for the job. We intend to use our influence to ensure that happens.
Lord Hardy of Wath: My Lords, will my noble friend consider the question of duplication? The Western European Union's planning cell may be unsung but it does some useful work, involving distinguished contributions from the United Kingdom. Would it not be a mistake if there were excessive duplication in this area?
Lord Whitty: My Lords, I entirely agree with my noble friend. A closer relationship between the EU policy-making function and the WEU is envisaged in the Treaty of Amsterdam, and certainly duplication is to be avoided in this area. But the combination should be at its most effective in support of the member states in the council.
Baroness Ludford: My Lords, is the Minister satisfied that the Government are putting enough effort into securing a common foreign policy? I am thinking not only of Iraq but also of the summit that has just taken place between Chancellor Kohl, President Chirac and the Polish president. A similar one is scheduled with the Russian president, Boris Yeltsin. Did the UK Government seek to be present at those meetings, either as the UK or as the presidency of the EU? It seems to me that they ought to have been present.
Lord Whitty: My Lords, the common foreign and security policy exists where the member states of the European Union have a consensus that they wish to pursue a particular line of policy. Bilateral arrangements by other member-states will continue to take place. It is not a matter for the UK, either as the UK Government or as the presidency, to move in on other member states' foreign policies any more than we would expect them to move in on ours. However, the whole point of these changes is to ensure that there are greater areas and better support for those areas where we can agree between the member states on a common policy.
Lord Beloff: My Lords, does the Minister agree that we have a splendid candidate for the job of high representative in the noble Lord, Lord Wallace of
402
Saltaire, since it would enable him to learn the truth about his Europhilia in perhaps an expensive and dramatic way?
Lord Whitty: My Lords, deeply appreciative as I am of the contribution of the noble Lord, Lord Wallace, any words from me would hardly improve his candidature for that post.
Lord Bruce of Donington: My Lords, in view of the deafening silence in some quarters of the European Union during the Iraqi crisis, which still continues, is it not a little premature to talk about a common foreign and security policy? Is the noble Lord aware that the security of Europe has depended very largely on the existence of NATO, with the support of the United States, and more particularly so far as we are concerned on Great Britain's undertaking in 1954 to underwrite the security of the whole of Europe by agreeing to commit its own forces without reference to anybody else to the defence of Europe?
Lord Whitty: My Lords, I do not dissent at all from the contribution made by NATO over past decades to the security of Europe referred to by my noble friend. However, we are now in an era when Europe as a whole would benefit from greater co-ordination between member states of the European Union on foreign policy whether we are talking about an immediate crisis or in the longer term. That is what these changes are designed to achieve.
Baroness Rawlings: My Lords, I agree with the question of my noble friend Lord Garel-Jones. Can the Minister say to whom the high representative of the common foreign and security policy will be accountable, and what will his role be in promoting decisions on which there have been constructive abstentions?
Lord Whitty: My Lords, as regards the first point, it is clear that the high representative will continue, as the secretary-general, to be responsible to the council. It will be the member-states on the council who will decide the policy. As regards constructive abstentions, the new mechanism will apply when a member state does not wish to prevent the council as a whole moving forward, but does not itself wish to participate in that policy. In those circumstances, the high representative will remain responsible for carrying out the position adopted by the majority of the council.

Asylum Seekers: Financial Support
3.1 p.m.
Earl Russellasked Her Majesty's Government:
What financial support will be available to local authorities to discharge their responsibilities to asylum seekers under the National Assistance Act 1948 for the financial year 1998–99, and whether they believe the present system is working well.
The Minister of State, Department of Health (Baroness Jay of Paddington): My Lords, local authorities are discharging the duties imposed upon them as a result of court judgments as best they can. The Government recognise the financial and administrative burden placed on them as a result and do not believe that the National Assistance Act is a suitable vehicle for providing support to asylum seekers. The Government are reviewing the whole asylum process including the way in which welfare support is delivered. The review team will be reporting shortly. Meanwhile, the Government have listened to representations from local authorities and have considered the costs that they are facing in arranging accommodation and support. The Government have announced that funding for 1998–99 will be increased by almost 18 per cent. to £165 per accommodated single adult asylum seeker per week: obviously, subject to parliamentary approval. That restores the level to that paid in 1996–97.
Earl Russell: My Lords, I thank the Minister for small mercies. Is she aware that, according to the Medical Foundation for the Care of Victims of Torture, the cost of supporting asylum seekers in London alone last year was £109 million, whereas, according to Mr. Paul Boateng speaking in a committee of another place last Wednesday, the total government support for asylum seekers came only to £89.6 million? Does the Minister agree that that helps to quantify the extent to which the Government are passing the buck of a central responsibility to local authorities? Why does not the buck stop at 10 Downing Street?
Baroness Jay of Paddington: My Lords, I believe I indicated in my original Answer that the Government are extremely concerned about the plight of asylum seekers. I am sure the noble Earl realises that for some months a review has been in progress on the whole of both asylum and immigration policy. A review of the benefits connected with them is taking place and a report will be made. That has led to a high level of activity within the Government; the lead department being the Home Office. As regards costs, we have decided, as I said, to accept the suggestions made by a number of local authorities, particularly in central London, about the costs imposed on them through their responsibilities in this field. That is why we have restored the grant to £165 a week.
The noble Earl referred to my honourable friend Mr. Boateng. Officials in the Department of Health estimate that the cost related to adult asylum seekers, to which I referred, on the basis of estimates of increased numbers will be about £89.7 million for the coming year. That does not include specific grants addressed to unaccompanied children or children in families.
Baroness Gardner of Parkes: My Lords, is it not a euphemism to say that the Government have listened to local authorities when in fact the appeal to the House of
404
Lords against the original decision was to be heard in February and that it was withdrawn because the Government agreed to increase the sum to £165 a week under that pressure?
Is not the Minister aware that the five inner London boroughs formed a consortium and are working together to try to resolve this problem? Does she agree that £165 a week is insufficient for caring for someone in the centre of London and that every effort to move people to where accommodation would be available more cheaply and of a better standard is thwarted or resisted very often by threats of judicial review? What can the Minister do to prevent these procedures stopping any innovative scheme coming forward? Will those matters be considered in her review? Is the Minister further aware that the need for space in central London is so desperate that thoughts are now being given to having floating accommodation in the form of a ship?
Baroness Jay of Paddington: My Lords, as I said in my original Answer to the noble Earl, the present situation under the National Assistance Act is unsatisfactory. Unfortunately, we inherited that situation because of legislation introduced in 1996 under the previous government. I repeat that we have tried to address the problem on an across the board basis. I am aware that there is a particular issue in central London. That is why we have been concerned to raise the grant for 1998–99.
One of the problems that has occurred is that we hoped cheaper accommodation would become available, but because local authorities—and quite rightly, because the review is taking place—see this as a relatively short-term problem which they need to address, they have felt unable to undertake longer-term accommodation arrangements which might have reduced costs.
Lord Mackay of Ardbrecknish: My Lords, does the noble Baroness recall the opposition which her side of the House undertook to the proposals on immigration put forward by the noble Baroness, Lady Blatch, and myself in the last Parliament? Why is it that 10 months later the Government still have not reversed the policy, as they said they were going to do? Is this another U-turn?
Baroness Jay of Paddington: My Lords, it is certainly not a U-turn. The problem is that the complexities and difficulties which we have inherited have led to a proper, sensible and sustained inquiry into the whole issue. For example, we have heard my noble friend Lord Williams of Mostyn describe in some detail the situation on immigration appeals, where we have inherited many thousands of such appeals since 1993 that have not been heard. We are addressing this problem. As I indicated in my original Answer to the noble Earl, it will be a matter of weeks, not months or years, before we produce a solution.

Business
Lord Carter: My Lords, at a convenient moment after 3.30 p.m. my noble friend Lady Hayman will, with the leave of the House, repeat a Statement that is to be made in another place on planning for the communities of the future. I would like to take this opportunity to remind the House that the Companion indicates that discussion on a Statement should be confined to,
"brief comments and questions for clarification".
There is a mandatory limit of 20 minutes from the end of the Minister's initial reply to the Opposition spokesmen.

Teaching and Higher Education Bill [H.L.]
3.8 p.m.
The Minister of State, Department for Education and Employment (Baroness Blackstone): My Lords, I beg to move that the Report be now received.
Moved, That the Report be now received.—(Baroness Blackstone).
Lord Topehad given notice of his intention to move, as an amendment to the Motion ("That this report be now received") to leave out from ("That") to the end and insert ("the Bill be re-committed to a Committee of the Whole House in respect of Clauses 16 to 18.").
The noble Lord said: My Lords, I say at the outset that it is not my intention to move this amendment, but I do intend to give an explanation of my reasons to your Lordships. This morning I received a letter from the Minister which I am sure she will not mind me—
The Lord Privy Seal (Lord Richard): My Lords, I am sorry to rise and interrupt the noble Lord, but I do so on advice and instructions. I am told that it is not in order for the noble Lord to speak to the amendment when he has not moved it.
Noble Lords: Oh!
Lord Richard: My Lords, I think that the noble Lord, Lord Tope, can speak to my noble friend's Motion, but he cannot speak to his amendment if he does not move it.
Lord Harris of Greenwich: My Lords, the noble Lord the Leader of the House and I are in agreement. My noble friend Lord Tope is speaking to the Motion moved by the noble Baroness, Lady Blackstone. He has referred briefly to an amendment which appears on the Order Paper, but it is perfectly reasonable to speak on the Motion, which is what he is doing.
Lord Tope: My Lords, I am, as always, grateful to my Chief Whip for telling me my intentions before I have discovered them for myself. I was, of course,
406
intending to speak to the Motion and to explain why I am speaking to that and not to what some noble Lords might have expected me to speak.
As I was saying, this morning I received a letter from the Minister which I am sure that she will not mind if I read to your Lordships because it is pertinent to the whole House, and not just to me. The noble Baroness wrote:
"Following your request that more time be made available for debate on some of the key issues in the Bill, I have given further consideration to this and I am now able to tell you that we expect to spend about two and a half days on the Report Stage of the Teaching and Higher Education Bill. As I said in my earlier letter, I would be happy to allow maximum debate of Clauses 16–18 of the Bill at Report within the rules of the House, and also if possible as first business. I undertake to respond very flexibly to interventions from Peers asking questions further to elucidate points raised in the debate. I hope you can accept this assurance. I am keen to press ahead with the consideration of this Bill. I am now clear that recommitting the Bill would not prevent implementation this summer, but it would have the effect of delaying the Government's remaining legislative programme, much of which your party support. I appreciate we disagree on certain aspects of the Bill, not least in relation to Clauses 16–18, which at Report you may continue to wish to amend or delete".
I shall! The letter continues:
"I hope however, that with your and your colleagues' constructive contributions, we will be able to work towards securing the objectives we share for schools and further and higher education".
I believe that it was a common view throughout the House that Committee stage was deeply unsatisfactory for quite a number of reasons, not least the skeletal nature of the whole of the Bill. With regard to Part II, I believe that all noble Lords found it difficult to frame an amendment that would allow any principled debate on tuition fees and, when we finally reached that stage, it was a little after midnight. I recognise that in themselves none of those is a reason for re-commitment, but to compound all that, whatever the causes, there was considerable confusion and great difficulty in getting clear answers from the Government about the legal basis on which they were intending to proceed on the question of student payment of tuition fees.
My purpose in suggesting re-commitment was to allow more time to debate and to clarify those important points. My reason was not particularly to delay the implementation of the Bill, although the thought that it might have had the effect of delaying the implementation of tuition fees this summer was something of a temptation. However, the Minister has now made it clear that that would not happen, even if we re-committed the Bill.
We wanted more time. The Government have now given us an additional day for Report stage so, in practice, Report stage will be virtually the same length as Committee stage. That meets one of my requirements in tabling my amendment. I wanted to have a full and proper debate. We are assured that we shall now have that debate as "first business"—in other words, when the House is full, we hope, when there is much interest, and when noble Lords can be present to press their points.
My next purpose for tabling the amendment was the need to probe and question the Minister. I recognise that we cannot, and should not, change the rules of

407
procedure of your Lordships' House but within that constraint the Minister has undertaken to be "very flexible" with regard to interjections from noble Lords seeking further clarification. I hope that that will go a considerable way to meeting our requirements.
Those are major concessions by the Government and they substantially meet my procedural concerns, if not my political concerns. I am strengthened in that view by a letter which my honourable friend in another place, Mr. Don Foster, has received from Douglas Trainer, the national president of the National Union of Students. I should like to read that letter also to your Lordships because it is important that the House knows the view of the NUS on this matter. Douglas Trainer stated:
"The issue of re-commitment of the Teaching and Higher Education Bill is something my colleagues and I have considered carefully. It is clear from both Hansard and the level of residual confusion amongst Peers that the initial Committee stage was insufficient. Indeed it is hard to understand how the Bill could have been debated in any truly meaningful way until Peers and others were clear about the Government's power to charge fees. For this reason there is a strong case for re-commitment. However, the central issue for NUS remains our ability to oppose many sections of the legislation and to affect major change for the benefit of our membership. Re-commitment would be a victory but NUS would rather secure a guarantee of suitable time to table amendments with Peers given the optimum chance for debate. For these reasons we would fully support a move to have the Bill debated in full session with a relaxation of the relevant procedures to facilitate a debate at report stage rather than the false dawn of re-commitment".
As I said earlier, I recognise—I understand that the NUS is not so familiar with this—that we cannot relax our procedures, but we do have a very generous offer from the Minister. However, I remain unhappy about the skeletal nature of the Bill. That unhappiness will become clear during further stages. My party remains totally and fundamentally opposed to the imposition of student payment of tuition fees, and we shall pursue that opposition to the fullest degree at the appropriate stages.
I am grateful to many noble Lords from all sides of the House who have offered me support on re-commitment because they share the concerns that I have expressed previously and, I hope, today. However, we have had significant concessions from the Government which go a long way to meeting my procedural concerns. I am concerned that any further delay with this Bill would not have any effect on the imposition of tuition fees, but could have a serious effect on other government legislation, some of which, it is true to say, my party supports, at least in principle. In all those circumstances, it would be churlish of me, at this stage, to press ahead with re-commitment and that is why I have decided not to move the amendment.
3.15 p.m.
Baroness Carnegy of Lour: My Lords, before the noble Lord sits down, can he tell the House why his great concern about Clauses 16 to 18 does not extend to Clauses 21 and 22 which do exactly the same for Scotland? Is the noble Lord completely ignoring the situation in Scotland?
Lord Tope: No, my Lords. I share the concern about Clauses 21 and 22. I am sure that the noble Baroness will have noticed that my original amendment referred
408
to the whole of Part II. That was for precisely the reason that the noble Baroness has outlined. I reduced the terms to "Clauses 16 to 18" in an attempt to meet some of the concerns expressed to me earlier by the Minister; namely, that if we re-opened the debate on the whole of Part II, all sorts of other issues would also be re-opened. I hoped and believed that further reconsideration of Clauses 16 to 18 would enable us better to understand and better to respond to the clauses relating to Scotland.
Lord Renfrew of Kaimsthorn: My Lords, since my name is on the Order Paper below that of the noble Lord, Lord Tope, I am advised that it is permissible, in debating the Motion that the Report be now received, to follow the noble Lord and to express some of the anxieties about the very nature of this Bill which emerged clearly in Committee and which made that Committee one of the least productive that I have known in your Lordships' House.
Lord Carter: My Lords, I think that the noble Lord will remember that in Committee I reminded him that he should not speak from the Gangway.
Lord Renfrew of Kaimsthorn: My Lords, I apologise to the noble Lord. He did, indeed, do that and I should have remembered his words with greater attention. I shall endeavour to do so in future.
What deeply troubles me about the Bill, and I know that it troubles quite a number of your Lordships, is its very nature. It is an all-purpose enabling Bill which seems to allow the Government to do almost anything in the field of higher education without further reference to Parliament, and to do so by means of financial controls which appear sweeping and unrestricted—unbridled. The Bill hardly outlines any policies whatever. It could be described as a monumental and sustained King Henry VIII clause. I wish that the noble and learned Lord, Lord Simon of Glaisdale, was still in his place and active on the battlefield to challenge it. Many of us here remember the battle to amend Section 68 of the 1992 Act which, if left unamended, would have seriously infringed the academic independence of universities. As the noble Earl, Lord Russell, argued in Committee in moving that Clause 18 do not stand part, that clause is a threat to academic independence.
It is not my purpose at this point either to argue against government policies—which, as I indicated in Committee, are not disclosed in the Bill and have to be gleaned from other sources—or to speak about individual clauses at Report stage. Instead, I should like to make two points of a more general nature to accompany the Motion that this Report be now received. First, I remind your Lordships that in Committee there was also on the Order Paper consideration of the 9th Report of the Select Committee on Delegated Powers and Deregulation. That committee said:
"We invite the House to consider whether the subject matter of the regulations under Section 16 is so important that the Bill should be amended to require affirmative procedure for the first regulations …"
It goes on to say that everything of importance will be in the regulations.

409
Referring to Clause 18, the committee said:
"The Committee is aware that this clause is controversial…the imposition of conditions…might be regarded as the exercise of secondary power".
The House has not yet fully addressed this important point, although attention was drawn to it in Committee by my noble friend Lady Blatch who has tabled Amendment No. 54 at Report stage. I believe that the House should encourage the Government to frame more clearly just what they are trying to achieve rather than approve legislation that would allow them simply by regulation to achieve anything that they wanted without reference to anyone now or in the future. That task was not adequately undertaken in Committee; nor was a single Division called.
My second and final point is an important example of the vague yet sweeping powers that the Bill may confer. The example relates to the colleges of Oxford and Cambridge. As a former master and continuing professorial fellow of one Cambridge college I declare an interest and apologise for any apparent parochialism. These colleges are self-governing institutions established by charters and governed by statutes, all approved by the Privy Council, of up to seven centuries' standing. Financially they are separate entities. My own college, Jesus, has been in existence for more than 500 years.
Lord Campbell of Alloway: My Lords, with respect to my noble friend, is his speech on the Motion that this Report be received in order?
Lord Richard: My Lords, it is not for me to be the arbiter of what is or what is not in order in this House. However, I can only tell the noble Lord who asked the question and the noble Lord who is on his feet that I am advised that the latter is veering very much in the direction of being out of order, and very shortly will be, if he continues as he has in the past.
Lord Renfrew of Kaimsthorn: My Lords, I am disconcerted by the remarks of the noble Lord the Leader of the House. If I am permitted by the House to do so I should like to take just two minutes to outline why this is a very difficult Bill to debate. It is precisely because the substance is not in it. Therefore, it is very difficult to amend the Bill. I make the point—I shall make it from the proper position—that the Bill may impact directly on the standing of the colleges of Oxford and Cambridge in a manner which it is not possible to amend because there is no statement to that effect in the Bill. With the permission of the House, I shall take perhaps two or three minutes to conclude the point.
The statutes of some of these colleges, for example Trinity Hall, not only empower them but require them to charge fees for tuition and other facilities that are offered to students. What are the intentions of the Government in respect of college fees? Since the colleges are not in receipt of grants from the Higher Education Funding Council for England, which go directly to universities, how are college fees to be controlled under the mechanism of the Bill? There are
410
moments when it looks as if the Government regard college fees as falling under the new anathema that they have pronounced upon top-up fees. But have not college fees been charged with government approval for centuries?
I have been shown a draft government amendment to Clause 20 that seeks to include college fees within the definition of "fees" as set out in that clause, but that particular element does not appear in Amendment No. 67 tabled by the noble Baroness, Lady Blackstone. Is the whole future of the colleges of Oxford and Cambridge to be determined by the vagaries of what is or what is not set down in the definition of "fees" at Report stage by the noble Baroness? Do the Government have a policy on this matter, or are they writing a Bill and inventing the policy afterwards?
That is an example—it is my only example—of why the amendment that has been withdrawn would have been welcome. Our problem is not simply that we disagree with government policy but that we are not sure what the policy is, and the Bill certainly does not tell us. There is no way in which this nebulous Bill, with its sweeping yet ill-defined powers, can profitably be amended to deal with such matters, because it is not at all clear whether or not it refers to them. We cannot effectively discuss these matters at Report because they are not in the Bill, yet the Bill is so sweeping that if the Government so choose they are covered by it.
That is all I have to say. I simply draw to the attention of the House my grave misgivings about a Bill which comes to Report stage when many of the policies which it allegedly contains are not at all clear.
Baroness Blatch: My Lords, I rise to speak to the Motion that this Report be now received. I found the speech of the noble Lord, Lord Tope, extraordinary in the extreme, although not surprising. The love-in between the Liberal Democrat Party and the Labour Party is almost complete. There is no doubt that there have been high level discussions and the Labour Party has said, "Keep the Liberal Democrats off our backs. We want this legislation quickly". Therefore, there has been a capitulation over the weekend.
I ask the noble Lord—perhaps it is an answer that he owes this House when he comes to sum up—what the noble Lord knows today that he did not know on Thursday. I shall answer for him. Nothing. The noble Baroness said in a meeting that I had with her—I know that the letter had already been written to the noble Lord, Lord Tope—that the rules of debate during Report stage could be relaxed. I ask the Minister directly: on what authority can the Minister in this House determine that the rules for Report stage should be relaxed? My understanding is that rules govern Report stage, Committee stage and Third Reading and that no Minister alone has the unilateral power to relax those rules. If noble Lords want to ask questions with the leave of the House it is not for the Minister gratuitously to say that she will give way to those. Noble Lords have the right to ask questions under those rules.
Beyond that, the noble Lord, Lord Tope, is easily pleased if he has accepted that as a concession. If it is a concession the noble Baroness should explain to the

411
House on what authority she has made it. The other reason for the remarkable about-turn of the noble Lord, Lord Tope, having had an amendment on the Order Paper for 27 days, is that he has said that noble Lords have two-and-a-half days for the Report stage of this Bill. That is simply not true. This Bill will be curtailed at about five o'clock this evening. The reason the proceedings have gone into a third day is that we are giving way to the Competition Bill today. I readily agreed to that because I understood that the Government were in difficulties over timetabling. We were offered part of Thursday. It is my understanding that this is not first business on Thursday. I understand that first business on Thursday is the Third Reading of the Late Payment of Commercial Debts (Interest) Bill. We also share the day with the Unstarred Question of the noble Lord, Lord Ashley of Stoke. Therefore, we have part of Thursday, not all of Thursday, and finish on Monday.
Lord Carter: My Lords, the Unstarred Question is in the dinner hour, and Third Reading of the Late Payment of Commercial Debts (Interest) Bill will be brief.
3.30 p.m.
Baroness Blatch: My Lords, when I was talking to the usual channels about how the Bill could be accommodated, I was told that it had a short time today. That is not half a day. We also have a Statement this afternoon. I was told, secondly, that we have a short time on Thursday, and that we would be given time on Monday to complete the Bill. That does not add up to two days, let alone two-and-a-half days. That is not a good reason for accepting what has been offered. The reason for accepting it is that Mr. Ashdown has been told by Mr. Blair that he must capitulate or else.
I do not know this, because I have not had an opportunity to ask my noble friend Lord Renfrew, but I do not know whether he has been shown the discourtesy that I have been shown. I had not been told that the intention was not to move the amendment. I heard it informally. I heard it rumoured around the place. One Liberal told me that it was not to be moved, another told me that it was to be moved, and the Liberal Chief Whip just shrugged his shoulders and said, "I do not really know what is going on". That is a discourtesy.
I shall further explain why it is a discourtesy. The noble Lord, Lord Tope, knows that my name would have been on the amendment. I was happy to support him and his colleagues on the Liberal Benches in pressing the amendment, because he knows that I believe strongly that we have had the most unsatisfactory Committee stage of any Bill in my experience since I entered the House in 1987. I understand that there is a technicality. I was not allowed to add my name to the amendment, because only one name is allowed on such an amendment. I think there should have been at least the courtesy of telling me this morning, or making some attempt to contact me this morning, to say that the amendment was not going to be moved. I repeat my question: what do we know today that we did not know on Thursday?
412
My noble friend Lord Renfrew has attended to put his amendment to the amendment. I suspect that he was not aware that that was going to be the case until he arrived here. In speaking to the Motion, That this Report be now received, my noble friend made the point most powerfully that we are still in the process of asking questions about the Bill; students are asking questions about the Bill; I receive letters daily asking me questions about the Bill; students are ringing up their colleges and their local authorities. They are being told that the Bill is only part way through its passage through Parliament. It still has to go to the House of Commons. Until it has gone through both Houses, we cannot pre-empt with certainty the outcome of the Bill. That is an unsatisfactory state of affairs.
We have exhausted the Committee stage. That is a more relaxed stage of a Bill which the House enjoys and which enables there to be discussions on amendments. Instead, we have had to use every kind of device to elicit information from the Minister. In fact we received a letter from the Minister, after the Committee stage, setting out in more detail the answers to some, but not all, of the questions that had been posed in Committee. We have now reached Report. I ask the Minister again: on what authority is she promising to relax the rules of the Report stage? If she is asking us to behave within the rules, that is not a concession. Nothing changes. We always act within the rules of this House. It is a matter on which the whole House should take a view, or at least the Procedure Committee should make a recommendation to the House.
The very fact that the Minister has written a letter to the noble Lord, Lord Tope, suggesting that there would be some relaxation of the way in which we conduct ourselves on Report, and that we would be given two-and-a-half days—it does not add up to two-and-a-half days—is because she is conceding that we need more time, and need a more relaxed stage of the Bill during which to conduct our discussions on the Bill. The Minister has, in principle, conceded the argument, but, in practice, she is going to stick to the promise she has given to her leader, that she wants to deliver the Bill and that she will not be thwarted by the Liberal amendment.
Earl Russell: My Lords, in speaking to the Motion, That this report be now received, I must repeat the declaration of interest which I made on Second Reading. I speak as a serving university teacher. I have the greatest confidence in the political judgment of my noble friend Lord Tope, but the questions I have to ask are inevitably somewhat different from the ones he has to ask.
He has to make a political judgment, but if the Bill is as badly drafted and as badly thought out as I believe that it is, I will have to help clear up the mess when my noble friend and the Minister may well have moved on to other briefs. For that reason, among others, I am sorry that we are not going to get the chance, in a proper Committee stage, to investigate exactly what the legal situation is.

413
That regret will be shared widely in university circles. The House will believe that I have not spoken on the Bill without taking a considerable amount of academic advice. In that advice, I have found that the doubt about the legal foundation for tuition fees is spread far outside the confines of the House.
In expressing my agreement with the point made by the noble Baroness, Lady Blatch, that procedure is a matter for the House, and not for the Government, I shall ask the Minister whether, in writing her letter to my noble friend, she took the advice of the Table before sending it. It is a material point, and the House is entitled to an answer.
It is clear that whenever we have a framework Bill before us, it leads to an ill-regulated Committee stage. That is an old rule, and it has been repeated. On the point about the timetable, I shall ask the Minister whether we are, after all, too late. I imagine that the Minister has seen the Times Higher Education Supplement for last Friday. She may have noticed the view of Mr. Dennis Farrington, deputy secretary of the University of Stirling, and author of The Law of Higher Education, that students could mount successful legal challenges against universities which fail to state in their offers to applicants for admission the exact details of any tuition fee to be paid. I have been making offers since before the Second Reading of the Bill. Was the Bill already too late when it was introduced?
Baroness Young: My Lords, I have just two points to make on this important Motion. First, I am sure that I am not alone in having received a letter from the noble Lord, Lord Tope, setting out his reasons for the amendment which he has put down today. I did not find his remarks a satisfactory answer to that. I echo what my noble friend Lady Blatch said. There is a way in which Members of your Lordships' House behave to one another. If one is not going to press an amendment, it would at least be a courtesy to write to say that one is not going to press it, rather than to leave everyone to come here uninformed. Furthermore, many have had to do homework over the weekend for something which is now clearly not going to take place. I am sorry that the noble Lord should have behaved in that way, because I agree with his object in tabling the amendment.
That takes me to my second point. I hope that the Minister will consider carefully her reply as to whether or not she can make a promise about relaxing arrangements on Report. I am bound to say that if, when I was Leader of the House, I had made such a statement, the House would have been very surprised indeed. The criticisms from the then Opposition would have been considerable. I am someone who believes profoundly in the self-regulation of this House. It is a matter for the House to decide, and it works very well indeed. Once we start having points of order, let alone Ministers deciding on the conduct of the House in changing the arrangements, we shall all suffer. Perhaps I may offer a little political advice and say that the Government will probably suffer more than the Opposition because two can play that game once it is started. However, it is a
414
most undesirable game to play and I hope that the Government will not go down that path. It would lead us into great difficulties.
I am particularly sorry that the Bill is not to be recommitted. I hope that the Minister listened carefully to what was said by my noble friend Lord Renfrew. It is difficult to overestimate the anxiety in universities. It exists not only among students, although the situation is difficult for them. They are young and inexperienced and face considerable financial problems. However, the situation is just as serious for those who teach and take part in universities. The House has not been treated well in respect of this Bill and it does not augur well for the future of higher education.
Lord Baker of Dorking: My Lords, I wish to express support for the sentiments of the noble Earl, Lord Russell. In Committee he, more than anyone else, questioned the legality of the powers that the Government were seeking to take in Clauses 16 to 18, and he did so very effectively. The Committee stage was nearly a month ago—23rd January—and since then there has been no clarification of the Government's intentions. Various amendments have been tabled which do not add any light to those intentions. The amendments are fairly minor. Not only are we, as part of the legislative authority of our country, in the dark, but the universities are in the dark. There is considerable anxiety and confusion as to what the Government intend and what will be the effect of their intentions. I would have hoped that at some stage Ministers would have made that clear.
If the Liberal Democrats have done some kind of deal with the Government not to have a recommittal, that is a matter for them. However, the noble Lord, Lord Tope, said that part of the deal was that the crucial Clauses 16 to 18 should be taken at "prime time"; namely, when many Peers are in the House. It may not be possible to reach those clauses at prime time on Thursday. That depends upon the progress of the House today—and there are pressures on the House today. Can we have an undertaking that Clauses 16 to 18 will not taken at some late hour on Thursday, but that the House will be adjourned then so that we can take them at prime time on whichever day the Government select?
Lord Glenamara: My Lords, I wish to say only two or three sentences. I am glad that the noble Lord, Lord Tope, has withdraw the Motion. I could not see much point in it. Furthermore, I have been in Parliament for 47 years and this is probably the worst Bill I have seen during those years not only in the way it is drawn up but in what it proposes.
The Bill will impose considerable financial burdens on large numbers of people at the beginning of their working lives. Those numbers will grow year by year. There will be debts of £12,000 a year on young people—teachers, nurses, midwives and so forth—so the Bill is wrong from that point of view. During the weekend, I discovered that large numbers of MPs and, I fear, some Members of your Lordships' House, believe that the Bill will introduce a graduate tax. It does no such thing. The amount which young people will have

415
to pay for their tuition will depend not on what they are earning but on the income of their parents in their family home which they left years before. Therefore, a barrister earning £200,000 a year might pay nothing; but a teacher earning £15,000 might have to pay the full amount. That is ridiculous, but that is what the Bill does.
I also oppose the Bill because of the way in which it is drawn up. It gives no details of its proposals; it is a purely skeletal Bill. It imposes financial burdens without explaining how that will be done and without giving any details. It is a ridiculously unfair Bill. I hope that the noble Baroness will listen carefully to my suggestion that the Government take it away, withdraw it, think it over again and bring another Bill back in the next Session. But, my Lords, please do not proceed with this Bill. The Government will lose it in the House of Commons if they do.
3.45 p.m.
Lord Peyton of Yeovil: My Lords, the noble Lord, Lord Glenamara, said that this is the worst Bill he has experienced in 47 years in Parliament. I wish to associate myself with the words spoken by my noble friend Lady Blatch. She is never one to be discourteous; but in speaking of the speech of the noble Lord, Lord Tope, she chose her words with lethal effect: extraordinary, but not surprising. Furthermore, I endorse the words spoken by my noble friends Lady Young and Lord Renfrew. Both were lethal in their effects.
I wish to ask the Minister one question, but I am not sure whether it has already been asked. Precisely when and precisely how did the Government communicate the so-called "concessions" to the noble Lord, Lord Tope? Was it so late in the day that they had no opportunity of informing other parties in opposition in this House?
I am afraid that I was not here for much of the Committee stage, but I gather that I did not miss very much. There are two aspects of legislation which I find objectionable. The first is regulatory powers taken freely and liberally—I am sorry. I did not mean to use that word—taken freely by Ministers on the quite unfounded assumption that they will be trusted to use them with wisdom and care. When my party sat on the other side of the House, I objected constantly to Bills containing regulatory powers which I thought were totally unjustified and unsuitable to present to Parliament.
Secondly, when Ministers offer concessions—I must admit that we know of this concession only through the medium of the noble Lord, Lord Tope—one needs to examine them very carefully. When they contain the word "flexibility" and when we are assured that Ministers will be flexible, my goodness, I become exceedingly suspicious! "Flexibility" is a word used by Ministers almost as a claim to the possession of virtue. "Flexibility" usually means not that Minsters will bow to the will of the House or listen to opinions, but that they will twist and turn in their efforts to get their own way.
I rejoice in this short debate because I hope that it has gone some way to teach Ministers a lesson in humility and good manners. As for the noble Lord, Lord Tope,
416
I do not believe that anyone need bother to add to what was said by my noble friend Lady Blatch, particularly the words "not surprising".
Lord Peston: My Lords, my noble friend the Leader of the House might tell us whether it is out of order for anyone to speak in favour of the Minister or of the Motion before the House. I am somewhat appalled at those who say they are sticklers for our rules but they still felt able to make Second Reading speeches in connection with the former Motion before the House. However, it is for them to reflect on that.
I spoke at Second Reading but I do not recall most of my noble friends and noble Lords opposite being present. At that time I made it clear that I did not care for tuition fees. But it seemed to me from that point on it was up to the Opposition to put up some opposition at the Committee stage. I have forgotten which noble Lord said that it was an appalling performance but I agree, it was. That appalling performance was not down to my noble friend the Minister, it was down to the fact that we discovered afterwards that the Opposition had not the faintest idea about the Bill or about university and higher education finance. I remember making this point not long ago. It did not seem to be my job to give them lessons on the subject. It was clear that they totally bungled the Committee stage because they did not know what they were talking about. They now seek to blame my noble friend the Minister because somehow she did not do their job for them.
I do not have a copy of the letter with me, but my last point is that it did not seem to me, when the noble Lord, Lord Tope, read it out, that he was for one moment suggesting that my noble friend was proposing that we break our rules. She was simply saying that she thought she had behaved reasonably. If she had consulted me purely on a friendship basis I should have said—and this is my whole attitude—"Never behave reasonably when you are dealing with the unreasonable". She is now being attacked for behaving reasonably. The noble Lord, Lord Tope, is being attacked for trying to respond to a reasonable offer, it seems to me.
I hope that my noble friend will now say: "Enough's enough; the whole thing is preposterous". She should suggest to noble Lords opposite that they start doing their job of tabling meaningful amendments and arguing the case. Some of us would be rather interested in taking part in that argument, but not to have this constant crying: "Oh, we bungled it, but it's not our fault".
Lord Campbell of Alloway: My Lords, perhaps I may make a brief point. By what authority does a Minister of the Crown offer flexibility affecting the rules of procedure of your Lordships' House? To me this is almost beyond credibility and belief. What did the noble Lord, Lord Tope, imagine he was getting other than a pig in a poke? There is absolutely no power, no sense and no force in an undertaking to use flexibility if it means in any way changing the procedures of this House on Report.
I came here to support the amendment. The essence of the problem was that we required the seriousness of debate at Committee stage where one can speak more than once and entertain discussion. That is what we needed, but

417
it has been given away in accepting an undertaking which, whatever the noble Baroness said, is worthless. It is a worthless, sterile, useless undertaking by which a kind of compromise has been accepted between the two parties so that the right action—to recommit the Bill—has not been taken.
Lord Desai: My Lords, I sat through the Committee stage of the Bill till late at night because I cared about higher education. If other people had cared about it, they would have been here and not asked for what is called "prime time". Prime time is when a Bill is being discussed that you care about you should be here to discuss it and not ask for special concessions. I should also add that we have now wasted 45 minutes of prime time.
Baroness Blatch: My Lords—
Noble Lords: Order!
Baroness Blackstone: My Lords, I wish to begin by thanking the noble Lord, Lord Tope, for not moving his Motion for re-committal. He and I have had a couple of constructive discussions recently and I can assure your Lordships' House that I shall be happy to allow maximum debate on Clauses 16 to 18 during Report stage within the rules of the House.
Baroness Blatch: My Lords, I believe that I am within the rules of the House to intervene when the noble Baroness is speaking. I wish to ask her this: since when has it been the lot of a Minister to allow maximum debate at any stage of a Bill? The Minister gave a hint that somehow this Report stage would be different from any other Report stage. I come to this House, whether it is to the Committee stage, the Report stage or Third Reading, and expect to have the maximum opportunity within the rules of the House as an individual Member of the House. I do not expect to be condescended to, and I do not expect the Minister to be condescending about allowing us to have maximum debate within the rules of the House.
Baroness Blackstone: My Lords, I feel that I am in one of those "damned if you do, damned if you don't" situations. I am trying to respond to some of the concerns that Members opposite, both in the Liberal Democrat Opposition and in the Conservative Opposition, have expressed about the Committee stage. I wrote to the noble Lord, Lord Tope, but since he was out of the country last week—and this is in answer to one of the questions put by a Member on the opposite Benches—he only received my letter this morning. I hope that that is a helpful explanation of the timing.
Perhaps I need to repeat what I said in the letter. I said that I would stick to the rules of the House and would also try to make it possible—because this question was also raised—to deal with the crucial clauses, Clauses 16 to 18 in the second part of the Bill, at first business. That is the Government's intention.
It is also the Government's intention to allow two-and-a-half days for the debate, if that is the time taken up by the amendments that are tabled. Of course, I accept
418
what the noble Baroness, Lady Blatch, said. The exact length of time will depend on how many people speak and how many amendments are put down; but the Government will stick to what we agreed.
Baroness Blatch: My Lords, again with the leave of the House, is the noble Baroness suggesting that we could negotiate more time, if there are sufficient amendments? We are talking about a very short time today, a relatively short time on Thursday and one day on Monday. Does the Minister suggest that that is the offer, over and above what we have at the moment? We do not have two-and-a-half days at the moment.
Baroness Blackstone: My Lords, this is a matter for the usual channels and not for debate across the Floor of the House. I have simply said that I have made an offer to the noble Lord, Lord Tope, that there would be two-and-a-half days available. The noble Baroness, Lady Blatch, queried whether that was the case. I wish to provide the reassurance that it is the case and we will make the time available.
I was asked whether we had consulted the Table. The answer is no. We did not need to consult the Table as there was no attempt or no wish in any way to relax the rules of the House. I simply said that I wished to be flexible. It is perfectly legitimate for any Ministers speaking in this House to be flexible in the way they interpret the rules. That is the issue. It is a matter of how many interventions—
A noble Lord: No!
Baroness Blackstone: My Lords, I am sorry, but I have heard many debates in the House at Committee and Report stages and Third Reading where, when Members of your Lordships' House rose to elucidate a point, the Minister speaking said that that Member had already spoken and it was not right at Report stage to take further questions of elucidation. That is all I am trying to do.
I found the remarks of the noble Lord, Lord Peyton, a little offensive, if I may say so. He accused me implicitly of lacking both humility and good manners. I say this in all humility. I do not wish to be rude or not to display good manners. I am attempting to find a way round the issue. In responding to the debate I hope that noble Lords will accept that it would not be right for me to become involved in the substantive matters raised as though it were a Second Reading debate; that is, on questions of policy. This is a procedural debate and we should stick to procedural matters.
I accept that the policy concerns of the noble Lord, Lord Tope, and many other Members of your Lordships' House will not be met by the Bill. We have different views on what should be the right policy. However, those noble Lords who have suggested that the higher education sector does not accept some of the principles behind the Bill are not right in making that claim. Of course, there will be

419
some members of the higher education sector who take that view. However, today I received from the CVCP briefing a statement which said:
"Vice Chancellors broadly support the principles of the new funding scheme".
That is an important point which we need to take on board. However, we are not here to debate that.
I should remind the House that the Companion to the Standing Orders provides for two situations in which re-committal may take place: where important amendments were tabled too late in Committee for that stage; or where amendments on a subject which had not been considered in Committee were tabled at a later stage and required detailed examination. Neither of those two situations applies in this case.
I have not heard any arguments which would lead me to believe that the House had not had sufficient opportunity fully to debate the provisions of the Bill and that it should not pass now to Report stage. I find it extremely difficult to understand how it can be argued that the Government have not been clear about the legal basis for the new fee regime. Both the Explanatory Memorandum and Notes on Clauses published on the same day as the Bill made clear that Clause 16 gives the Secretary of State power to provide substantial support to students in respect of fees. Clause 18 gives the Secretary of State power to make it a condition of grant from the funding council that institutions charge certain students fees at the level of the maximum support payable under Clause 16; that is, it gives him a reserve power to control top-up fees.
Again, I understand that some noble Lords do not agree with the Government's decision to take that reserve power. But we shall debate that at length on Report when further amendments have been tabled to Clause 18. Indeed, we have already had a debate about it in Committee. The Government believe that it is right to take that reserve power because of their commitments to parents that they would not have to pay any more than they do at present and also the commitments they have made to students.
I return to the issue on which there is confusion. Fees have been charged by universities, not the Government, for years and the Bill does nothing to affect that position. Moreover, exactly the same device has been used to secure contributions from students and their parents as is planned under this Bill; that is, the means-testing of government support for fees from 1963 to 1977 under the 1962 Act.
Our Second Reading debate on 11th December did not indicate any misunderstanding of our plans. At the end of that debate there was nothing to indicate to me that there was a misunderstanding on the charging of fees. Moreover, I said in relation to the Bill:
"It does not give the Secretary of State power to set university fees".—[Official Report, 11/12/97; col. 257–8.]
420
The noble Earl, Lord Russell, seemed to indicate his understanding of the status of universities when he said:
"Universities are not nationalised industries. They arc private corporations".
Later, when referring to fees, he said:
"I appreciate that the noble Baroness is technically right that the university is still free to set its own level".—[Official Report, 11/12/97; col. 286.]
In view of that, I was genuinely unaware that the noble Earl, Lord Russell, believed that the Government thought that they had power to charge directly. I can only apologise for the fact that I was unaware of that. The noble Earl's misunderstanding, which first came to light in Committee, seemed to have stemmed from his misinterpretation of my department's memorandum to the Delegated Powers and Deregulation Committee. Before that time, I did not know that there was a misunderstanding. Had I done so, I should certainly have agreed to meet the noble Earl to try to clarify the position. When the misunderstanding became apparent, the noble Earl will recall that I took the first opportunity, at about five o'clock on 26th January, to meet him and his noble friend Lord Tope, together with the senior legal adviser from my department, to clarify the matter. Of course, any misunderstanding is always regrettable and I know that the noble Earl was grateful to my officials and thanked them for their assistance in trying to put the matter right.
From the Delegated Powers and Deregulation Committee memorandum, the noble Earl came to the conclusion that the Government believed that they had the power to charge fees. I do not wish to go into more detail about that because it would not be particularly helpful at this stage.
I shall now deal with one or two points raised by other noble Lords. I am rather puzzled by what the noble Baroness, Lady Blatch, said. During our Second Reading debate she asked some 37 quite specific questions but none of them related to the charging of fees. I should certainly have responded before the Committee stage had she raised a question on such an important point. But again I had no idea that there was any misunderstanding of the provisions of the Bill on her part until the noble Earl, Lord Russell, intervened on that point in Committee.
The noble Lord, Lord Renfrew, will forgive me if I do not become involved in the issue of college fees at Oxbridge. That is quite a different matter. It is not an issue for this Bill. No legislation is required for the Government to respond to the recommendation made by the noble Lord, Lord Dearing, and his committee of inquiry but it is a matter that should be looked at by the Government. The Government have referred it to the HEFC.
The noble Lord, Lord Renfrew, my noble friend Lord Glenamara and the noble Baroness, Lady Blatch, have objected to what they consider to be skeletal provisions. However, we have had extensive debate about the nature of those provisions during the passage of the Bill. I have tried to explain that it is right that we should put much of the detail of a Bill of this sort into regulations.

421
I believe that that is right so that when the higher education system changes, as it may well do, we do not have to come back with primary legislation.
I should say to the noble Lord, Lord Baker, that there really can be no doubt that the Government have made quite clear what they intend to do. I do not believe that the noble Lord took part in the Committee stage of the Bill, although he spoke on the Second Reading. We have provided extensive documentation in relation to our intentions and have set out at length what is likely to form the vast bulk of the regulations. We have done that in language which is rather easier to follow and understand than draft regulations would be.
Lord Denham: My Lords, perhaps the noble Baroness will forgive me. I should like to ask the Leader of the House a question. Is not this procedure indicative of the fact that it is absolutely essential that the rules of order of this House be maintained? The noble Lord the Leader of the House suggested quite properly that the noble Lord, Lord Tope, was not in order to say that he would not move his amendment.
When the noble Lord decided not to press his amendment he had two options which would have been proper in this House. One would be—the least satisfactory option—to say "not moved" and then the House would have moved into Report in the normal way.
The second would be to move his amendment to the Motion, whereupon the noble Baroness on the Woolsack would have put that Question. The matter would then have been debated and he would have asked leave to withdraw the amendment. The House would then have had an opportunity to refuse him leave to withdraw it and come to a vote on it. We have had all this discussion purely because the rules of order have been allowed to be widened far more than they should have been. That is not at all the fault of the noble Lord the Leader of the House because he set about the matter in the right way. However, is it not absolutely essential that the rules of order in this House should be obeyed; otherwise, we enter a totally unjustifiable general debate on what is, after all, a procedural Motion?
Lord Richard: My Lords, the noble Lord invites me, I suppose, to give judgment on the proposition he puts to me. I can say only that I am advised that the Motion that this House do now move into Report is a debatable Motion. I tried to confine the limits of the debate upon that Motion in as polite a way as I could. We have had a series of Second Reading speeches. If the House wants to indulge itself in this way, it is difficult to see what I as Leader of the House can do to stop it.
Baroness Blackstone: My Lords, I have just tried to respond to some of the procedural points.
Lord Denham: My Lords, could not the Question be put, because if this debate continues we shall exacerbate the breaches of order in this House?
Lord Richard: My Lords, I believe that the debate is just about coming to a conclusion. I have great hopes
422
that it is. My noble friend the Minister is on her feet. I anticipate, and trust, that she is coming rapidly to a conclusion. In those circumstances the Question will then be put. I am advised that the noble Lord. Lord Tope, will not be entitled to say anything else in the course of this debate.
Lord Strathclyde: My Lords, I support very much what my noble friend Lord Denham said. We have got ourselves into a procedural muddle. That has been caused by the decision of the noble Lord, Lord Tope, not to proceed with his amendment. Will the noble Lord the Leader of the House examine how this has happened and try to make sure that the House does not get itself into the kind of mess in which it now finds itself, particularly as we are about to commence a Statement before reverting to the Bill? Am I also right in thinking that there is every likelihood that we shall not continue with this Bill after the Statement because it will then be time to discuss the Competition Bill?
Lord Richard: My Lords, I shall certainly take into account and ponder deeply the circumstances in which this debate has taken an hour and four minutes. I am bound to say that I regard it as basically the self-indulgence of many of those people who have spoken in it who have chosen to turn what is a narrow procedural point into a major Second Reading debate.
Baroness Blackstone: My Lords, I end by saying that obviously Bills are not, and could not possibly be, drafted with a view to assisting the Opposition to table amendments. Bills are drafted to give effect to government policy. The noble Baroness, Lady Blatch, seemed to expect the Government to spell out what the Bill does not do. However, I believe that is rather at odds with the normal mode of explanation where one explains what the legislation does. I am pleased that the noble Lord, Lord Tope, has decided not to move the Motion. I believe that the higher education sector would prefer not to see this Bill re-committed. Plenty of time has been made available for discussion on Report today, on Thursday and on Monday of next week. I very much look forward to that discussion.
Baroness Blatch: My Lords, before the noble Baroness sits down I raise a point which is important to the House. I understand that the noble Baroness wrote a letter on Friday, 20th February to the noble Lord, Lord Tope. Was the letter copied to me and was it copied to my noble friend Lord Renfrew?
Baroness Blackstone: No, my Lords. The Motion on the Order Paper was in the name of the noble Lord, Lord Tope. I did not think it appropriate for me to copy that letter to either the noble Baroness, Lady Blatch, or the noble Lord, Lord Renfrew.
On Question, Motion agreed to.

Planning for the Communities of the Future
4.14 p.m.
Baroness Hayman: My Lords, with the leave of the House, I shall now repeat a Statement being made by my right honourable friend the Deputy Prime Minister in another place. The Statement is as follows:
"Madam Speaker, I wish to make a Statement on planning for the communities of the future. A document setting out our approach is published today and has been placed in the Libraries of both Houses. This document includes a response to the public consultation on the previous administration's Green Paper, Household Growth: Where Shall We Live?
"I hope we can refocus this debate and, in doing so, change some of the language we use in it. To my mind, much of the debate so far has been clouded by unhelpful language, crude figures and confused statistics. For example, the term 'brownfield' is not helpful. I propose to talk about recycled land, which can, of course, be in cities, towns or villages. Greenfield is too often confused with green belt, as if the two were always the same. Most importantly, while the technical term 'household growth' is sometimes necessary, it does not adequately describe our main concern, which is to develop sustainable communities now and in the future.
"I hope that, following today's Statement, the Opposition will join us in a sensible debate about how to achieve that aim, while recognising the real difficulties involved in meeting household growth in a sustainable way. My department published the latest projections of growth in the number of households in March 1995 under the previous administration.
"The projections suggest that around an extra 175,000 households a year will form in the 25 years from 1991 to 2016. This is because of population growth and because people are living longer and couples are separating more often. Household growth has been outstripping population growth increasingly since the turn of the century.
"The dilemma is clear cut and affects us all—how to accommodate more households and, at the same time, protect our precious countryside, without rents, house prices or homelessness spiralling upwards. It is not just a matter of how many households but where they will live.
"There are four key elements in our new approach: first, increased flexibility. We shall emphasise that the projections are guidance not building requirements. Secondly, more decentralisation. Regional planning conferences will have more responsibility and accountability in deciding the most sustainable way of meeting the needs of their communities. Thirdly, making the best possible use of previously developed land and existing buildings. We must put the heart hack into our cities and put cities at the heart of our strategy. Fourthly, what I set out today is part and parcel of our determination to get better integration of a range of policies which affect communities.
424
"In order to achieve greater flexibility, we are determined to get away from a simplistic 'predict and provide' approach in housing, as we have done for road building. We will treat the household projections as guidance, not house building requirements. Moreover we will allow for greater flexibility in adjusting regional and local plans to ensure local provision is meeting local need over time.
"Decentralisation is an essential aim of this Government whether in devolution, in establishing the regional development agencies, or in our proposals for London. We therefore propose to strengthen the role of the regions in translating projections into regional planning guidance. The regional planning conferences will work together with the government offices to determine how much extra housing is needed in their regions.
"The aim will be to increase the local ownership of the figures so that local authorities translate this new regional guidance into plans and actions on the ground. I want to see better public information on the consequences of decisions on releasing land for housing, so that those responsible can be held accountable and the public debate can be better informed. I want this to be a truly bottom-up approach.
"The conferences may be able to justify lower or higher housing figures than those implied by the projections, but we will expect local authorities to monitor and report on the effects of their decisions. If the effects are damaging, authorities will need to act—or we may need in the last resort to intervene. But the whole philosophy of our new approach is to strengthen local responsibility and to have a bottom-up approach.
"We will move to this new approach as quickly as possible—in the reviews of regional planning guidance which are already underway.
"As soon as new regional planning guidance is ready, possibly as early as next year, it will be open to local authorities to review their development plans.
"In considering development plans in advance of new regional planning guidance, I will continue to treat each case on its merits, taking account of this statement.
"It is our firm policy to protect our countryside and revitalise our towns and cities, by maximising the use of recycled land and existing buildings. One of the most effective ways of relieving the pressure on the countryside is to revitalise our cities and improve the quality of urban life. That is why I have called for an urban renaissance in Britain.
"This will require a whole range of measures. It is not just a matter of urban housing, let alone planning. It is about tackling the range of problems affecting the quality of urban life—whether it is crime, education, jobs, transport or the environment. Many of these same problems also affect rural communities, to which we must also direct our attention.
"Last Wednesday, I unveiled the winner of the millennium village competition. This is a flagship scheme, providing 1,400 homes on recycled land at

425
Greenwich. The development will be built to the highest quality of architectural and environmental design. Energy use will be 80 per cent. better than average. Every home will be linked to the Internet, opening new horizons of communication. This will be a development for a whole community. There will be homes for rent as well as homes to buy, with provision for jobs, shops, public transport, health and schooling.
"The millennium village will point the way for urban regeneration in the future and I have asked English Partnerships to seek out other similar sites for urban villages to share the benefits throughout the country.
"This initiative will run alongside our other main programmes—nearly £1 billion under the capital receipts initiative, £250 million announced last week under the Estates Renewal Challenge Fund and our other urban regeneration programmes.
"These sorts of initiatives will help to meet a higher proportion of future housing need on recycled land in our towns and cities, rather than in the countryside.
"The target set by the previous administration was `that, by 2005, half of all new housing should be built on re-used sites'. In practice, it was able to achieve an average of 42 per cent. between 1985 and 1995—rising from 38 per cent. in 1985 to 50 per cent. in 1995. Those figures are national averages—ranging from 33 per cent. in the East Midlands to 83 per cent. in London. But the target was not based on any assessment of the availability of recycled land.
"In future, we will expect each regional planning conference to make a proper assessment of land availability and set regional targets for the use of recycled land. This has never been done before and is an important change. It will sharpen the focus of policy and action on the ground.
"Last week, I asked my department to work with English Partnerships and local government to create a national database of land use which will give local authorities reliable information on the amount of recycled land available for housing.
"Today, I can go further. Local authorities, developers, builders, and the professions have all been looking for a lead. To spearhead this unprecedented collective effort, I have established a Task Force to help make better use of recycled land. I have asked my noble friend Lord Rogers of Riverside to lead it. It will co-ordinate and develop the wide range of activity and innovation underway.
"I consider that a national target for the use of recycled land can help guide regions and local authorities, and help them improve on their performance. With our new policies in place, we expect local planning authorities to be able to raise the national proportion of new homes to be built on previously developed land to 60 per cent. over the next 10 years. We will come back to refine the national target in the light of regional targets when they are known and when our database is established.
426
"We also want for the first time to measure separately the re-use of previously developed land in urban areas and in rural areas, so we can get a better focus on urban re-development.
"Many of the respondents to the Green Paper accepted that 60 per cent. would not be easy. No-one should underestimate the problems and costs of redeveloping some sites, such as those which are contaminated. Indeed, it cost over £100 million to clean up the Greenwich millennium peninsula alone.
"If we are to make our towns and cities attractive places to live and work in, we must ensure a good quality of life. That is why we reject so-called 'urban cramming' and pressure to build on green spaces in towns. Our parks and green spaces are part of what makes town living attractive. That is why we have strengthened the protection against building on school playing fields.
"I now come to an important new element in our proposals. We propose to follow a sequential approach to the location of new housing and a phased approach to the release of land. Whenever possible, recycled land in urban areas should be built on first, provided it can be well linked to public transport, jobs, shops and other facilities. The same tests will also apply to the sequence of development of greenfield sites. We will also need to allow for release of empty property and so called 'windfall sites'.
"Some of the responses to the previous Government's Green Paper called for economic instruments, such as a greenfield tax, to be introduced. As a first step, we want to open up debate on the use of this type of measure. Final decisions on taxation are, of course, a matter for the Chancellor.
"Much of the debate has concentrated on urban housing, but we must also allow for the housing needs of people in rural areas. Many country people are deeply concerned at the lack of affordable housing, often while houses are bought up by wealthier commuters or bought as holiday cottages. A young couple in a village have every much a right to a decent home as their counterparts in the town.
"Members will be aware of the recent report by the Rural Development Commission, the '1997 survey of rural services', which highlighted specific problems in the rural economy. Communities fall into decline and are no longer able to sustain jobs and essential local services. These problems are particularly acute in our former coalfield communities, which are often in rural areas, where the pit closures left those communities devastated. We must find new ways to address these problems. We want to see thriving communities in our rural areas—a living countryside.
"It was the post-war Labour government which laid the foundations of the modern town and country planning system, including green belts and national parks.
"The Government remain committed to protect the green belts and the wider countryside—protection of the green belt is as strong as ever.

427
"Any new development, whether in town or country, must he sustainable development. And there will be exceptional cases—such as in Hertfordshire—where pursuing the most sustainable solution leads to adjustments to green belts.
"Nevertheless I would point out that since we came into office, more green belt—over 30,000 hectares—has been added than taken away by changes to boundaries. I anticipate that trend will continue during this Parliament.
"Finally, successful community development depends on a wide range of policies. We will tilt the balance in favour of urban development—not only through the planning process itself, but through fairer regional development, improving our public transport, raising standards in our schools and tackling crime.
"We shall now consult on how best to implement these proposals and take them forward in partnership with those most involved, especially the regional planning conferences.
"This statement represents a break with the past on one of the most important issues facing us today: how and where we should live. We want to replace the top-down 'predict and provide' mentality of the past, with a system which is more responsive, more accountable, and better able to revitalise our towns and cities and protect a living countryside, which we can all enjoy.
"I believe these proposals will help us achieve our twin aims of an urban renaissance and of ensuring we hand on a green and pleasant land for future generations."
My Lords, that concludes the Statement.
4.30 p.m.
Lord Bowness: My Lords, I thank the noble Lady for repeating the Statement in this House. The Statement represents a significant change of heart on the part of the Government. It is regrettable that it had not been made before several disastrous decisions.
In the light of this review, can the Minister say whether the extra 12,000 houses that were permitted in East Sussex, the 150 acres of industrial development of green belt near Sutton Coldfield, the 12,000 acres of green belt released for house building near Newcastle and the 10,000 houses to be built on green belt land at Stevenage covering 1,000 acres will be reconsidered? Will the Minister acknowledge that the then Shadow Minister for Housing, Mr. Raynsford, was clearly wrong when he described the target of 60 per cent. as a recipe for disaster and, perhaps more important, confirm that the belief that the green belt is "up for grabs", as referred to by another present Minister, no longer exists in the Department?
The Statement says that more green belt has been added than taken away. Whatever definitions of land one uses, whether "green belt", "greenfield" or "recycled land", the fact is that when green and undeveloped land is lost through boundary changes, that undeveloped, open and green land is taken away. It is
428
no good saying that one has increased the amount of land classified as green belt; when what I have described occurs, there is a net loss of undeveloped land.
I hope the Minister will agree that, in the light of the Statement, there is now some common ground. The previous government doubled the amount of green belt, toughened the restrictions on green belt development and made it clear that the projected 4.4 million homes could not be achieved by the use of greenfield sites. The previous administration pushed up the proportion of new homes being built on brownfield sites, as the Statement acknowledges, to some 50 per cent. Indeed, the Conservative Party made a manifesto commitment that more than 60 per cent. of the required homes should be built on brownfield sites. We suggested two-thirds; Friends of the Earth and the United Kingdom Round Table on Sustainable Development suggested 75 per cent.
The statement refers to planning tools. Perhaps the Minister will be kind enough to tell the House whether account will be taken of planning procedures. If the building targets are to be achieved, there is a need for as many decisions as possible to be made within the statutory time. But they should be real decisions, not refusals by local authorities with a request for resubmission in order to keep up the number of decisions made within the eight-week period.
The Statement also mentions a greenfield tax as having been referred to in the responses to the previous administration's consultation paper. I hope the Minister will acknowledge that there may be grave doubts about such a tax in that it would somehow give acceptability to the idea of developing open sites and would probably not be effective unless levied at a penal rate.
The Statement also refers to decisions being taken at a regional level. I hope that the Minister will be able to tell the House a little more about how the regional targets are to be set. Perhaps she can at some time confirm that the planning powers dropped last week from the Regional Development Agencies Bill will not be introduced under cover of decisions by regional planning conferences. Given the statutory planning role of local authorities, we need to know how the regional planning conferences will interact with local authorities, which are the accountable planning authorities in the area.
The involvement of the noble Lord, Lord Rogers of Riverside, will, I am sure, be welcomed on all sides of the House. His views about cities for people, and how they need to be revitalised and the quality of life improved, should be an influence for encouraging imaginative developments in cities to provide the homes needed in centres near to facilities and employment rather than outside, which lower targets for inner city housebuilding would mean and which one clearly wishes to avoid.
The Statement refers to the Millennium Village. Perhaps the Minister can at another time tell the House more about the density of that development, what provision for open space will be made there and how the contamination of the site has been dealt with. Matters of that kind will be important with regard to the development of many sites in city centres.

429
The conversion of the Government to the cause of the green belts is welcome, but the unfortunate decisions made since they have been in office, which have been more in line with Statements made previously than in this Statement, have left people wondering about their real intentions towards green belt and greenfield sites. We hope we shall see real progress towards achieving the target, reconsideration of some of the more unfortunate decisions, and evidence of a real commitment to preserving green belt and urban renewal. Those two aspects must go hand in hand if we are to achieve the aims of the Statement.
4.35 p.m.
Baroness Hamwee: My Lords, I too thank the Minister for repeating the Statement and welcome it from these Benches. We welcome the commitment to changing the language and the effort to turn action on these problems into a co-operative venture, not one of confrontation.
The Minister referred to the confusion between "greenfield" and "green belt". While she and her right honourable friend are correct about that, I hope that she will be able to confirm that the protection of the green belt and, in London, metropolitan open land remains a matter of important consideration, as will the protection of areas of outstanding natural beauty, which at present do not have the statutory protection that many of us believe they should have.
We welcome all efforts to ensure that projections are as up to date as possible. We regard it as essential that they should command confidence. It would be welcome if they could be rolling projections; namely, projections which remain the working figures, not projections taken as a snapshot which become out of date.
We welcome the focus on regional decision-making, though we, too, are concerned about how that decision-making will interrelate with decisions at the level of local planning authorities who want to protect their precious areas, whether in town or country, and who want to achieve affordable housing but at present do not have the mechanisms to do so. However, perhaps I may inject a note of concern and caution about whether the regional structures at present and as foreseen in the short and medium-term will be adequate. The regional planning conferences, made up of people indirectly representing local areas rather than people elected to deal with regional planning as their primary job, are probably of variable quality and certainly variable in their approach to the problems.
We also welcome the comments on the simplistic predict-and-provide approach, although I believe it has not been so much predict and provide—because the provision of affordable housing has not been achieved—as predict and prepare; or perhaps not even as much as prepare.
We note that decentralisation is an essential aim, but we note also that much of the thrust of the Statement is on centralised decisions, and certainly a centralised structure and framework.
430
We warmly support the aim to increase the local ownership of the figures, as indicated, but there is a dilemma that ownership—to use the jargon term—takes time; community participation is not a speedy process.
We note the problems affecting the quality of urban life and agree with the list. However, we note too that tackling crime requires attention to police numbers. Though I appreciate that that is not a matter for the Minister's department, tackling crime will require more investment in our police forces than the Government have attempted to provide—adopting as they have previous Treasury plans.
Much of the Statement causes me to ask how the proposals are to be achieved. How can the cost of cleaning up be met? How can good social mixes in housing be achieved, both in town and country, particularly when the investment in social housing leaves an enormous shortfall?
I note the establishment of the task force and welcome the appointment of the noble Lord, Lord Rogers of Riverside. In view of his commitment to lively urban areas I shall be interested to know more of his remit to co-ordinate and develop a wide range of activity and innovation. It is a huge task hut, at any rate in the Statement, not a well-defined task.
I note the reference to the release of empty properties and to allowing for such release. I assume that that is in connection with the statistics. I hope that the Minister can say something more about how the use of empty properties—particularly that in public ownership—can be encouraged. I hope, too, that in the whole debate attention can also be paid to the refurbishment of our housing stock. Not to attend to the condition of housing stock will mean increasing, not reducing, the problem.
As I indicated, though we welcome the Statement, we regard it more of a Statement than a set of proposals. We look forward to discussing mechanisms to achieve the laudable objectives, particularly the measures which I accept are within the aegis of the Exchequer rather than within the Minister's department. I hope, too, that there will be some carrots in the proposals as well as sticks. I do not believe that, without carrots, any of the sticks can work. We welcome taking forward this difficult issue.
4.43 p.m.
Baroness Hayman: My Lords, I am grateful for the welcome given, with differing degrees of grudgingness from the two Front Benches opposite, to the Statement, and particularly to the announcement of the appointment of my noble friend Lord Rogers of Riverside to lead the task force. The task force will play an important role in the identification of recycled land that can be used.
A number of detailed questions were raised and the noble Baroness, Lady Hamwee, was right to point out that we are at the beginning of a process. This is very much setting out the framework that the Government wish to see; the policies that we believe will enable the framework to develop, and for us to meet our aims. But it is a matter on which we must consult, particularly with those who will have the prime responsibility for implementation and particularly at a regional level.

431
There is, therefore, a lot of work still to be done, but we believe that we have a firm foundation on which to build.
The noble Baroness also said that we should be setting ourselves robust targets on figures in which we all have confidence. That has been one of the problems that undermined some areas of the debate in the past, particularly in relation to the key issue of targets for re-used land by 2005. Those targets are based on evidence of what is achievable and that is why we are proposing a database of land uses. It will be crucial in establishing exactly what can be done at local and regional levels.
In that regard we are talking about achievement, and that must be the crucial point. With the greatest respect to the noble Lord, Lord Bowness, it is not a question of saying, "Our target is bigger than your target"; it is about what we manage as a nation to achieve and how we manage to strike the real balances that must be struck between the need for affordable homes and housing to meet household growth and the desire both to protect the countryside and regenerate urban areas.
I stress again something that is accepted in this House; that is, that it is important that we do not believe that we protect the countryside simply by maintaining it in aspic as it is now. There are rural housing needs, particularly for local families, just as there are needs for rural transport, rural shopping, rural education and rural jobs. We must look at those communities as well as the urban communities.
On the question of looking at regional planning conferences and how they take the situation forward, it is essential that they are strong enough to do that work; to command confidence among the local authorities with the targets that they set; and, as I said, to monitor the results. The government offices for the regions will be working with the regional planning conferences because we do not want it to be an exercise in centralisation—a danger to which the noble Baroness alluded. We want to reach agreement with regional planning conferences rather than having to overrule them.
It was a shame that the noble Lord, Lord Bowness, chose to categorise the decisions that have been taken as "disastrous". It is important to look both at the overall commitment of this Government to the green belt and the overall increase in green belt provision that has happened in the past months. For example, there was the creation of a whole new green belt around Durham. It is important that we look not at boundaries that are unchanging and unchangeable, but at the functions that the green belt is meant to fulfil and at how effectively it is doing that. We cannot lose sight of the overall aims which concern sustainability.
Decisions that have been made were made on that basis. In terms of reconsidering those decisions—for example, in relation to Newcastle—the changes to the unitary development plan have been adopted. In relation to West Sussex, the authority sought judicial review and therefore it would be wrong for me to comment. We have no plans to review other decisions. However, it is open to local authorities to review their own plans in the light of the new regional planning guidance, once it has been prepared.
432
Moving from 50 per cent.—the House should remember that the achievement under the 50 per cent. target was actually an average of 42 per cent.—to a 60 per cent. target for new homes on recycled land is a challenging target. That was recognised by those who responded. Those targets need to be based on hard information and that is what we will get through the land use database.
Regarding the details of the millennium village, I shall write to the noble Lord on the issue of density. However, as I pointed out in the Statement, the cost of the reclamation was very high. We were talking of £100 million. It is the relative costs as between greenfield and recycled land development which have led many people to raise the issue—although the Green Paper did not—of economic instruments. Many people argued that local authorities would need adequate tools in order to achieve higher rates of recycling. They suggested greenfield taxes, incentives in relation to the use of recycled land or a greater use of planning obligations. The recent Statement that we issued, Modernising Planning, proposes examining the issue and holding discussions. I note the comments of the noble Lord, Lord Bowness, and repeat mine: ultimately these are issues for the Chancellor of the Exchequer.
Finally, turning to the specific point about the regional development agencies' reserve planning powers, in another place my honourable friend the Minister for the Regions, Regeneration and Planning agreed that in the light of arguments put on behalf of the Local Government Association from our own side during the Committee stage of the Bill, he would re-examine the need for reserve planning provisions—the provisions in Clauses 24 to 27 of the Bill to be transferred from English Partnerships are very much "reserve" provisions—and bring forward amendments in time for Report stage.
4.51 p.m.
Lord Swinfen: My Lords, the Minister said that one of the problems causing a shortage of housing was couples separating. Without going into any Budget secrets (because I know that she cannot) can the Minister assure the House that the Government are examining both their fiscal policy and their social security policy to ensure that every possible help is given to couples to encourage them to stay together? That will help in reducing the demand for separate housing.
On another point, there are centres of cities and towns which are dead, particularly after the shops close. They used not to be. I am sure that there is a lot of old residential accommodation above shops which is now not used. Can encouragement be given to the owners and lessors of those shops to ensure that that wasted accommodation is brought back into residential use? Not only will it help to house people; but also, because people will live regularly in those areas, it will help to make those centres safer in the evening in relation to both individuals and property.
Baroness Hayman: Yes, my Lords, we have discussed previously in this House the need to ensure

433
that residential property over shops is brought into use wherever possible. I very much accept the noble Lord's point. If we are to regenerate city centres, we must make them places where people want to live, where they are able to live in retirement and where they feel safe to bring up their children. That means examining a whole range of issues. People will not wish to live in places which are desolate wastelands at night, where they do not feel secure and where the environment is not one in which they and their families wish to conduct their lives. It is important to examine specific issues and ensure mixed developments—shopping, residential and leisure developments—and that feeds into the sequential approach to planning permissions for other developments, particularly those that are out of town in terms of matters such as shopping.
Turning to the issue of marital breakdown increasing demand for household formation, it is an example of how wide the policies to be considered need to range. The social factors that contribute to housing demand go far wider, as the noble Lord pointed out, than simply the responsibilities of any one government department.
Baroness Nicol: My Lords, I warmly welcome the Statement, and I am sure that it will be widely welcomed in the country. I wish to put two very brief questions. I was pleased to hear that there will be a presumption in favour of using recycled land in localities first before greenfield developments are encouraged. Will any kind of advice or guidance be issued to local authorities to make sure that they are aware of the desire for that presumption? Secondly, have the Government made quite sure that everyone is aware of the polluter pays principle? In many cases, the authors of the contamination of land can be traced, and we have a firm commitment to use that principle wherever possible. It would be of considerable help in encouraging development on recycled land.
Baroness Hayman: My Lords, I note my noble friend's point regarding the importance of ensuring that all possible resources are brought in to clean up the land that needs to he used again. On the point about advice to local authorities, it is right that, although much is going on, there is also a need for a lead in this area, and for examples of good practice for local authorities, developers, builders and the professions to know where they can go in order to ensure that their efforts contribute to the national effort. I am sure that the task force led by my noble friend Lord Rogers of Riverside will include in its agenda not only how it can co-ordinate and develop the wide range of activity and innovation that is under way, but also how it can make sure that advice is disseminated to those who need to implement it.
Lord Rix: My Lords, several references have been made to the millennium village at Greenwich and the clearance of the millennium site at a cost of £100 million. Does the Minister agree that if urban development is to take place successfully, particularly in the millennium village, it would be a tragedy if the
434
Greenwich Theatre, which is already in place there, were to be allowed to close for the want of a quarter of a million pounds? I should have thought that the theatre would provide much-needed help to the infrastructure of the millennium village when it is finally built. Secondly, will the Minister assure the House that in the millennium village and in other urban developments of a similar nature, there will be due reference and that due care will be taken to provide housing for those in need and under care in the community?
Baroness Hayman: My Lords, I congratulate the noble Lord on raising two issues which I know are dear to his heart in the context of this Statement and the millennium village. So far as the theatre is concerned, I know that my right honourable friend the Deputy Prime Minister is anxious that this should be a rounded development in which people can take leisure, receive education, do their shopping and everything else. While in no way committing the Government to the expenditure that the noble Lord suggests, I will certainly draw to the attention of my right honourable friend the needs of the theatre.
On a broader point, it is proper to remind us that, when we talk of communities, developments have to be inclusive and meet the needs of a wide range of citizens.
Lord Howell of Guildford: My Lords, now that the famous 4.4 million figure for housing projection has in effect been declared redundant, or indeed watered down, does the Minister agree that it would be sensible to advise all the county authorities which are busy reviewing their structure plans, holding public inquiries and spending quite a lot of public money on the basis of those figures, to freeze their plans for the time being since, clearly, they are based on invalid figures which are to be revised?
Baroness Hayman: My Lords, I am not sure that the noble Lord is right to say that the figures are to be revised and are necessarily invalid. The technical figures for household projection and projected growth will still have a role to play. What we are doing is making sure that those figures are for guidance, and are not requirements for building. In fact, many of the development plans coming forward at the moment are based not on the 4.4 million figure from 1995, but in fact the earlier, 1992 figures.
Lord Taylor of Gryfe: My Lords, I congratulate the Minister on these exciting and imaginative plans. In her peroration she said something about restoring England's land. I should like to ask whether this is a devolved subject. Will the imaginative plans that have been outlined this afternoon apply to the Scottish parliament, which is to be set up in May of next year? If that is so, and if considerable public funds are involved—the millennium village will call for a large investment of public funds—will appropriate financial arrangements be made? That would enable us not only to talk about England's green and pleasant land but also about the United Kingdom's green and pleasant land.
Baroness Hayman: My Lords, I am almost 100 per cent. certain that the Statement refers to

435
England. I should know better than to come to your Lordships' House without adequate territorial briefing on all aspects of the matter. Perhaps I may undertake to write to my noble friend on this issue.
Lord Monkswell: My Lords, I thank my noble friend most warmly for repeating the Statement, which I think the whole House will very much welcome. I was particularly pleased by the reference to urban renaissance in Britain. In answer to the previous questioner, the Statement refers to Britain, and I think we should be glad about that. The Minister also said that this was the beginning of a process. I should like to press the Minister slightly on the subject of increasing household growth, which is happening mainly because people are living longer and couples are separating more often, whereas in the original projections it was said that young people tended to leave home and set up on their own. Can we hope that the Government will engage all their activities—whether it is fiscal policy, social policy, architectural policy and planning policy—to ensure not only that we have urban renaissance but also that we have a social renaissance? We can build on the idea that people should live, work and play together.
Baroness Hayman: My Lords, I am aware of my noble friend's interest in this subject. We should not take the social trends that have led to increased household formation as irreversible or as necessarily to continue. A whole range of different factors influences the numbers of households, factors such as younger people living away from home earlier, marriage breakdown and elderly people living on their own rather than in groups, an issue which we discussed in your Lordships' House last week. There are significant factors at work which can ebb and flow and which can change the figures. However, there is a trend of household growth going ahead of population growth which has been apparent from the beginning of the century. Although these figures may not be absolutely right and factors may change within them, we should not assume that the tide will be completely turned back.
Lord Graham of Edmonton: My Lords, perhaps I may take the Minister back to the golden years of 1974 to 1979, when she and I had the privilege to represent constituencies in another place, and remind her that one of the most depressing aspects of a surgery was to sit there time after time and hear the wretched and heart-rending cases of those in housing need. Therefore, I look upon this as a Green Paper of courage and vision. I congratulate the Government and the Minister on showing that courage and vision and on bringing forward what I consider to be a comprehensive plan. Does she agree that under the fourth direction of the basis of the paper, which I took down as a range of policies which affect communities, careful consideration should be given to stimulating and encouraging the growth of co-operative housing in its many forms? Co-operative housing needs stimulus, direction and guidance. The housing corporation and the Government can do a great deal to encourage that. When the Minister and her colleagues are considering
436
what advice they should give to the various levels, I very much hope that they will be able to encourage the use of tenant management policies and objectives whereby the tenant—the member of the housing co-operative—has a far better opportunity to influence the policies than he has under any other system.
Baroness Hayman: My Lords, I am well aware of my noble friend's longstanding interest in matters co-operative, which even pre-dated 1974 to 1979. I very much take his point about the potential role of co-operative housing. I am sure that those representing it will contribute to the consultation on how we implement these proposals and take them forward in partnership with the range of organisations—voluntary and local authority organisations and regional planning conferences—that will need to take them in. Throughout the Statement and the formulation of policy we are looking to implement twin ends.
There is the important issue of protecting the countryside, for all the reasons that are very often expounded in your Lordships' House. But we have to do that in a way that does not create enormous stress on those who are without homes. We have to find ways of doing it that do not allow rent levels and house prices to go spiralling upwards and put even more people into the kind of housing distress which is suffered by too many in our community today.
The Earl of Harrowby: My Lords, the Minister should be congratulated on her defence of the green belt. However, I wonder whether she is aware that abuse of the green belt comes from other sources as well. I particularly refer to the West Midlands, where foreign concerns involved in industrial development are interested only in the use of green land and solely for aesthetic reasons. The department should be aware of that.
Baroness Hayman: My Lords, I note the points made by the noble Earl. Green belt decisions are essentially local ones. They are matters for local authorities and regional planning conferences to weigh up. The competing demands of housing and industry are best considered at a local level, with intervention only as very much the last resort.
The Earl of Harrowby: My Lords, when a £100 million subsidy is at stake it does not quite work like that.

Business
Lord Carter: My Lords, it has been agreed through the usual channels that consideration of the Teaching and Higher Education Bill will now proceed for about one hour. The rest of the groups of amendments on today's list will be taken on Thursday and consideration on Monday will begin with Clause 16. The Report stage

437
of the Competition Bill will continue today after the Teaching and Higher Education Bill, and the social security orders will be taken in the dinner adjournment.

Teaching and Higher Education Bill [H.L.]
5.10 p.m.
Consideration of amendments on Report.
Clause 1 [The General Teaching Council]:
Baroness Carnegy of Lour Baroness Carnegy of Lour moved Amendment No. 1:
Page 1, line 11, after first ("Council") insert ("for England and Wales").
The noble Baroness said: My Lords, we begin the Report stage of the Bill with consideration of the clauses creating a new general teaching council. This is a simple amendment and, I believe, it should not detain the House long. However, the amendment is important. Its intention is simply to change the name of the council from the general teaching council, as the Bill proposes, to the General Teaching Council for England and Wales. In studying the record of the Committee stage of this part of the Bill, it struck me—and it has since struck the registrar of the GTC for Scotland—that it is in the interests of all concerned that there should be no confusion between the existing General Teaching Council for Scotland and the new one which the Bill sets out.
In the early stages of the council I suggest that this will be especially important. Unless the Government relent and take on board some of the amendments on the Marshalled List, such as those of my noble friend Lady Young, the new general teaching council will have virtually no executive powers while the Scottish general teaching council has many. The two bodies will be very different indeed. It will be important that nobody mixes their functions.
I appreciate—and for this I apologise—that the amendment on its own, if accepted in principle, will necessitate further amendments elsewhere in the Bill. I am sure that the noble Baroness will castigate me on that point. I am sorry that I have not sorted out the consequential amendments. That is particularly important in order that the change is valid when the general teaching council for Wales separates from the parent body.
I hope that the wording is not a stumbling block and that the flexibility which the noble Baroness is aiming to bring to the Report stage will extend to some of the amendments as well as to the procedure. This is a matter on which she should be flexible. I hope that the Government and the House will feel able to change the name of the general teaching council in this way. I beg to move.
Lord Butterfield: My Lords, I support this amendment. It is not recognised in this country how much work the General Teaching Council for Scotland has been doing. It is very important that because of the
438
differences which will undoubtedly emerge between the general teaching councils in the different countries that they are recognised by their names. I strongly support this amendment.
Baroness Blackstone: My Lords, I am very happy to accept the principle that the GTC's name should reflect its territorial responsibilities to avoid confusion between the councils covering different parts of the United Kingdom. The last thing I would wish to do is castigate the noble Baroness for what she has said. However, I am advised that the wording would need to provide both for the council to be called The GTC for England and Wales in the first instance and also for it to be re-named The GTC for England once a separate GTC for Wales has been established under Clause 6. I believe that the noble Baroness has already alluded to that and I fully understand. If the noble Baroness is prepared to withdraw her amendment, I will undertake to bring forward an appropriate amendment at the next stage to achieve what she is seeking.
Baroness Carnegy of Lour: My Lords, I thank the noble Baroness very much indeed for that response. It was the problem of how to word the Bill for the circumstances that she identifies. It was impossible for me to do that. This is a very good start to the Report stage and I am sure that the House appreciates it. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Blackstone Baroness Blackstone moved Amendment No. 2:
Page 1, line 11, at end insert—
("() The principal aims of the Council in exercising their functions are—

(a) to contribute to improving the standards of teaching and the quality of learning, and

(b) to maintain and improve standards of professional conduct amongst teachers,

in the interests of the public.").
The noble Baroness said: My Lords, in moving this amendment I shall speak also to Amendments Nos. 3, 12 and 14. During debate a number of amendments were tabled by the noble Baronesses, Lady Young and Lady Maddock, and the noble Lords, Lord Northbourne and Lord Tope, which sought to set out on the face of the Bill an objective for the GTC. I agreed to consider the proposed amendments further. I have now done so and I am returning to the House with Amendment No. 2, which sets out a principal aim for the council.
The GTC will be the professional body for teachers. It will represent the highest professional standards. I believe that we can all agree that it will promote a positive image of teaching both within the profession and outside. It will play a vital role in improving standards of teaching and the quality of learning and will maintain and improve standards of professional conduct among teachers. The amendment I am proposing sets this out clearly as a principal aim for the council.
I also believe it is right that the GTC should be a body not just concerned with protecting the interests of its own members. It should be outward-looking and

439
speak out where standards are not as they should be. It will be working to raise the quality of teaching and learning in our schools for the benefit of parents, pupils, and the wider public. There are few professions as important as teaching. Teachers are responsible for the success of future generations. Any objectives for the GTC must therefore have these responsibilities to the wider public at their heart.
The amendment I have brought forward I believe reflects the principles behind the amendments tabled by the noble Baronesses and the noble Lords during Committee stage. There was some debate then about whether the GTC should also have an overall aim about enabling the profession to exercise responsibility for the standards and quality of its professional service and to offer advice. There were mixed views about that. In my view the GTC will achieve this by fulfilling its wider aims and its functions, as set out in the Bill. Therefore, I do not believe it is necessary, or indeed appropriate, to state this as an aim in itself.
I also indicated during debate in Committee that I was very sympathetic to the proposal made by the noble Lord. Lord Jenkin of Roding—I do not believe that he is in his place—that the council should be required to take into account the needs of disabled people in the course of its work. I have therefore brought forward Amendment No. 3, which will require the GTC to have regard to the requirements of disabled people when carrying out its functions. This parallels an existing duty placed on the Teacher Training Agency. I am grateful to the noble Lord, Lord Jenkin of Roding, for raising this very important issue, with his customary force and eloquence, through his amendment at Committee stage.
I should add, that I have also introduced a further amendment, Amendment No. 5, which we will be discussing later. This further amendment requires the Secretary of State to have regard to the need to reflect the interests of persons concerned with the teaching of persons with special educational needs when making regulations about the composition of the council. The Government are determined that their crusade for higher standards should encompass all learners. I believe that, taken together, Amendments Nos. 3 and 5 will ensure that the GTC will have regard to the interests of those with disabilities and learners with special educational needs when carrying out all its functions.
I turn now to Amendments Nos. 12 and 14, proposed by the noble Lord, Lord Tope, and his colleagues. The existing Clause 2 sets out what we believe should be the advisory functions of the GTC. This will be the professional body for teachers and it will be able to advise the Secretary of State on a broad range of matters related to teaching. These include standards of teaching; standards of conduct for teachers; the role of the teaching profession; the training, career development and performance management of teachers; recruitment to the teaching profession; and medical fitness to teach. It may also advise on individual cases of teachers' misconduct.
Amendment No. 12 suggests an expanded and reworded version of those responsibilities. On a number of points I believe our intentions are exactly the same,
440
and much as I respect the noble Lord's drafting skills I am not altogether persuaded of the case to amend or adjust the present wording.
There are also a number of significant additional responsibilities here which we would not see as properly falling to the GTC—at least in the first instance. I do not think it would be right, for example, for the GTC to take a role in advising on grounds for suspending and dismissing teachers. We have recently agreed new procedures with employers and unions for dealing with teachers who are not up to the job. It is for line managers and employers to identify teachers who are not performing to standard or who ought to be dismissed for other reasons. Suspending someone or dismissing them from a particular post is quite different to barring them from the profession. The Bill gives the GTC a power to advise on the latter, but I do not think it would be helpful to start cutting across the relationship between employer and employee. Responses to our consultation exercise last year displayed a wide range of views on this topic with many urging us to tread very carefully where employment matters were concerned.
I do not believe it would be right either for the advisory role of the GTC to be expanded to cover other aspects of education such as funding or the curriculum. In the initial years, at least, the focus of the GTC should be on teaching. We need to give the GTC time to develop and establish itself before its role expands any further.
In particular we should not set out to duplicate the advisory functions we have given to other public bodies. Other public bodies, such as the Qualification and Curriculum Authority, will certainly look to the GTC for advice on issues, but it would not be right to give the GTC a principal function of advising on the school curriculum, syllabuses, examinations and testing. Many of the advisory functions presently envisaged for the GTC will involve questions of resources, but I do not think that advising on the funding of the education service should be set out as a principal advisory function of the GTC.
Amendment No. 12 also provides for the GTC to establish such committees as it thinks appropriate. The GTC will already have this power under paragraph 9 of Schedule 1, so that part of the amendment is unnecessary.
Finally, I note that the amendment provides for the GTC to determine which other bodies it should advise. It is certainly not our intention to constrain the council's ability to play a full part in the national education debate. Where there are issues on which the council would be expected to have a professional perspective to offer, it should be able to do so. In practice, I do not think that Clause 2 would unduly limit the GTC. We have already provided in Clause 2(5) for the GTC to publish its advice, so it would be open for any other body to take note of it. The amendment appears to remove that power from the GTC. I am not sure whether that was intentional. However, I am persuaded that we should consider further whether Clause 2 fully secures our intention that the GTC should be a major partner in the national drive to raise standards in schools.
I must also resist Amendment No. 14, again proposed by the noble Lord, Lord Tope, and his colleagues. It seeks to provide that the GTC should be given a greater role in promoting teaching as a career and in the continuing professional development of teachers. In England, those functions currently rest with the Teacher Training Agency. I do not think that it would be a good idea to see the TTA's statutory responsibilities weakened or its critical work in any way undermined. The TTA is doing a good job. We have recently given it a major new remit to ensure that good quality candidates are attracted to the teaching profession and receive the training and professional development they need throughout their careers. If experience shows that we need to consider the balance of statutory duties between the GTC and the TTA we may return to that in the next Parliament. It may be that the case proposed by the noble Lord, Lord Tope, and his colleagues is drawn from the clauses referring to the GTC for Wales. However, the situation in Wales is rather different because there only a small TTA unit has responsibility for a very limited range of functions. I beg to move.
Baroness Maddock: My Lords, when I wound up for my party at Second Reading—at nearly midnight—I forecast that the Bill would have a rough ride. I did not expect, however, that it would be quite as bad as it has been, as today has shown.
I begin by being positive. I welcome the government amendments. The Government have listened to what we said in Committee and we thank the Minister for that. It would be most ungracious not to do that because I notice that the phrases, "principal aims", "standards of teaching", and "quality of learning" have been incorporated in the government amendments.
I realise that it may sound a little pedantic but I do not apologise for what I am about to say because other noble Lords agree with our concern. Indeed, the way in which the teaching profession has been treated in past years means that we have to be careful now. That is why I am disappointed that the Minister has not adopted our phrase, "to maintain and enhance", but has used instead the term, "to maintain and improve". We believe that the word "improve" has a slightly negative implication which is not helpful.
I turn now to our amendments, Amendments Nos. 12 and 14, which we hope will become Clauses 2 and 4. In doing so, I stress once again the importance of having as a general teaching council an independent professional body which can give the teaching profession status and authority. Many of us fear that, if we are not careful, such a body may become merely an arm of government. In passing, I must add that we warmly welcome Amendment No. 3 which ensures that the specific requirements of persons who are disabled are included on the face of the Bill.
Amendments Nos. 12 and 14 set out fully what we see as the functions of the council and the activities we believe it is right for the council to carry out. We feel that the present proposals give the GTC far too limited a role. Indeed, it is mainly an advisory role. Perhaps I
442
should have referred to "the present proposals as far as we know them" because regulations are to follow and we do not quite know what will be the end result.
I believe that everyone, including the Government, is agreed that the setting up of the GTC is intended to have the effect of raising the status and esteem of the teaching profession. I believe that our two proposed new clauses leave teachers in no doubt that that is what we on these Benches want to see happen. Whether the Government have the same vision is open to question. The Minister has spelt out the differences between her vision and ours. I am not particularly optimistic that all that we would like will be taken on board so that we can have a truly effective general teaching council. This is particularly disappointing, because what we propose is precisely in line with the words of the Minister for School Standards when launching the consultation document on the Government's proposals for the general teaching council. He said that the aim was,
"to enhance the standing of teachers by giving them a clear professional voice, independent of government hut working with us to raise standards".
That is what we seek to achieve by many of our amendments.
As the Minister pointed out, subsection (2) of the proposed new Clause 2 seeks to do very similar things to those proposed in the Government's clause. We make no apologies for that, because we have removed the Government's clause and included it in our new clause. Subsection (3) of our new clause makes clear that it is for the council to decide which other bodies it advises, not the Secretary of State. That point was discussed in Committee. Our proposed subsection (4) reintroduces some material. In part this was supported by the noble Baroness, Lady Young, when discussing amendments in Committee. Originally they were tabled to amend Clause 1. It emphasises standards and commits the profession to putting pupils first. We have grouped the functions in order. Paragraphs (d), (e) and (f) deal with developing the profession, which we feel is very important, while (g) (h) and (i) deal with the disciplinary code and the striking off of teachers.
Having listened to the Minister, I believe that there is some confusion. We do not envisage that the general teaching council should become involved in the individual appointment of teachers but rather that it should be fully involved in the way that this takes place. Paragraphs (j) and (k) deal with the wider aspects of the profession's work in the education service. We believe it is vital that it has a public say. That point is also picked up in our new Clause 4 which may well not be discussed today.
I turn to Amendment No. 14 which proposes our new Clause 4. Most of this is borrowed from Clause 7 of the Bill. It gives powers to the Welsh general teaching council which are not given to the English council, as the Minister said. Subsection (1) enables the GTC to take independent action on its own behalf to promote recruitment. Perhaps it can improve on some of the efforts that have been made so far. We think that this is an opportunity to deal with the real crisis that we face in teacher supply, retention and recruitment. Subsection (2) is particularly vital because it gives the general

443
teaching council in England legal power to act publicly. Without that right it would not be able to publish material in any form, which effectively would be gagging the general teaching council. This reinforces our point that we want the council to be independent and not an arm of government.
If the Minister is still not minded to accept what we propose, we remind her of some of the issues raised last week in another place when a debate took place on the first report of the Education and Employment Select Committee for the 1997–98 Session. That report was entitled Teacher Recruitment: What can he done? The chairman of that committee, the honourable Margaret Hodge, when speaking in the debate in the other place last Wednesday, made two or three telling points. I repeat them for the benefit of the Minister and hope that they have some effect when she responds to the points that we make about the general teaching council. First, it was said that the teaching profession lacked self-esteem and struggled to meet the needs of children and the demands of policy-makers. Another point, which is very relevant, is that the Government must respond more enthusiastically than they have done so far to the report of the committee about standards and the need for teachers.
The chairman said that the committee had advanced radical and practical ideas to head off the growing crisis in teacher supply and was very disappointed by the Government's lukewarm response to the report. I suggest that when the Minister responds she takes that on hoard. I believe that many of the proposals that we have made to enhance the role of the general teaching council will go a long way towards convincing teachers that this is a profession to which they want to belong because the council will regulate that profession, work in its interests and lead to better working between government and teachers in the ensuing years.
5.30 p.m.
Baroness Young: My Lords, I begin by thanking the noble Baroness, Lady Blackstone, for Amendment No. 2 which is clearly designed to meet the first amendment that I tabled at Committee stage. She gave an undertaking that she would look at it. I should like to be the first to express gratitude that she has tabled this amendment, which puts into rather better language the point that I sought to make at Committee stage. I believe that it is valuable to set out in these terms the aim of the general teaching council. Although my noble friend Lord Jenkin is not in his place this afternoon, I am quite sure that he would want me to thank the noble Baroness on his behalf for tabling Amendment No. 3. I believe that we all acknowledge it to be a very great improvement on the Government's proposals.
I turn to the other two amendments tabled by the noble Lord, Lord Tope, but spoken to by the noble Baroness, Lady Maddock. I recognise that Amendment No. 12 is in many ways designed to be similar to my Amendment No. 8, which I shall move later in the proceedings. I share some of the concerns about this amendment that have been expressed by the noble Baroness, Lady Blackstone. Although I accept entirely the principles that lie behind it, on which I shall
444
elaborate when I move my own amendment—namely, the importance of giving to teachers the responsibility which such a teaching council would give if it had powers to do the things that I believe it shouldI—I would be unhappy, for example, about the funding of the education service, which would lead us into difficulties, and the details about the curriculum syllabuses, and so on. I do not believe those to be matters for a general teaching council except very much in an advisory capacity. Many people will have a view about that. I am not quite sure that that is right.
However, I share some of the concerns in relation to Amendment No. 14, which applies to the teaching council in Wales. One quite worrying area is the recruitment of teachers. We are very short of men to teach in primary schools, for example. We all know how extremely difficult it is to get people to agree to be head teachers. That is something which emerges from talking to almost any teacher now in the profession. I believe that we must look at imaginative ways to improve the position. I quote just those examples but there are others that should be looked at.
I said in Committee—I apologise for repeating myself—that I thought very highly of the Teacher Training Agency. I know Professor Clive Booth personally, for whom I have a very high regard. I am quite certain that he is doing a very good job. This is not intended in any way as a criticism of him, but I should have thought that there was a role for the teaching council in recruitment, if only on the general principles set out here of helping, explaining and encouraging young people to consider taking up teaching at all.
We have to face the fact that although all of us here this afternoon are interested in education, and believe being a teacher to be one of the most important things one could ever do, the picture painted to young people in the outside world is not one of a life of interest and ease. I am reminded of a novel which I read many years ago which told of the young girl who wished to teach in a poor school in New York. I think that the title of the novel was Up the Down Staircase.In a way it summed up the position well. When she reached the class and was longing to explain to it the joys of literature, replies she got were not what she expected. The reality of teaching is different from the ideals.
The serious point about all that is the problem of recruitment, and the need to get across to young people that this is something of importance; that when one does it well it is very enjoyable, but extremely hard work for very little pay. There is definitely a down side to it. Any further ways of increasing recruitment will be an advantage. I am not here to pick holes in all this. I thank the Minister for accepting my original amendment. I shall return to the whole question of the principles of the GTC later in the debate.
Baroness Darcy de Knayth: My Lords, I took no part in the earlier stages of the Bill because I was abroad. I extend a warm welcome to Amendment No. 3 which gives the GTC a duty to have regard to the requirements of disabled people, which brings it into line with the Teacher Training Agency and the HEFCs.

445
It has been useful way of reminding large organisations what a major impact their decisions can have on individual students. It will be important in this case for the GTC, which will be responsible for the medical-fitness-to-teach regulations, which in the past have been responsible for barring many disabled people from becoming teachers.
I have a question for the Minister. The GTC in Scotland, which already exists, does not have a duty to have regard to the requirements of disabled people. Does the Minister have any plans now to remove that anomaly? As she mentioned Amendment No. 5 relating to the composition of the council and the desirability of including someone concerned with the teaching of persons with special educational needs, I extend it a warm welcome to save time at a later stage.
Earl Baldwin of Bewdley: My Lords, I, too, welcome the amendment. The Minister has been as good as her word and brought it back. I think that it is thoroughly satisfactory. I have just one small point. It is no more than a schoolmasterly quibble, if you like. Perhaps I am reverting to type. I wonder whether one can "maintain" and "improve". Are they not in some sense mutually exclusive? Ought one perhaps to say "or improve as appropriate" or something like that? It may have got past the draftsman already, but it struck me that they were two rather different things, and you could not do them both at the same time. However, in principle, obviously, this is an amendment to be welcomed.
I would say the same about the amendment standing in the name of the noble Lord, Lord Tope, because I believe we need a good deal more—if you like—beefing up on the face of the Bill for this council from the moment that it starts. I am also in two minds about one or two things that appear in the amendment. I shall not go over that ground. I rather wish that the amendment tabled by the noble Baroness, Lady Young, had been grouped with these amendments, so that we could have heard her arguments at the same time, and I could have heard those before deciding on this matter, because it covers a great deal of the same ground. Having said that, I certainly approve in principle much that has been put in the amendment tabled by the noble Lord, Lord Tope.
Earl Russell: My Lords, I join my noble friend Lady Maddock in offering a welcome to Amendments Nos. 2 and 3. So far as they go, they are significant improvements. I am glad to see that they are going to be in the Bill. I said "so far as they go", because I must say a word in support of Amendments Nos. 12 and 13 to which I have put my name.
One of the key advantages of those amendments is that they get us away from the straitjacket of the existing Clause 2, which is the one that restricts the GTC entirely to the job of giving advice to the Secretary of State. I have always said that legislators, like parents, must learn to let their offspring grow up. They must learn to let the legislative progeny evolve, grow and develop in their own way, rather than perpetually seeking to control them.
446
Clause 2 treats the GTC like a toddler who is put in leading reins. I know that in dense traffic with a young child that occasionally may be necessary, but to keep them perpetually in leading reins as they grow older, seems to me to be unnecessary. It is likely to diminish the status of the GTC and its usefulness.
The key words in Amendment No. 14 are:
"The Council may of its own volition".
The words, "of its own volition" cross a crucial watershed which the Minister's amendments have not approached.
I should like to say a few words in support of the particular points in Amendment No. 12. I must admit that I am a little surprised by the Minister's reading of subsection (4)(h) which provides:
"grounds for suspending and dismissing teachers".
I cannot see anywhere in those words any intention to address individual cases. That was not in our minds. "Grounds" is a legislative rather than a judicial notion. It is general reasons why dismissal or suspension may be justified. The cases are different.
When the Minister talked of matters not on syllabuses or the curriculum, she reminded me a little of a former professor in the university of London—part of what is still known 30 and four years later as the ancien régime—who once said in the History Board of Studies:
"This proposal originates with the teachers of the subject which I regard as a most improper matter".
I do not share that attitude. It is a little out of date. I was sorry to hear it from the Minister.
I was sorry, though not surprised, to hear what the Minister had to say about funding. That is a ministerial litany. If Ministers in the DfEE, or whatever name it may from time to time be known, have one signature tune it is not "Never on a Sunday", it is "Never on funding". I have been moving similar amendments to education Bills since 1988. They have been turned down every time, but I think that the results show that I was quite right to move them, and I wish that they had been accepted.
5.45 p.m.
Lord Peston: My Lords, the amendments put forward by my noble friend the Minister improve the Bill considerably. I think that they enhance the Bill. I particularly like the expression:
"in the interests of the public".
I hope that noble Lords have noticed that that is what is said there. That is enormously useful. The distinction between the aims and functions is needed, as was pointed out, and my noble friend has dealt with that. Of course there is no disagreement between any of us on the amendment dealing with discrimination. That was obviously needed. It is a pleasure to see it there.
I agree, although I do not think that it is fundamental, with the noble Baroness, Lady Maddock. I prefer the word "enhance" to the word "improve", but, to use her other word, is a bit pedantic. I would have chosen "enhance" but I do not think that we need to die in the last ditch between the words "enhance" and "improve".

447
On the remainder, I disagree with the noble Baroness. I stand second to none in my desire to see a considerable increase in funding of education. I think that my record in proposing that, which I have not forgotten now that I am on this side of the House, is not a minor one. I strongly support the need to improve the funding of the education service, but, until I saw Amendment No. 12, it had not occurred to me that that would be a major role for the GTC. When it comes into existence, it will probably find it irresistible to make the odd comment on funding, because all bodies do, but it would not have occurred to me to write that into the Bill.
I also find paragraph (k) confusing. It does not identify the curricula, syllabuses, examinations and testing. My inclination would be to exclude them from the Bill because I do not believe that Clause 2 is constricting. In that respect I disagree with the noble Earl, Lord Russell. On the contrary, I believe that at this stage it gives the general teaching council a massive role.
As we debated in Committee, this is the first stage in the development of the general teaching council. To use the noble Earl's analogy, it is the toddler in reins which many of us wish to see striding ahead on its own. There was some disagreement between us on how powerful the body should be. As my noble friend the Minister knows, I would have gone further, although I believe that the Government's position is within the bounds of reasonable discourse in not going further. If there were ever a matter on which one should agree to disagree this is it.
I share the anxiety of the noble Baroness, Lady Maddock, that one does not want to see the general teaching council as an arm of government or in the pocket of the Secretary of State. It is worth getting that on the record. However, it will depend to a considerable extent on who is appointed as chairman, chief executive and members of the council. My noble friend is introducing an amendment relating to the number of teachers who will be members. However, my limited experience shows that the idea that any such person will end up in the pocket of the Secretary of State is unfounded. As soon as the body gets going, led by the chairman, it will start making trouble for the Secretary of State because that is exactly what such bodies do. Perhaps I should not have said that because he might change his mind about whether he wishes to go ahead with the proposal.
However, the reason for the body's existence is to do exactly what is proposed and I believe that it will. For that reason, I believe that Clause 14 is less important than the noble Baroness, said. The body is intended to enhance the professional development of teachers. I am convinced that it will do so. That is one of the most important paths towards improving the recruiting problem. The present trouble is that teaching does not look like the kind of attractive profession that a would-be professional wants to enter. I strongly believe that, even at this early stage, the general teaching council will he capable of returning us to the view that teaching is a noble profession of which one can be proud. However, that does not solve the problem expressed by the noble Baroness, Lady Young. I have
448
seen teachers working in the most adverse physical and psychological circumstances, trying to explain to a group of oversized boys the pleasures of "Romeo and Juliet". The role of the council is to give enhancement to the profession.
I believe that my noble friend's amendment improves the Bill. We have our points on the record, which is helpful, but I am not persuaded that we need to go further at this stage. My noble friend has spoken of the next Parliament and new legislation, and I am convinced that we might have to do more in due course. However, I believe that we can tread a little carefully at this stage.
Lord Northbourne: My Lords, I welcome Amendment No. 2 and I am grateful to the Minister for taking on board the points enshrined in the amendment tabled in Committee by the noble Baroness. Lady Young, and myself. The noble Baroness, Lady Maddock, referred to raising the standards of the teaching profession and enhancing the standing of teachers. They are desirable objectives, but they cannot be achieved in a vacuum. I suggest that Amendment No. 2, which sets out the principal aims of the council, will set in context the enhancement of teachers' standing and will help to achieve the objective of improving the status of teachers. I strongly support the amendment.
Lord Butterfield: My Lords, perhaps I may make a small criticism of Amendment No. 2. I am anxious that when the teachers of this country read about the general teaching council they do not feel that it is lording things over them. I suggest that it might be more diplomatic to change the wording in subsection (b) of her amendment. The words,
"to maintain and improve standards",
imply that in some cases the professional conduct among teachers is in need of improvement. I should prefer wording such as, "to encourage the highest standards of professional conduct among teachers". That leaves out any question of judgment of the present position.
Baroness Carnegy of Lour: My Lords, perhaps I may draw on my experience of Scotland and give the benefit of that to the noble Baroness, Lady Maddock. If a general teaching council is to achieve all the objectives in her Amendment No. 12 it will need to have many committees and spend a great deal of time at a central point discussing them and deciding what to say. One of the problems for the general teaching council in Scotland is that members must be sure that it is worth paying their membership fees. They believe that if the council has executive powers and is taking actions which affect the issues it is worth doing so. They find no satisfaction in funding a talking shop. That applies also to teachers who must fill in for school teachers who are absent because they are members of the general teaching council. Therefore, from a local authority point of view, I doubt whether Amendment No. 12 is wise.
Lord Pilkington of Oxenford: My Lords, too, join the choir of praise for Amendment No. 2. It may therefore seem ungracious if I am then critical of what

449
has been omitted. The Minister may remember that when we discussed the Bill on Second Reading I supported the Government's evolutionary approach. But when it emerged that their evolution was at a dinosaur-like pace and that we had to wait until the next Parliament I began to worry. When I discovered that evolution was blocked by the fact that the Bill cannot be altered except by primary legislation—and we know that there is little possibility of that in this Parliament—my worries became considerable.
I should have liked the Minister to include in Clause 2 powers to control the register on the grounds of professional conduct. I and my noble friends will support her amendment to that extent at subsequent stages of the Bill. However, I believe that the Government are making a great mistake and that teachers will be resentful of paying money to a general teaching council which will have no powers. It will become a source of discontent. I have spoken to my own union, the National Association of Head Teachers, and to two other unions and all of them share my opinion on the matter. Even at this late stage, I urge the Minister to discuss with her colleagues in the other place the possibility of at least giving the teachers some control over the register as regards standards of teaching and the quality of learning. Otherwise, I see great problems ahead.
My noble friend Lady Young will debate the issue later when we return to it, but it is important. The council will become not only a talking shop but a discontented talking shop. The teachers will not be pleased that the Government have created a council with such limited powers. Like everyone else, I welcome the support given to the disabled and to the whole intention of the Bill, but without powers it is a sorry business.
The Lord Bishop of Ripon: My Lords, I wish to make a point which I made in Committee but which has not been made on Report. I, too, welcome Amendments Nos. 2 and 3. I listened carefully to the noble Lord, Lord Pilkington, and to the noble Earl, Lord Russell, about the powers of the general teaching council. I particularly noted the point made by the noble Earl, Lord Russell, about the words in Amendment No. 14:
"The Council may of its own volition undertake activities".
That distinguishes it from the parallel clause for the General Teaching Council in Wales. Although many phrases are the same, there it is the Secretary of State who instructs the council to undertake work.
The point I wish to make is not unlike that made about teachers paying fees. I wonder who will consider it worth belonging to the general council. It is clear that if the general council is to be effective it must have people of the highest calibre, but they will only be attracted to it if they feel that it can undertake work of real significance. In my view, unless greater powers are given to the General Teaching Council in the Bill I am not clear that people of calibre will be willing to serve on it.
6 p.m.
Baroness Blackstone: My Lords, I am sorry that Members of your Lordships' House have not been entirely in support of Amendment No. 2, although I am grateful to the noble Baroness, Lady Young, and the noble Lord, Lord Northbourne, who supported it, as did one or two others who have spoken in the debate. In my view the amendment clearly states the principal aim of the General Teaching Council, showing how it would represent professional standards and promote a positive image of teaching. Of course I accept how important that is in the current teacher supply situation. The council will play a vital role in improving standards of teaching and professional conduct and will raise the quality of learning.
I believe that the amendment fully reflects the principle behind the amendments tabled at Committee by the noble Baronesses, Lady Young and Lady Maddock, and the noble Lords, Lord Northbourne and Lord Tope. It was intended to do so. However, I am delighted that Amendment No. 3 is widely supported by noble Lords. It will ensure that needs of disabled people are taken into account by the GTC in the course of its work.
Perhaps I may deal straight away with the point made by the right reverend Prelate. He asked whether it would be likely that people of high calibre would come forward if the powers of the GTC were limited in the way that we suggest. I cannot judge what will happen in the future, but the Government believe and hope that after so many years of waiting for a GTC, something which the teaching profession has wanted for a long time, excellent people will come forward who are willing to serve and will do so.
I add that we have said all along that we wanted an evolutionary approach, as the noble Lord, Lord Pilkington, said. The NUT which is the largest teachers' union takes that view. I received a letter recently from the General Secretary of the NUT which said:
"The Union believes that the establishment of the GTC…should he by way of a small number of enabling clauses, followed by subsequent regulations…
"As the largest teacher organisation, we believe that the creation of a body which is entirely new requires a 'step-by-step' approach which seeks to achieve consensus. Placing all the powers of a GTC in primary legislation could create division rather than consensus".
Although I do not always agree with everything that Doug McAvoy says on all matters, on this occasion he has set out in a clear and succinct form some important reasons for supporting the Government's approach.
The noble Lord, Lord Butterfield, criticised Amendment No. 2 on the grounds that it might be slightly insulting to teachers. I do not believe that. We can all improve our standards and I say that as someone who was a university teacher for a long time. Good teachers believe that it is always worth looking at how to do things better and how to improve.
Lord Butterfield: My Lords, perhaps I may interrupt—
Baroness Blackstone: My Lords, that brings me to the question raised by the noble Baroness,

451
Lady Maddock. Should we use the term "enhance" or "improve"? I do not see much difference between them, they seem to be similar and I am not strongly wedded to one or the other.
The noble Earl, Lord Baldwin, said that in a schoolmasterly way he would question whether we could say both "maintain" and "improve", and that in some way they are contradictory. I see his point, but the wording has been through the parliamentary draftsmen. They think it reasonable and not contradictory, and I hope that the noble Earl can accept that.
The noble Baroness, Lady Maddock, raised one or two questions about whether we would be jeopardising the independence of the GTC in the way in which we have worded our amendment. My noble friend Lord Peston suggested that that was not the case and I strongly agree. The Government wish to see a strong and independent GTC giving independent advice to the Secretary of State. It would defeat the object if that were not the case.
The noble Baroness and other Members of your Lordships' House raised the issue of whether what her amendment says in relation to individual appointments and dismissals cuts across employers. The noble Baroness said that there was no intention to do that. I can take the matter away and examine it, but my advice is that the way in which it is currently drafted means it could well be interpreted to cut across the role of employers.
Baroness Maddock: My Lords,—
Baroness Blackstone: My Lords, as this is Report stage, the noble Baroness may wish, before I sit down, to ask a question for elucidation. In that case I should be happy to answer it. Would she like to do it now?
Baroness Blatch: My Lords, we are dealing with a point of order. My understanding is that on a point of order the Red Book says that one can intervene for clarification. The noble Baroness has just refused to allow my noble friend Lord Butterfield to do just that on a point of clarification. Having given the promise that she would be accommodating on points of clarification, she has now accepted a question from a Member of the Liberal Benches.
Baroness Blackstone: My Lords, I was not aware that the noble Lord, Lord Butterfield, wished to ask a question on a point of clarification. I thought he was going to make a further point. He did not proceed to ask a question but, if he wishes, I am happy to accept a question, as I am from the noble Baroness, Lady Maddock. That is, if it is a point of clarification on what I have been saying.
Baroness Maddock: My Lords, I wish to clarify whether the Minister understood that what we are saying is that the provision concerns advice and teachers advising on what the standards should be and no more.
Baroness Blackstone: My Lords, if the point concerns advising, I am happy to take the wording away
452
and ask for its re-examination, to see whether it can be drafted in such a way as to make it absolutely clear that it concerns advice. I shall then come back to it. I am happy now to give way to the noble Lord, Lord Butterfield.
Lord Butterfield: My Lords, I am grateful to the Minister. I merely wished to ask what was the difference between the Minister's amendment and my suggestion that the provision be worded: "to encourage the highest standards of professional conduct". That is perhaps a little less pejorative of the professional standards of the profession today.
Baroness Blackstone: My Lords, the government amendment makes it clear that that is what we want to do. I hope that the noble Lord, Lord Butterfield, will accept that that is what the Government have in mind.
The noble Baroness, Lady Young, and the noble Baroness, Lady Maddock, raised questions about teacher supply. I agree with them that that is a serious problem—both trying to recruit more men into primary schools and to make sure that more people come forward for headships. That is a particular problem in the primary sector and much less of a problem at the secondary level.
The Government are taking a number of actions to try to deal with the problem of boosting recruitment. The TTA has that very much at the forefront of its current work. As I mentioned in Committee, a number of advertisements have been shown in cinemas to which there has been quite a good response. But clearly we must monitor the position and continue to do more.
I believe that the very existence of a GTC which speaks for the profession will raise its status and the self-esteem of teachers which has been referred to. However, we must remember that the TTA also has the primary responsibility for teacher supply and I am very grateful to the noble Baroness, Lady Young, for what she said about the work of the current chairman, Professor Booth, because we all have the highest regard for what he is doing.
The noble Baroness, Lady Carnegy of Lour, asked about disabled people in Scotland and the Scottish GTC.
Baroness Carnegy of Lour: My Lords, I was not speaking about disabled people. I suggested that Amendment No. 12 might be very time consuming for teachers and therefore very expensive for local authorities and schools. I did not address the government amendments which I believe are excellent.
Baroness Darcy de Knayth: My Lords, I asked the question about whether the duty should be attached to have regard to the Scottish Teaching Council.
Baroness Blackstone: My Lords, I am most grateful for that. I have come to assume that any reference to Scotland comes from the noble Baroness, Lady Carnegy of Lour, who is so assiduous, and rightly so, in promoting the position of Scotland. I shall have to write to the noble Baroness, Lady Darcy, about that. There is

453
a question as to whether that would be within the scope of this Bill, which is not about setting up a GTC for Scotland but about setting up a GTC for England and Wales.
I have tried to respond to all the issues that have been raised. I regret that I cannot support Amendment No. 12 as it would add a significant number of additional responsibilities which we do not see falling properly to the GTC at present. However, as I said earlier in the debate, I am prepared to consider further whether Clause 2 fully secures our intention that the GTC should be a major partner in the national drive to raise standards in schools, if that helps the noble Lord, Lord Butterfield.
As regards Amendment No. 14, I am pleased that your Lordships value the work done by the TTA and accept the importance of the TTA working in harmony to raise standards in the teaching profession. I am sure that all noble Lords in this House will agree that that is a very desirable objective. On that basis, I hope that the noble Baroness will not press her amendment.
On Question, amendment agreed to.
Baroness Blackstone Baroness Blackstone moved Amendment No. 3:
Page 1. line 17, at end insert—
("() In exercising their functions, the Council shall have regard to the requirements of persons who are disabled persons for the purposes of the Disability Discrimination Act 1995.").
On Question, amendment agreed to.
Lord Whitty: My Lords, I beg to move that consideration on Report be now adjourned.
Moved accordingly and. on Question, Motion agreed to.

Competition Bill [H.L.]
6.15 p.m.
The Minister of State, Department of Trade and Industry (Lord Simon of Highbury): My Lords, I beg to move that the Bill be now further considered on Report.
Moved, That the Bill be further considered on Report.—(Lord Simon of Highbury.)
On Question, Motion agreed to.
Clause 48 [Appeals on point of law etc.]:
[Amendments Nos. 153 to 154E not moved.]
Schedule 8 [Appeals]:
[Amendments Nos. 155 to 158 not moved.]
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 159:
Before Clause 49, insert the following new clause—
("Advisory body for the Director
ADVISORY BODY ON FUNCTIONS OF THE DIRECTOR
.—(1) The Secretary of State shall, prior to the coming into force of Chapters I to IV of this Part, establish an advisory body for
454
functions exercised by the Director under this Part, and the body so established shall consist of such members as the Secretary of State may from time to time appoint.
(2) It shall be the duty of the advisory body established under this section to advise the Director on any matter—

(a) in respect of which the Director exercises functions under this Part; and

(b) which is referred to it by the Director or is a matter on which it considers it should offer its advice.

(3) The advisory body established under subsection (I) shall, as soon as practicable after the end of 1998, and in each subsequent calendar year, make a report to the Secretary of State on its activities during that year.").
The noble and learned Lord said: My Lords, important as this amendment is, it is more important that at long last we should reach our deliberations on this Bill. It does not seem to me that the conduct of the business in your Lordships' House this afternoon has been at its most edifying, particularly as this Competition Bill is extremely important. To reach it only at quarter past six does not indicate to the world outside, which is keen to see how we are to deal with competition, that we are taking the matter as seriously as it warrants.
Amendment No. 165 is grouped with this amendment. That seems to me to be extremely appropriate because, although both amendments are in my name and relate to advisory bodies, it would be a superfluity of advisory bodies to have them both established. The amendments are essentially alternatives.
Amendment No. 159 would require the Secretary of State to create an advisory body to provide advice on the exercise of functions under the Bill to the Director General of Fair Trading or to any regulator exercising those functions concurrently. Advice would be provided at the request of the director general or any regulator or on the advisory body's own initiative where it considered that it was appropriate to do so.
As I am sure that many noble Lords will appreciate, the sectoral statutes already provide for the Secretary of State to establish such bodies to advise regulators in respect of certain functions and enable regulators to establish advisory bodies in respect of other matters. I understand that the Director General of Telecommunications has already established such a body in relation to the application of licence conditions which are based upon Articles 85 and 86 of the treaty.
The proposal in Amendment No. 165 is that the Secretary of State would create an advisory body to provide advice to the sectoral regulators alone without going back to the director general, and to advise them on the exercise of their functions under the Bill. The advice would be provided on the request of the regulator or on the advisory body's own initiative where it considered it was appropriate to do so.
An example of the type of arrangement which is already in place is under Section 54 of the Telecommunications Act 1984 which authorises the establishment of an advisory body on matters affecting small business. I understand that such a body has already been established.
Once those amendments appeared in my name, I received a letter from the Director General of Telecommunications who said:
"While I believe it is important that regulators have access to independent advice on issues, I do not believe that formal provisions for such arrangements needs to he written into the Bill".
At the same time, I received a communication not just from the regulator but from those who are to be regulated.
A document from the Cable Communications Association states,
"While the CCA believes it is important that regulators have access to independent advice of the highest quality, we do not believe that provision for formal arrangements needs to be written into the Bill … Oftel already makes extensive use of advisors on legal and economic issues … Introducing a formal advisory body would risk introducing unnecessary bureaucracy and delay into the decision making process"
of regulators. The association further states:
"In our own experience Oftel already makes extensive use of advisors on legal and economic issues and we believe that the Director General of Telecommunications and other sectoral regulators should have the freedom to seek specialist advice as required on a case by case basis".
On one view it might seem a happy coincidence that the regulator and the regulated should agree, but such is the coincidence of language that if I were an examiner for an examinations board I might think that someone had seen someone else's paper.
The more important point is that if there is that coincidence of view it would appear to be unnecessary to explore the matter further if the approach that was proposed met with everyone's approval. I think it is clear that we should not believe that that is the only view that has been expressed by those who have an interest in these matters. I take a little time to explain this because the same point will arise in relation to a number of the groupings we are discussing this evening.
As I am sure the Minister will have seen, there is an article in today's Times by Mr. Thomas Sharpe QC, who is a specialist in United Kingdom and EU competition law and utility regulation. The Minister may not have read the article but I am sure he has seen his own beaming face smiling out from the pages of The Times today. It is worth recording that Mr. Sharpe, a distinguished Silk, states that this is a major Bill and it is a major achievement for the Government. He compliments the Government on introducing it into the Lords rather than the Commons, which reflects its technical nature and cross-party support.
However, what begins to emerge clearly from the article is that there are a number of risks as regards the way the Government are approaching this matter, particularly in relation to concurrency. The clear proposal is that the director general should have a continuing and important competition law function but that all the regulators should be similarly involved. While from time to time in the course of our deliberations we have dealt with one regulator or another, the fact of the matter is—as the article points out—that there will be no fewer than eight other
456
regulators who from time to time may have to exercise competition law policy approaches. In our view there is a real risk, as Mr. Sharpe states, that,
"As it stands, the Bill will lead to duplication of scarce resources among regulators; the certainty of inconsistency of treatment between regulators and difficulties over which regulator should have jurisdiction in any situation".
It is in that set of circumstances that we believe it to be desirable that there should be one advisory board that offers advice both to the director general and the sectoral regulators, or to the sectoral regulators alone. As I indicated, it is my understanding—I am open to correction—that Oftel has already established such an advisory board to give specific advice on the issue of conditions in licences where there is an Article 85 or 86 point. There would be a real risk of inconsistency. Each and every one of those regulators who sought to impose conditions within licences—all those which had an Article 85 or 86 point—and each different advisory committee could potentially come up with a different variation. That seems to me to be undesirable. It would lead to a great deal of uncertainty and duplication. The simplest and best way forward to eliminate the inconsistency I have mentioned would be through the establishment of an advisory body.
As I say, this proposal is not wildly out of line with the scheme of things as they are at the present time. It is my understanding that in most, if not all, of the sectoral statutes such a power already exists. But if there is to be this more distinctive, clearer, concurrent competition law responsibility in those circumstances, particularly where multi-utilities will operate—if we do not have them already—it is desirable that there should be some arrangement for a single body. We have proposed alternatives. I hope that the Government will consider that one of them is a desirable way to proceed. I beg to move.
Lord Desai: My Lords, I take it that the noble and learned Lord prefers either Amendment No. 159 or No. 165. I think that Amendment No. 159 is better because Amendment No. 165 would add too many advisory boards.
The noble and learned Lord referred to concurrency. While that is an important issue, I am not clear that the amendment will deal with it. I shall clarify the problem. I believe that the concurrency problem will arise. At Second Reading I said that we should have an over-arching regulatory body rather than Snow White and the Seven Dwarfs, as it were. I do not see that the advisory board that the noble and learned Lord proposes will have any binding power to say, "This is our judgement and therefore this particular problem falls in the path of a sectoral regulator". If it is not to have that kind of power, I do not know that the advisory body will add much more to what the director general and various other regulators already seek by way of informal advice on a retail basis from time to time. That is my only comment.
Lord Simon of Highbury: My Lords, I am grateful to the noble and learned Lord, Lord Fraser, for pointing out that there is an article in The Times today on this

457
subject. I shall hasten to read it. Perhaps in view of recent debates I have not been reading the paper as closely as I should have done. In any case, the thinking is not that with which I would be totally at one.
I believe that the thinking behind Amendments Nos. 159 and 165 although clear is flawed. The noble and learned Lord has, in my view, underestimated the mechanisms in the Bill for ensuring that the director takes account of the views of those affected when he exercises his powers, and for ensuring that his decisions may be appealed. The advisory bodies proposed in the amendments would also, if I may say so, add an unnecessary layer to the decision-making process, particularly that suggested at Amendment No. 159. I shall return to Amendment No. 165.
The Bill already makes provision to make the director accountable for his actions and to oblige him to take into account the views of affected persons. He must publish applications for decisions, consult those likely to be affected and take into account their views—I refer to paragraph 5, Schedules 5 and 6. In investigation cases he must give written notice to those most likely to be affected and provide them with an opportunity to present their case—I refer to Clause 31. Most importantly, his decisions may be appealed by the parties concerned, affected third parties and their representative bodies. The appeals tribunal may conduct a full rehearing of the merits of the case. Thereafter, appeal lies on a point of law to the Court of Appeal and your Lordships' House, as noble Lords are aware.
It is worth pointing out that the accountability mechanisms are much more extensive than those which exist at EC level. In contrast to the full rehearing of the case by the appeals tribunal, the European Court of Justice is in certain respects more akin to judicial review. Similarly, the class of third parties which can appeal a director's decision is highly likely to be wider than the class which may appeal Commission decisions.
The noble and learned Lord mentioned the advisory body for Oftel. It is true that it was established to advise on the application of the fair trading conditions in licences granted under the Telecommunications Act, which are similar to the prohibitions in the Bill. But under the Telecommunications Act there is no comparable appeal body to that established under the Bill. The situation is therefore quite different.
I find it difficult to see what benefit can be gained by adding an additional layer to the decision-making process as suggested by these amendments. That is not to discuss the issue of concurrency formally; I quite understand that there are separate arguments that will run this evening in relation to concurrency. My submission is that the noble and learned Lord's submission will only add a layer to the consultative process, which has already benefited from the way in which we have shaped and structured the Bill. I have tried to explain why I believe the position of Oftel is different; namely, that there is no recourse to appeal in its circumstance as there is in the circumstances of the Bill. I hope therefore that on reflection the noble and learned Lord will recognise that and not press his amendments.
6.30 p.m.
Lord Fraser of Carmyllie: My Lords, first, perhaps I may say to the noble Lord, Lord Desai, that I entirely agree with him. The establishment of an advisory body, whether under the proposal in Amendment No. 159 or my alternative proposal in Amendment No. 165, does not eliminate the problem of concurrency. However, if the policy is to be that concurrency should exist, it would seem to us desirable to avoid the duplication and inconsistencies which we would predict, unhappily, are almost inevitable, and that there should be a single advisory body to do what it could to avoid that. I return to the particular example I used. If Oftel already has an advisory body, advising specifically on where Articles 85 and 86 might impact on conditions in licences, it is to be presumed that the other regulators will wish to address much the same problem. If they are going to do that, there would seem to be a powerful case for there being a single body providing that advice rather than up to eight separate bodies on this technical matter.
The noble Lord, Lord Simon, has a good point in this respect. I would certainly not wish there to be an additional layer. I appreciate that it would be something of an absurdity if Oftel had its own advisory committee on Articles 85 and 86 and there was also a broad regulator's one also offering advice on those articles. If that is the noble Lord's only objection, I believe that I can go away and table amendments before Third Reading to eliminate the right of Oftel and others to have their own separate independent advisory bodies. I shall withdraw the amendment. I wish to reflect on the noble Lord's remarks. I did not quite understand his point about there being rights of appeal under the Bill. No doubt it is my fault, but I shall want to read those remarks carefully in order to determine whether or not we wish to return to the matter at Third Reading. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 49 [Rules]:
Lord Kingsland Lord Kingsland moved Amendment No. 159A:
Page 24, line 40, at end insert—
("() The Director shall, prior to the coming into force of section 52, make rules under this section which specify (by means of objective criteria set out in those rules) the circumstances in which the Director rather than a regulator shall exercise the powers conferred by or under Part I.").
The noble Lord said: My Lords, Amendments Nos. 159A, 170, 171, 171B and 225 all refer to the problem of overlapping jurisdiction between the Director General of Fair Trading on the one hand and the individual regulators on the other when enforcing their competition responsibilities. Amendment No. 164E refers to a much wider matter which reflects an amendment made by the noble Lord, Lord Ezra, in Committee.
As the Minister is only too well aware, the problem of concurrency has a number of manifestations. Much of this evening's debate will be about those. This particular one relates to which regulator—or, if not a regulator, the director—is responsible for a particular alleged anti-competitive activity.
Of course it is simple if a matter is within the gas sphere, once a satisfactory definition of "gas" has been decided on, or within the electricity sphere, once a satisfactory definition of "electricity" has been decided, and so on. But, as the Minister knows, the real world is not like that at all—especially when we are seeing the growth of utility conglomerates and we know that many of these agreements will cross the lines of responsibility of the regulators. Which regulator should be responsible?
That is not merely an academic question. Since it is proposed to give individual regulators concurrent jurisdiction enabling them to exercise both regulatory and competition power at the same time, which regulator might determine the degree of severity with which he enforces his powers? If it becomes known that the gas regulator is "softer" on competitive matters than the electricity regulator, or that both are softer than another regulator, it is almost certain to lead to forum shopping by the regulatees. In order to prevent that, these amendments seek to establish ab initio and a priori a means of dividing up responsibilities. It is the belief of Her Majesty's Opposition that the rules for that dividing up should be clear and determined, and known to this House before the Bill becomes law.
In the course of the Committee stage, I recall the Minister referring to the undesirability of a hierarchy of powers. However, I should like him to reflect for a moment on any other solution but a hierarchy. The great danger that the Minister faces is that this Bill will be applied in seven or eight different ways by seven or eight different people, which will, quite apart from the discomfort of the regulatees, cause enormous confusion to the appeal courts which can apply only one set of rules; namely, the rules in the Bill.
I therefore say to the Minister that what is required is some careful thought about where the boundaries ought to lie, and some clear, at least draft, rules before the Bill becomes law setting out those boundaries beyond peradventure. I beg to move.
Lord Borrie: My Lords, I have great sympathy with some of the points made. Certainly it is extremely valuable to have had a debate initiated on the whole question of concurrency and consistency. If there is one point on which everyone in the Chamber agrees, it is the desirability of consistency in decision-making whichever regulator is involved, so that competition law develops, with the aid of the competition commission's appeal tribunal. I think that that is everyone's intention.
But the amendments immediately under discussion seem to proceed from gentle to harsh rigidity. They start with the notion of the director making rules, and proceed to amendments such as Amendment No. 170, which would lay down at some length and with great rigidity in the Act itself the intention as to precisely where the demarcation lines should be. If noble Lords believe that consistency is desirable, there is another technological matter on which we may agree and that is the current convergence in the field of broadcasting, telecommunications, information technology, and so on. I challenge noble Lords to say where we will be in five or 10 years' time. It therefore follows that it would be
460
wholly undesirable to lay down, in either modest or rigid form, the demarcation lines. The noble Lord, Lord Kingsland, is concerned with the regulatee. I am not sure about that word but I think I understand what he means. Business and industry want to know where they stand. At this stage of a developing convergence in technologies and at this stage of regulation, before the Government's utilities regulation review, which will almost certainly change some of the regulatory arrangements, it would be unwise to lay down demarcations which may be suitable in February 1998 but which will almost certainly be unsuitable in February 1999 or in five years' time.
The arrangement whereby the Director General of Fair Trading chairs informal meetings to discuss rules and procedures is the kind of concordat which has existed for many years in the more limited concurrent jurisdiction of other regulators. The concordat is made public and can be altered from time to time. It would be much more helpful than laying down the precise rules proposed by the noble Lord, which may or may not be right.
Lord Desai: My Lords, I support the comments of my noble friend Lord Borrie. I have been worried about concurrency for some time. It is untypical of the noble Lord, Lord Kingsland, and the philosophy of his party to impose a vast number of rules on a changing scene. The present arrangement will not last and we will need new arrangements in three or four years' time. We need, not a hierarchy of rules, but a hierarchy of authority so that one knows who is the top dog who can be consulted by those who are lower in the hierarchy. The current arrangement may not be perfect but the Director General of Fair Trading can talk to other regulators and resolve matters. However, I still believe that this is a transitional arrangement and that we will have to decide the matter after the utilities review and then introduce binding rules. Inventing vast numbers of rules now is not the way forward.
Baroness O'Cathain: My Lords, just because something is going to change does not mean that it should not be controlled now. New customer practice can develop over a very short period of six to 18 months, after which time it is very difficult to get it back on track. Although we are dealing with a new technological area, telecommunications, it is a bit of a cop-out to say that we should not lay down precise rules because everything changes so rapidly.
During the debate on the Broadcasting Bill many noble Lords stated that the Broadcasting Act would be superseded by another Broadcasting Act because everything changes so rapidly. The same could apply here, but that did not stop us from acting in relation to the Broadcasting Act. I have a great deal of sympathy with the idea that in order to stop excesses this area should be regulated now and not retrospectively.
Lord Fraser of Carmyllie: My Lords, in putting forward an amendment containing a set of rigid rules we thought that we would be appealing to the philosophy of the noble Lord, Lord Desai, not to our own. The

461
proposals we have put forward are not entirely consistent. We are seeking to improve the Bill, to find the best way forward which will meet with broad support and avoid issues of concurrency in relation to issues that we do not as yet fully grasp.
It is difficult to define what will be the jurisdiction of Oftel. I do not know what the area of telecommunications will encompass in five or 10 years' time. Without being particularly skilled in gazing into the crystal ball of technology, there is every prospect that Oftel might seek to regulate everyone from Microsoft to Asda and Sainsbury. The amendment is a better way forward and avoids the risk of returning in three or four years to make further changes in primary legislation. It would be better to take the extremely complicated area of telecommunications competition away from Oftel and put it under the direct and exclusive authority of the director general.
I rose to speak to the further amendment in this group, Amendment No. 225, which the noble Lord did not directly address. It proposes that the Secretary of State should be prevented from making an order to bring Clause 52 into force until the review of the function of regulators has been completed and a report made to Parliament. One could probably accurately predict parts of the review particularly in the energy field but elsewhere it might be more complicated. Before that clause is brought into force Parliament should know what has happened. I appreciate that there are great difficulties and no doubt a very extensive review has been undertaken. The Minister has been open enough at each stage of the Bill to make clear that, however desirable, it would not be possible to complete that review before the Bill leaves this House. We accept that situation but suggest that there should be a provision, as proposed, which would delay commencement.
Lord Simon of Highbury: My Lords, it is worth making one or two general points about concurrency. In my last response I managed to put it off and talk to why I believe that another advisory committee would not be advisable at this stage. The noble and learned Lord, Lord Fraser, has probably addressed the factors of concurrency that he really wanted to talk about so I can put it off no longer; but I am glad that he is going to reflect on my previous answer.
The principle of concurrency is right. This is a Bill about competition. Regulators need to have powers in order to encourage and maintain competition in their sectors and to co-ordinate their use of sector-specific regulation with these powers. We have said that we do not believe that a "bright line" of jurisdiction is practical. We do not want gaps or litigation about who has jurisdiction. Hence, powers have to be exercisable concurrently by the regulator and the Director General of Fair Trading to ensure the competitive marketplace which I know all noble Lords are seeking via the powers of this Bill.
The marketplace is dynamic, as we have repeated many times. We have already talked about the scope of Oftel, though we shall return to that in further
462
amendments. It is true that the legal scope of Oftel's remit needs to be kept under review. It must he clear, but it must be wide enough and it must be up to date. As many noble Lords and the noble Baroness, Lady O'Cathain, have stated, this is probably the most dynamic marketplace that we are currently trying to regulate. We are prepared to respond to the concerns expressed in Committee to propose a clarification and widening of the powers of Oftel, but within the current framework of Oftel's existing powers and concurrency. We do not believe that a more radical review of Oftel's powers would be appropriate for the Bill. It needs to be dealt with in the context of telecommunications and broadcasting generally, which the Government are reviewing. We expect to launch a consultation on these matters in the spring. We shall talk about the scope of Oftel; we shall talk about the telecommunications sector and broadcasting generally; but we must have a starting point in a very dynamic market, and this is about the starting point.
To help define the starting point we have said clearly that flexible rules need to be drawn up to make clear within the prescribed legal scope who does what. Rules need to change and adapt as necessary. I am slightly fearful that my noble friend Lord Desai has already defined only five years as the lifetime of the rules; that worries me. But, who knows, in five years' time I may be elsewhere. Let us define the rules that we need today and make clear as part of the rules to whom notification should be made. This is a matter for the Director General of Fair Trading, consulting regulators, to decide in the first instance, under Clause 49 of the Bill. Rules are, however, to be subject to consultation, approval by the Secretary of State and the parliamentary process, so there will be further opportunity to make sure that they are clear and adequate. They will not drop like pennies from heaven; they will be consulted on. There is further scope for clarification of the role of individual regulators in the advice and information to be prepared under Clause 50.
We have tried to describe a framework in which, as I believe I observed at Committee stage, in a dynamic marketplace sensible men will speak and work together under a format of rules which will be flexible and capable of taking into account the dynamism of the marketplace, which we all wish to encourage and make more competitive.
I believe that that is wholly consistent with everything we have said to date on the subject of concurrency, but I believe it will be helpful for the record if I now turn to Amendments Nos. 170 and 171. Those amendments would very substantially limit the ability of the Director General of Telecommunications to use his concurrent functions under the Bill. If this kind of restriction were right for the Director General of Telecommunications, by implication it would be right for the other regulators. The Government do not accept that it would be right to have any such restriction.
Each of the utility statutes provides that before either the regulator or the director general exercises concurrent functions in a particular case he shall consult the other; and once one of them has taken action the other is barred from doing so. When they consult, I would expect the

463
regulator and the Director General of Fair Trading to be able to reach agreement on which of them is best placed to take action. This will be in a context where procedural issues on concurrency will be dealt with in rules under Clause 49 and advice and information under Clause 50. The letter of 6th February from the Director General of Fair Trading, to which I referred on the second day of Report, described the progress which has been made by the working party of the Office of Fair Trading and regulators which is already considerable. For example, they have agreed on a central public register of notified agreements and a single notification point.
These amendments would put an override on the consultation between regulator and the Director General of Fair Trading. Effectively it would mean that wherever it appeared to the director general that a matter fell, even partly, within a set of criteria, he would have exclusive jurisdiction, to the exclusion of the regulator. There would be no consideration as to which of them was more appropriate; only the director general would be able to act. Freely adapting the words of my noble friend Lord Desai, I think we would have defined the chief honcho. And, in each of these amendments, some of the criteria seem wide enough to suggest that the director general could end up dealing with a large proportion of the matters which would otherwise fall within the scope of a regulator's concurrent powers. I do not believe that such a mechanistic approach is appropriate; and I certainly do not believe it would be right to provide concurrent functions for regulators and then allow a large part of those concurrent functions to be clawed back.
Similarly, I do not believe it would be right for rules to prescribe whether it is the director general or the regulator who should act on a matter which falls within the scope of the regulator's concurrent jurisdiction. It is the Bill which prescribes the scope of concurrent jurisdiction. I am advised that it would not be possible for rules to prevent the director general or the regulator from acting on a particular matter which falls within the scope of the regulator's concurrent jurisdiction.
I do not believe it would be right to provide for the scope of concurrent jurisdiction of the Director General of Electricity Supply to be limited in the way that Amendment No. 171B would seem to do. The amendment would limit the scope of concurrent jurisdiction of the director general in a way which would undermine his powers to act under the Bill. If he acted on a matter which related mainly but not exclusively to commercial activities connected with the generation, transmission or supply of electricity, he would be exposed to the risk of legal challenge. This would he unacceptable.
However, I should like to refer back to a commitment I made during Committee on the issue of sensible men talking to sensible men and finding a sensible way to work together, to reflect on whether an amendment to the Bill may he needed to provide flexibility for a regulator and the director general to work together on investigations where both agree that this would be helpful (Official Report, 25/11/97: col. 915). We have therefore been considering the particular provisions in
464
utility statutes that require the regulator and the director general to consult before either takes action; and for one to he barred from taking action once the other has done so. These seem to raise concerns about preventing the director general and regulators from working together, even where that would clearly he helpful, and about preventing a case being switched between a regulator and the director general even where a change of circumstances makes that appropriate. We are continuing to reflect on these provisions but, if we decide that changes are needed, they will have to be brought forward in another place. We are reflecting seriously on this issue which was raised in Committee.
Amendment No. 164E would not have the effect of removing concurrent functions. In any event, I have made clear that the Government believe it is right for regulators to be able to exercise functions concurrently with the director general.
Amendment No. 225 seems to be looking for yet another bite at the issue of concurrency right at the point where provisions of the Bill are being brought into effect. I could not accept that. The issue is being fully debated during the passage of the Bill. There will be wide-ranging consultation following publication of the utilities review Green Paper. I do not accept that there is any need for further debate at Report stage.
I have tried to recapture again—I hope just one more time—the reason why we believe concurrency to be fundamental to achieving true competition. I set out as per the letter of 6th February how the director general and the regulators are going about setting up a process of flexible rules that make clear that we are attending carefully to the issues on the table. Also, we are reflecting on an amendment to make the working together of the director general and a specific regulator under certain circumstances more flexible and supported. In those circumstances, I urge the noble and learned Lord, Lord Fraser, and the noble Lord, Lord Kingsland, to withdraw the amendment.
7 p.m.
Lord Kingsland: My Lords, I thank the Minister for that comprehensive reply in which he not only dealt with the amendments, but also with the wider aspect of concurrency.
In dealing with that wider aspect, the Minister made an observation to which I feel compelled to respond. He talked of the desirability of concurrency in the context of competition. In so saying, he made an assumption that the responsibilities for competition under the Bill are the same as the responsibilities for competition under whatever specific regulatory regime is under review.
The truth of the matter is that those responsibilities—for example, in the telecommunications sector—could not be more different. Under the Bill the responsibilities of the regulator will be reactive and adjudicatory, almost quasi-judicial, and very clear procedures will be set out to enable the regulator to fulfil that function. On the other hand, the competition responsibilities that the regulator has under his specific regulatory statute are quite different. They are not reactive; they are not

465
adjudicatory; they are what I understand economists term "structural". He is there under his Telecommunications Act to promote competition; to change the structure of the industry if necessary; to make it more competitive. This is competition in an entirely different context. It would be extremely dangerous for the telecommunications regulator to confuse the two. That is just one example of why putting a bridge into the Telecommunications Act which was not there before is so dangerous. I have not heard the Minister address that specific matter. I hope that at some time in the course of the evening—these amendments are perhaps not the most appropriate—he will give your Lordships' House the benefit of some further reflections on the matter.
A second related but distinct point is that if the telecommunications regulator, the electricity regulator, the gas regulator or whichever regulator we are discussing, seeks to enforce against a regulatee, once the Bill is on the statute book, he now has not only one set of legally enforceable rules, but two. He has complete discretion as to which one he chooses, to enforce whatever he chooses to enforce. He is entitled to address himself not just to his responsibilities under the Bill, but also to his responsibilities under the regulation Act at the same time. That is a recipe for uncertainty among the enterprises subject to his jurisdiction. Inconsistency and uncertainty are enemies of enterprise and competition. If the Minister tells your Lordships' House that concurrency is a good thing, he must rebut those two allegations.
I listened to the noble Lord, Lord Borrie, with great interest. He has unmatched experience in this area. For 10 years he was Director General of Fair Trading. I shall certainly not accuse him of not keeping up with what has been going on since then. He has been most assiduous in attending all the stages of this Bill before your Lordships' House. But up to now the role of the Director General of Fair Trading has been a preliminary role in the adjudicatory process. He looked at the problem; made an assessment; took a decision and passed it on to somebody else. That is a very different world from the world into which Her Majesty's Government are about to take us. The informal arrangements—the casual chats on the telephone; the ad hoc meetings summoned in order to resolve a particularly knotty problem—may be highly appropriate to the old informalities of competition law, but it will not do where there are eight or nine regulatory directors who have jurisdictional enforcement powers in addition to those possessed by the Director General of Fair Trading.
I apologise to the Minister, but the offering that he served up in summing up the debate was too potent to resist. I had to reply more generally. I do not ask him to come back all at one go now. I thank him for the noble concession that he made on consultation. I hope that he will reflect on Amendment No. 159A and, in those circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Haskel Lord Haskel moved Amendment No. 159B:
Page 24, line 41, leave out from ("section") to end of line 43 and insert ("he must consult such persons as he considers appropriate.
() If the proposed rules relate to a matter in respect of which a regulator exercises concurrent jurisdiction, those consulted must include that regulator.").
The noble Lord said: My Lords, we spoke to this amendment when it was grouped with Amendment No. 135B and we considered it on day two. I beg to move.
On Question, amendment agreed to.
Schedule 9 [Director's Rules]:
Lord Haskel Lord Haskel moved Amendments Nos. 160 to 162:
Page 68, line 2, after first ("the") insert ("documents and").
Page 68, leave out lines 24 and 25.
Page 69, line 30, at end insert—
("Directions withdrawing exclusions
. Rules may make provision as to the factors which the Director may take into account when he is determining the date on which a direction given under paragraph 4(1) of Schedule I or paragraph 1A(3) or 6A(3) of Schedule 3 is to have effect.").
The noble Lord said: My Lords, we spoke to these amendments with other amendments on day two. With the leave of the House I shall move them en bloc. I beg to move.
On Question, amendments agreed to.
Lord Simon of Highbury Lord Simon of Highbury moved Amendment No. 162A:
Page 69, line 30, at end insert—
("Disclosure of information
.—(1) Rules may make provision as to the circumstances in which the Director is to be required, before disclosing information given to him by a third party in connection with the exercise of any of the Director's functions under Part to give notice, and an opportunity to make representations, to the third party.
(2) In relation to the agreement (or conduct) concerned, "third party" means a person who is not a party to the agreement (or who has not engaged in the conduct).").
The noble Lord said: My Lords, we brought forward this amendment in response to points made in Committee about the need to warn third parties before publishing information which they had disclosed to the director.
The question of the protection of information obtained under the Bill is obviously an important one. We shall debate it further later. It was debated at length in Committee and there are later amendments tabled which relate to the same issue. We have, of course, taken great care in framing the provisions in the Bill which restrict the disclosure of information. However, we felt that there was considerable force in the argument put to us in Committee that third parties should be forewarned before the director published information provided by them. In particular, my noble friend Lord Graham spoke of a,
"procedure whereby the director who intends to disclose confidential information would advise a third party of his intention before the information was published".—[Official Report, 25/11/97; col. 954.1
My noble friend Lord Haskel undertook to reflect on that point.
We concluded, in the light of the debate in Committee, that it is right that there should be some procedure for third parties along those lines. The amendment therefore makes clear on the face of the Bill that the director's rules may include provisions requiring that he give notice, and an opportunity to make representations, to third parties, before disclosing information which they provided.
The opportunity to make representations is something which was not specifically discussed in Committee, but the Government believe that it would be a useful further safeguard. It would give third parties an opportunity to put to the director any objections they have to particular information being disclosed. The precise details are a matter to be dealt with in preparing the rules, which are of course subject to annulment by either House. There may be some circumstances in which it would not be right for notice and representation procedures to have to apply; for example, where it is necessary for the director to act very quickly. However, it is the Government's clear intention that the director's rules will include rights for third parties of the kind I have explained. I beg to move.
Baroness Nicol: My Lords, I welcome the amendment, which responds to some of the worries we raised at an earlier stage. We shall return to the edges of this subject a little later on. In the meantime, I am grateful for the amendment.
Baroness O'Cathain: My Lords, I welcome the amendment but wish to ask a question. It states:
Rules may make provision as to the circumstances in which the Director is to he required
Why not say that rules "will" make provision?
Lord Borrie: My Lords, I welcome the amendment, but the issue raises a question in my mind. The third party is usually what one might call the complainant, who is alleging that there is a cartel agreement or some conduct which the director ought to examine. In providing confidential information the amendment is wholly desirable in that he will be consulted before that confidential information which may disclose the identity of the complainant is made known. But one of the other things the complainant may wish to know—indeed, it may be helpful to the director—is the response of the person against whom it is alleged that he has engaged in a prohibited agreement or has engaged in prohibited anti-competitive conduct. I do not see in the amendment any obligation on the director general to disclose back to the complainant the response that has been made so that he may answer it. I wonder whether that is catered for somewhere else. It is surely something in which the complainant will be interested.
Lord Simon of Highbury: My Lords, perhaps I may respond, first, to the issue of "may" and "will". I have stated—I hope clearly—that it is the Government's intention that the rules will include rights for third parties in relation to notice and opportunities to make representations. That is a clear commitment to the House. However, the precise details are best left to rules.
468
We need to be careful not to write into the Bill something which will make the director's job impossible in certain circumstances. The new provisions as drafted retain the flexibility needed to address such points in the detailed rules. However, there will be rules on this matter and those rules will be subject to consultation and parliamentary scrutiny. I hope that that assurance is sufficient to meet the noble Baroness's query.
Perhaps I may turn to whether there is a reconsulting process with the director general. This has not been stipulated, but it is a query to which I pay strong attention and I shall return to the matter with the noble Lord.
On Question, amendment agreed to.
Lord Haskel Lord Haskel moved Amendment No. 163:
Page 69, line 45, at beginning insert ("the documents and").
The noble Lord said: My Lords, we considered this amendment on day one, when it was grouped with Amendment No. 32. I beg to move.
On Question, amendment agreed to.
Clause 50 [Advice and information]:
[Amendment No. 164 not moved.]
Lord Haskel Lord Haskel moved Amendments Nos. 164A and 164B:
Page 25, line 36, leave out from ("section") to end of line 37 and insert ("he must consult such persons as he considers appropriate.
() If the proposed advice or information relates to a matter in respect of which a regulator exercises concurrent jurisdiction, those consulted must include that regulator.").
Page 25, line 42, at end insert ("; and
(c) such other persons as he considers appropriate.").
The noble Lord said: My Lords, we considered these amendments when we debated Amendment No. 135B on day two. I beg to move.
On Question, amendments agreed to.
Clause 51[Fees]:
Lord Simon of Highbury Lord Simon of Highbury moved Amendment No. 164C:
Page 26, line I, leave out subsections (2) and (3) and insert—
("(2) Rules may, in particular, provide—

(a) for the amount of any fee to be calculated by reference to matters which may include—

(i) the turnover of any party to an agreement (determined in such manner as may be specified);

(ii) the turnover of a person whose conduct the Director is to consider (determined in that way);

(b) for different amounts to be specified in connection with different functions;

(c) for the repayment by the Director of the whole or part of a fee in specified circumstances;

(d) that an application or notice is not to be regarded as duly made or given unless the appropriate fee is paid.

(3) In this section—

(a)"rules" means rules made by the Director under section 49; and

(b)"specified" means specified in rules.").

The noble Lord said: My Lords, as my noble friend Lord Haskel explained in Committee (at col. 907 of the Official Report on 25th November) it was put to us

469
when we consulted on the draft Bill that it might be useful if fees could be set in relation to a person's ability to pay. This amendment would enable that to be done. I should say that Ministers have not decided that the power to charge fees on any basis should be exercised, but we agree it would be useful were the director to have this additional option of setting fees by reference to a person's turnover. Any rules to set fees would be made by the director under Clause 49. They would therefore require to be approved by order by the Secretary of State before coming into operation and could be modified, varied or revoked by the Secretary of State as provided for in that clause. The order would be subject to annulment by resolution of either House of Parliament.
The amendment amends Clause 51 in two further ways. First, it provides that the rules may make provision for the repayment of the fee in whole or in part by the director in specified circumstances. This might be appropriate, for example, where a fee was set for the giving of guidance on an agreement and the application was withdrawn shortly after it was made. Secondly, the amendment provides that the rules may provide that an application or notice is not to be regarded as duly made or given unless the appropriate fee is paid. I beg to move.
Baroness O'Cathain: My Lords, perhaps I may ask a question for clarification. I am really arguing against myself now, having listened carefully to the Minister on the previous amendment about "may" and "will". The amendment states,
for the amount of any fee to be calculated by reference to matters which may include … the turnover.
I take it that that means that the Government are allowing flexibility. I am sure that the Minister is as aware as I am that turnover does not necessarily indicate a person's ability to pay.
Lord Simon of Highbury: My Lords, I quite agree. That is why we have used the word "may".
On Question, amendment agreed to.
Clause 51, as amended, agreed to.
Clause 52 [Regulators]:
The Deputy Speaker (Lord Skelmersdale): My Lords, before calling Amendment No. 164D, I should say that if it is agreed to, I cannot call Amendment No. 164E.
Lord Simon of Highbury Lord Simon of Highbury moved Amendment No. 164D:
Page 26, line 6, leave out subsection (1).
The noble Lord said: My Lords, with the leave of the House, I should like to speak also to Amendments Nos. 164F, 168A, 171E, 171F, 174B, 174D, 174F, 174H and 174J.
Amendments Nos. 174D and 164F are drafting changes. They provide a reference in Clause 52 to the separate parts of Schedule 10 on concurrency. Amendments Nos. 171E, 171F, 174B, 174D, 174F,
470
174H and 174J relate to disclosure provisions in utility statutes and are for clarification. Because the concurrent powers of utility regulators are provided within their utility statutes, it might be argued that where they obtain information in exercising functions under this Bill it is nevertheless the disclosure provisions of the utility statutes that apply rather than Clauses 53 and 54 of the Bill. These amendments make it clear that it is the disclosure provisions of the Bill that are to apply, not those in the utility statutes. We shall be discussing disclosure more fully a little later. Meanwhile, I hope that noble Lords will be content to accept these amendments for clarification.
I now turn to Amendment No. 168A. At Committee stage I said, in response to an amendment from the noble Baroness, Lady Dean, to the scope of the Director General of Telecommunications' concurrent powers, that while I was not convinced that any change was needed, I would reflect further. I have now done so and I have come to the view that, in response to the concerns raised, a small technical change would be a necessary and useful addition to the scope. This change represents both a clarification and a widening of the scope of concurrent powers, but it is within the current framework of Oftel's existing powers and concurrency.
The proposed amendment replaces the phrase,
which relate to commercial activities connected with telecommunications
with
which relate to the production, supply or acquisition of telecommunication apparatus or the supply or securing of telecommunication services.
The term,
commercial activities connected with telecommunications
is a defined term in the Telecommunications Act 1984 and the proposed amendment essentially takes the elements of the defined term and adds the words "or securing" before "telecommunication services".
This is a modest amendment that would extend concurrent powers under the Bill but not beyond those conferred by the Telecommunications Act 1984 and would reflect the 1984 Act wording used in respect of concurrent powers under the Competition Act 1980. I beg to move.
Lord Fraser of Carmyllie: My Lords, we have no difficulty as regards the large number of amendments proposed by the Government. As the noble Lord will have anticipated, we have a difficulty with Amendment No. 168A. The noble Lord was full enough in his explanation to admit that the change of definition would have the effect of extending concurrency within the Bill itself. It would be to run against the grain of all that we have been arguing for, not only at this stage of the Bill but earlier, if we were to say that we approved of this amendment. I would prefer that the noble Lord did not move Amendment No. 168A when we reach it. I am not entirely convinced from the argument that he advanced that it is necessary even to meet his own needs. It would certainly be objectionable to us.
I appreciate that the noble Lord intends to move it only as a clarifying amendment, but to some extent it is somewhat inflammatory as we begin to get into the

471
debate about concurrency. Any proposal, far from being any attempt to meet us on the points of concern that we have about concurrency and in fact extending what is going on, makes us extremely uncomfortable.
Lord Simon of Highbury: My Lords, I quite understand the position that the noble and learned Lord puts to me. I shall reflect very strongly on the issues. It is an amendment for clarification relating to sets of competences together. If it is thought that we have not achieved the right clarification, I am certainly willing to take the matter away and reflect again.
On Question, amendment agreed to.
Lord Haskel Lord Haskel moved Amendment No. 164F:
Page 26, line 9, at end insert:
("(2A) Parts II and III of Schedule 10 provide for functions of the Director under this Part to be exercised concurrently by regulators.
(2B) Parts IV and V of Schedule 10 make minor and consequential amendments in connection with the regulators' competition functions.").
My Lords, we have already spoken to this amendment. I beg to move.
On Question, amendment agreed to.
[Amendment No. 165 not moved.]
Schedule 10 [Regulators]:
Lord St. John of Bletso Lord St. John of Bletso moved Amendment No. 166:
Page 70, leave out lines 24 and 25.
The noble Lord said: My Lords, in moving this amendment I shall speak to Amendment No. 167. I understand that the noble and learned Lord. Lord Fraser, and the noble Lord, Lord Kingsland, will be speaking to Amendments Nos. 168, 171H. 171J and 171K. I also understand that they may be speaking to Amendments Nos. 172. 173, 174 and 174A.
While I recognise that the Government are committed to introducing concurrent powers to the regulators in this Bill, these amendments would ensure that the functions under the Bill, when exercised by the Director General of Telecommunications, are exercised on the same basis as they would be exercised by the Director General of Fair Trading.
These amendments are specific to the information technology field. Amendments Nos. 166 and 167 would reverse changes which Schedule 10 to the Bill proposes should be made to the Telecommunications Act 1984 to merge the job of the DGT as a regulator with his new job under the Bill. The amendments, therefore, would concern the important issue, which we debated at Second Reading as well as in Committee, of the relationship between the new jurisdiction of regulators under the Bill and their continuing jurisdiction under the various statutes that created their offices and set out their statutory remits.
As I see it, the current situation is that Section 3 of the Telecommunications Act 1984 sets out the DGT's regulatory—if I can call it—"job description". The Act sets out how the DGT can achieve those objectives. Essentially, he has the powers to enforce licences granted under the 1984 Act. The DGT is vested with the same competition functions as the DGFT. Under the
472
1984 Act there is a distinct separation of powers. The regulatory job was kept separate from the competition law job. Therefore, when the DGT acts as a competition authority he acts as if he had no other job in the same way as the DGFT would.
In essence my amendments would preserve the existing legal arrangements under the 1984 Act whereby the two jobs are kept separate and would ensure that the powers to be vested in the DGT under this Bill could not be used to achieve his regulatory objectives or job description. This would in no way prejudice the efficacy of his concurrent functions under the Bill but would ensure consistency when the DGT exercises his powers under the Bill (including enforcing the prohibitions) since he would do so on the same basis as the courts, the DGFT and the tribunal within the competition commission would do. This argument was eloquently rehearsed by the noble Lord, Lord Kingsland, in speaking to the group of amendments with Amendment No. 159A.
Following my recent meeting with the Minister, I believe that he shares my concerns that the Bill should provide a simple, workable and effective arrangement for the new competition laws. My amendments would further these objectives. They would ensure that concurrent jurisdiction exercised by the DGT with the DGFT under the Bill would be exercised on a consistent basis. I do not believe that Section 3(3) of the 1984 Act should be narrowed as paragraph 2(3) of Schedule 10 proposes. Amendment No. 166 would achieve exactly that.
I recognise the Minister's concern that when a regulator discharges his functions under the Bill he must treat those functions as paramount. In other words, when he acts as a competition authority, pursuing the objectives of the Bill, any conflict with his objectives as a regulator should be resolved in favour of the Bill. I am not convinced that the current drafting of paragraph 2(4) of Schedule 10 achieves that objective.
It seems to me that the purpose of regulation and the purpose of competition law are different. Competition law protects the competitive process. Regulation is concerned with many other and varied objectives. There should not be confusion between the creation of competition and the protection of competition.
The noble and learned Lord, Lord Fraser, referred to a letter which was sent to various noble Lords by Oftel. In that letter, dated 17th February, the director general stated of Amendments Nos. 166 and 167:
These amendments identify a distinction to be drawn between a regulator's sectoral statutory duties and those under the Bill. They are correct to do so. Under the existing framework I am unable to have regard to my Telecommunications Act duties when acting under general competition law. I believe that I would, as a matter of practice, be hound to maintain that approach to cases under the Bill. Therefore, although the Bill, as drafted, would not prevent me from doing so, there is a case for putting the matter beyond doubt".
If the DGT exercises powers under the Bill and leaves his sectoral objectives to one side, it seems to me that the functions that he is exercising—that is, those under the Bill—will then be "paramount".
If the amendments are not accepted, Schedule 10 would enable the DGT to have regard to matters even if they would not otherwise be relevant when exercising

473
Bill powers, and would appear to allow the DGT to base his decisions upon matters which the courts, the DGFT and the tribunal would not be able to base their decisions upon. There would, therefore, seem to be an incompatibility between the provisions of Schedule 10 and the governing principles set out in Clause 58. Rather than Clause 58 prevailing, which I believe is the Minister's intention, it seems that Schedule 10 would prevail. I beg to move.
7.30 p.m.
The Deputy Speaker: My Lords, as Amendment No. 167 is grouped with Amendment No. 166, I should advise the House that if Amendment No. 167 is agreed to, I shall not be able to call Amendment No. 168.
Viscount Trenchard: My Lords, I should like to speak in support of Amendments Nos. 166 and 167. We have come a long way since we debated the Bill at Second Reading. I welcome the co-operative approach which the Government have in general adopted in seeking to improve the Bill and to remove the imperfections in it which compromise the paramount need for consistency and clarity in the application of competition law. Unfortunately, however, the concurrent powers which the sectoral regulators and the DGFT will exercise under the Bill remain a potential cause of confusion and muddle. I wholly agree with what my noble friend Lord Kingsland said a little earlier on the subject.
As noble Lords are no doubt aware, investment decisions in a competitive environment require a clear and unambiguous regulatory framework with as little room as possible for uncertainty and inconsistency in the application of laws and regulations. The Bill as presently drafted vests new and comprehensive competition law powers in the sectoral regulators, but does not clearly separate those powers from those which sectoral regulators already possess, and will continue to possess, for a variety of purposes, some of which overlap and others of which may conflict with the objectives enshrined in the Bill.
I suggest that that is a recipe for confusion and uncertainty which may well tend to delay or prevent investment decisions, thus weakening the competitive position of British businesses with a consequent negative effect on both employment prospects and customer services. It is surely undesirable that the Bill does not specify clearly the respective circumstances in which powers will be exercised by the DGFT and the sectoral regulators.
I recognise, however, that the Government are committed to granting concurrent powers. The more serious problem, as the noble Lord, Lord St. John of Bletso, clearly pointed out, is that sectoral regulators may, or are possibly required to, have regard to their various other functions when they exercise their powers under the Bill. This clearly means that their conclusions may not always be the same as would be those of the DGFT who does not have other, possibly conflicting, responsibilities deriving from powers granted otherwise than in the Bill in considering the same matters.
474
The sectoral regulators have responsibilities to seek to achieve objectives which have no connection with the principal purpose of this Bill, which is to protect competition. These responsibilities should be clearly isolated from their responsibilities under the Bill. The new powers granted to the sectoral regulators under the Bill are considerably greater than those which it has been felt that they should exercise hitherto. It is, therefore, all the more important to define clearly the circumstances and contexts within which they may be used.
In order to thrive in today's competitive market, business undertakings need certainty and consistency in the application of the law. These laws include unclear terms such as "abuse". The provisions for the issue of procedural rules contained in Clause 49 will not explain what abuse of dominance is. Any advice or information provided by the director under Clause 50 will be only non-binding and cannot be comprehensive. Certainty cannot be obtained through the alignment provisions of Clause 58 because EU case law remains under-developed, patchy and in part conflicting. Much will, therefore, be left to the discretion of those applying the new laws on a case-by-case basis.
Amendments Nos. 166 and 167 are necessary to ensure that when the Director General of Telecommunications acts under his Bill powers he does so consistently with the way in which the Director General of Fair Trading would act.
Amendment No. 168, which has been tabled by my noble and learned friend Lord Fraser of Carmyllie and my noble friend Lord Kingsland, and which I also support, establishes consistent treatment with what would be the case in the European Court.
These amendments, if adopted by your Lordships, will help to remove confusions and to procure a greater degree of clarity and consistency in application of the extensive powers granted by the Bill. They would promote alignments with the European law principles referred to in Clause 58. They would avoid the perhaps unintended situation where regulators and regulatory goals depart from the Bill's objectives and processes.
Schedule 10 should be amended to avoid misalignment with European law principles and to ensure that Clause 58 is not overridden. These amendments will not have any adverse or inhibiting effect on the effectiveness or the working of the Bill. I hope that the Minister will support their introduction.
Lord Kingsland: My Lords, Amendment No. 168 is a second-best amendment. It refers also to the telecommunications sector. The noble Viscount, Lord Trenchard, has already alluded to it. Essentially, where there is a conflict between the objectives of the Bill and the objectives of the Telecommunications Act, it seeks to require the Bill's objectives to be paramount except in circumstances where the regulatory objectives are "relevant". "Relevant" is defined as what would be relevant to the European Court of Justice if it were directing its mind to the matter. That is not an ideal solution but it offers the Minister an alternative should he have any reservations whatsoever about the previous two amendments.

475
The telecommunications sector is not the only one with worries about the bridge. In the Telecommunications Act there is no bridge; that is what distinguishes it from all the other utility sectors. But the bridge that exists in the other utility sectors is very different from that which the Minister proposes. There are two reasons for this. First, the competition component that forms part of the bridge in the other sectors is much weaker than the one proposed in the Bill. It is an alloy of the Fair Trading Act 1973 and the Competition Act 1980. Secondly, the present powers of the regulator under the existing bridge in those two Acts are very light indeed; in particular, they are not enforcement powers. What is proposed by maintaining the bridge in all these other sectors, therefore, is much more dramatic than it seems superficially. In effect it is as dramatic a change as that proposed by the Minister for the telecommunications sector.
It is absolutely clear that many of the regulatory objectives, desirable though they are in their own context, are in flagrant contradiction to the objectives of the Bill. One example of that, which I believe has been described to your Lordships in the course of the Committee and Report stages, is the provision of universal service in the world of telecommunications. That is a laudable objective which clearly conflicts with the competition objective.
I say to the Minister when looking at these amendments that it is not too late to think again about the wisdom of what is proposed with respect to the bridge. With the greatest respect, it certainly deserves deeper reflection than it appears to have received so far.
7.45 p.m.
Lord Simon of Highbury: My Lords, I am very grateful to the noble Lord, Lord St. John, the noble and learned Lord, Lord Fraser in a previous debate, the noble Lord, Lord Kingsland, and the noble Viscount, Lord Trenchard, for again raising the issue of the relationship between duties under the utilities statute and exercise by the Director General of Telecommunications and other regulators of concurrent functions under the Bill. I certainly do not accept the comment of the noble Viscount, Lord Trenchard, that this is a muddle. It is not. We seek to explain, as we have been challenged to do yet again by the noble Lord, Lord Kingsland, how we can have a framework Bill for competition and at the same time a regulatory process running in parallel.
To date, clearly I have failed to explain my reasoning to the noble Lord, Lord Kingsland. He says that on the one hand an adjudicatory and reactive system, which is what the prohibition is, and on the other hand an interventionist and active system are two separate bodies of thought that can never meet. I do not agree. I believe that we should strive to make them meet. It is most appropriate in dynamic market places to have a framework for a Competition Bill that encourages businesses to run their affairs in the most competitive manner, but with a very large stick to beat them if they do not do that in markets which for years have had none of these opportunities due to the very strange systems that have been adopted in the past for running the utilities. I should not go into that. However, because of
476
that they have had none of these opportunities. We are giving them the opportunities, and I am pleased that we are doing so. The issue is how to bring the dynamic new markets within the framework of the Bill. I do not perceive here polemics that cannot be resolved but opportunities that challenge us.
I do not feel at all muddled. I have listened with very great care to what noble Lords on the Opposition, Liberal Democrat and Cross Benches have put to us as to how best to shape the Bill, particularly in regard to the position of the Director General of Telecommunications who has focused this argument, and other regulators who have a bridge whereas he does not. I have pondered, reflected and listened. In the light of all that I have thought about the provisions of Schedule 10. The result that we wish to achieve is that each regulator must regard his functions under the Bill as paramount and act in accordance with the governing principles set out in Clause 58. That was the point so clearly made by the noble Lord, Lord St. John. At present we have provided that he may have regard to his statutory utility duties although he is not required to do so.
Our policy is that in exercising the functions under the Bill a regulator and the director must each apply the same considerations as to what he may or may not take into account. The reference to "having regard to the statutory duties" was intended to show that the regulator could look at them but was to be circumscribed by the paramount duties under the Bill in doing so. I understand that the Divisional Court in a case involving British Telecom held that the effect of the existing disapplication of the duties of the Director General of Telecommunications under the Telecommunications Act was that he was not entitled to look at them. However, that interpretation was obiter and the court in some future case might come to a different conclusion. We do not believe it is right that a regulator exercising concurrent powers should be prevented from looking at matters covered by his duties; nor that the relationship between the duties and the functions under the Bill should be left subject to uncertainty.
Noble Lords opposite and the noble Lord, Lord St. John, have not accepted that "have regard to" achieves our mutual desire for the regulators and the director to apply the prohibition in the same way as to minimise inconsistency. I have listened carefully to the points that have been made that the ability of a regulator to have regard to statutory duties raises the possibility, however small, of inconsistency in the basis on which the prohibitions are to be applied by the director and each regulator.
The position that we wish to achieve is that a regulator applying the prohibitions is to do so on precisely the same legal basis as the director general. We wish to make that clear on the face of the Bill. I accept the argument that the Government need to table amendments to the Bill in order to achieve that. I hope that with that assurance the noble Lord will be content to withdraw his amendment at this stage.
Lord St. John of Bletso: My Lords, I am grateful to the Minister for his detailed response. Obviously,

477
I found it a little disappointing. He appears to have given me a bit of a stonewall response. I am encouraged to hear that the Minister will consider tabling amendments at a later stage. However, the Minister does not appear to have taken on board my key themes, which are: the separation of powers; the need for certainty in the parameters of those powers; and the need for consistency in the operation of those powers. I believe that there is no such thing as sector specific competition law. It is vital that there is only one uniform national competition law that must be adjudicated on the same basis by all. The Minister recognised the importance of that principle in debate on the first day of Report stage. There remains widespread concern that the mixing of regulatory objectives and those of the Bill is fundamentally flawed. I give notice that I intend to revert to this matter on Third Reading. I am grateful to the Minister for the assurances that he has given. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 167 and 168 not moved.]
Baroness Farrington of Ribbleton: My Lords, I beg to move that further consideration on Report be now adjourned. In moving this Motion, I suggest that we do not return to Report stage before 8.50 p.m.
Moved accordingly, and, on Question, Motion agreed to.

Social Security (Incapacity for Work) (General) Amendment Regulations 1998
  Social Security (Contributions) (Re-rating and National Insurance Fund Payments) Order 1998
    Social Security Benefits Up-rating Order 1998

      Guaranteed Minimum Pensions Increase Order 1998
      7.50 p.m.
      Lord Haskelrose to move, That the draft regulations and orders laid before the House on 5th February be approved [22nd Report from the Joint Committee].
      The noble Lord said: My Lords, I beg to move the four draft orders and regulations standing in my name on the Order Paper en bloc. I understand that that is acceptable to those of your Lordships who take part in such debates. The orders we discuss today are to give effect to new rates of social security benefits from April. They also include the consequential re-rating of national insurance contributions, the amendment of levels concerning guaranteed minimum pensions and an increase in the level of therapeutic earnings allowed in incapacity benefits.
      478
      The orders that are the subject of this debate are part of the normal business of this House and the Department of Social Security. We are required annually to review the rates of benefit and the rates of contributions. These orders would bring the revised rates into effect. It has also been the convention at this time to look more widely at social security, especially focusing on expenditure. After all, the uprating, which this year will cost nearly £2.5 billion, is the most significant feature of the department's spending plans.
      As noble Lords know, a recurring theme of these debates, and one which has troubled many people, is that, despite growing prosperity, spending on social security has also continued to grow. While an effective social welfare system is the bedrock of an inclusive society, the evidence shows that our system has increasingly failed to match the needs of our people.
      Spending on social security has increased dramatically in real terms. It is now nudging £100 billion, an increase of £43 billion over the period 1979–1996—an annual growth rate of 4 per cent.
      And yet society is less equal. One in five people lives on less than half average income today, compared with one in 10 in 1979. The proportion of households where no one is working, now just under 20 per cent; has doubled since 1979. And the system has failed those who want to help themselves.
      There are over 1 million sick or disabled people of working age living in workless households. Yet more than a quarter of the people on sickness and disability benefits are either looking for work or have aspirations to work. It is clear that if we are going to meet the needs of the people we must re-cast welfare. We need to use it as an investment to empower people so they can help themselves.
      Our New Deal strategy, with its emphasis on caseworking, with supporting people to make the best of the labour market, has been an immediate and powerful response. Helping people to get the best out of themselves is a great challenge for this Government. The welfare reform that is needed to achieve this is more than the New Deal. It is a recognition that the system itself is a barrier to empowerment. Its complexity, especially the overlays of work and non-work benefits, of tax and national insurance, means that many people who should be in work cannot see the clear financial advantages of doing so. This particular area has been of concern for many years. The frustration is that the perversities of the system are plain to see, but oh so difficult to overcome.
      We now have a manifesto commitment:
      to examine the interaction between the tax and benefit systems so that they can he streamlined and modernised so as to fulfil the objectives of promoting work incentives. reducing poverty and welfare dependency, and strengthening community and family life.
      The Chancellor in his pre-Budget Statement announced that the Government propose moving towards a more integrated tax and benefit regime. A lop starting rate of income tax and a reform of benefit tapers will be introduced when it is prudent to do so. The Government will also consider the scope for bringing national insurance payments for the low paid

      479
      more closely into line with income tax to raise their income from work. And a working families' tax credit is planned, with cash paid through the wage packet to families on low incomes.
      The important work of Martin Taylor should ensure that the "drag factors" of unemployment traps and of swingeing deduction rates which form poverty traps are fully exposed. The conclusions that emerge from the Taylor review will inform the judgments made in the Chancellor's Budget next month.
      This emphasis on people of working age is not to ignore older citizens. I will come to that later. But getting people back to work is a pressing need. Work is the only sustainable route out of poverty for most people. But there is more to it than that. The concentration of unemployment in certain areas, plus the marked differences between working families and non-working families, has led to inter-generational dependency and social exclusion.
      For that group there is little of the dignity of belonging to mainstream society; the disciplines of work which especially for young people can mark their way in life are missing; the opportunities for advancement, career progression and the learning experiences of work are not there; and also missing is the example that work gives—the example of providing an order for children to follow their parents and youngsters to follow their peers.
      For all those reasons it is right that the major investment in welfare to work is our number one priority. A working and busy society is an inclusive society. It can support the right level of investment that the great public assets of the health service and education greatly need. Equally important, a working society provides the wherewithal to support those who cannot support themselves. For all our hopes of releasing people to fulfil their potential, there will always be those who will not be able to manage, and I can assure noble Lords we have no plans to abandon that group.
      Work gives young people and families the freedom to invest in the future by building decent pension provision. If there is one area that can provide the best examples of how self-reliance can revolutionise people's lives it is the example of pensioners' income. In recent years pensioners as a group have on average enjoyed faster income growth than any other broad group of the population. Between 1979 and 1995/96 pensioners' income grew by 64 per cent. compared with a growth in average earnings of just under 40 per cent. But not everything is as rosy as might appear at first sight. While a third of pensioners have net income to place them in the top half of income distribution, around one in four in the bottom 20 per cent. of income distribution are pensioners. Even while a combination of state and private provision now means that millions of pensioners can enjoy a life in retirement on a decent income, some one in four pensioners have to rely on Income Support, or even worse fail to claim their entitlement.
      To ensure that all pensioners in future will be able to retire with income security, one of our first tasks in government was to set in process the pensions review.
      480
      It was clear to us, however, that immediate action was necessary to ensure that all pensioners had need of help with heating. A significant winter fuel bill is so unwelcome an event in some pensioner households that heating is rationed to the extent of prejudicing well being. Our strategy has been twofold. First, to reduce the costs of energy. We have made significant progress with this. We have reduced VAT on domestic fuel from 8 to 5 per cent.; reduced the gas levy, which should result in lower prices; encouraged competition in gas and electricity suppliers to the consumer; extended energy efficiency grants to include cavity wall insulation and the upgrading of heating system controls; and announced the setting up of the environmental task force, as part of our welfare to work programme. Furthermore, we have made a start by releasing almost £800 million to local authorities in England over the next two years to help meet pressing housing needs, which is expected to feature improved energy efficiency in many areas. Similar provisions have been made in Scotland, Wales and Northern Ireland.
      Secondly, immediate and significant cash help has been made to pensioners dependent on income support; £50 to each household and £20 to other pensioner households. There is to be a comprehensive package of practical measures which will make a significant difference to the most vulnerable in our society.
      There will be one group which will get £20 and should have got £50. These are the estimated near 1 million pensioners who do not claim the income support to which they are entitled. As with the assistance for winter fuel bills, the Government felt that early action was required to get help to this group. Research is being carried out to establish why pensioners are so resistant to taking up their entitlement. Shortly we will be issuing further details of the pilot initiatives announced by the Chancellor in November. Fifteen million pounds will be invested to test the best ways of identifying pensioners with apparent title and the best ways of getting them to claim.
      These reforms that will give new hope to many of working age, and security to many in retirement are but one side of what we want from a modern welfare system. To achieve a modern welfare service, we must also reform our approach to managing social security. We need to provide better information. Rights and responsibilities will underpin welfare for the 21st century. If welfare develops as a mix of the best between what the state and the private sector can provide, it will become more and more critical that people understand their position in relation to the state. We need to link the services we provide. The system fails to recognise that our customers should be busy people. No need for them to be involved in the paper chases between systems and organisations, or for them to be victims of inflexible technology.
      We need to support our staff better. Their's is a tough job. They have been at the sharp end of people frustrations over economic exclusion and of the changes in society. The success of welfare in the future depends on our staff providing effective interventions at the right time through caseworking.

      481
      Why are we in the process of such significant and major change? My right honourable friend the Minister for Welfare Reform suggested an answer in his thoughtful speech on a similar Motion to this on 18th February. He described the four stages of welfare. For some 400 years there has been a national programme to combat destitution; that is the first stage. For the most part of this century the focus has been on relieving poverty; that is the second stage of welfare. We are now in the third stage. This is where policies have been increasingly directed at the prevention of poverty. The fourth stage—and this is our ambition for welfare for the 21st century—is to deliver services and make opportunities so that individuals can live up to their potential.
      A key to achieving this ambition to match the aspirations of people is to engage them in the process. We hope that the publication of the Green Paper on welfare reform will be the beginning of that engagement. I commend the orders and regulations to the House. I beg to move.
      Moved, That the draft regulations and orders laid before the House on 5th February be approved [22nd Report from the Joint Committee].—(Lord Haskel.)
      Lord Higgins: My Lords, in my short time in your Lordships' House, I have been impressed by the versatility of its Members. It would seem that the noble Lord, Lord Haskel, can transfer seamlessly from a debate on the Competition Bill, to this debate and, presumably, back to the Competition Bill. I fear that he may go to bed hungry and, if so, I regret that.
      As the noble Lord rightly pointed out, this is a traditional debate. The four orders increase the level of various social security benefits either in line with the retail price index or the more relevant Rossi index. Correspondingly, they increase the contributions and have important indications for the operation of the Pension Schemes Act 1993, to which I shall return in my remarks.
      There is no more fashionable a subject than that of welfare reform. Indeed, the Prime Minister has been in the forefront of it. There was a great fanfare in the press that he was to launch a national campaign and was to tour the country putting forward his views. There were two curious aspects about the campaign. First, almost every aspect of welfare in this country was under review and therefore it was not clear how the content of the great speeches would appear. Secondly, a great national campaign was announced in the first speech made on 15th January. However, the Prime Minister opened the second speech by saying that it was the second of his party meetings to debate the reform of the welfare state. If it is to be a national debate, it is far from clear why all the audiences are to be restricted to what one might call "the party faithful". At Question Time last week, I sought on two occasions to obtain from the noble Baroness, Lady Blackstone, an assurance that they would become public meetings, but, alas, I received no reply. Perhaps the noble Lord, Lord Haskel, can enlighten us tonight. We are debating important issues
      482
      and if the Government put forward reasonable and sensible proposals we on these Benches will not oppose them.
      However, we must note that at the meetings to which I referred there was a considerable air of dissent, even given the restricted nature of the audience. To a large extent, that reflects a widespread fear that the reforms are driven largely from the Treasury. Indeed, at times it seems as though the Treasury and the Chancellor have taken over the whole issue of welfare reform.
      That is not surprising because the abolition of the ACT reliefs on pension funds, the rebates to which I shall refer later and in particular the issue of single parents, have rightly raised suspicions that this is likely to become a cost cutting exercise. Surely, that is not what it ought to be about. During the debate on the Statement on these orders I raised at length what can only be described as the Government's U-turn with regard to lone parents.
      It seems that that decision was taken to reverse temporarily the line that the Government had taken in opposition. However, we have had no explanation whatever as to why that change took place. It is one of the reasons why there is considerable undermining of the Government's credibility on these issues. No doubt we can refer to those matters in the Committee stage of the Social Security Bill and I shall therefore not press the Minister on the point. However, we need an explanation—if fears about the change being Treasury-driven are to be allayed—of why the Government changed their mind on a matter on which they had clearly taken a position in opposition.
      Perhaps I may pick up the point made by the Minister on heating allowances. Having represented for 33 years the constituency with the oldest population in the country I am well aware of the problem. However, one should put the record straight in one respect. While it is true that the previous government introduced VAT on fuel, they also introduced generous compensation arrangements for pensioners on low incomes. In the event, because of the success of the deregulation process, the price of fuel did not go up at all so people were compensated for an increase which did not happen.
      I listened with great interest to the various points mentioned by the Minister in that context and many are welcome. However, I was puzzled by a remark he made with regard to the heating bonus and even more surprised at the inclusion of a reference to it in the Prime Minister's speech. In the second speech made in the course of his campaign, he said:
      "We've already paid a fuel bonus to over a million pensioners".
      As I understand it, the statement which the Prime Minister made on 30th January is simply not true. The bonuses had not been paid. No doubt the Minister will be able to tell us whether that is so. Moreover, if I understand the position correctly, the bonuses are not being paid to all pensioners. Perhaps the Minister can confirm the point because it is important. If the bonus is not paid until the weather has improved—though, goodness knows, the weather has been good enough already this winter—it is a matter of concern. However, we may reasonably welcome the other measures to which he referred.

      483
      At the moment we have little idea what the outcome of the Government's various reviews will be. Some indication at least was given by Mr. Frank Field in opening the debate on the orders last week in another place. He made a similar reference in his distinguished and elegant Beveridge Memorial Lecture on 18th February. As I understand it, he said that the Government intend to reform and extend welfare but consensus now favours,
      "a mixed economy of welfare … while we shall aim to increase welfare expenditure, we shall aim also to decrease the proportion of the budget that is covered by taxpayers through benefits guaranteed by the Government.—[Official Report, Commons, 18/2/98; col. 1102.]
      As regards pensions it seems clear that the Government's intention is that more private provision should be made rather than the normal social security budget bearing as heavy a load as it does at the moment. The pension budget is 40 per cent. of the total social security budget, which is, as noble Lords know, a very large item.
      What is curious is that, having indicated that that is the way the Government's thoughts are going, the actions which have been taken seem inconsistent with the aims they declare. In particular, with regard to the limitations on PEPs and the move to ISAs, many people who have made pension provision through PEPs will find that they are no longer receiving the same reliefs as they expected and on which they made decisions with regard to pension relief.
      I have already referred to the serious effect amounting to something like £5.4 billion which the abolition of the ACT dividend credit will have on pension funds. Here I must declare an interest because for many years I have been a trustee of a company pension fund. But some of the Government's actions have been puzzling in that respect. The effect of the ACT change did not appear to be appreciated either by the Chancellor or by the Department of Social Security when the changes were announced.
      The result of the change made in the Budget is to downrate the rebate which is given to occupational pension schemes. The Department of Social Security, as I understand it, asked the Government Actuary to produce some figures to show what will be needed to he done to adjust that. The Government Actuary duly replied. But, as I understand it—and no doubt the Minister can clarify the point—the Government did not do what the Government Actuary recommended. I do not understand why that should be so. What they have done seems clearly to be inconsistent with the aim which the Minister for Welfare Reform has clearly stated: namely, to move more towards private provision of pensions.
      The effect of the decision not to implement the recommendations of the Government Actuary in full will, it seems, tend to push people from some company schemes into personal pensions or back into SERPS. Personal pensions which the Government have previously criticised seem to do rather well on the deal.
      Therefore, I ask the Minister why is it, if the aim is to move towards more private provision and away from the taxpayer carrying the whole burden with regard to SERPS in particular, they appear to have taken the
      484
      decision. It has an adverse effect on people's pensions, but the amounts of money do not seem so large—about £0.5 billion over the life of a Parliament. At the very moment the Government were saying that they would move in one direction, they took actions which seem to move in precisely the opposite direction. Perhaps the Minister can, in the context of the orders which are relevant, explain why that appears to have happened. Once again one is left with the impression that it is all driven by the Treasury who seek to get back money here, there and wherever they can without regard to the longer term objectives which the Department of Social Security has set up.
      I turn to two other points. The first is the real fear over the National Insurance pension and whether it should be means tested. Just before Christmas we had the sudden introduction of the hitherto unknown expression "affluence testing". That seems to have been clobbered and, if so, it is welcome. I speak from many years of constituency experience. There is a real fear among pensioners that at some stage there will be a situation where the National Insurance pension will be subject to affluence testing, means testing, come what may. I hope that the Government will be able yet again to state the view that that is not their intention, although a statement by the Secretary of State for Health recently caused some doubt about it.
      The second of my last two points is that we anxiously await a Green Paper on welfare reform. We were told that it would be published much earlier, at the turn of the year. Then, when the matter was debated last week in the House of Commons, the best Ministers could do was to say that it would be published before the next annual uprating. That seems to me to be a strange, almost contemptuous, way of putting it. Shadow Ministers and others in the other place reasonably said: "Are we going to have it before the Budget, on Budget day, or after the Budget?" To give a contemptuous answer that it would be some time before the next uprating does not seem to me to be satisfactory. It may be that the Minister can enlighten us further on that.
      The Minister for Welfare Reform, in the recent distinguished speech to which I referred, suggested that it will be concerned largely with principle rather than detail. Nevertheless, in the context of the forthcoming Budget, that is something which we shall obviously await with great interest.
      If the proposals in that are consistent and compatible, we shall welcome them if they are likely to improve the lot of people and also bring about the move to which the Minister has rightly referred, from welfare to work—always provided that the position of those who are unable or who do not wish to work is protected.
      Having said that, I thank the Minister for his opening remarks and I shall look forward to his reply.
      Earl Russell: My Lords, by long convention, this debate is treated as an occasion for a general discussion on the social security system. That has never been more appropriate than it is this year. The orders themselves, I am thankful to say, contain nothing particularly extraordinary. I assure the Minister that I shall not make

      485
      another speech on single parents. I have made a good many; there are more to come; but this is not the occasion for another.
      I shall touch on two points in relation to the orders. First, I am pleased to note the verdict of the Government Actuary that there is no need for a Treasury supplement for the National Insurance Fund this year. That does a little to dispel the atmosphere of crisis which is occasionally generated around that subject.
      The other matter is that, not for the first time, I wish to deplore the failure to uprate the capital limits for eligibility for benefits. That failure is a disincentive to saving and I hope that that is not what the Government want.
      It is possible that this may be the last statement that we have in this form, and that suspicion can only be increased by the Prime Minister's rather curiously-worded threat to "go the full Monty" on welfare reform. I wonder why the Prime Minister had the vanity to think that that would be a turn on.
      There is always a need to review the social security system. On these Benches, we are well aware of that and we are in the middle of reviewing our policy. We are particularly concerned with the elimination of poverty traps. The Minister will remember that in an Unstarred Question on 3rd June, I wished the Taylor Committee a fair wind. That is without prejudice to any comments that I may make on its ultimate conclusions.
      We cannot prejudge the welfare reform. Government policy on social security seems to be still in the period of "Let 100 flowers bloom", and they even have a field to grown them in. We shall have to judge what they are doing when they ultimately do it.
      What is increasingly concerning—and concerned me more as I listened to the Minister this evening—is the fear that they are setting out on the operation starting from a mistaken diagnosis. Mistaken diagnosis does not always lead to mistaken treatment. Were it so, it is likely that none of us would be here now. Our ancestors would have died long ago before our previous ancestors were born. But when I listened to the Minister, he gives the number of people in poverty as an indication of the failure of the welfare state. I do not see how that can be so unless he is proposing to increase benefit levels, and I do not believe that he is.
      He gave the number of people and the number of households who are workless as an indication of the failure of the welfare state. It simply passes my understanding how the Government can suppose that that is so. I should have thought that that was rather a failure in the general economy—a failure to generate a sufficient number of jobs. Blaming the welfare state for that is simply a case of shooting the messenger.
      I share the suspicions of the noble Lord Higgins, that the exercise may be Treasury-driven, especially having noticed, well before the election, the number of occasions on which the Prime Minister expressed the hope that he could spend more on health and education by reducing the social security budget.
      486
      We can reform the welfare state or we can cut costs but there is a potential conflict between those two objectives. While we should all like to cut costs, we should be careful of portraying an atmosphere of crisis. If the Minister cares to look at the current Social Trends, he will see that in the Eurostat figures for the spending on social protection in the EU—if he wishes, he may point out that that is not quite the same as social security but the pattern does not differ very widely—we come ninth out of 11 countries listed. The four missing are Luxembourg, the Republic of Ireland, Greece and Spain. While I believe Greece and Spain come below us. Luxembourg comes above us, and with the Republic of Ireland it depends precisely which method of measurement is used. Therefore, we are certainly not at the top.
      The increase in social security spending has been a global trend over the past 20 years or so. Because it is a global trend, it is most mistaken to put it down to a particular failure of the British welfare state. It is a regular rule of explanation that the explanation must be as wide as the phenomenon it explains. The Minster's speech failed to pass that test.
      Also, if we look at what the Government Actuary said in his Politeia Lecture of 27th January, when he was talking about the actuarial basis for pension reform, he said:
      "The fact that future costs of social security in the UK look much more manageable than in most other countries reflects relatively low benefits which can he expected from the public system".
      He pointed out—and the point bears repeating—that the financing method will not alter the way in which the population ages or obviate the need to transfer resources from the working population to the retired population. Transferring costs to the private sector is not a cost-free option.
      If we look at what is causing all that, it is fairly obvious what are the main global causes: ageing, which the Government Actuary reminds us is a matter of reduced fertility as well as reduced mortality, relationship breakdown and the flexible labour market. I remind the Government that we live in a global market in which there is free movement of capital but not free movement of labour. That is something which must tend to reduce the value of labour and therefore must tend globally to increase the costs of social security.
      We live in a world with a cult of what is nowadays misleadingly known as efficiency. That means that the costs of, if I may so put it, the warehousing of labour are shifted regularly from employers on to the state. Those costs must fall somewhere. I am not necessarily arguing that the state is always the right place to put them but, when the Prime Minister describes the flexible labour market as the real world, he should be prepared to foot the bill which results.
      If one wants to try to tackle any of that, one should, as far as one can, tackle the global trends, which are involved. If the causes of the increase in social security spending are outside the social security system, then many of the cures should be also.
      Let us take, for example, spending on disability, which is causing concern. I wonder whether increasing the enforcement powers of the Health and Safety

      487
      Executive would do more to reduce the costs of disability to the social security system than any welfare reform you could imagine. At least that is a point worth considering and it is worth costing.
      It seems to be a problem that the economy is not generating enough jobs for the people who want them, and this is particularly true in individual pockets of high unemployment. The Scottish Select Committee has recently reported that a third of all young unemployed in Scotland are in the City of Glasgow. One wonders whether repairing the west coast main line, which needs doing anyway, might do more to reduce the social security budget than any measures brought in through welfare-to-work.
      In one of these pockets where the local economy has in effect collapsed, it is no good blaming the unemployed and telling them that they ought to look harder for work. That is only telling the rats to run round the treadmill faster. It does not get them anywhere. In that kind of situation I cannot help feeling that the notion of welfare dependency, now so fashionable, is something of a mirage. We all depend on something, whether it is an employer, a pension, inherited wealth or the benefit system. If we say that someone suffers from welfare dependency, I think we are saying no more than that he has nothing else to depend on.
      On one occasion I have seen my son submitting 100 job applications in one week. Not a single one of them got so much as an acknowledgment. In a situation like that you see the truth of the maxim that hope deferred maketh the heart grow sick. If people talk in a way which encourages people to think that they are feeding welfare dependency, they may be saying no more than the proverbial jolly miller,
      "I care for nobody, no, not I, If nobody cares for me".
      The state is sometimes mistaken to take that sort of remark at its face value.
      The Scottish Select Committee also found that 20 per cent. of the young unemployed were suffering from some form of handicap such as illiteracy, a criminal record, a physical disability or a drug addiction. In those cases, simply chasing people will not get us far. When we assess the kind of reviews we want and the kind of objectives we want, we must accept that there is a possibility of conflict between the objectives. The European Convention on Human Rights is a constant balancing of objectives which have to be weighed against each other. For example, if one thinks about poverty traps, one has to weigh the good objective of encouraging people into work against the good objective of reducing costs. The things that need to be done to remove poverty traps are extremely expensive, especially the lengthening of tapers on housing benefit, which is one of the most urgent things that needs to be done. I am not arguing for indiscriminate spending but am arguing for an attempt, difficult though it may be, at sensible cost benefit analysis.
      In talking about encouraging people into work, I must say that I think it necessary to allow an exemption for people who have to care for young children, especially for children under five. I do not think it is the state's
      488
      business to intervene in anything where the judgments that are needed are so personal. The Social Security Select Committee on a recent visit to Wisconsin reported on the requirement that in Wisconsin people must seek work when their youngest child reaches 12 weeks old. It stated,
      "We regard that 12 week requirement as potentially damaging for both mother and child. It could he argued that this requirement is also inefficient, in that by making the mother work outside the home, the State has to pay for child care (possibly expensive and possibly low quality)".
      It is not the state's business to teach people how to live; it is the state's business to help them to make their own choice effectively. If anything like that should ever come into force here, it would be deeply regretted. I am pleased to see the Minister nodding in sympathy at what I have said.
      One of the matters that we on these Benches are determined about is, in the words of our previous manifesto, that we should encourage people to work without compulsion. That is a view that has been forcefully supported recently by the Scottish Select Committee, on the ground of employers' reluctance to have a conscript workforce, on the ground of efficiency and on the ground of common humanity. Those words "without compulsion" are our policy and they will remain our policy for so long as I have the privilege to speak for this party on this subject.
      Concern is expressed in government circles about the problem of consent for social security taxation. Mr. Field in his Beveridge lecture observed that,
      "the poor no longer have enough votes to win an election."
      But Mr. Field out of date if he thinks those who need to think about their right to social security are only the poor. One needs only to look at the history of income support for mortgages to see that that is not so. We are told that between the previous two elections 8 million people suffered a spell of unemployment. We all know that that could happen to any of us. That is the basic reason for taxpayers to consent to the social security system. They pay their taxes for the same reason they buy lottery tickets; namely, "It could be you".
      Lord Haskel: My Lords, I was advised by my noble friend the Minister to listen carefully to the remarks made by noble Lords this evening because these contributions would help stretch our understanding of the complex and difficult issues which will challenge us as we develop our approach to welfare. As usual, my noble friend the Minister was not wrong and I thank noble Lords for their contributions this evening.
      I shall try to respond to some of the points. I thank noble Lords for having given me some notice of what their points might comprise. The noble Lord, Lord Higgins, asked about the road shows. They are by invitation because they debate the need for welfare reform. However, the press will be present to report what goes on. Welfare reform will, of course, be subject to the widest consultation and will not be debated only at these various road shows. The noble Lord asked who pays. It is certainly not the Government. The Labour Party pays for some of them and some are sponsored.

      489
      Noble Lords asked about lone parents. This is not a Treasury driven matter. In the past lone parents have not been given the opportunity to leave benefit and move into work. The Government's strategy is not to leave lone parents on benefit but to address the barriers they face in moving into work. A key to helping lone parents into work is to provide practical help with job search, with building their confidence and with motivation, with developing their skills and with finding the right childcare. The Government are already providing that through our new deal for lone parents and our national childcare strategy. Some lone parents will choose not to take a job immediately, perhaps because they have a young child. However, these measures will allow those parents to return to work sooner, reducing the duration of benefit receipt and reducing the hardship associated with lengthy spells of benefit.
      The noble Lord, Lord Higgins, also asked about heating payments to pensioners. Who is eligible? People receiving income support or income based jobseekers' allowance for at least one day in the week commencing 5th January 1998 and whose benefit includes a pensioner premium have received £50. People over state pension age (60 for women and 65 for men) receiving one of the many benefits during the week commencing 5th January will also receive a winter fuel payment. Those benefits are: attendance allowance; constant attendance allowance; disability living allowance; graduated retirement benefit; incapacity benefit; industrial death benefit; invalid care allowance; retirement pension; severe disablement allowance; unemployability supplement; war disablement pension; widow's benefit; war widow's pension. Those people, where there is only one eligible person in the household or that eligible person is of no fixed abode, will receive £20. Otherwise, each person will receive £10.
      The Government want to have payments issued as quickly as possible. Payments of £50 to the 1½ million eligible pensioners receiving income support or income-based jobseeker's allowance have been made. The vast majority of payments to others will be made by the end of March.
      The noble Lord also asked—
      Lord Higgins: My Lords, I am extremely grateful to the noble Lord for giving way. Was the statement made by the Prime Minister, in the speech to which I referred, correct? That is to say, had all those payments been made at the time when he was speaking? In that context, what is the argument for the meetings not being public? I could not quite understand that.
      Lord Haskel: My Lords, I do not have the Prime Minister's remarks in front of me so I would rather not comment on that. The position regarding the payments is as I have just said. The reason why the meetings are not public is that they are by invitation, to discuss the need for welfare reform. Those are discussions that take place as part of ordinary political activity.
      The noble Lord also asked about pensions and the insurance rates. The measures in the July Budget are intended to ensure that the Government create and
      490
      maintain the conditions for long-term investment and growth. They consider that that is the way to ensure that wealth is created to sustain pensions in the future and aid the companies that provide occupational schemes.
      The noble Lord is quite right. John Denham did write to the Government Actuary asking him for advice on the effects changes to some of the factors might have had on the levels of the rebates. The Government Actuary concluded that in relation to the tax changes, in order for the rebates to continue to match the benefits forgone, an increase to all rebates is required. In the light of both that advice given by the Government Actuary and the impact of recent trends in the pensions industry on the resources available to the National Insurance Fund, my right honourable friend John Denham recently announced that. from April 1999—the first opportunity available—he proposed to increase age-related rebates for appropriate personal pensions and adjust the rebates for COMPS by replacing the current loading for expenses with the same as that contained within the rebate for the contracted out salary related schemes. Orders will be laid shortly and will be subject to debate in both Houses. That will give noble Lords an opportunity to debate the matter further.
      The noble Earl, Lord Russell, spoke quite eloquently on a number of philosophical matters. He asked whether children living in poverty and the high number of workless are failures of the welfare state or failures of the economy. I am not sure which; one thing I am sure of is that they are in fact failures. That is why we are introducing a new deal for the unemployed and for the sick and disabled, and comprehensive spending reviews to examine every part of the social security system.
      The noble Earl asked a similar question regarding the Government Actuary. I believe that the answer I gave to the noble Lord, Lord Higgins, covers his point.
      If there is one clear message from today's debate, it is that people are not benefiting as they should from the unprecedented level of social security expenditure. Our task is to reform the system so that it is the engine that powers social policy, so that the money spent is used as a kind of investment—an investment in an active welfare system which seeks to influence people's behaviour and which encourages self-reliance where appropriate; an investment in customer focused service responding to people's needs.
      We have made plain that welfare has a clearly defined role in supporting fully those who are unable to support themselves. The mark of an inclusive society is the extent to which people feel honour bound to pool their resources to help the needy. But we have also made clear that the importance of work, with its wage and non-wage values, is fundamental. The failure of welfare is in part due to the inability to distinguish between the needy and those who can support themselves. I am sure that today's debate has advanced our understanding of the tensions that arise when trying to place welfare in the context of a society that wants to move on from the past. I welcome the support that noble Lords have given to the general principles of the business in hand and commend the orders to the House.
      On Question, Motion agreed to.
      Lord Haskel: My Lords, I beg to move that the House do now adjourn during pleasure until ten minutes before nine o'clock.
      Moved accordingly, and, on Question, Motion agreed to.
      [The Sitting was suspended from 8.47 to 8.50 p.m.]

Competition Bill [H.L.]
Consideration of amendments on Report resumed on Schedule 10.
[Amendments Nos. 167 to 168A not moved.]
Lord St. John of Bletso Lord St. John of Bletso moved Amendment No. 169:
Page 70, line 45, at end insert—
("(3B) Where the Director is entitled to exercise any of the functions assigned to him by subsection (3) above in respect of any matter he shall deal with that matter by exercising those functions and not by exercising any functions provided by or under Part II of this Act or any licence issued under that Part.
(3C)Where the Director proposes to exercise any of the functions assigned to him by subsection (3) above, before doing so he shall give written notice that he proposes to exercise those functions to any person likely to he affected.
(3D)Where the Director exercises any of the functions assigned to him by subsection (3) above in respect of any matter, any duty imposed upon him by any other provision of this Act to take enforcement action in respect of that matter shall not apply."").
The noble Lord said: My Lords, this amendment, like Amendments Nos. 166 and 167, is specific to the information technology field. It deals with the problems posed by the overlap of jurisdictions where the DGT acts as regulator under the 1984 Telecommunications Act and as competition authority under the new powers in the Bill. The amendment ensures that the DGT, when exercising powers to deal with anti-competitive behaviour within the Bill, should do so under and strictly within the scope of the Bill.
While I accept the Government's commitment to give new, comprehensive powers to regulators on a concurrent basis with the DGFT, I am concerned that those powers could make the regulators the investigator, the prosecutor, the judge or even the jury. It is therefore important that the Bill establishes and clearly defines how and when the regulator will exercise those powers.
I refer again to the letter which was sent by Oftel. The DGT, in his commentary on the amendment, said:
"I believe this amendment would unnecessarily restrict my freedom to use the most appropriate legislation in a particular case".
The DGT also wrote in the Financial Times last week expressing concerns on a number of the amendments to Schedule 10. He was concerned that the amendments might threaten the ability of sectoral regulators to tackle anti-competitive behaviour effectively. I do not entirely agree with his concerns. The amendments are not aimed at reducing the efficacy of the sectoral regulators' powers to tackle anti-competitive behaviour but—and I stress this—that they determine and define exactly when and how those powers should be exercised. The amendment would promote the use of powers under the Bill and ensure that anti-competitive behaviour within the Bill was tackled in accordance with the provisions
492
of the Bill. It would promote consistency and certainty about how anti-competitive behaviour within the scope of the Bill should be dealt with. It would ensure that the provisions of the Bill were not avoided or circumvented by use of alternative overlapping powers which might be available to the DGT from time to time. To mix up the different roles and powers and to make no provision about when each set of powers should be used would encourage conflict and potential confusion. If the wrong tools are used for a job, the nature of the job itself can become confused.
The amendment would avoid any problem if decisions were based on mixed jurisdictions. There would be severe difficulties for a tribunal dealing with any appeal from a decision based on mixed jurisdictions. The amendment would not prejudice the new powers under the Bill or disturb the continuing regulatory powers of the DGT to deal with any matters, including competition matters, falling outside the scope of the Bill.
As I mentioned in my previous two amendments, the jobs of a regulator and of a competition authority under the Bill are different. As indicated by the noble Lord, Lord Kingsland, the purposes of competition law and regulation, and their regimes of enforcement, are different. It is likely that it is for those reasons that the 1984 Telecommunications Act gave the DGT general powers as a competition authority on a concurrent basis with the DOFF in addition to his regulatory objectives and powers. If the DGT is to have two jobs it is essential that it is clear when he will do one and when he will do the other. When the jobs overlap, the Bill, with this amendment, should prevail.
The second part of the amendment deals with whether a matter is within the scope of the Bill or outside the scope of the Bill. The amendment would ensure that the DGT consider at the outset whether to proceed under the Bill's powers or under other powers. The DGT should give written notice of the cases where he proposes to exercise functions under the Bill rather than other functions.
The third part of the amendment ensures that where the DGT exercises functions under the Bill, any duty which might arise under the 1984 Act to deal with the same matter under the separate enforcement provisions in that Act shall not apply. I refer again to the DGT's letter of 17th February where he stated on this subject:
"I would agree with concerns highlighted in the last part of the amendment about the Director General of Telecommunications being required, as a result of obligations in the Telecommunications Act, to take enforcement action against a breach of a licence condition even if he decided that it was more appropriate to deal with the situation under the new Competition Act."
My amendment would clarify how the regime should work in a complementary and commonsense way. I beg to move.
9 p.m.
Viscount Trenchard: My Lords, I speak in support of Amendment No. 169 which seeks to ensure that the Director General of Telecommunications, in pursuing the objectives of the Bill, must decide whether he wishes to exercise powers granted under the Bill or powers granted under other legislation. It also requires him to

493
use Bill powers to deal with matters within the scope of the Bill and to make clear that he is acting under Bill powers alone.
For the reasons I gave earlier when speaking in support of Amendments Nos. 166 and 167—namely, the need for consistency and certainty, particularly in the information technology field—this amendment is important. As Mr. Thomas Sharpe QC pointed out in his article in The Times today, it would be a fundamental mistake to regard competition and regulation as having no real difference between them. I hope that the Minister may have had time to read the article during the dinner-hour.
I believe it is essential that the business community should know that anti-competitive behaviour of the kind dealt with by Articles 85 and 86 of the Treaty of Rome should be dealt with under the Bill. I hope that, after further consideration, the Minister may decide to support the amendment.
Lord Kingsland: My Lords, this line of amendments deals with another aspect of concurrency. Until now we have been discussing the problem of bridging. Here we confront a situation in which a regulator can opt either to go down the regulatory route in terms of enforcing a licence obligation or down the Bill route in terms of determining whether a prohibition exists and, if that is determined to be the case, to inflict a penalty.
On the assumption that the regulator has these two powers, how ought he to conduct himself? In my submission, the regulator ought to opt at the earliest possible phase to go down one route or the other. One of the difficulties that the Minister faces in seeking to find an appropriate formula to ensure that this happens is the following. If I were a regulator, I would find the early phases of the procedures laid down in the Competition Bill very attractive: I have draconian powers of search and seizure; I can knock down somebody's door if I want to; I have the widest possible powers to get my hands on documents if I want them. On the other hand, when it comes to the procedure at the end of the Bill, I am much more hedged about by my Bill powers than I would be under my regulatory powers: I am subject to an elaborate and—I say in parenthesis—highly desirable appeal procedure; I can be subject to judicial review; and I have a range of other obligations which make the end phase of the procedure quite demanding.
Therefore, if I were a regulator, I should like to start my investigation under the Bill because of my extensive investigative powers but I should like to avoid going the whole way. At some stage I should like to switch to my regulatory powers so that I can complete my objectives by enforcing under the regulatory regime.
I do not suggest for a moment that that course has occurred to any regulator, but it might do so at some stage once the Bill becomes an Act. Therefore, in my submission, it is extremely important that provisions should be included in the Bill to prevent that happening and to require each regulator to opt at an early stage for the route down which he wishes to travel.
494
I give one example of the difficulties that the noble Lord will encounter if he does not face up to this problem. Widespread information-pooling powers are given to the director under Clauses 53 and 54 of the Bill. What is to stop a regulator going on a fishing expedition? He starts off by using his Bill powers, extracts a lot of information from the regulatee and spreads it around to other regulators. All of a sudden someone finds something that entitles him to go off in another direction. Is that conducive to certainty and consistency in the system?
Following on from what the noble Lord, Lord St. John, and the noble Viscount, Lord Trenchard, said, Amendment No. 172 in my name deals with the problem that faces the electricity industry. It is not a problem that is unique to the electricity industry; other former utilities face exactly the same problem. That amendment was tabled at Committee stage and I thought I detected some sympathy from the noble Lord when he responded to my promotion of it at that time. It seeks to give the regulator an option if he would prefer to use his Bill powers rather than his enforcement powers under the Electricity Act. But it is crucial that he opts clearly for one route or the other and, once he has opted, he ought not to be allowed to switch back.
Lord Simon of Highbury: My Lords, noble Lords, refreshed from a period of contemplation and. I hope, dinner as well, seem to have returned with but one thought on their minds: that concurrency still raises certain problems. I should like to point out to the noble Lord, Lord St. John. that, in replying to his previous two amendments, I thought I had made two matters absolutely clear: that the duties under the Bill are paramount for a regulator and that we wish to carry over Clause 58 with the maximum consistency. Those issues in his otherwise generous response seem to have been missed.
It is important, when we are talking of concurrent powers, that we understand that the Bill and the prohibitions are paramount for the regulator, and that we are subsequently talking about the duties which may arise under the licence conditions. Indeed, when the noble Lord, Lord Kingsland, was eloquently talking of how he would behave as a regulator—my mind immediately started to "boggle" at the thought of what the noble Lord might do were he to become a regulator—I felt that I would have but one comfort: that is, that as a consumer I would be sure that once he had done his business I would have the most competitive supply of whatever commodity it was that was available to me. I remind the House that, whichever way we twist and turn on the use of the powers, the outcome is likely to be that, however the information is exchanged between the regulators or the director general, with the proper provisions we will be in a position where the industry will become more competitive and the offers to the consumer more attractive. That must always be our focus.
I do not intend to return to a justification of concurrency. In Committee, the noble Lord, Lord Kingsland, spoke to an amendment that was the same as the present Amendment No. 174. I said that that

495
amendment seemed to make a valid point about the interaction between Section 25 of the Electricity Act and the enforcement of the prohibitions. I said that I should therefore like to reflect on the issue it raised and come back to the matter at Report. The noble Lord struck a kernel of understanding.
I have indeed reflected on the matter and concluded that it would be right to bring forward government amendments in respect of each of the utility statutes to deal with the point. I am happy to give a commitment to bring forward amendments at Third Reading.
I believe that the Bill should be amended to remove the obligation on each of the regulators to take action under his utility statute to enforce licence conditions, if he were already taking action under the prohibitions and he was satisfied that that would be the more appropriate course of action to deal with the breach or threatened breach. That is clearly right.
We consider that the regulator should not be committed, once and for all, to taking action only under the provisions of the Bill. If circumstances change, or indeed his assessment of the situation changes, he has to retain the ability to take action to enforce the licence condition. A breach of licence condition cannot be allowed to continue just because a regulator had started to take action under the prohibitions and then found, for whatever reason, that that was not an effective route for dealing with the breach. I therefore concede on one point but wish to clarify the situation on another.
In this context it has been helpful to hear what has been said about Amendments Nos. 172, 173, 174 and 174A. However, Amendments Nos. 169 and 224 seem, in different ways, to go further in seeking to reduce a regulator's flexibility. Amendment No. 169A relates to a different aspect of the relationship between the prohibitions and the utility statutes.
As I said, I believe it is right to make amendments to remove the duty that would require a regulator to take parallel enforcement action. But I do not accept that it would be right to impose the restrictions on regulators' powers that are in some of these amendments. It is for the judgment of the regulator as to which enforcement route to pursue. I certainly do not accept that a regulator should be precluded from taking licence enforcement action because he can take some action on the same matter under the prohibitions, even if that is clearly less effective. Nor that he should be precluded from taking licence enforcement action because he started taking action under the prohibitions and circumstances changed. I believe that the proposal in Amendment No. 169 for a regulator to give notice before he exercises any concurrent function under the Bill is unworkable. Some requirements for notice to be given are set out in the Bill, others will be specified in director's rules. Of those, some may relate to the exercise of concurrent powers; for example, in relation to notification for guidance or a decision. But a blanket notice requirement on regulators is neither desirable nor workable.
I feel that some of the concern about overlap between the prohibitions and licence conditions may not be justified because the licences in place may in some cases
496
need to adapt to the strengthened competition law that will be in place when the prohibitions are brought into effect. The Director General of Telecommunications told me that a number of licence conditions were removed when the Fair Trading Condition, based, like the prohibitions, on Articles 85 and 86, was introduced into telecommunications licences. He went on to say that, in the light of the implementation of the Competition Bill, Oftel will continue to consider the removal of licence conditions that are no longer necessary. Similarly, the Director General of Gas Supply told me that she will be considering the extent to which licence conditions, such as those which control prices, can fall away.
Perhaps I may quote from the letter of the Director General of Gas Supply:
"I would like to take this opportunity to confirm that once the competition legislation is in place, and as competition becomes more effective in gas supply and in activities ancillary to transportation, such as storage, I will be considering the extent to which licence conditions, such as those which control prices, can fall away on the basis that I can rely instead on the new, more effective powers under general competition legislation".
The letter from the Director General of Tele-communications states:
"In the future, particularly in light of implementation of the Competition Bill, Oftel will continue to consider the removal of licence conditions that are no longer necessary".
I quote those letters in order to show to the House that this will be a moving circumstance and that we should construct both a series of rules and therefore subsequent guidance which is able to take account of the way the market place changes with the experience of the new competition law. I do not regard this as fixed in stone. We should look at the rules that the director general and the regulators bring forward and comment on them, as we will have appropriate occasion to do, in the future.
Amendment No. 169A creates a wholly inappropriate link between telecommunications sectoral regulation and the Bill. It is not realistic to treat action in relation to licence conditions as decisions under the Bill. They are not decisions under the prohibitions and it would not be right to treat them as such.
I make a distinction between the paramount objective of looking to the prohibitions in bringing the new competition law into place and the separate role of the regulators in applying licence conditions. As I said in a previous answer, although I do not believe these to be what the noble Lord, Lord Kingsland, would like to see, I do understand that we will have to pay great attention to the relationship between these two bodies of law in order to achieve the most effective development of competition in very differently behaving market places. I hope that, with a commitment to bring forward the government amendments for Third Reading on the particular issue of the Electricity Act, the noble Lord will be willing to withdraw the amendment.
9.15 p.m.
Lord St. John of Bletso: My Lords, I am grateful for the Minister's considered response and I fully take on board what he said about the duties of the regulator and the prohibitions being paramount. The Minister referred

497
to the need to retain flexibility for the DGT. My amendment would not remove flexibility for the DGT. The DGT would still decide whether a matter was to be dealt with as anti-competitive behaviour within the scope of the Bill or as something else under the other powers. Once the DGT decides to proceed on the basis that he is addressing anti-competitive behaviour within the scope of the Bill he will be obliged, with this amendment, to use the Bill's powers. If there is any difficulty at the initial stages of investigation it may be that the amendment should be redrafted slightly to impose the requirement to use the Bill's powers at the earliest practical moment—certainly before any substantive decision is taken.
The new competition laws are very different from the old. They give extremely wide discretions. As I have said, the powers are so wide that anyone wielding them is essentially investigator, prosecutor and judge, all in one. It therefore follows that the relationship between the new competition laws and the continuing regulatory powers is very different from that between the existing laws and the regulatory powers. The new relationship causes new problems and, in that event, should be dealt with in the Bill. It should be clear from the Bill that all anti-competitive behaviour within the scope of the Bill must be tackled by the Bill. The Bill will have primacy and will not be circumvented by alternative powers.
Finally, the Bill will not be mixed with other powers, but will be operated by the DGT on precisely the same basis as by the DGFT. Although the Minister says that in his opinion the provisions of this amendment would, in his word, be "unworkable", I remain convinced that an amendment such as this is necessary. I shall need to return to the issue perhaps at Third Reading. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Kingsland Lord Kingsland had given notice of his intention to move Amendment No. 169A:
Page 70, line 45, at end insert—
("(3B) If, in the exercise of his functions under this Act, the Director decides to impugn a matter on grounds within the Chapter I prohibition or Chapter II prohibition of the Competition Act 1998, that decision shall he treated as a decision for the purposes of section 45 of that Act.
(3C)The Director shall give written notice to any person likely to he affected by any decision made in accordance with subsection (3B) above.
(3D)Following the making of a decision in accordance with subsection (3B) above, the Director shall not take any enforcement action under this Act in respect of the matter which is the subject of that decision—

(a) until the end of the period for giving notice of appeal against the decision; or

(b) if such an appeal is made, until that appeal is determined or withdrawn."").

The noble Lord said: My Lords, I have already spoken to this amendment, but I have heard the Minister's response. While thanking him very much indeed for the specific remarks he made about the electricity industry in the context of Amendment
498
No. 172, I am extremely disappointed about the manner in which he dealt with the issue of parallel jurisdiction exercised by the regulator.
The effect of what the Minister said is this: by this Bill he will be amending the regulatory Bills. Through his interpretation of what the regulator can do, the Minister will be handing over a whole range of powers to each one of the regulators that they do not have in the Act. It also seems to break the fundamental code of sportsmanship which ought to apply to the exercise of the regulatory regime. It is very important that enterprises are given a fair chance. Fairness is now part of our constitution. It has become part of it through decisions made in a series of cases in judicial review. It is now going to be part of it in statutory form through the incorporation of the Bill of Human Rights. That fairness has to be reflected in the Competition Bill just as it will have to be reflected in all Bills that are made by your Lordships' House in future.
I have reflected on what the Minister said. I am certainly not going to press the amendment to a vote, but it is a matter to which the Opposition will be returning at Third Reading.
The Deputy Speaker (Baroness Lockwood): My Lords, is the noble Lord moving Amendment No. 169A?
Lord Kingsland: My Lords, no.
[Amendment No. 169A not moved.]
[Amendments Nos. 170 and 171 not moved.]
[Amendment No. 171A had been withdrawn from the Marshalled List.]
[Amendments Nos. 171H, 171E and 171J not moved.]
[Amendment No. 171C had been withdrawn from the Marshalled List.]
[Amendment No. 171K not moved.]
Lord Haskel Lord Haskel moved Amendment No. 171D:
Page 76, line 29, leave out from beginning to first ("the") in line 30 and insert ("In selecting a group to perform the Commission's functions in relation to any such reference,").
The noble Lord said: My Lords, we have already debated this amendment on Day 2. We considered it with Amendment No. 142A. I beg to move.
On Question, amendment agreed to.
Lord Haskel Lord Haskel moved Amendments Nos. 171E to 171G:
Page 76, line 50, at end insert—
("() At the end of section 101, insert—
(6) Information obtained by the Director in the exercise of functions which are exercisable concurrently with the Director General of Fair Trading under Part I of the Competition Act 1998 is subject to sections 53 and 54 of that Act (disclosure) and not to subsections (I) to (5) of this section.'"').
Page 77, line 34, at end insert—
("() At the end of section 42, insert—
"(7) Information obtained by the Director in the exercise of functions which are exercisable concurrently with the Director General of Fair Trading under Part I of the Competition Act 1998 is subject to sections 53 and 54 of that Act (disclosure) and not to subsections (1) to (6) of this section."").
Page 78, line 20, leave out from beginning to first ("the") in line 21 and insert ("In selecting a group to perform the Commission's functions in relation to any such reference,").
On Question, amendments agreed to.
[Amendments Nos. 172 to 174A not moved.]
Lord Haskel Lord Haskel moved Amendments Nos. 174B to 174D:
Page 78, line 47, at end insert—
("() At the end of section 57, insert—
"(7) Information obtained by the Director in the exercise of functions which are exercisable concurrently with the Director General of Fair Trading under Part I of the Competition Act 1998 is subject to sections 53 and 54 of that Act (disclosure) and not to subsections (1) to (6) of this section.'"').
Page 79. line 28, leave out from beginning to first ("the") in line 29 and insert ("In selecting a group to perform the Commission's functions in relation to any such reference,").
Page 79, line 50, at end insert—
("() After section 206(9) (restriction on disclosure of information), insert—
"(9A) Information obtained by the Director in the exercise of functions which are exercisable concurrently with the Director General of Fair Trading under Part I of the Competition Act 1998 is subject to sections 53 and 54 of that Act (disclosure) and not to subsections (I) to (9) of this section."").
The noble Lord said: My Lords, we debated this group with Amendment No. 164D. I beg to move.
On Question, amendments agreed to.
Lord McNally Lord McNally moved Amendment No. 174E:
Page 80, line 45, leave out from beginning to end of line 14 on page 81.
The noble Lord said: My Lords, your Lordships will be aware how assiduous an attendee my noble friend Lord Ezra has been at our deliberations on this Bill. He cannot be here this evening and it is with his leave and on his behalf that I am moving this amendment which he thinks deserves clarification from Ministers.
The amendment concerns the interaction between the Bill and the Railways Act 1993. Under that Act, a train operating company which enters into an agreement to use the railway network, or a station, or a maintenance depot can do so only in accordance with directions issued by the railway regulator. The so-called "access agreements" are scrutinised carefully by the rail regulator who normally requires changes to be made to a proposed agreement when he directs the parties to enter into it. In giving his directions, the regulator has a duty to follow a number of criteria set out in the Railways Act, including acting,
in the manner which he considers best calculated … to promote competition in the provision of railway services.
The result is that access agreements are entered into only on the direction of the railway regulator, following detailed scrutiny and with the object of promoting competition.
In those circumstances, it would not make sense for the agreements to be subject to the prohibitions in this
500
Bill. It is my noble friend's understanding that they are excluded by Schedule 3(3). This excludes agreements made,
in order to comply with a legal requirement.
I hope that the Minister will confirm that that is his understanding.
If my noble friend is right that access agreements are excluded from the prohibitions, then sub-paragraphs (5) and (6) of Schedule 10(15) are redundant. They introduce consequential amendments to the Railways Act which would specifically empower the rail regulator to require amendments to be made to an access agreement entered into on his direction if it has infringed a Chapter I or Chapter II prohibition, but an agreement which is excluded from the prohibitions cannot infringe them.
Amendment No. 174E removes that unnecessary change to the Railways Act. If the amendment is not made, the changes to the Railways Act will not only undermine confidence in the commercial and regulatory arrangements underpinning the restructured railway industry, but will also cast doubt on the effectiveness of Schedule 3 in excluding agreements made to comply with a legal requirement. I beg to move.
Lord Simon of Highbury: My Lords. the last time that the noble Lord, Lord McNally, and I exchanged views in a quiet and thoughtful manner in this House, and I made what I thought was a quiet and thoughtful response, the noble Lord said, "What the Minister means is 'get lost"'. I am warning the noble Lord that I shall try again.
As the noble Lord described, the Bill inserts a provision into the Railways Act 1993. I have some sympathy with the concerns raised by the noble Lord. To the extent that the terms of access agreements are required by the regulator, they will be excluded under Schedule 3. The provision in Schedule 10 is not intended to cast doubt on that. It would apply only in circumstances where the provisions of access agreements are not legal requirements. I am advised that that might apply in the case of amendments to access agreements.
Amendment No. 174E would not produce the result of precluding the application of the powers in the Bill to access agreements to the extent that they were not legal requirements. Instead, it would leave uncertain whether the bar in the Railways Act on the regulator requiring amendments to such agreements did or did not apply to the powers of the regulator under the Bill so far as concerned any provisions of an access agreement that were not legally required.
I am not therefore persuaded that the Bill is wrong as drafted, but I am prepared to reflect carefully on the points that the noble Lord has made to assess whether any change to the Bill would be desirable. With the assurance that we will reflect upon this matter, I invite the noble Lord to withdraw his amendment.
Lord McNally: My Lords, perhaps I may seek to clarify my "get lost" remark. The Minister will recall that Billy Budd's excuse was a moment of impulse

501
instantly regretted. I am sure that that was the case. I am sure that my noble friend Lord Ezra will carefully read the response and reflect upon it. He has drawn attention to a possible conflict. I am sure that when he reads the Minister's response he will be assured that his concerns are to be examined. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
9.30 p.m.
Lord Haskel Lord Haskel moved Amendment No. 174F:
Page 81, line 19, at end insert—
("() After section 145(6), insert—
(6A) Information obtained by the Regulator in the exercise of functions which are exercisable concurrently with the Director General of Fair Trading under Part I of the Competition Act 1998 is subject to sections 53 and 54 of that Act (disclosure) and not to subsections (I) to (6) of this section."").
The noble Lord said: My Lords, the House has already debated this amendment. I beg to move.
On Question, amendment agreed to.
Lord Haskel Lord Haskel moved Amendments Nos. 174G to 174J:
Page 82, line 15, leave out from beginning to first ("the") in line 16 and insert ("In selecting a group to perform the Commission's functions in relation to any such reference,").
Page 82, line 42, at end insert—
("() At the end of Article 61, insert—
"(7) Information obtained by the Director in the exercise of functions which are exercisable concurrently with the Director General of Fair Trading under Part I of the Competition Act 1998 is subject to sections 53 and 54 of that Act (disclosure) and not to paragraphs (1) to (6)."").
Page 83, line 29, at end insert—
("() At the end of Article 44, insert—
"(8) Information obtained by the Director in the exercise of functions which are exercisable concurrently with the Director General of Fair Trading under Part I of the Competition Act 1998 is subject to sections 53 and 54 of that Act (disclosure) and not to paragraphs (1) to (7)."").
The noble Lord said: My Lords, I beg to move Amendments Nos. 174G to 174J en bloc.
On Question, amendments agreed to.
Clause 53 [General restrictions on disclosure of information]:
Lord Kingsland Lord Kingsland moved Amendment No. 175:
Page 26, line 17, leave out ("subsection (2) is") and insert ("subsections (2) and (4A) are").
The noble Lord said: My Lords, Amendment No. 175 and the other amendments in this grouping were dealt with at Committee stage. Clause 53(3) of the Bill exempts quite widely from the rules of confidentiality disclosure of information made for the purpose of facilitating the performance of any relevant functions of a designated person. "Relevant functions" and "designated persons" are dealt with in Schedule 11 to the Bill. We debated this matter at some length in Committee. I believe that the Minister will agree with me if I describe his reaction to my submissions as pretty dusty.
I have retabled the amendments that I tabled in Committee. Amendment No. 176 seeks to remove Clause 53 (3)(a)(i) from the Bill. By so doing it removes the associated designated persons and relevant functions listed in Schedule 11. Given his reply in Committee the Minister may not feel that he can go as far as to agree with me totally this time. I have therefore presented him with some alternatives.
The first is in Amendment No. 175 itself, which seeks to cut down the circumstances in which Clause 53(3) applies, requiring a delayed period before any information given to one of those designated persons can be passed on to another designated person.
The problem is that if, together with the schedule, the clause stands in its present form, a huge pool of information will be created, consisting not just of the Director General of Fair Trading and the regulators, but a whole range of other people over whom there will be no control or discipline with respect to how they disseminate that information. So any regulator who has grounds for suspecting that something is going on in his particular sector, can tap into that pool, as it is presently established, without any constraint on his ability to do so, or any protection for the person to whom the information in the pool refers.
If the Minister is not prepared to accept the blockbuster amendment, he has the option of going for Amendment No. 175, connected with Amendment No. 178, which will require a period of notice before information given for one purpose is allowed to be used for another purpose. Alternatively, there is a series of amendments which can be made to Schedule 11 itself, which would cut down and control the definition of "designated person" and "relevant function".
Clause 53 is an enormous gap in the system of protection to which an individual is entitled if he is under investigation. I hope that the Minister will look carefully at these amendments and respond positively. I beg to move.
Lord Simon of Highbury: My Lords, we are dealing here with a large group of amendments which cover various aspects of confidentiality. That confidentiality of information is an important issue is not doubted by either side of the House. The noble Lord, Lord Kingsland, should be in no doubt that I understand that this is a sensitive matter, especially for business. It is for sure, and my memory is still fresh on those issues. We have accordingly framed the relative provisions in the Bill carefully.
Some of the amendments in the group are new. Nevertheless, I was slightly disappointed that we have again to go over the ground that we debated in Committee, but I shall. It was not that I thought that I was dusty. It would have been difficult to have read that into my mind at that time. I was desperately hoping

503
that I was clear, but clearly I was not. So dusty may mean a certain way of being cloudy in vision. I am not sure, but we will get to it.
Lord Kingsland: My Lords, perhaps I may help the Minister: by the expression I meant "dismissive".
Lord Simon of Highbury: My Lords, no, that would not have been right. This is an important issue and I would not have been dismissive about it. We have explained carefully the basis for our position on these points. The disclosure provisions in the Bill are fully in line with the type of disclosure provisions contained in many other UK regulatory statutes. Let us make no mistake about it, we agree that the provisions are tough, but they are carefully balanced and closely defined.
The sanction for infringing these provisions is also very tough. Unlawful disclosure of information obtained under the Bill will be a criminal offence. Whether or not a great pool of information is available to the regulators as a result of the Bill and the exchange of information, they will still be subject to a—and I would use the word—"draconian" regime of punishment for improper use.
Amendments Nos. 175 and 178A are to do with information passed by a person who obtains it under the Bill to one of the regulators specified in Schedule 11. There is no case for imposing the restrictions set out in this amendment on such co-operation. We have explained before that the provisions for disclosure between regulators in this Bill are entirely within the mainstream of UK regulatory statutes. There are no such restrictions in those other statutes and nor should there be. Our view is that the provisions of Clause 53 as to disclosure will continue to apply to information obtained under the Bill when it is disclosed to another regulator for the purposes of this Act. The information is therefore fully protected against being used except for authorised purposes.
Amendment No. 175A relates to subsection (2) of Clause 53. Subsection (2) is a very restrictive provision. It requires that information may not be disclosed without the consent of both the person who initially provided the information and, if they are different, the person or business to whom that information relates. That is a tougher restriction than appears in most other regulatory statutes. The amendment seems to me to add nothing. The relevant person will have to be told the purpose for which the information is to be used in order to secure his consent. If he does not wish to give consent, he need not do so.
We discussed a similar amendment to Amendment No. 176 in Committee. We explained on that occasion that this amendment would wreck the Bill. That remains the case. The amendment would prevent any disclosure of information for the purposes of functions under the Bill, except with consent. It would prevent, for example, the disclosure of information between the director and the competition commission to assist the Commission to hear appeals. It would likewise prevent the director from disclosing to parties who were subject to an investigation the information necessary for them to
504
understand the accusations against them. I hope the House will therefore agree that the new regime would be unworkable with this amendment.
Amendment No. 177 is another that we discussed in Committee. It would delete subsection (3)(a)(ii) of Clause 53, which enables information to be disclosed to the European Commission to help the Commission perform its functions under European competition law. As my noble friend Lord Haskel explained in Committee, we believe it is right to give the director the power to help the Commission to enforce community competition law.
Amendment No. 177A relates to similar territory. We think it is unnecessary. If disclosure of information is not required to meet a Community obligation it cannot be disclosed under Clause 53(3)(d). Unlawful disclosure is a criminal offence.
Amendment No. 179 would remove subsections (5) and (6) of Clause 53. These provisions enable the Secretary of State to specify additional persons and purposes to whom and for which disclosure is to be permitted. This power is exercisable by order, subject to annulment by either House. The purpose of this power is to ensure that there is sufficient flexibility in the Bill to respond to developments in regulatory and competition policy without need for fresh primary legislation.
Amendment No. 179A, like 177A, misses the point that disclosure of information obtained under the Bill is prohibited unless it is specifically permitted. The subsection (5) power enables an order to be made permitting information to be disclosed for the purpose of specified functions. Information not meeting those purposes may not be disclosed. I am glad of the opportunity to make this clear. I hope the noble Lord will therefore agree that the amendment adds nothing to the firmness of that position.
Turning to Amendments Nos. 180 and 180A, they seek to impose a statutory duty on the recipients of information passed through the disclosure gateways in Clause 53. As I have already explained, our view is that the provisions as to the disclosure in Clause 53 will continue to apply to information obtained under the Bill when it is disclosed to another regulator for the purposes of the Act. The information is therefore fully protected against being used except for authorised purposes.
In the context of information passed to the European Commission, such a provision cannot be made to apply. However, such information will be subject to European law, which will restrict its disclosure. If we turn to Clause 53(3)(c), for example, do noble Lords think that if a policeman is passed information about an offence he should not be allowed to disclose that further? No, it would be quite wrong to interfere with disclosure in criminal proceedings, which must remain a matter for the criminal law and the courts dealing with those proceedings.
Turning to the persons listed in Schedule 11, it would frustrate the whole purpose of the gateways in the Bill if a regulator were to be prohibited from disclosing information provided to him to perform a statutory function if such disclosure were needed in order to

505
perform that function. We are quite clear that appropriate restrictions will apply to any further disclosure of information that they have received under Clause 53.
As I understand it, the purpose of Amendment No. 180B appears to be to apply the duties contained in Clause 54 to any disclosure of information made under Clause 53. That is already the effect of the Bill as it stands. I hope that that clarification is helpful.
Amendments Nos. 180C to 180E, 181, 182 and 182A all seek in one way or another to interfere, in differing degrees, with the ability of those who obtain information under the Bill to disclose it to other persons specified in Schedule 11 for the purposes of their statutory functions. For those reasons, noble Lords will understand that I do not believe that they add to the safeguards that are already introduced into the gateways.
Amendment No. 183 is another which relates to the confidentiality of information obtained under the Act and passed to another person. The same points as I made in relation to Amendment No. 180 apply.
I have gone fully through the system because, as I said when I started, we regard the balance of safety in the area of confidentiality for the individual and the business as being an important matter to which we must all attend with due seriousness. I have tried to attend to it in that way.
I hope that having heard what I have said noble Lords will accept that what we have set out in the Bill strikes the right balance between the importance of protecting information and the need to ensure that the new regime is fair, transparent and workable.
We have taken considerable care in framing them, recognising that this is indeed an extremely important issue, particularly the issue of fairness which the noble Lord, Lord Kingsland, put to me so clearly. We think that the Bill is entirely in line with existing UK precedents. I therefore urge the noble Lord to consider the withdrawal of the amendments.
9.45 p.m.
Lord Kingsland: My Lords, I wish to thank the Minister very much for going through each amendment so carefully and assiduously. I am especially grateful to him for his reaction to Amendment No. 180B, in which he made it absolutely clear that Clause 53 is subject to the contents of Clause 54. I would prefer it to be on the face of the Bill, but, if the Minister is not prepared to do that, I shall take his statement as being absolutely clear from an interpretive point of view.
The purpose of this group of amendments is to reinforce the point that I was aiming to make at an earlier stage of our proceedings today about the importance of keeping distinct the jurisdictional powers which relate on the one hand to the Bill and on the other hand to the regulator. My concern was that the pool of information that would be gathered under Schedule 11 should be used strictly for Bill purposes and should not seep into the regulatory sphere. That would be including things in the regulatory acts which it was not the intention of Parliament to do.
506
I have listened as carefully as I could to the Minister's response. I shall read Hansard with equal care and reflect as to whether I should return to the matter on Third Reading. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 175A to 177A not moved.]
[Amendment No. 178 had been withdrawn from the Marshalled List.]
[Amendments Nos. 178A to 180B not moved.]
Schedule 11 [Interpretation of Section 53]:
[Amendments Nos. 180C to 183 not moved.]
Baroness Nicol Baroness Nicol moved Amendment No. 184:
Page 27, line 15, leave out ("the Director") and insert ("any designated person or specified person (as defined in subsections (4) and (6) of section 53 respectively)").
The noble Baroness said: My Lords, yet again I am afraid that I shall invite the Minister to canter round a course that he has covered before. I wish to move Amendment No. 184 and to speak in particular to Amendments Nos. 185 and 208. The effect of this group of amendments would be to protect the commercial secrets of innocent third parties—that is my particular concern—during investigation and thereby to encourage more transparency when detailed information is required by the authorities.
Amendment No. 184 seeks to ensure that the obligation to protect commercial secrets is extended also to designated or specified persons involved in the investigation. Amendments Nos. 185 and 208 introduce those obligations.
The amendments would also promote harmonisation of approach in respect of investigation across the EU and would reduce the bureaucratic burden on businesses by introducing consistency in documentation.
Your Lordships will remember that I raised those concerns in Committee and I am aware that the British Retail Consortium has since had an encouraging dialogue with the Bill team. However, I have tabled these amendments so that the Minister can clarify and record assurances which he has given during those discussions.
Of course, investigations are necessary to ensure that there is no abuse of power and that consumers have access to a free and competitive market. But it cannot be right that business secrets of innocent third parties are revealed to their competitors. The amendment would introduce a system which is used currently by the competition directorate of the European Union—DGIV—in its investigations.
Article 214 of the Treaty of Rome imposes a general duty on all EU officials not to disclose information which,
"by its nature is a professional secret, and, in particular, information relating to enterprises and concerning their commercial relations or components of their production costs".
That is reflected in the detailed regulations setting out the rules for investigation in Regulation 17/62.
Articles 19(3) and 21(2), which deal with the publication of detailed reports, specifically bind the Commission to have regard to the legitimate interests of

507
undertakings in the protection of their business secrets. That system seems to work effectively for DGIV and for businesses themselves. It is surely in the interests of both business and authorities to have a transparent approach to investigations. If businesses are confident that their commercial secrets will be respected, it is more likely that they will be co-operative with investigators. I beg to move.
Lord Kingsland: My Lords, the difficulty is that there are a whole lot of other amendments in the group and if I do not speak to them now, I shall not have an opportunity to do so.
This really is a continuation of the exchanges that I had the privilege of having with the Minister a few moments ago. He conceded that Clause 53 was subject to Clause 54. That was extremely good news. We now have the added problem of examining Clause 54 to see whether its terms are strong enough to bear this immense responsibility. I trust the Minister will agree with me that on a true construction of the terms of Clause 54 it is inadequate to bear the heavy responsibility placed upon it. I draw his attention particularly to Clause 54(3)(a)(i) and (ii). I am particularly concerned about the expression "in his opinion" which is inserted into both these paragraphs, as that introduces a subjective element into the application of the director's judgment which is, I think, in contrast with what the Minister has sought to introduce in other parts of the Bill. My amendments seek to remove that.
Moreover, my amendments also seek to remove the expression,
"must also have regard to the need for excluding".
Perhaps I can give the Minister the benefit of the doubt by suggesting to him that what he really means is exclude, no more and no less, and that the "have regard to" and "the need for" are simply otiose.
Lord Simon of Highbury: My Lords, these amendments focus us directly on the question of the proper balance between the protection of information and the demands of efficiency, transparency and fairness under the new regime. This balance is, as I said in answering the previous group of amendments, an important issue, and I am grateful to my noble friend Lady Nicol and to the noble Lords opposite, for providing us with another opportunity to examine it in such clear terms before the Bill leaves this House. I say "clear terms" because the amendments propose a radical shift in the balance. Indeed, I fear that the proposals illustrate the risk of hampering the operation of the new regime to a degree which unbalances the options.
It is right that the director should be under a duty to have regard to the need to exclude business secrets. This is what the first part of Amendment No. 185 appears to propose. The duty is already contained in Clause 54. Under Clause 54 the director is required to balance that need against the extent to which disclosure is necessary for his purposes under the Bill. When I say the "director" I also mean the regulators acting under the Bill. The Government believe that this is the right duty.
508
We should not under-estimate the seriousness of the matter. The director will have to weigh carefully the potential harm to the interests of business and individuals before disclosure. I might point out that it would also not be in the director's interest to disclose information unnecessarily. To do so would clearly discourage co-operation in any future cases.
But these issues must be weighed against the necessity to disclose information in certain circumstances; for example, to enable a party to have sufficient details of the case it has to meet so as to be able to respond. If the director failed to follow this principle it would certainly be grounds for legal challenge. This also applies to publishing decisions that there have been infringements where other parties have a clear interest in knowing the facts about that infringement.
Amendment No. 185 would impose a further, far more onerous restriction to demonstrate that the public interest in disclosure outweighed the business's interest in confidentiality. I fear that this would be a recipe for paralysis. It would give infringers fertile ground to obstruct and to delay the director's procedures, challenging him at every turn that he has not produced a sufficient demonstration of the public interest. The scope for delay could be almost endless. We have to give the director some discretion, although clearly, as I said, within strict bounds, if the system is to work.
The amendment imposes a rigid requirement for notice. In some circumstances 14 days' notice may be right. In others, however, it will not be. We have already debated a proposal to impose a notice requirement on confidential exchanges of information between regulators. This amendment would impose the same requirements on every function under the Bill where disclosure is necessary. It makes no allowance for the differences. What if, for example, the director needs to move urgently to impose interim measures to stop an abuse? He could be hamstrung by this proposal.
We have accepted the argument that it is right for third parties to have notice and an opportunity to make representations in some circumstances. But the right way to approach this is through the Director's Rules, which will be sufficiently detailed to cater for different scenarios, and which can be more readily refined. This is not a matter for primary legislation. The rules will of course be subject to consultation, so people will have an opportunity to say if they do not believe the rules cover the right matters in the right way.
My noble friend Lady Nicol referred to the practice under the EC system of enabling business to identify which pieces of information are confidential. Again this is a matter of procedure best left to the Director's Rules. It does not strike me as the sort of detail which is necessary or sensible to put into the primary legislation, and indeed I do not believe it appears in Regulation 17/62 either. It is the Commission's implementing regulations, equivalent to the Director's Rules, on the making of notifications under Regulation 17 that provide for parties to identify business secrets and to justify that treatment in making applications.

509
I now turn to the amendments tabled by the noble Lord, Lord Kingsland, Amendments Nos. 184A and 184B, and Amendments Nos. 185A to 185D. The effect of these amendments is to remove requirement for the director and the Secretary of State to balance the relevant considerations. I have already noted that some discretion is necessary for the system to work effectively and clearly.
More damagingly still, the amendments will make it unlawful for the director or Secretary of State to disclose any information which might damage the legitimate interests of business or individuals. I believe this proposal to be unworkable. Disclosure may sometimes be necessary. I have already mentioned, for example, the need for parties under investigation to have sufficient information to enable them to understand the case against them. It would be quite wrong to limit that right in this way.
If I may turn quickly to Amendment No. 208, there is already an established system in place for protecting confidential information under the FTA. Interested parties are given an opportunity to make representations to the MMC as to whether information that they have provided should remain confidential, before the MMC sends its report to the Secretary of State.
I do not in any way seek to play down the importance of the arguments raised by noble Lords and my noble friend Lady Nicol in respect of the disclosure provisions in the Bill. On the contrary we have taken considerable care to get the balance right. What we have produced in the Bill is entirely in line with existing UK precedents. We have also brought forward an amendment recognising the force of the arguments about notice to third parties and an opportunity to make representations.
It is important to recognise that the director or Secretary of State will only wish to disclose information where that is properly justified under the tests we have set out in the Bill. It would hardly be in their interests to disclose confidential information without proper justification. Companies would soon become unwilling to co-operate and the effectiveness of the system would be compromised. Nevertheless, we do not believe that the system would be workable without some discretion, albeit circumscribed as we have provided. I am grateful for this opportunity to explain our position once again. I urge my noble friend Lady Nicol to withdraw the amendment.
Baroness Nicol: My Lords, I am grateful for the careful answer that the Minister has just given. I am persuaded by the arguments to withdraw my amendment. It is comforting, too, that there is an opportunity in the formation of the rules to clarify even further some of the matters that he mentioned. I can quite see his point about not wanting the provision in primary legislation. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 184A to 185 not moved.]
Lord Kingsland Lord Kingsland moved Amendment No. 185A:
Page 27, line 21, leave out from ("also") to ("so") in line 22 and insert ("exclude,")
The noble Lord said: My Lords, I beg to move Amendment No. 185A. I have spoken to this amendment. I do not think the Minister responded to my point about the subjective judgment of the director. It related to the expression "in his opinion". However, I have no doubt that the noble Lord will reflect on that matter and, in that spirit, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 185E to 185D not moved.]
Clause 56 [Findings of fact by Director]:
[Amendment No. 186 not moved.]
Lord Haskel Lord Haskel moved Amendment No. 186A:
Page 28, line 4, at end insert ("; or
(b) conducting an investigation under section 25.").
The noble Lord said: My Lords, as I explained on the third day of Committee, it is the Government's intention that Clause 56 should apply to findings of fact made by the director in all decisions. It should not be limited to decisions resulting from a notification for a decision. The amendment gives effect to that intention. I beg to move.
On Question, amendment agreed to.
Clause 57 [Interpretation]:
[Amendment No. 186B not moved.]
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 186C:
Page 28, line 36, at end insert—
("" dominance" does not include any ability to act independently which might exist but for a legal requirement arising other than under this Act;").
The noble Lord said: My Lords, Clause 57 concerns interpretation of governing principles. It immediately precedes Clause 58, the Eldorado Clause in the Bill which will provide a goldmine for lawyers for at least the next decade.
We hope by Amendments Nos. 186B and 186C to reduce by a small margin the opportunities for digging away at that vein. Amendment No. 186C proposes that included within this interpretation clause "dominance" should be clearly defined. The definition we have offered is that "dominance" should have the same meaning as within the EC treaty.
It might shorten proceedings if I say that in relation to my next amendment, Amendment No. 187B, which relates to undertaking, we will be adopting the same position. I cannot believe that anyone would wish to see anything other than clarity being given to the interpretation of the Bill. I beg to move.
Lord Simon of Highbury: My Lords, I was not clear from the drafting of the amendment what its purpose was. I understand from the noble and learned Lord's explanation that it is partially to stop lawyers earning

511
money and to disapply the Chapter II prohibition from an undertaking in so far as it occupies a dominant position because of a legal requirement.
We cannot accept this proposal. We intend that the fundamental question of dominance should be interpreted in accordance with Article 86 jurisprudence. The proposal would interfere with that interpretation to a degree. I remind the noble and learned Lord that the Chapter II prohibition will catch abuses, not dominance itself. Dominant companies have a responsibility not to abuse their market position, howsoever the dominance arises. If the concern is that the conduct may be caught as an abuse, even if that conduct is required under statute, the Bill ensures that that will not be the case.
Paragraph 3 of Schedule 3 provides that the Chapter II prohibition does not apply to conduct carried out in order to comply with the legal requirement. It would not, however, be right to disapply the prohibition from all conduct carried out by an undertaking which occupies a dominant position under a statutory regime.
In the light of that explanation, which I hope is a fair conclusion as to the answer that the noble and learned Lord required for clarification, but in no certainty that I have given it correctly, I invite him to withdraw his amendment.
Lord Fraser of Carmyllie: My Lords, that is not a wimpish answer by the Minister but I do think it is a slightly wimpish answer by the draftsman. I can see no reason why he should not have been prepared to see dominance. If I am wrong and it does not accurately reflect the terms of the EC treaty, I would retreat immediately. If, however, the definition I have attached to it is a correct one, I believe it would have been helpful to have that placed on the face of the Bill. As the noble Lord might expect, I am not concerned to press the amendment at this time. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Haskel Lord Haskel moved Amendment No. 187:
Page 28, line 43, at end insert—
("'information" includes estimates and forecasts;").
The noble Lord said: My Lords, this amendment was debated on day one. I beg to move.
On Question, amendment agreed to.
Lord Simon of Highbury Lord Simon of Highbury moved Amendment No. 187A:
Page 29, line 6, at end insert—
(""person", in addition to the meaning given by the Interpretation Act 1978, includes any undertaking;").
The noble Lord said: My Lords, this is a technical amendment which provides that in the interpretation of Part I of the Bill "person" is to include any undertaking.
As your Lordships will be aware from our earlier discussions on this Bill, the prohibitions are modelled on Articles 85 and 86 which apply to undertakings and, as a result of Clause 58, words in the Bill such as "undertaking" are to be interpreted by reference to EC law. However, it is not appropriate for all of the provisions
512
of the Bill to be drafted in terms of "undertakings". For example, Clause 20 provides that persons may apply to the DGFT for guidance or decision about the application of the Chapter II prohibition to their conduct. The applicant may seek to argue in that application that the Chapter II prohibition does not apply to it because it is not an undertaking. But there may be undertakings that are not regarded by our legal system as persons. We therefore felt that we should make clear through this amendment that a "person" is to include any undertaking. I beg to move.
On Question, amendment agreed to.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 187B
Page 29, line 17, at end insert—
(""undertaking" includes a person who, or body which, requires, causes or connives in an infringement of the Chapter I prohibition or Chapter II prohibition.
() Except where the context otherwise requires words and expressions in this Act shall have the same meaning as in the Treaty.").
The noble and learned Lord said: My Lords, I have already explained the reasoning that lies behind Amendment No. 187B. It is an attempt to place on the face of the Bill what I understand to be the definition to be found in the treaty. I move it shortly because I anticipate exactly the same response as previously. I beg to move.
Lord Simon of Highbury: My Lords, my response will not vary on this occasion. I do not think I have a wimpish draftsman this time; but, given the late hour, my response stands as the noble and learned Lord predicted.
Lord Fraser of Carmyllie: My Lords, with that compelling argument, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Haskel Lord Haskel moved Amendment No. 188:
Page 29, line 18, leave out ("the production of').
The noble Lord said: My Lords, we have already debated this amendment. I beg to move.
On Question, amendment agreed to.
Lord Haskel Lord Haskel moved Amendments Nos. 189 and 190:
Page 29, line 20, leave out ("the production of").
Page 29, line 21, at end insert—
("() Any power conferred on the Director by this Part to require information includes power to require any document which he believes may contain that information.").
The noble Lord said: My Lords, we have already debated Amendments Nos. 189 and 190. I beg to move en bloc.
On Question, amendments agreed to.
10.15 p.m.
Clause 58 [Principles to be applied in determining questions]:
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 191:
Page 29, line 23, leave out from beginning to ("questions") in line 24.
The noble and learned Lord said: My Lords, in many respects this is as important a group of amendments as we have discussed this evening, and again it is regrettable that we come to it at this late stage.
Perhaps I may look back at the history of Clause 58. If we reflect on what was said at Second Reading, I do not recall any contribution to that Second Reading debate where it was said that it was not desirable in one form or another to include Clause 58 within the Bill; that if Articles 85 and 86 of the Treaty were to be incorporated into our domestic law, so far as possible it should be clear that we understood where the jurisprudence of the European Court would be followed in the United Kingdom and where it would not be followed.
That broad proposition found no dissent in any part of your Lordships' House. However, I know that along Competition Street the noble Lord has the reputation of being a model Minister in terms of being prepared to listen to representations from all quarters. If I may say, by all reputation the noble Lord has been exceptionally patient with all representations that have been made to him from quarters that are clearly conflicting in their ultimate objectives. It is worth placing on record that we have a great respect for him for that.
However, it must be clear to the Minister as it is becoming clear to me that, while nobody wishes to see Clause 58 in any sense removed from the Bill, there is a growing anxiety—not only among those who are experts in this area of law, but also more broadly in the CBI and elsewhere—that we are potentially about to encounter a risk that, far from Clause 58 being of assistance to the courts of the United Kingdom—that is the ultimate stage of any competition law process—more importantly, it also will not help at an early stage when companies have to determine whether or not the conduct in which they are engaged is in breach of the provisions of the Bill. It is important that they are able to determine as clearly, effectively and as quickly as they can whether or not they will be in breach.
As more people look at the situation, there is a growing unease about the clarity of the definition or the extent of what the clause provides. When I said earlier in a slightly flippant way that it was a sort of "Eldorado" clause. I meant that with some seriousness and sincerity. It sounds a good, simple idea that lawyers and judges in the United Kingdom should know immediately to what jurisprudence they might refer. But the first thing that one finds in the clause—the purpose is simply enough stated—are the words,
"The purpose of this section is to ensure that so far as is possible (having regard to any relevant differences between the provisions concerned). questions arising under this Part in relation to competition within the United Kingdom arc dealt with in a manner which is consistent with the treatment of corresponding questions arising in Community law in relation to competition within the Community".
Before we get into the wording in the brackets, we already have the qualification,
514
"The purpose of this section is to ensure that so far as is possible".
No sooner do we finish with that qualification, than we have the greater qualification within the brackets—
"(having regard to any relevant differences between the provisions concerned)".
A similar issue arises as soon as one reaches subsection (2) which states,
"At any time when the court determines a question arising under this Part, it must act (so far as is compatible with the provisions of this Part and whether or not it would otherwise be required to do so) with a view to securing that there is no inconsistency".
We start by thinking it is all going to be seriously helpful. What concerns me is that those who appear before the competition courts and deal in competition law would not even begin to engage in a debate before the court as to what is the jurisprudence of the ECJ. They would spend a considerable, if not interminable, time in trying to discover whether or not what was being discussed was in the area described as "relevant differences" or issues of compatibility. This is a very real question. It would be helpful for the future development of competition law within the United Kingdom if we could discover before the Bill concludes its passage through Parliament just exactly where those issues of compatibility or incompatibility are said to arise.
I do not want at this hour to deal with this matter exhaustively but the jurisprudence of the ECJ has developed in such a way that there are detailed decisions about procedure and about how things are to be taken forward. However, as soon as we get to this Bill, we see in Clause 49(1), which we have not been too distantly considering, that,
"The Director may make such rules about procedural and other matters in connection with the carrying into effect of the provisions of this Part as he considers appropriate".
In isolation in a domestic context one would have regarded that as being a perfectly sensible and sound provision to include within any Bill. However, because the ECJ has already developed an elaborate set of decisions about what is procedurally permissible and correct, there is immediately an issue of inconsistency, incompatibility, difference and the like. Furthermore, Clause 34 spells out the requirement for the director to give interim relief—interim measures. Again, the ECJ has developed a significant body of jurisprudence about that. Similarly, in relation to Clause 35 on fines, there are major matters which have been the subject of ECJ jurisprudence.
We would probably settle for an undertaking from the Minister that he will at least write to us to spell out where in Clause 58 the Government, in the way they have put together the framework of the Bill, recognise that there are indeed relevant differences or issues of incompatibility. I have given three examples and I have no doubt that my noble friend Lord Kingsland would be able to identify a large number of other issues. I hope I have emphasised sufficiently to the noble Lord that we are not hostile to the basic approach of having such a provision, but we are extremely concerned that, far from achieving simplification and uniformity with European law, we suffer the very real risk that our domestic law

515
will become even more complicated than would be the case if the clause were to be omitted. We are not suggesting that as an approach but we are anxious that real complications might emerge. I beg to move.
Lord Borrie: My Lords, at this hour I will not delay the House because I am sure that we would like to hear the Minister. I believe that the noble and learned Lord, Lord Fraser, in his usual charming and helpful way, has made some fundamental errors as regards the way in which the Government have sought and explained throughout the debates on this Bill how they see its purposes in relation to European law. For example, he has ignored the differences between substantive law and procedural law. He has ignored the fact that in the set-up for the United Kingdom we have the Director General of Fair Trading and the other regulators. We also have the commission on appeal. We have a structure, system and procedures which are not precisely the same as in the European Union. Therefore, it is inevitable that one has to use words like "as far as possible" and others of that kind. I shall not elaborate further on the speech that I was most interested to hear, because, like everyone else, I would like to hear from the Minister, too.
Lord Kingsland: My Lords, I had not intended to intervene in this phase of the debate until I heard the noble Lord, Lord Borrie. He is quite wrong in accusing my noble and learned friend Lord Fraser of clouding the issue because it is perfectly straightforward. Either Her Majesty's Government intend the procedural jurisprudence of the European Court of Justice to apply to our own competition law or they do not. It is not clear on the face of the Bill because it refers to decisions of the court. The court makes many decisions on procedure, remedies and third party rights. As the Bill stands, we do not know to what extent they apply. These are important matters. We need to be clear that we understand exactly what the Government's interpretation is; otherwise we are not in a position to draw sensible conclusions about many other clauses. The noble and learned Lord, Lord Fraser, mentioned Clauses 34 and 35 of the Bill. I shall add to that Clause 36 on third party rights.
Lord Simon of Highbury: My Lords, in the spirit of the hour and the way this debate on Clause 58 is developing and which is absolutely crucial, I do not believe that I need to refer extensively to the amendments that have been tabled. I could but I shall not because, first, I appreciate the way in which the Opposition have credited me with listening so far during the course of this Bill and, secondly, I wish to make clear that I have listened to their last statements. So I am not going to go into the amendments. I shall, however, comment on the general proposition that is being put to me, as I understand it. It is that the construction of Clause 58 is confusing. I understand the proposition but I cannot agree. As I said in Committee, the purpose of the governing principles is to ensure that as far as possible the UK prohibitions are interpreted and developed consistent with EC prohibitions. That is of crucial importance in minimising the burdens on business. They already deal with EC prohibitions that
516
have applied in the UK for over 20 years. We must seek to maintain the domestic prohibitions on parallel tracks. That is the purpose of Clause 58.
The noble and learned Lord, Lord Fraser, is, I know, a highly professional and extremely well-trained lawyer in his own right. He said to me that he finds the clause confusing. As a mere businessman my problem is that I thought it was clear. Therefore, I am left with something of a problem, which is the statements which purport to bring across the fundamental prohibitions. In my previous life I dealt with them for 20 years. I did not find much difficulty in understanding them because I believe that most businessmen understand what an abuse is. In my view much difficulty has been made of the complexity of this notion. I do not think that it is so complex for most businessmen. Therefore, when reading the clause, I believe that I would have understood that it carries across into our law the basis of the law which I have had to consider for 20 years when conducting my international business. I thought that it was clear.
There must be some doubts in the minds of the Opposition—doubts which they have not in any way reflected in their discussion on the amendments, which I appreciate—and, from a very legal construct, doubts about the relationship of this clause to other parts of the Bill. We have had a clear statement from my noble friend Lord Borrie that we have to differentiate between the fundamental construct of the law, the procedural aspects and the rules flowing from that. Indeed, this is a different argument from the clarity of Clause 58 in carrying across the jurisprudence and the construct of European law. The point is well taken that those are two different issues. I do not want to go into the issue of procedural coherence as opposed to the coherence of Clause 58. They are different debates and they can be taken one by one, as we have taken them. I want to stick with the view that has been proposed that Clause 58 is not clear in carrying across the basic body of jurisprudence in Europe.
I shall reflect carefully on the general statement that has been made because it has been made by an eminent lawyer and if, on a careful reading of the text, I find that this is a real problem rather than a construct about how procedure flows, I shall reconsider whether I can say anything further to elucidate what I take to be a clear clause to help the noble and learned Lord in this matter. I shall attend to that, but I can give no promises at this stage because I must reflect carefully on the noble and learned Lord's confusion.
10.30 p.m.
Lord Fraser of Carmyllie: My Lords, the noble Lord might now find that this will take a little longer to resolve, because it is not a confusion that I have; it is a confusion of the Confederation of British Industry and it is a difficulty which one of the most prominent law firms in the City has. It is not a matter to be dealt with too lightly. I thought that I had taken the trouble, as briefly as I could, to summarise an argument that I believe requires a serious answer. As I have not had a serious answer, I now intend to go over it so that the noble Lord can reflect on it at his leisure.

517
In my opening remarks, I pointed first to Clause 49(1), which states:
"The Director may make such rules about procedural and other matters in connection with the carrying into effect of the provisions of this Part as he considers appropriate".
I commented that if that were to be a solely domestic provision, with no reference to any other jurisprudence or legal system, it would be a perfectly standard and obvious provision to include in the Bill. However, I am invited to look to the whole of the Bill against the provision of Clause 58. The difficulty seems to arise because the European Community has developed both its procedural and remedial rules not, as we might sometimes see it, simply from a procedural basis but from fundamental principles derived from the treaty itself. If the noble Lord wishes to write to me before Third Reading to tell me that with regard to Clause 58 we in the United Kingdom shall never have to look to the jurisprudence of the ECJ (and all the other decisions attaching to that primary source), I would be very satisfied.
More importantly, there are very prominent lawyers in the City who have entered into this debate, not in any childish way or for any short-term, narrow party-political reasons, but because they are concerned that the competition law of the United Kingdom should be as clear and as lucid as possible. I have no doubt that they would be even more interested to hear the noble Lord's answer. If that is the course that he contemplates I hope that he will spell out that neither procedural nor remedial matters are to be construed in the context of Clause 58 and explain in the fullest possible detail the legal basis on which he reaches that conclusion. If he does so I doubt that your Lordships will have time to return to this matter, but because of the broad concern, not hostility that Clause 58 should be as clear as possible it would be helpful if the Minister could provide me with that information, and preferably before we reach Third Reading. I beg leave to withdraw Amendment No.191.
Amendment, by leave, withdraw.
[Amendments Nos. 192 to 198B not moved.]
The Deputy Speaker (Baroness Hooper): My Lords, there is a printing error in the Marshalled list. Therefore, I must call Amendment No.199 before Amendment No.199A. In doing so, I draw to the attention of noble Lords that if Amendment No. 199 is agreed to Amendment No.199A is pre-empted.
Clause 60 [Power to enter premises: Commission investigations]:
Lord Haskel Lord Haskel moved Amendment No. 199:
Page 30. line 38, leave out from beginning to ("by") in line 39 and insert ("A judge of the High Court may issue a warrant if satisfied, on an application made to the High Court in accordance with rules of court").
The noble Lord said: My Lords, this amendment has already been spoken to. I beg to move.
On Question, amendment agreed to.
[Amendments Nos.199A and 199B not moved.]
Lord Haskel Lord Haskel moved Amendment No. 200:
Page 31, line 5, at end insert—
("() A Commission investigation is also being obstructed if there are reasonable grounds for suspecting that there are books or records on the premises—

(a) the production of which has been required by an official of the Commission exercising his power in accordance with the provision under which the investigation is being conducted; and

(b) which have not been produced as required.").

The noble Lord said: My Lords, I beg to move Amendment No. 200 and speak also to Amendments Nos. 203 and 210. These amendments ensure that the provisions concerning warrants issued in relation to investigations concerning Articles 85 and 86 of the EC Treaty reflect the corresponding provisions relating to investigations under the domestic regime. It is our intention that the procedures set out in Part II should be equivalent to those proposed for domestic investigations in this Bill with differences only to reflect the different nature of the investigation at issue. It makes administrative and regulatory sense for similar procedures to be available to ensure that a competition investigation can be conducted effectively irrespective of whether an EC or domestic competition investigation is taking place.
On Question, amendment agreed to.
[Amendments Nos. 200A and 200B not moved.]
Lord Haskel Lord Haskel moved Amendment No. 201:
Page 31, line 34, leave out from first ("to") to end of line 37 and insert ("the High Court are to be read as references to the Court of Session.").
The noble Lord said: My Lords, we considered this amendment on day two. I beg to move.
On Question, amendment agreed to.
Clause 61 [Power to enter premises: Director's special investigations]:
[Amendment No. 202A not moved.]
Lord Haskel Lord Haskel moved Amendment No. 202:
Page 31. line 38, leave out from beginning to ("by") in line 39 and insert ("A judge of the High Court may issue a warrant if satisfied, on an application made to the High Court in accordance with rules of court').
The noble Lord said: My Lords, we have already debated this amendment. I beg to move.
On Question, amendment agreed to.
[Amendment No. 202B not moved.]
Lord Haskel Lord Haskel moved Amendment No. 203:
Page 32, line 4, at end insert—
("() A Director's special investigation is also being obstructed if—

(a) there are reasonable grounds for suspecting that there are books or records on the premises which an authorised officer of the Director has power to examine;

(b) the officer has produced his authorisation to the undertaking, or association of undertakings, and has required production of the books or records; and

519

(c) the hooks and records have not been produced as required.").

The noble Lord said: My Lords, we have already debated this amendment. I beg to move.
On Question, amendment agreed to.
[Amendments Nos. 203A and 203B not moved.]
Lord Haskel Lord Haskel moved Amendment No. 204:
Page 32, line 29, leave out from first ("to") to end of line 32 and insert ("the High Court are to be read as references to the Court of Session.").
The noble Lord said: My Lords, we debated this amendment on day two. I beg to move.
On Question, amendment agreed to.
Lord Haskel Lord Haskel moved Amendment No. 205:
After Clause 61, insert the following new clause—
ENTRY OF PREMISES UNDER SECTIONS 60 AND 61: SUPPLEMENTARY
(".—(1) A warrant issued under section 60 or 61 must indicate—

(a) the subject matter and purpose of the investigation;

(b) the nature of the offence created by section 62.

(2) The powers conferred by section 60 or 61 are to be exercised on production of a warrant issued under that section.
(3) If there is no one at the premises when the named officer proposes to execute such a warrant he must, before executing it—

(a) take such steps as arc reasonable in all the circumstances to inform the occupier of the intended entry; and

(b) if the occupier is informed, afford him or his legal or other representative a reasonable opportunity to be present when the warrant is executed.

(4) If the named officer is unable to inform the occupier of the intended entry he must, when executing the warrant, leave a copy of it in a prominent place on the premises.
(5) In this section—

"named officer" means the officer named in the warrant; and

"occupier", in relation to any premises, means a person whom the named officer reasonably believes is the occupier of those premises.").

The noble Lord said: My Lords, we debated this amendment on day two. I beg to move.
On Question, amendment agreed to.
Clause 63 [Monopoly investigations: general]:
[Amendment No. 206 not moved.]
Clause 64 [Investigations: complex monopolies]:
Lord Haskel Lord Haskel moved Amendment No. 207:
Page 35, line 12, at end insert—
("() If a person is charged with an offence under subsection (4) in respect of a requirement—

(a) to provide an explanation of a document, or

(b) to state where a document is to be found,

it is a defence for him to prove that he had a rasonable excuse for failing to comply with the requirement.").
The noble Lord said: My Lords, we debated this amendment on day two. I beg to move.
On Question, amendment agreed to.
[Amendment No. 208 not moved.]
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 209:
Before Clause 66, insert the following new clause—
CONTRACTS AS TO PATENTED PRODUCTS ETC
(" . Sections 44 and 45 of the Patents Act 1977 shall cease to have effect.").
The noble and learned Lord said: My Lords, I may have some knowledge about some areas of the law, but I have to say that I have virtually no knowledge of that area of the law which is encompassed by the Patents Act. This is an important amendment. I look forward to the Minister's response. I beg to move.
Lord Haskel: My Lords, I shall speak also to Amendment No. 223. I am most grateful to the noble and learned Lord for raising the position of Sections 44 and 45. In a very few words he made an extremely strong case. So we are prepared to accept his amendment. Clearly we shall have to address the transitional arrangements, such as the position of agreements currently in force which are affected by Sections 44 and 45 of the Patents Act. We will also have to consider any savings which may need to he made affecting the respective territorial extent of the Patents Act and the Competition Bill. Such matters can be dealt with under our powers in Clause 70 or in another place.
Lord Fraser of Carmyllie: My Lords, I knew that I was articulate and fluent, and all the rest, but I have been quite bowled over by the Minister's response for which I am very grateful.
On Question, amendment agreed to.
Lord McNally Lord McNally moved Amendment No. 209A:
After Clause 66, insert the following new clause—
TRADE MARKS, NAMES ETC: UNFAIR COMPETITION
(" . —(1) Any of the acts and practices referred to in sections (Trade marks, names etc: confusion) and (Trade marks, names etc: damage to goodwill or reputation) of this Act shall constitute an act of unfair competition and shall be actionable as such.
(2) In an action for unfair competition under this Act all such relief by way of damages, injunctions, accounts or otherwise shall be available to the plaintiff as is available in respect of the infringement of any property right.
(3) Nothing in this Act affects any of the laws relating to passing off or malicious falsehood or to the protection of any intellectual property right.").
The noble Lord said: My Lords, I do not know whether that means the shorter the speeches the more chance we have of convincing Ministers. The Minister will know that my broad philosophical approach to the Bill is that a competition Bill should be about competition and that we should use the opportunity to see whether we can advance the cause of competition. It is in that spirit that I move Amendment No. 209A and speak also to Amendments Nos. 209B to 209D.
When I raised the question of lookalikes earlier in the passage of the Bill, a number of noble Lords—most vigorously the noble Lord, Lord Peston—assured me that it had already been dealt with in earlier legislation. I can only say that if that is the case it was dealt with inadequately. The grievance remains about lookalike products and in proposing the amendments it is my

521
intention to suggest to Ministers that those grievances are legitimate and that the Bill is an appropriate opportunity to right the wrongs done by lookalikes.
Lookalike products trade parasitically by mimicking the package of brands. They use the brand's imagery and reputation to persuade consumers that their products are related to the brand. Lookalike packaging is most commonly used by retailers who seek to gain market share by associating their products with the brand leaders. There is no doubt that authoritative polling has shown that shoppers are confused and believe that when they are buying similarly packaged products they are buying the genuine goods.
I believe that an investment in a brand which may take years to be associated in consumers' minds with quality, taste or value should be protected on behalf of the consumers. In this case, imitation is not the sincerest form of flattery. It is a form of theft and should be treated as such. The amendments seek to prevent lookalike products by ensuring that unfair competitive practices are outlawed.
Amendment No. 209A would allow unfair competition to be actionable, just as other property rights are. Amendment No. 209B would prevent unfair competition practices which are likely to cause consumer confusion over product and services. Amendments Nos. 209C and 209D would prevent parasitic trading on brand goodwill and reputation by protecting the distinctiveness of product packaging.
Since I and other noble Lords first raised the matter, discussions have taken place with Mr. Nigel Griffiths, Minister for Competition and Consumer Affairs. He agreed to discuss the problem of lookalike products. That initiative was most welcome and I am glad to see that after some prodding the Government have been persuaded to consider the issue. However, we do not yet have on record any public statement confirming that the Government see this as an existing problem or that they are prepared to act on it. That is why I again raised the matter this evening.
The decision to produce a draft paper on potential solutions is useful, but I would welcome clarification from the Government on whether they think that the study of the problem rules out action under the Competition Bill. If the Government now accept that it is a problem, why not use this opportunity to legislate upon the issue?
If the Government do not take the opportunity to address the problem in this Bill, then when will there be legislative opportunity to tackle it? Ministers must be well aware of the difficulty of securing parliamentary time. Brand manufacturers would be extremely concerned if the issue were allowed to fall by the wayside again after years of campaigning for change.
Before I close, perhaps it would help noble Lords if I explained what the amendment will not do. It will not reduce consumer choice or raise prices. I was rather disappointed that my old employers, the British Retail Consortium, suggested that in its briefing about lookalikes. I humbly suggest to my old bosses that it is no part of their job to protect imitators because imitators
522
are no friends of retailing or quality. I am pleased to see that Tesco have agreed to stop producing lookalikes. That is an advance.
However, the amendments would not restrict the use of visual clues which indicate a product category. Such category indicators—for example, yellow bottles indicating lemon-scented detergent—would not be affected. Brand manufacturers are not seeking to limit category indicators which are an important aid to the consumer. This misunderstands the issue. It is neither the purpose nor the effect of the amendments. Lookalikes involve a whole range of features from one brand being copied closely to create a strong resemblance and an apparent link with another brand.
It is also palpable nonsense to suggest that any court would be incapable of differentiating between a category indicator and a lookalike which closely mimics the brand. As I said before, what we are dealing with here is a kind of theft, a theft of good name which has often taken years of investment to create. I beg to move.
Lord Islwyn: My Lords, in considering the amendments and new clauses moved by the noble Lord, Lord McNally, the basic question which I think needs to be asked is whether the Government recognise that there is a problem. If they do, then it follows that I should ask: what are they going to do about it? I feel it is essential to recognise what a lookalike product is. As I understand it, a lookalike product is one with packaging which deliberately imitates, mimics if you like, that of a brand.
In putting these few points to noble Lords, I wish to point out that I have no financial interest whatever. The imitators have similar colours, pack shapes, labels and names which are used to achieve the deception. The lookalike products are produced by retailers, domestic manufacturers and overseas manufacturers. I should have thought that this commercial piracy should be outlawed.
The products are not to be confused with own label supermarket products, which are distinctly packaged. Needless to say, consumers are confused by the packaging, they tend to believe that there is a connection between the brand and the lookalike when none exists. Consumers face far less choice through the disincentive to innovate because of incessant copying.
So far as I am able to ascertain, this Competition Bill does not cover that issue of lookalikes. My understanding is that the World Intellectual Property Organisation—a United Nations body—has put forward proposals which would answer the problem. Those would tackle the lookalike problem and consumer confusion, and, not least, the damaging of a competitor's goodwill and reputation. Distinctive packaging costs as much to produce as lookalike packaging, so there will be no additional cost to the consumer.
We should all recognise that brands are important in a free market economy. They are the basis on which a differentiation can be made between products and the basis on which there is competition. By comparison, lookalikes distort competition by deceiving consumers and by reaping a financial reward from a competitor's

523
ideas, investment, effort and risk. There would seem to be a weakness in UK law which makes this country particularly vulnerable to lookalikes.
The Bill and the amendment put forward could deal with the problem once and for all. I urge the Government to consider the issue seriously.
Baroness O'Cathain: My Lords, I oppose this amendment and in doing so, I declare an interest as a non-executive director of Tesco. But that is really not why I am speaking on this issue.
First, the noble Lord, Lord McNally, said that shoppers were confused. I assure your Lordships that shoppers are not confused. I pray in aid of that comment the fact that the Consumers' Association and the National Consumer Council—and I believe we all have great respect for both bodies—do not believe that shoppers are confused. At present there is an Institute of Grocery distribution code; there is the Trade Marks Act 1994; and there is the tort of passing off. That provides the trademark owners with adequate protection against infringement.
The noble Lord who has just spoken said that own-label products are not the same as lookalikes. But part of the argument seems to be that lookalikes are own-label products. Own labels are brands that have been built up by the retailers themselves. I believe that there is more confusion about this issue on the Floor of this House than there is outside on the part of the canny shopper buying the goods in the supermarket. I hope that this amendment will not be accepted.
Lord Fraser of Carmyllie: My Lords, after that brief intervention, I rise with some trepidation to say to the noble Lord, Lord McNally, that he has no need to apologise for having tabled these amendments again. My noble friend Lady O'Cathain is correct to say that this is far from an easy issue to resolve immediately.
However, from the last time we discussed this matter, it seems that some profitable progress has now been made because the Minister, Mr. Nigel Griffiths, has, I understand met with the British Brands Group and has given some indication of the recognition of a problem existing. If that is the Government's position, it would certainly be worth while to have that recognition placed on public record.
It may be that the Minister will have to say that that is not the appropriate time or there is not sufficient time to incorporate an amendment into the Bill. However, perhaps he will bring us up to date on where matters stand after that apparently useful meeting with Mr. Nigel Griffiths. I have no doubt that a large number of people and concerns would welcome such a statement from him.
11 p.m.
Lord Haskel: My Lords, as other noble Lords have pointed out, we discussed this matter in great detail in Committee. Then, as today, we have heard a range of opinions and I am grateful to noble Lords for giving us the benefit of their experience in this matter and for explaining to us their views about lookalikes. Clearly, it
524
is important that a consensus is reached on the need to change and, if so, on the extent of any change. There obviously is a divergence of opinion and we have heard that reflected in the Chamber this evening.
These amendments would add a substantial new dimension to the Bill. They would create new rights and remedies which are far more extensive than those which owners of existing intellectual property and similar rights already possess. Under the guise of unfair competition they will widen the rights of the owners of such rights, amongst other things, to exclude their competitors from offering products that are similarly got up but not so as to confuse the consumer. I am not sure that the noble Lord. Lord McNally, is right when he says that his amendment will advance the cause of competition.
Amendment No. 209C in particular goes well beyond providing protection for branded goods from lookalikes. In effect it covers virtually any commercial activity which lessens or would be likely to lessen the distinctive character or advertising value even of the appearance or the presentation of a product or service. This would create a new right of action of an extremely wide scope. Much has been made of the confusion that consumers might suffer as a result of the practices which these amendments are designed to address. However, these amendments would create rights of action whether or not the act or practice causes confusion.
These amendments would effectively make redundant almost all existing trade mark legislation because of the much larger range of activities that would be actionable than is currently the case. Indeed the UK might find itself out of step with other member states in granting greater protection to registered trade marks than is provided under the EC Trade Marks Directive. Clearly, the implications of this need to be considered very carefully, in particular the impact that the adoption of very rigid unfair competition laws would have on the consumer. It is therefore important that all parties are given the opportunity to put their views forward.
Nevertheless the Government recognise the concerns which brand owners have expressed about the current remedies available to protect their products. The noble Lord is quite right: following the debate on this issue at the Committee stage, the Competition and Consumer Affairs Minister, Mr. Nigel Griffiths, met representatives of the British Brands Group and another trade group, Anti Copying in Design, which has similar concerns.
While it remains our view that this Bill is not an appropriate vehicle to deal with this issue, it has been agreed that those two groups will make further representations to Ministers on this matter. These groups are in touch with officials. I should again point out that there is not a consensus on this issue; in particular the Government are concerned to ensure that the interests of the consumer are fully represented and considered.
Opportunities to discuss unfair competition have also arisen since the Trade Marks Bill was debated in 1994, notably before the Standing Advisory Committee on Industrial Property. That committee has not

525
recommended that there is a need for unfair competition legislation. The committee is continuing to review the issue as further evidence is presented.
I hope noble Lords will see that we are prepared to explore with the industry and consumers the appropriate response to the concerns that have been raised this evening. Meanwhile, there are effective remedies in common law and under the Trade Marks Act 1994 where confusion is caused in the mind of the consumer. I gave examples in Committee. Lookalikes in the form of the alleged imitation of packaging can be dealt with by the common law tort of passing off, which has proved effective. I referred to the Penguin v. Puffin case.
As I have said, these amendments in any instance would go well beyond the issue of defining unfair competition as acts or practices which would cause confusion to consumers. Given this, as well as the lack of consensus on what, if any, further remedies are needed in this area, and the Government's willingness to consider the representations I mentioned earlier, I invite the noble Lord to withdraw his amendment.
Lord McNally: My Lords, I am grateful for the support I received from the noble Lord, Lord Islwyn. Also, but for a bereavement, my noble friend Lady Hamwee would have been here this evening to speak in my support.
Picking through the Minister's reply, there were signs of some encouragement and some movement on this issue. I cannot agree with the noble Baroness on this. The amount of effort that goes into imitating a brand into which tremendous investment has already poured is the give-away. The own-brand products of the supermarkets stand and stand (I almost said "fall") because they are quality products based on the name of the supermarket. For example, people associate the names Tesco and Sainsbury with quality. We do not object to that. We are objecting to what has always seemed to me to be quite blatant passing off.
The Minister has gone through his brief pointing out that there have been attempts at legislation and that there are opportunities in the courts. I did receive one "behind the chair" intervention from the Government Chief Whip, which in the circumstances either reveals the horrid reputation I have in this House or his own suspicion. He asked me whether I intended to divide the House. Ministers already know that my interventions are meant only to be helpful in making progress so far as this Bill is concerned. I know that at five minutes past eleven the Minister is already considering whether there are not better ways of earning a living, such as running an international oil company. So in those terms and in the light of the noble Lord's reply, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 209B to 209D not moved.]
Clause 67 [Offences by bodies corporate etc.]:
Lord Haskel Lord Haskel moved Amendment No. 210:
Page 36, line 18, leave out from ("under") to end of line 19 and insert ("any of sections 41 to 43, 53(8) or 62.").
The noble Lord said: My Lords, e have already considered this amendment. I beg to move.
On Question, amendment agreed to.
Clause 68 [Crown application]:
Lord Haskel Lord Haskel moved Amendment No. 210A:
Page 37, line 8, at end insert—
("(3A) If, in respect of a suspected infringement of the Chapter II prohibition or of the Chapter II prohibition otherwise than by the Crown or a person in the public service of the Crown, an investigation is conducted under section 25—

(a) the power conferred by section 27 may not be exercised in relation to land which is occupied by a government department, or otherwise for purposes of the Crown, without the written consent of the appropriate person; and

(b) section 28 does not apply in relation to land so occupied.

(3B) In any case in which consent is required under subsection (3A), the person who is the appropriate person in relation to that case is to be determined in accordance with regulations made by the Secretary of State.
(3C) Sections 60 and 61 do not apply in relation to land which is occupied by a government department, or otherwise for purposes of the Crown, unless the matter being investigated is a suspected infringement by the Crown or by a person in the public service of the Crown.
(3D) In subsection (3C) "infringement" means an infringement of Community law relating to Article 85 or 86 of the Treaty establishing the European Community.").
The noble Lord said: My Lords, I have already spoken to this amendment. I beg to move.
On Question, amendment agreed to.
Lord Haskel Lord Haskel moved Amendment No. 210B:
Page 37, line 15, at end insert—
("() Any amendment, repeal or revocation made by this Act hinds the Crown to the extent that the enactment amended, repealed or revoked hinds the Crown.").
On Question, amendment agreed to.
Schedule 12 [Minor and Consequential Amendments]:
Lord Haskel Lord Haskel moved Amendment No. 210C:
Page 84, line 40, at end insert—
("() In section 81 (procedure in carrying out investigations) —

(a) in subsection (1) —

(i) in the words before paragraph (a), omit from "and the Commission" to "of this Act)";

(ii) in paragraph (b), omit "or the Commission, as the case may be," and "or of the Commission";

(b) in subsection (2), omit "or the Commission" and "or of the Commission"; and

(c) in subsection (3), omit from "and, in the case," to "85 of this Act" and "or the Commission, as the case may be,".").

On Question, amendment agreed to.
Lord Haskel Lord Haskel moved Amendment No. 210C:
Page 85, line 18, at end insert—
("() In section 135(1) (financial provisions)—

(a) in the words before paragraph (a) and in paragraph (b), omit "or the Commission"; and

(b) omit paragraph (a)." ").

On Question, amendment agreed to.
[Amendment No. 211 had been withdrawn from the Marshalled List.]
Lord Haskel Lord Haskel moved Amendment No. 211A:
Page 85, line 21, at end insert—
("The Estate Agents Act 1979 (c. 38)
. In section 10(3) of the Estate Agents Act 1979 (restriction on disclosure of information), in paragraph (a)—

(a) omit "or the Restrictive Trade Practices Act 1976"; and

(b) after "the Coal Industry Act 1994", insert "or the Competition Act 1998".").

The noble Lord said: My Lords, I shall speak also to Amendments Nos. 211B, 212A, 223A, 223B and 223C. These are minor consequential amendments. I beg to move.
On Question, amendment agreed to.
Lord Haskel Lord Haskel moved Amendment No. 211B:
Page 88, line 9, at end insert—
("The Consumer Protection Act 1987 (c. 43)
. In section 38(3) of the Consumer Protection Act 1987 (restrictions on disclosure of information)—

(a) omit paragraphs (e) and (f); and

(b) after paragraph (o) insert—

"(p) the Competition Act 1998." ").
On Question, amendment agreed to.
[Amendment No. 212 not moved.]
Lord Haskel Lord Haskel moved Amendment No. 212A:
Page 89, line 16, at end insert—
("The Cool industry Act 1994 (c. 21)
. In section 59(4) of the Coal Industry Act 1994 (information to be kept confidential by the Coal Authority) —

(a) omit paragraphs (e) and (f), and

(b) after paragraph (m), insert—

"(n) the Competition Act 1998."").
On Question, amendment agreed to.
Schedule 13 [Transitional Provisions and Savings]:
Lord Morris of Manchester Lord Morris of Manchester moved Amendment No. 213:
Page 91, line 21, after ("determined") insert—
("(a) in the case of proceedings under the RPA, before the date of enactment; and
(b) in the case of proceedings under the RTPA,").
The noble Lord said: My Lords, I beg to move the amendment standing in my name on the Order Paper.
While it may be helpful for me very briefly to recall the case for this group of amendments, I shall not, of course, repeat tonight the arguments with which I commended these amendments to your Lordships' House in the short debate made possible by my paving amendment to Clause 1 of the Bill on 9th February.
What was established then, by speeches from all parts of the House, was that this Bill will determine whether community pharmacy has any future in Britain. Independent researchers have shown that as many as 3,000 local pharmacies are today barely viable. But if Retail Price Maintenance (RPM) on over-the-counter medicines was abruptly to end, thousands more would
528
face closure at a time when the public service they provide has never been more important to local communities, more especially to millions of elderly and disabled people, mothers with small children and the less well-off with no private means of transport, who rely so crucially on their chemists' shops.
The tabling of the amendments had two purposes. Briefly stated, the first was to stay the Director General of Fair Trading's legal proceedings under the old Act: for not to do so would put community pharmacies in double jeopardy. My second purpose was to secure RPM for over-the-counter medicines for a minimum 5-year period of transition before it could be tested by the director general under the new Act, so as to provide time for a proper analysis of the pharmacy market; to allow community pharmacies to develop their role in the Government's healthcare agenda; and to facilitate due consideration of the effects of the large and growing body of European case law.
In response to the wide-ranging support given to my amendments on 9th February, my noble friend the Minister undertook to look sympathetically at the case for RPM to be granted for a minimum 5-year transitional period once his Bill comes into force. He has been as good as his word and I am most grateful to him for tabling his amendments, thus making it possible for me not to press my amendment on the issue. In 34 years at Westminster I have rarely known a Minister go to so much trouble both to consult and help a parliamentary colleague.
There still remains, however, the highly important issue of staying, for a limited period, the legal proceedings which have now been commenced by the director general under a law that, not improbably, will be replaced on the day the court action is concluded. The director general would then have a second opportunity to litigate under the provisions of the new Act. That classically is double jeopardy and is what my amendments to Schedule 13 sought to avoid. For their part, not surprisingly, the community pharmacists want the case for RPM to be tested only once, under the new law, and against up-to-date criteria for determining the public interest.
They have overwhelming public support, as the MORI poll demonstrates, and already 108 Members of another place, of whom 99 are Labour Members of Parliament, have put their names to an Early Day Motion supporting the community pharmacists. It is worth stressing as well that to force the closure of thousands of community pharmacies would be to act in flat contradiction of the Government's stated policy of promoting small businesses. For so many such businesses to be forced to close to the advantage of big business is also surely both socially and morally indefensible.
But there has now been an ugly and disquieting new development in relation to my amendment on staying the director general's legal proceedings under the old law. In Last Thursday's Evening Standard it was reported that:
"The Office of Fair Trading today launched a fierce rearguard action as the drugs industry scented victory in its fight to keep price-fixing for over-the-counter medicines.

529
"The House of Lords was set to debate an amendment to the Competition Bill … which, if passed, would enshrine price-fixing in law for non-prescription drugs.
"Last month the OFT launched legal action in the Restrictive Practices Court to have price-fixing for drugs outlawed—although the case will not be heard until next year at the earliest. If the amendment successfully passes through Parliament the legal action will automatically fail.
"The director general, John Bridgeman, set out to lobby peers, concerned that in the past the Labour Party had supported the pharmacists' case for keeping the status quo. Last year there was cross-party backing in the House of Lords for exempting pharmacists …"
The newspaper goes on to report the director general as directly implying that the "drug giants" are behind my amendments, even although they sell medicines as readily to hypermarkets as they do to local pharmacies, and quotes him as saying that,
"drug companies are among the biggest spenders on advertising",
as if our debate tonight was one between drug companies and the consumer.
I most strongly repudiate the suggestion of involvement by drug companies of any size in the drafting or tabling of any of my amendments. I am not retained by the drug companies or by anyone else, nor have I ever been retained by any drug company, large or small, giant or dwarf, in all my years in Parliament. My commitment is to community pharmacy and the most vulnerable of its customers. If the Evening Standard report is accurate—and I have seen no attempt by Mr. Bridgeman to correct what it says—I have been very seriously misrepresented; and indeed in the view of experienced parliamentarians who have discussed it with me, the report is grossly contemptuous of your Lordships' House. Mr Bridgeman's remarks are at once partial and unfair and constitute a blatant and unprecedented attempt by a public official to intervene in the parliamentary process.
His remarks also imply that those who support my amendments are seeking special protection. They are not. In fact they fully accept that community pharmacy should ultimately have to make its case under the provisions of this Bill after it becomes law. But they believe that the director general's action in bringing proceedings under an Act that is about to be repealed and replaced by new legislation is oppressive and unjust.
It is demonstrably wrong for Mr Bridgeman to suggest that these amendments are either inspired by, or aimed at supporting, the drugs industry. It is wrong for him to quote as a fact, and then exaggerate, an assumption made in one study, which is completely baseless, that price-fixing costs consumers
"at least £180m per annum".
It is also wrong for him to say that pharmacy is seeking special protection when it is simply seeking to argue its case once, under this Bill's provisions, and thus to avoid double jeopardy. And it is wrong again to suggest that the British public pay too much for their medicines, when in fact local pharmacists can help them to get the right medicine at the right price, together with good advice.
I am reminded of Lloyd George's famous dictum that war is too important to leave to the generals. Those who know most about Lloyd George's private life might say that there were some things too important to leave to Lloyd George. But we must profoundly hope that what Mr. Bridgeman has now done will not have influenced too many people to conclude that fair trade is too important to leave to the Office of Fair Trading.
Clearly, his attempt to influence this debate ill-becomes a public servant and merits comment from the department. I trust that my noble friend shares my concern about its implications and am sure that he appreciates how strong and genuine feeling is in this House and beyond about allowing the director general to continue, at vast expense to the public purse and to small businesses alike, with legal proceedings that are so widely regarded as a waste of public money.
If the Minister is unable to respond conclusively tonight to my amendment on staying those proceedings—I know that he is still in dialogue about it with colleagues in other departments—I urge him and them, when they are free to act, to do so as parliamentary and public opinion want and expect them to do. In that regard I can hope for no better outcome than that, when we come to Third Reading and the need then for a definitive decision from this House, my noble friend will be seen to have done as well for us as he did in satisfying the call for a five-year transitional period under the new law. I beg to move.
Lord Fraser of Carmyllie: My Lords, I can deal briefly with this amendment. First, I say to the noble Lord, Lord Simon, that the next group of amendments also deal with issues of community pharmacy—Amendments Nos. 215 and 216. I indicate to him now that I shall not move those amendments when we reach the next group.
Briefly, I should like to offer a number of observations. I certainly do not believe that this is an appropriate time—almost the last group of amendments on Report—to be dealing with something which the noble Lord, Lord Morris, is right in describing as an issue attracting a great deal of concern in the wider world. As he also pointed out, that concern is also felt in another place where over 100 Members of Parliament signed an Early-Day Motion indicating their concern for the continued existence of community pharmacies.
Perhaps I can also place on record that I have known the noble Lord in another place as well as here, and I do not suppose that we will always agree on political issues. However, the idea that the noble Lord would table amendments and spend the time that he has for any purpose other than pursuing the belief and desirability of maintaining community pharmacies is an outrage. If that is indeed what Mr. Bridgeman told the Evening Standard, I hope that he will retract it. It would seem to me that, for an admired public servant, for once he has lost a sense of objectivity and ought to reflect carefully on the matter.
All I say to the Minister is that I do not believe it to be necessary or appropriate for him to give a full reply tonight. I simply want to indicate that, rather than

531
pursuing the line of amendments in my name on the Order Paper, we will look to him coming back with amendments to meet the full case advanced by the noble Lord, Lord Morris of Manchester. That is not in the nature of a threat; it is in the nature of a proper response to public demand that if we do not obtain that reply the noble Lord should anticipate that we shall certainly want to test the will of the House when we return at Third Reading.
Finally—this is not a complaint addressed to the Minister—I have said repeatedly that it is not a matter of competition policy that concerns us; it is a matter of the Government's declared health policy. It is a good health policy. If the noble Lord is again going to reject the amendments moved by his noble friend Lord Morris of Manchester, I hope that we shall see on the Government Front Bench health Ministers so that we can look them straight in the eye and discover whether or not they truly believe that what they are asking their noble friends to vote for coincides with the policy which the Department of Health truly believes to be the correct one.
Lord Graham of Edmonton: My Lords, I rise to support my noble friend Lord Morris. I am sure the Minister senses that this is one of those issues on which one has to take a direct and focused point of view. As I said earlier, I am concerned as a consumer and as someone interested in retailing about the inevitable way in which small shops have been gobbled up by the big ones. I declared an interest then, as I do now, in the Co-operative movement. We are the proud possessors of big shops as well as little ones. But when one looks at what has happened on the high street of the village or the small town, one cannot help but come to the conclusion that if one lifts the protection for the small community pharmacy there will be closures.
The figure of 3,000 has been quoted, which seems too precise to be true. Whether that figure will stand up remains to be seen. In the town of Loughton in Essex there is one very large supermarket, Safeway, a company for which I have the highest respect. In the high street there are two or three chemists, one of which is a Co-op chemist. If the supermarket is allowed to reduce the charges, the Government may say, "This is what competition is all about—to reduce the cost to the consumer." I think that Parliament is about more than simply reducing the cost. It ought to be about protecting the consumer. Medicines are not like pounds of cheese, the cogs of wheels or newspapers. The Government should take on board that medicines are in a special category. Very often the small pharmacy is looked upon by its users as a place in which they can have confidence. The pharmacist gives advice freely and serves the community well.
I noticed in the newspaper today that Asda has placed a large advertisement asking that the amendments be rejected. Asda believes in what it calls "fair prices." I read that to mean "fair profits." Big companies like Asda are motivated almost completely by the desire to become bigger and bigger and more profitable. Inevitably, that is at the cost of the small businessman or consumer.
532
I do not demur from anything said by my noble friend or by the noble and learned Lord, Lord Fraser. The Minister has time to reflect on finding some means to satisfy the House. The Minister has gone a long way. I believe that he can go just a little further. It would be a tragedy if the Government got the reputation of believing in removing the barriers to competition but also carried out the long process of eliminating or reducing choice for the consumer. The case that has been made should very much impress the Minister. I look forward to hearing what he has to say.
11.30 p.m.
Lord McNally: My Lords, since the noble Lord, Lord Morris, called Lloyd George in aid in his remarks perhaps I may remind him of the cartoon showing a young Liberal outside a conference calling on people to make love and not war. The old Liberal passing said that Lloyd George did both. But I do not believe that the noble Lord, Lord Morris, need worry about his own reputation as regards some of the remarks that he reported to the House. I believe that he stands far too high for anyone to cast doubts on why he tabled these amendments.
I intervene only briefly because when he raised the matter earlier my colleague, the noble Baroness, Lady Ludford, from these Benches, gave support. We have here a genuine case of the danger of an important policy falling between departments. It is clear that the Department of Trade and Industry, with its push for competition, may not be full square with the Department of Health. It was very interesting when this issue was first raised at Question Time. I believe it was the health Minister, the noble Baroness, Lady Jay, who responded in an inadequate way because she said that these were matters for the DTI. It is not good enough for an issue of such importance as the role of the community pharmacy to shuttlecock between departments without its role in the community being adequately defended.
The noble Lord, Lord Morris, made a powerful case. He has had support from all Benches in this House. I hope that we shall have an assurance from the Minister that if the matter cannot be dealt with fully at this time of night and at this stage of the debate the message will go back firmly into Whitehall that allowing this issue to fall between departments is not good enough. We want a comprehensive response which gives what the public want—a guarantee that the community pharmacy is to be protected in order to fulfil a role which is needed in our community.
Lord Islwyn: My Lords, I applaud the efforts which have been made by the Minister to resolve this issue. I, too, resent the attacks on my colleague and friend, the noble Lord, Lord Morris. He is above reproach. I have always admired his sincerity in espousing so many worthy causes over the years. At all costs we must avoid the closure of local pharmacies. It would be highly detrimental to many communities, as I know from personal experience and through my career in the other place. There are isolated estates with low wage earners

533
and no personal transport. If the local pharmacy was closed they would be highly disadvantaged. The Government should look very seriously at the issue.
Lord Hughes: My Lords, I do not often speak in your Lordships' House nowadays and I have picked a rotten time to depart from my usual rule. At the beginning of these proceedings I indicated an interest and said that I would not speak or take any further part in them. That was based on my experience in local government more than half-a-century ago when the advice was that if one had an interest one could declare it but one must not take any further part. It was not very often that a councillor was in that position. However, recently, two company directors declared an interest in an amendment and then proceeded to vote; so I do not believe that I need deny myself any further.
My experience and knowledge of what takes place in the community pharmacy makes me aware that the fear within such pharmacies of what this provision will do to them is real. I give the example of the over-the-counter sales in a community pharmacy. They represent anything from 25 per cent. to 30 per cent. of its income.
It has been said that anywhere between 25 and 50 per cent. of the total number of community pharmacies might have to close. Their income might diminish by anything from 7.5 to 15 per cent. Few community pharmacies could survive a loss of income on that scale. If they do not survive, people will have to go elsewhere for more than their over-the-counter products because there is also the matter of prescriptions. In many cases, the only other place to go for a prescription is Boots or its equivalent, which can be anything from 10 to 50 miles from some villages. I believe that when we last considered this matter, the noble Lady, Lady Saltoun, spoke of experiences in her area and of having to put people on the bus. However, in many cases, the cost of getting a bus there and back would be more than the saving that might be made by using the supermarket.
I told the noble Baroness, Lady O'Cathain, that I would be referring to what she said in Committee about prices. I apologise to the noble Baroness if that is all that has kept her here at this unearthly hour. If she proposed to be here anyway, so much the better. The noble Baroness said in Committee that a 24-pack of Asprin is sold in supermarkets for 39p while in a community pharmacy Disprin is £1.50. If I can read my own writing, she also said that Nurofen cost £4.69 in a community pharmacy and £1.99 in a supermarket.
I wondered why in the first case the noble Baroness compared Asprin with Disprin, rather than Asprin with Asprin, whereas in her second example she compared like with like, so I made further inquiries. Supermarkets sell such products in packs of 24, which is supposed to safeguard against overdosing. Community pharmacies sell in lots of 100 tablets and they sell 100 for 99p which is equivalent to less than 25p for 24 as compared to the supermarkets' 39p, so there is not much incentive to go to a supermarket to buy Asprin.
534
In the second case, the noble Baroness compared like with like. I am absolutely certain that the prices which the noble Baroness quoted are correct, but sometimes one can quote something which is absolutely correct and yet create a false impression. I wondered why in the second case the noble Baroness compared like with like because the difference was so great. I have found that just as Disprin is an alternative to Asprin, so too the pharmacist has an alternative to Nurofen, Ibuprofen. Local pharmacies can sell that for £1.39. Once again, that is cheaper than the figure quoted for the supermarket.
My noble friends Lord Morris of Manchester and Lord Graham have spoken of all the other advantages of community pharmacies as compared with supermarkets. A case in point which has occurred to me relates to one of the most widely used drugs, which is beneficial when properly used, paracetamol. But two other products can be bought, Lemsip and Night Nurse, which both contain paracetamol. The community pharmacist would tell a customer that if he used both products he should be careful because he might unwittingly overdose. Would a salesperson in a supermarket be in a position to give that advice to a purchaser?
My noble friend referred to the remarks of the director general on the radio. I did not hear them. I do not know what he meant by "considering my position". It is possible that he meant that he would have to consider whether he was doing it the right way. However, it is perhaps more likely that he meant he would have to consider whether he should continue as director general. Considering the impropriety of what he said on the radio, if they have to choose between losing hundreds, perhaps thousands, of local pharmacies or losing the director general, I believe that the public would prefer to see the director general tendering his resignation.
Baroness O'Cathain: My Lords, I certainly had no intention of misleading the House. I saw figures. In my view, aspirin and Disprin are the same. I try to avoid taking either, but there it is. I never for one moment suggested the closure of community pharmacists. I made the point that this was a competition Bill and I could not understand why over-the-counter medicines were the only items subject to retail price maintenance. On a previous occasion the noble Lord, Lord Morris, said that the difference between over-the-counter medicines in a community pharmacy and elsewhere was about 50p. I shall not go into the difference, but I suspect that it is good deal higher than that. If the article in the Evening Standard, which I have only just seen, is true and over-the-counter medicines account for only 5 per cent. of the total turnover of these pharmacies, what are we worried about? We are talking about 5 per cent. If community pharmacies are so valued by members of the community there is no competition problem; the community will support them. I do not believe that the nonsense of having retail price maintenance on certain

535
products should create a problem under the Competition Bill. I believe that the Competition Bill is right and the amendment is wrong.
Lord Simon of Highbury: My Lords, I thank my noble friend Lord Morris both for the charming way in which he has spoken of the efforts that we have made to resolve the real issues that lie behind his amendments and the clarity of his position.
It is worth making one or two points despite the lateness of the hour because these are very important issues, as the noble and learned Lord, Lord Fraser, said. The development of our policy is important. The Government wholly accept the importance of community pharmacies. We fully understand the interests of those who wish to press their arguments. I do not mean "interests" in the wrong sense of that word. I am referring to those who are seriously concerned about the role of pharmacies in health policy. I have said before from this side of the Chamber when speaking for the Government that we fully understand the very important health policy issues in this debate, but they are different from the competition issues. I shall not be drawn into a discussion of health policy at seventeen minutes to the hour. I believe that the issue in competition terms is not whether retail price maintenance in this sector is good or bad, but whether the independent bodies which have been set up to look at such matters under statutory provision should be allowed to do so, or whether the RPM for OTC medicines should be removed from scrutiny under the Resale Prices Act and the Chapter I prohibition in the Bill until 2004. That is the purpose and likely effect of my noble friend's amendments. It is a point to which I shall return with regard to the position of competition in this sector, and. in particular, its European aspects.
My noble friend raised also, correctly, the question of double jeopardy. He then kindly acknowledged that I have been trying to respond to that issue through the government amendments. In looking at the position that we have now reached, I can see the case, although it is not what the Government propose, for saying that RPM of OTC medicines should be considered under the new regime only, in which case it would benefit from the one-year transitional period we are providing for existing agreements. I can also see the case for saying, as we have proposed, that the present action should be allowed to continue to a conclusion, and if the result of the proceedings is that OTC medicines are exempt, RPM on those goods should benefit from a generous five-year transitional period from the Chapter I prohibition.
However, it is difficult to see the case for saying that the present action, seeking a review of the exemption, should be stayed, and that RPM for OTC medicines should benefit from a five-year exclusion. As I said, I shall return to that point in terms of competition law in general.
The existing exemption of RPM for OTC medicines has always been subject to possible review by the court, if there is prima facie evidence of a material change in the relevant circumstances since the court took its decision in 1970. My noble friend's amendments take
536
the opportunity of the Bill effectively to ask whether the practice could be exempt from consideration until 2004. As I have said, we recognise the public interest in a plentiful and well-distributed supply of pharmacies. We would hope, as well as expect, that the court would consider most carefully any evidence that they might be put at risk by the prohibition of RPM.
It is only fair to point out that the director general has studied the issue long and hard, and therefore has proposed a review. I shall not go into the points that he has made in calling for the review. All I will say is that they are clearly serious and important. I shall let the matter rest there for tonight, except to return to a final point—that my noble friend's amendments would obviously prevent proper consideration of them by a court until 2004.
To what avail is that likely to be? I said that I wanted to return to competition law in general, and I have to remind noble Lords that over and above whatever we may provide in domestic competition law, there exists Article 85 of the Treaty of Rome, which is directly applicable in the UK. If RPM for OTC medicines in the UK were to be removed from any form of competition scrutiny under domestic law, it is entirely possible that the Commission would seek to examine it under Article 85.
So I have to warn the House that the consequences of passing the amendments, as tabled by my noble friend, are unpredictable and may not necessarily be to the advantage of the sponsors of the amendments. It would be better were we to leave the matter to be dealt with on its merits by the court, and to provide that if, but only if, the proceedings result in an exemption from RPM for OTC medicines, they should enjoy the benefit of a five-year transitional exclusion from the Chapter I prohibition from the end of the proceedings, and the director should not be able to propose to terminate the transitional period early. That is the double jeopardy issue which I believe will be the effect of the Government's amendments.
Those are the issues that we have been carefully weighing. They are difficult issues, as my noble friend Lord Morris rightly put to us tonight. I commend to your Lordships the approach as tabled in our amendments. We have considered long and hard what are the most appropriate ways forward and what they might be. I hope that my noble friend Lord Morris will agree to reflect further on our proposals and I ask him not to press his amendment at this stage.
Lord Morris of Manchester: My Lords, it is clearly the sense of your Lordships' House as a whole that the Minister should have due time to reflect on what has been said tonight by noble Lords all across the House. My noble friend the Minister's track record encourages me to think that, if anyone can make our case against placing small business in double jeopardy, it is my noble friend. Thus, I am content that my amendment should not be pressed at this stage, so that he can use his best endeavours before Third Reading to achieve acceptance of the amendment, if not in its present terms then in some other form to the same effect. Meanwhile, I strongly urge him, as did the noble Lord, Lord

537
McNally, and others, to emphasise to his colleagues the wisdom of ensuring full and effective co-ordination between Whitehall departments on an issue of such importance both socially and morally. That, too, is clearly seen as a most important consideration by your Lordships on both sides of the House. For those reasons, I shall not be pressing the amendment at this stage.
Amendment, by leave, withdrawn.
[Amendments Nos. 214 and 215 not moved.]
Lord Haskel Lord Haskel moved Amendment No. 215A:
Page 92, line 14, at end insert—
("(1A) There is no transitional period for an agreement, decision or practice in respect of which there are continuing proceedings to the extent to which the agreement, decision or practice is, as a result of those proceedings, void or unlawful.").
On Question, amendment agreed to.
[Amendment No. 216 not moved.]
Lord Haskel Lord Haskel move Amendments Nos. 217 to 217B:
Page 92, leave out lines 27 and 28.
Page 92, line 30, leave out ("and") and insert ("the transitional period is five years.").
Page 92, leave out lines 31 to 33 and insert—
("(5A) In the case of an agreement, decision or practice relating to goods which immediately before the commencement date are exempt under section 14 of the RPA, the transitional period is five years, unless sub-paragraph (1A) applies.
(5B) In the case of an agreement, decision or practice relating to goods—

(a) which at the commencement date are the subject of continuing proceedings, and

(b) which at the conclusion of the proceedings are found to be exempt under section 14 of the RPA,

the transitional period is five years.").
On Question, amendments agreed to.
[Amendment No. 218 not moved.]
Lord Haskel Lord Haskel moved Amendments Nos. 219 to 222:
Page 92, line 39, leave out (" 25(2)").
Page 93, line 9, at end insert—
("() If, by virtue of paragraph 8(5A) or (5B), there is a transitional period for an agreement, decision or practice relating to goods—

(a) which immediately before the commencement date are exempt under section 14 of the RPA, or

(b) which at the conclusion of continuing proceedings are found to be exempt under section 14 of the RPA,

the period is not affected by sub-paragraphs (1) to (5) of this paragraph.").
Page 93, line 21, at end insert ("documents and").
Page 93, line 37, at end insert ("regardless of whether or not it will be exempt").
Page 94, line 3, at end insert ("regardless of whether or not it will be exempt").
On Question, amendments agreed to.
Schedule 14 [Repeals and Revocations]:
Lord Haskel Lord Haskel moved Amendments Nos. 222A and 222B:
Page 95, line 22, column 3, at end insert—

("In section 81(1), in the words before paragraph (a), from "and the Commission" to "of this Act)"; in paragraph (b), "or the Commission, as the case may be" and "or of the Commission"; in subsection (2), "or the Commission" and "or of the Commission" and in subsection (3), from "and, in the case," to "85 of this Act", and "or the Commission, as the case may be,".")

Page 95, line 22, column 3, at end insert—

("In section 135(1), in the words before paragraph (a) and in paragraph (b), "or the Commission", and paragraph (a)."")

On Question, amendments agreed to.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 223:
Page 95, line 34, at end insert—
("1977 c. 37. The Patents Act 1977. Sections 44 and 45.")
The noble and learned Lord said: My Lords, I believe that following the acceptance of Amendment No. 209, the amendment is accepted. I am prepared to stand corrected. I beg to move.
On Question, amendment agreed to.
Lord Haskel Lord Haskel moved Amendments Nos. 223A to 223C:
Page 95, line 34, at end insert—

("1979 c. 38.

The Estate Agents Act 1979.

In section 10(3), "or the 1979. Restrictive Trade Practices Act 1976."")

Page 96, line 44, at end insert—

("1987 c. 43.

The Consumer Protection Act 1987.

In section 38(3), paragraphs (e) and (f).")

Page 98, line 20, at end insert—

("1994 c. 21.

The Coal Industry Act 1994

In section 59(4), paragraphs (e) and (f).")

On Question, amendments agreed to.
Clause 70 [Consequential and supplementary provision]:
[Amendment No. 224 not moved.]
Clause 71 [Short title, commencement and extent]: [Amendment No. 225 not moved.]
House adjourned at six minutes before midnight.

Official Report of the Grand Committee on the Data Protection Bill [H.L.]
Monday, 23rd February 1998.
The Committee met at half-past three of the clock.
[The Deputy Chairman of Committees (Lord Ampthill) in the Chair.]
The Deputy Chairman of Committees (Lord Ampthill): Before I put the Question that the Title be postponed, it may be helpful to remind your Lordships of the procedure for today's Committee stage. Except in one important respect, our proceedings will be exactly as in a normal Committee of the Whole House. We shall go through the Bill clause by clause; noble Lords will speak standing; all Lords are free to attend and participate; and the proceedings will be recorded in Hansard. The one difference is that the House has agreed that there shall be no Divisions in a Grand Committee. Any issue on which agreement cannot be reached should be considered again at the Report stage when, if necessary, a Division may be called. Unless, therefore, an amendment is likely to be agreed to, it should be withdrawn.
I should explain what will happen if there is a Division in the Chamber while we are sitting. This Committee will adjourn as soon as the Division bells are rung and then resume after 10 minutes.
Title postponed.
Clause 1 [Basic interpretative provisions]:
Lord Craig of Radley Lord Craig of Radley moved Amendment No. 1:
Page I. leave out lines 9 and 10 and insert—
("(a) is stored or being processed as text or image by equipment responding to instructions given to achieve those purposes,").
The noble and gallant Lord said: This is a probing amendment to see whether the basic interpretative provisions of the Bill will encompass closed circuit television and similar surveillance systems. The report of the House of Lords Select Committee on Science and Technology on Digital Images as Evidence was published at the weekend. In Chapter 4 of our report we addressed the benefits and concerns we had about the use of closed circuit television and similar surveillance systems in public spaces, which may be defined as sites to which the public have free access.
As the report is only just released, it may be for the convenience of the Committee if I indicate briefly our conclusions and quote the recommendation that is particularly relevant to the amendment. We felt that these surveillance schemes are a very valuable tool for prevention of crime and civil disorder. They will in future be based on digital technology and, unless they are seen to be under adequate control, the broad public acceptance that these schemes now enjoy is likely to be diminished. The Select Committee concluded, on the
CWH 2
evidence that it heard, particularly from the Association of Chief Police Officers, that improved controls were needed.
If these were not put in place, there was a danger that the actions of a few, by, for example, the release of video images for entertainment purposes, could undermine the public consent under which these schemes operate in public places. The controls that the Select Committee thought necessary relate in particular to the release of data and the use of data-matching techniques. In paragraph 5.15 of House of Lords Paper 64 we say:
"We have not made a specific legislative proposal for improved control over public space CCTV systems, but the similarity of our objectives with the current Data Protection Act suggest that this, or its successor [i.e. the Bill before us] might be an appropriate vehicle".
It cannot be often that a Select Committee report and the passage of a piece of legislation relevant to a part of its recommendations coincide. What we are seeking by means of the amendment is to ensure that public space surveillance systems, in particular closed circuit television, are unambiguously within the scope of the proposed legislation before us. Later we shall have an amendment to address the issue of enforceable codes of practice. On that I was interested to hear the Home Office Minister from another place, Mr. Alun Michael, say on Radio 4 that the Government were prepared to approve enforceable codes.
But first, does this Bill cover closed circuit television and similar surveillance systems? We are aware, from evidence given to us by the Data Protection Registrar in the course of our inquiry, that a number of CCTV systems are outside the scope of the 1984 Act. Clause 1(1) of the Bill significantly expands the definition of personal data and the requirement of the earlier 1984 Act that processing should be undertaken solely by reference to the individual. We welcome that, but have three specific reasons for tabling the amendment, apart from seeking confirmation that it is intended to encompass closed circuit television and similar systems.
It is not clear whether "instructions given for that purpose" refer to the processing of information or the automatic features of the equipment involved. The apparent ambiguity needs to be considered.
Secondly, data can, of course, be stored or processed. The definition of processing, at the top of page 2, relates to personal data and includes a reference to the word "holding". Data, whether personal or otherwise can, of course, be stored. Is there a reason for not including in the definition of data the concept of storage? It would be helpful for the Committee to be clear about this aspect of the holding of information. I note that the Minister has down Amendments Nos. 5 to 11 which have a bearing on the definition of data.
I wonder also about the use of the word "automatically" in this clause. Again, it would be helpful to have a clear understanding of the meaning here of "automatically". In our proposed amendment we have not thought it necessary to include it.
In conclusion, we are proposing Amendment No. 1, with its reference to "text or image", to make explicit that closed circuit televisions and similar systems are

CWH 3
within the scope of the Bill. It also allows the Government to consider whether there is any ambiguity in their present wording, to seek clarification of the concepts of storage and holding and to ensure that the intention of using the word "automatically" in this clause is explained. I beg to move.
Lord Flowers: Perhaps I may support the noble and gallant Lord, Lord Craig, as a fellow signatory of the proposed amendment. I support everything he said but have three brief points to make.
In the past, the word "data"—in the context of data processing—has usually been taken to apply only to textual information or perhaps in scientific terms also numerical information. It is an extension of that meaning if it is to apply to images as well. Yet this is not specified in the Bill. Perhaps it would be better if it did so. The proposed amendment remedies the situation explicitly.
The second point I wanted to make was that the noble and gallant Lord referred to information being stored as well as processed. One can argue that the act of storage is itself a process. Whereas that is undoubtedly true, the state of being stored is not. It would, therefore, again be better to be explicit about computers storing as well as processing information.
Thirdly, the word "automatically" suggests to most people that no human intervention is involved. In practice, however, there may be a great deal of human intervention in the processing of data, in the setting of options, the correction of errors, and so on. If the word "automatically" can be omitted, it will remove that confusion. If it cannot be omitted, then it should be explained precisely what it refers to.
Lord Brain: I support the two previous speakers, having participated with them on the committee we have been discussing. I should like to make two slightly different comments. Personal data are often considered to be personnel files held in various different situations. Going back many years, when I was a management consultant, we used to hold on the personal file a photograph of the candidate, or someone like that. That was an image in addition to the text. If the data are to be held electronically, that image will be held electronically. It may have been scanned in incorrectly. On a photograph, if you worked efficiently, you noted the candidate's name and other details. Because scanning an image in does not necessarily have this data scanned off the back, it needs to be available to be checked.
The noble Lord, Lord Flowers made another point briefly, and we heard evidence about this in our committee. Data have to be stored from some source—a camera, a scanning device, or from where they have been typed in indeed—before they can be processed. I therefore support also the addition of the word "storage". I shall not cause further confusion by discussion the word "automatic".
Viscount Astor: My two amendments, Amendments Nos. 2 and 3, are grouped with the noble Lord's
CWH 4
amendments. Amendment No. 2 is a probing amendment. There has been some difference of opinion in the past between the Home Office and the Data Protection Registrar as to what constitutes manual data. I notice that the registrar earlier last month said she wished there would be a clearer definition of "manual data" that would be covered by the new Act. I wonder whether the noble Lord, the Minister, will be able to tell us whether the registrar and he now agree what the definition of "manual data" will be under the Act. Perhaps he could elucidate that point.
My second amendment covers the same subject as that put down by the noble Lord: CCTV. I read the EC directive and, paragraph 14 clearly states that,
"in the framework of the information society, of the techniques used to capture, transmit, record, store or communicate sound and image data relating to natural persons, this Directive should be applicable to processing involving such data."
The directive clearly says that image data refers to that. It seems to me that there is an intention by the directive to cover CCTV. This is an expanding world and there are CCTV cameras all over the place, whether they are used by government agencies, the police, the highways agencies or shops, for example. We know that they can now be used to match records. It is done by government agencies, but it could equally be done by the supermarket wishing to check whether it was the same person who came in once a week. Using a computer, you could look at the pictures of all the people who came in and match them. It seems that this should be included under the Bill, and the noble Lords have made a powerful case.
3.45 p.m.
The Parliamentary Under-Secretary of State, Home Office (Lord Williams of Mostyn): If I may, I shall speak to Amendments Nos. 1, 2 and 3. Would Members of the Committee allow me a general observation before I begin? I said at Second Reading, and we have affirmed it subsequently in correspondence with a number of noble Lords and indeed a number of organisation who have written to the Home Office and to officials, that we want to make the best fist we can of this Bill. In order to achieve that, I would gently ask that amendments are put down in a reasonable time. We had 60 on Friday, and although the Bill team is very expert, it is not enormous and to ask officials to work all night and all weekend does not produce the best outcome in terms of responses that we can provide. We have met with co-operation from everyone to whom we have spoken. I recognise that sometimes interest groups tend to bombard one late on Thursday or early on Friday morning, because they have not done the work that they are in this world to do; not in any event with promptness.
Dealing with these particular matters, it is a felicitous coincidence, as the noble and gallant Lord said, that the report of the committee came out just at the time that we were about to discuss these matters. One or two questions relate more to Amendment No. 13, which concerns personal records, and perhaps it is convenient if I deal with those when we come to that amendment.

CWH 5
I understand well the importance, and indeed the topicality, of CCTV systems. There is a great and proper concern about CCTV and the invasion of privacy which it offers, and the possible abuse of information privacy which it threatens.
A number of noble Lords spoke of CCTV. The noble and gallant Lord correctly pointed out that the committee concluded that further controls over such systems were required, and wondered whether the Bill might be the appropriate occasion. Quite plainly, therefore, and I am grateful for the explanation, the purpose of this first amendment is to ensure that digital images are caught by the Bill. I hope I can reassure the Committee that the amendment is unnecessary, because such images are already caught by the Bill and, indeed, Amendment No. 1 might in fact reduce the coverage of the Bill.
In Clause 1(1)(a), data are defined as information which:
"(a) is being processed by means of equipment operating automatically in response to instructions given for that purpose".
The reason that the word "automatically" is inserted there is to differentiate between manual processing, which is covered by different rules. There is no doubt in our mind that,
"operating automatically in response to instructions given for that purpose",
covers text or image, and storage and other processing. Indeed, the description of data is set out in Clause 1(1)(a) on page 1 and at the top of page 2 the Bill states that,
"'processing', in relation to personal data, means obtaining, recording or holding the data".
We have no doubt that that includes storage.
I agree with the proposition that the present Data Protection Act 1984, because of the limitations of definition within it relating to personal data and the requirement, as one noble Lord indicated, for processing to be undertaken by reference to an individual, is not as wide as our present scheme. We have deliberately wished to expand the definitions. "Processing", as I said a moment or two ago, covers storage. We believe that the new definitions are broad enough to catch not only sophisticated types of CCTV but much simpler equipment also, for example the sort of equipment which merely projects images of individuals passing a shop into the shop window, without recording those images.
The reason I suggest that the amendment would reduce the coverage of the Bill is that, if one limits the definition of data to information which is being processed as text or image, it is arguable whether that would cover the processing of binary codes by computer. We believe that it certainly would not cover some other forms of information processing such as radio waves.
I hope that explanation is of assistance, and I shall turn briefly to Amendments Nos. 2 and 3 in the name of the noble Viscount, Lord Astor. His Amendment No. 2 would provide that only information which was recorded as part of a relevant filing system, or with the intention that it should form part of such a system, for
CWH 6
the purpose of the processing would be regarded as data. That assumes, we believe, that the recording and subsequent holding of information does not itself constitute processing. As I sought to indicate a moment or two ago, that is not the case because of the definition in Clause 1, which encompasses obtaining, recording, holding, retrieving or even the destruction of data. I hope that is of assistance and is consistent with the spirit of the noble Viscount's probing amendment.
Amendment No. 3 would make it explicit that information,
"recorded by camera or video surveillance",
falls within the definition of data. We believe that to be unnecessary. I have indicated the reason earlier. The definition of data incorporates all information processed by means of equipment operating automatically or recorded with the intention that it should be processed by means of such equipment. We believe that recording of information by camera or video surveillance already falls within the definition of data, and I hope those explanations prove helpful.
Viscount Astor: I should like to thank the Minister for his reply. But I wonder whether perhaps he could answer one question. I quite accept the answer he gave to my Amendment No. 2. Does that mean that he and the Data Protection Registrar are now in agreement, as it were, as to what constitutes manual records?
Lord Williams of Mostyn: That was my rather delphic coded reference to Amendment No. 13. The present position, as I believe I indicated at Second Reading, is that discussions are still continuing between officials in the Home Office and the Data Protection Registrar, and indeed others. The specific answer is, first, that it relates to Amendment No. 13, and, secondly, that no definitive conclusion has been arrived at.
Lord Craig of Radley: I am grateful to the Minister for his explanations and views, which I should like to study with care. The concept that "automatic" is the obverse of "manual" seems to be one point, with "holding" being absolutely identical to "storage". I take it at this stage that more thought is necessary, and on that basis I seek leave to withdraw my amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 2 and 3 not moved.]
Lord Williams of Mostyn Lord Williams of Mostyn moved Amendment No. 4:
Page 1, line 29, at end insert ("and any indication of the intentions of the data controller or any other person in respect of the individual").
The noble Lord said: Amendment No. 4 is now grouped with Amendments Nos. 5 to 11, 12, 14 and 16, and I will speak to the amendments in that group if I may. Our purpose in Amendment No. 4 is to seek to put it beyond doubt that the definition of personal data includes indications of intentions towards data subjects. The definition in Section 1(3)of the Act of 1984 says in terms that indications of the intentions of data users towards data subjects are excluded from the definition of personal data. The data protection directive does not allow such exclusion to be maintained.
We have tried to make that clear in our July 1997 White Paper. We originally thought that no express reference to indications of intention was needed, but having thought about it further we believe it would be better to put the matter beyond doubt on the face of the Bill, and that is the purpose of the amendment. This is not a change of policy, but we thought we had better make compliance with the requirements of the directive clear beyond any doubt. There is no change of substance; it is a cautious approach.
Amendments Nos. 5, 6, 7, 8, 9, 10 and 11 are technical amendments to ensure that we have the basic building blocks of the Bill correct. Essentially the Bill is about processing information about people. "Processing" means doing anything with that information, from collection right through to destruction. The definition of "processing" is presently expressed by reference to personal data, and that means that the definition of "data" earlier in Clause 1 does not work properly. Therefore the first amendment corrects the reference by substituting "information or data" for "personal data". The following amendments change later references to "data" to "information or data".
If one looks at the definition of "data" on page 1 of the Bill, your Lordships will see that "data" means information which is dealt with in one of a number of different ways, so at various points in the cycle of the process the raw product, if I may call it that, may be either information or data, and we simply introduce these amendments in order to cater for both possibilities.
Amendment No. 12 is in the name of the noble Earl, Lord Northesk. I am not entirely sure at this stage—I am sure it is my deficiency—what the purpose of the amendment is. We think that it is to provide an exception from the definition of processing given in the Bill for the processing of personal data which forms back-up data. We considered at some length whether we could provide an exemption for back-up data such as is to be found in the 1984 Act. However, we cannot see that the directive allows us to make such an exemption. In practice, we anticipate that it may be quite rare that a data subject will want access to back-up data, and there is nothing to stop a controller confirming that a data subject wishes only the most recent records. But if, rarely, a data subject desires access to a set of records, we cannot see any immediately persuasive basis on which that may be properly denied. The question of subject access fees of course falls to be settled in subordinate legislation.
I hope that is a helpful pre-rejoinder, since the noble Earl, Lord Northesk, has not said anything about his amendment, but it may have been convenient that I set out our position there.
The last two amendments in this grouping are Nos. 14 and 16. Amendment No. 14 is in the name of the noble Viscount, Lord Astor. We are bound to implement the directive, which means in turn that we are bound to provide a very wide definition of what makes data personal data. We have done our best to put that definition as tightly and tautly as possible.
The directive also has a very wide definition of what is "to process data", which includes disclosing it, and that is why we have disclosure in the Bill's definition of processing. If a data controller discloses personal data as we have defined it, then we are obliged by the directive to treat that as a disclosure to which the regime applies; we do not see that we have an option to do otherwise.
If information identifying the data subject is unlikely to come into the hands of the recipient, those data will not qualify as personal data in the hands of the recipient for that reason, and will therefore not be subject to the data protection regime to that extent. We do not see any basis in the directive which would allow us to deem disclosures not to be disclosures in the way suggested by the amendment. Again, I hope that has been helpful.
We believe that there is a logic to the conclusion to which the directive points us. A data controller may find it quite hard to know what information is likely to come into a recipient's hands. He may have little control over what a recipient does with the data, but the directive suggests he should minimise the risks by complying with the data protection principles.
The last amendment in this group is Amendment No. 16, again in the name of the noble Viscount, Lord Astor. We do not believe that the amendment is strictly necessary, though we are not out of sympathy with its underlying purpose, which we take to be the clarification of who the controller is in the case of messages sent by telephone or on systems like the Internet. I think I am right in saying that the approach in the amendment follows that in Recital 47 in the directive. The effect crudely would be that if I used the Internet to send a message, I, not the Internet service provider, would be the controller for any personal data contained in my message, but the Internet service provider would be the controller for any personal data used in the system underpinning the message. The distinction is there, and it is understandable when one sits down with a wet towel for some hours and a bucket of black coffee—so I am told!
We believe, therefore, that the definition of data controller in Clause 1 already has the desired effect. When I send my message on the Internet, I determine the purpose of the processing—that is, the reason for my sending the message—and the manner of the processing—that is, the Internet. The Internet service provider has no part in the determination of the purpose of the process, so he cannot be controller for the message content. However, he does determine the process and manner of processing of any personal data used in the support of the message—for instance, if I am to be billed for use of the service. In the billing context, the service provider is the controller, not I who simply use the service that the service provider provides.
We think, therefore, that our definition achieves the effect which we believe to be the purpose behind the amendments. Those are the words that I wish to offer to the Committee in respect of that group.
4 p.m.
The Earl of Northesk: I am grateful to the invitation from the Minister to clarify Amendment No. 12, which is in this group. In essence, I am trying to tease out an issue that I raised at Second Reading. As I attempted to explain at that time, a great deal of computer software has been designed to conduct a series of routine operations in the background without any specific input being required of the user of the programme or—this is the key point—without his necessarily being aware that they are being carried out. For example, mail merge functions could be interpreted as falling into this category. Over coming years, if not months, programmers will be designing more and more macros to facilitate repetitive and laborious computer operations and building them into commercial software.
One example I cited at Second Reading was that of e-mail programs. As a matter of course these are frequently designed to generate a number of personalised fields in the headers which fall within the definition contained in Clause 1 of the Bill. That being so, it is possible that anyone using an e-mail programme, except in so far as the exemptions in Part IV of the Bill apply, will qualify as a data controller and/or a data processor within the terms of the Bill.
Of course, for large organisations, either public or private, this may not be a particular problem. The data processing operations of such bodies will almost certainly be subject to the provisions of the Bill for other legitimate reasons in any event. I am much more concerned about the burden that this could impose upon individual users of such programs. For example, it is entirely possible that a sole trader or a self-employed person, without otherwise processing data within the terms of the Bill, may be using e-mail as a preferred means of business communication with contacts elsewhere in the European Union. As currently drafted, and if I understand it correctly, the Bill could require such persons to be subject to its notification provisions. In effect they would require a form of permission before being allowed to conduct their business and/or communicate with colleagues. Indeed, much the same could be said of Members of Parliament who use e-mail in pursuit of their duties.
Equally, this raises awkward questions with respect to e-mail communication with third-party countries. More generally, it is conceivable that the Bill could be applied to all Internet traffic, not just to e-mail, because of the way in which relevant software programmes process data in the background—again, essentially without the knowledge of the user. Inevitably this particular aspect will become increasingly significant as digital television and set-top-box technology comes on screen. It may or may not be a good thing to have inadvertently stumbled upon a mechanism that has potential in terms of regulating the Internet but, to my interpretation, this is outwith the purposes of the Bill as defined in the Long Title.
Thus the attempted purpose of the amendment is to exclude these forms of background processing from the provisions of the Bill. Of course, I acknowledge that my drafting leaves a great deal to be desired. Nor am I
CWH 10
wedded to using this particular route to resolve the problem—if indeed there is a problem here. I hope that the Minister will clarify that and other points I have raised in due course.
In passing, I do not wish to embarrass the Minister, particularly bearing in mind his gracious opening remarks, but I should perhaps mention that I wrote to him about this point on 5th February, seeking clarification on a number of other matters. It is perhaps regrettable that I have not yet had a reply to that letter.
Viscount Astor: It may be convenient if I speak to Amendments Nos. 14 and 16. I can only half thank the Minister for replying in advance to my amendment. I had rather hoped to ask him a series of difficult questions about Amendments Nos. 14 and 16, but he has asked me a whole series of difficult questions about my amendment. Unfortunately, I do not have the hot towel, the coffee, or any of the support that is needed.
Perhaps I could start in reverse order, because that is the question I remember better. My concern, as the noble Lord rightly surmised, was that telecommunications operators should not be considered the data controller for personal data which are carried as part of a message. As the noble Lord said, this is provided for in paragraph 47 of the directive, to ensure that anybody who is just providing a service would be exempted, if I understood him. It is only those who were providing a service who were not only sending the data but in some way processing them who would therefore be caught. That is what I understood from the noble Lord. Therefore, for example, if British Telecom or any other Internet provider provides the lines, it is not a controller: it is just using the lines and therefore it is not caught. I am grateful for the noble Lord's clarification on that.
On Amendment No. 14, about anonymous information, I am rather concerned by the noble Lord's reply. In the directive, paragraph 26 is clear. It says that:
"The principles of protection shall not apply to data rendered anonymous in such a way that the data subject is no longer identifiable".
I accept what the Minister said, but I feel that the Bill is weak in making that clear. I wonder whether there is some way in which we can ensure clarity. Information will be used for statistical and research purposes and it would be a pity if that information could not be used because there were worries on this issue. I wonder whether between now and the next stage the Government could address the issue and come forward with a solution to clarify it on the face of the Bill. I entirely accept what the noble Lord says are the intentions. However, I am not 100 per cent. convinced that this is clarified in the Bill as it stands.
Baroness Nicholson of Winterbourne: I have a comment on Amendment No. 16. We have not heard the last of the need to address the problems of personal privacy on the Internet. The Commissioner, Mr. Mario Monti, of the Internal Market and Financial Services, announced last week that he will be seeking from the Council of Ministers a possible brief to negotiate on the drafting of guidelines for the protection of individuals

CWH 11
with regard to the collection and processing of personal data on the information highways. He has stated that, while working on this in the Council of Europe, he believes he should ensure that the work is of a comparable level of protection with Directive 95/46EC, and does not interfere with its implementation. He goes on to say that he believes the Commission should pay particular attention to a number of quite stringent points. My own view, for what it is worth, therefore, is that while we may believe that we make up our minds on this, it will end up in a holding position while we await yet another directive.
Lord Williams of Mostyn: The noble Baroness may well be right, and I make my response to her comment on Amendment No. 16. We sought to get the balance as safely as we can. It may well be that circumstances will make us take a different view.
Let me say how sorry I am that there has been any apparent personal discourtesy in respect of the noble Earl, Lord Northesk. I gave particular instructions that the letter was to be delivered to him before we began this Committee in the Moses Room. I know that I have signed it and it may well be on its way. But it is extremely unsatisfactory and I can assure not only the noble Earl but the Committee that I intended no discourtesy. His letter was very informed and detailed, and required quite a good deal of research, which I know officials began as soon as the letter came to the Home Office because I made the particular request that they should do that, and I know they have. I will take that further and find out where the letter is. It may well simply not have arrived; it may have been lost in the building.
The Earl of Northesk: I thank the Minister very much for that, and I know perfectly well that no discourtesy was intended.
Lord Williams of Mostyn: I am grateful to the noble Earl.
The noble Viscount, Lord Astor, returned to this question on Amendment No. 14. All of these matters are certainly worth considering because there is no absolutely right answer to any of these problems. I can undertake that we will give them careful thought, by which I mean truthfully and literally rather than any implied inducement, because I am not in a position to give any sort of inducement at all, nor to indicate by a nudge and a wink that we are likely to change our minds. We are genuinely wanting assistance, I cannot repeat that too often, and I am most grateful for the further questions that have been put, which we shall of course consider.
On Question, amendment agreed to.
Lord Williams of Mostyn Lord Williams of Mostyn moved Amendments Nos. 5 to 11:
Page 2, line 1, leave out ("personal") and insert ("information or").
Page 2, line 2, after ("the") insert ("information or").
Page 2, line 3, after ("the") insert ("information or").
Page 2, line 4, after ("the") insert ("information or").
CWH 12
Page 2. line 5. after ("the") insert ("information or").
Page 2, line 6, after ("the") insert ("information or").
Page 2, line 9, after ("the") insert ("information or").
On Question, amendments agreed to.
[Amendment No. 12 not moved.]
Viscount Astor Viscount Astor moved Amendment No. 13:
Page 2, line 15, leave out ("particular").
The noble Viscount said: I can be very brief with this amendment. It concerns the definition of "relevant filing system". By eliminating what one might call the second hurdle, more files will come with the ambit of a "relevant filing system". Otherwise files which are structured by reference to individuals but not also by reference to the particular information which they hold would not come within the definition. That does not seem to be what the Bill intended. In trying to improve some of the drafting of the Bill, I suspect I might not have it necessarily right, but I look forward to the noble Lord's response. I beg to move.
Lord Williams of Mostyn: It was this amendment to which I made oblique reference earlier. Let me say at the outset what I am directed to say at the end, which is that we will certainly look at the wording of this clause to see if we can get more precision. At present, the Act of 1984 only applies to computerised records. Because of the directive, we have the obligation to extend the regime of protection to some manual records. This is extremely important and it is also extremely difficult to get the right phrasing.
The definition as it stands is our best effort so far, and we have tried to identify three key elements: one, the set of information must be structured: two, the structuring must be done by reference to individuals; and, three, particular information about particular individuals must be readily accessible. There is no doubt that that can be criticised as lacking certainty. It does not make it absolutely clear as to whether all personnel files will be caught, but the answer is that it depends on the way in which the files are structured and upon the ease of access to particular information. To give an example: a personnel file about a named individual which contains a miscellaneous set of papers filed in date order may not be caught. A personnel file about a named individual with nothing in it but annual staff reports might well be.
I mentioned at Second Reading—and have reiterated to this Committee in answer to the noble Viscount's question—that the Data Protection Registrar does not share our view on the effect of the definition as drafted. Her view, if I have it correctly, is that it already covers the general personnel file. She believes that it is sufficient for the file to be about a single named individual for it to be caught by our present definition. That would apply to files of any kind.
I did say at Second Reading that we were willing to have another look at the definition to see whether it could be made more precise. We need to reach a conclusion, after the full debate, as to which categories of records are to be included. One possibility would be to make clear that the definition did, indeed, apply to

CWH 13
the broader category of records which the registrar believes are already included. As the noble Viscount said, that would virtually be the effect of his amendment.
If that is the way we are to proceed, there would be for all users of manual records important consequences and substantial extra burdens. From representations we have received, it would not seem to be welcomed by those who hold large collections of this type of file, going back decades.
Our present preferred approach would be to maintain the present definition and limit it to a narrower category of files. However, as I stressed at the outset speaking to Amendment No. 13, I do not pretend that we have necessarily arrived at a perfect drafting answer. We are content to look further as the debate itself develops.
4.15 p.m.
Lord Flowers: I understand why the Minister wishes to make such a sharp distinction between automatic and manual, because it has been a problem in the past and he is concerned about it. However, the future of computing is an interactive one, in which automatic processing pauses from time to time and waits for the operator to feed in manual information or instructions. Increasingly, computing is developing in that interactive manner. It will become more and more difficult to make a sharp distinction between automatic and manual. In the amendment put forward by the noble and gallant Lord, Lord Craig, which I support, we raised an objection to the use of the word "automatic" for that reason. I emphasise again, in the context of the particular paragraph now under discussion, that the same objection applies. I hope that the Minister will reconsider the use of the word "automatic" throughout.
Lord Williams of Mostyn: I certainly listened carefully to the points which have been made, because they may well be points of general application, not specifically directed to Amendment No. 13. I am bound to say that the noble Lord's comments echo quite a number of observations which have come from industry and from business in general. I shall certainly bear in mind his cautionary note. It is perhaps of wider application than simply Amendment No. 13.
Viscount Astor: I am grateful for the Minister's reply to my amendment in particular, if I may call it that, and also his statement concerning the current situation with the registrar, which, of course, is a wider issue.
There is an important point here and one which I am sure we will want to consider further. It is likely that we will have to move somewhere towards the position outlined by the noble Lord, Lord Flowers, on one part of the Bill before the next stage, so that we are all—if nothing else—in a position of clarity. Unless this Bill is made clear, it will, in effect, be interpreted by the new commissioner. She will be looking over her shoulder, as it were, at what the Bill says and also at what is said as the Bill progresses through Parliament. It would be better for all involved, as I am sure the Minister will agree, if we could have a Bill which clarifies the issue entirely. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 14 not moved.]
Viscount Chelmsford Viscount Chelmsford moved Amendment No. 15:
Page 2, line 22, at end insert ("and
(c) "consent" includes the consent of data subjects obtained through standard contractual provisions, where such conditions have been approved by the Commissioner.").
The noble Viscount said: This amendment follows up some of the issues which were discussed at Second Reading. Schedule 2 begins with the comment that where,
"the data subject has given his consent to the processing".
the first principle applies. It is a question of establishing what is consent.
We all know perfectly well in our minds what is personal data that may move from place to place and be totally appropriate, legal and correct, in particular in the business sense. We all know perfectly well what is data which, if passed without consent, are probably not legal or appropriate. There is a dividing line somewhere; and that dividing line probably differs slightly for each one of us. It is almost something that cannot be put on paper and defined. But I am not discussing the dividing line; I am simply suggesting that when business needs to move personal data, and it is obvious to anyone with a modicum of common sense that that personal data will be accepted by the data subjects because it is in the data subjects' interests, then there should be some means of taking a short cut.
The obvious way to take a short cut is contractual. There are a number of contracts in different parts of the industries which are standard. We mentioned two of the many standard business contracts at Second Reading—the employment contract and the proposal forms for insurance. I suggest that where the business wishes to take that short cut in order to move things along speedily it can apply to the data commissioner to inquire whether a standard clause in the standard contract about personal data would be acceptable. I beg to move.
Baroness Nicholson of Winterbourne: The other part of the amendment has already mentioned by the noble Viscount, Lord Chelmsford, but my point is the more personal one. My amendment talks about free and informed consent, and from that it may be seen immediately that I am thinking particularly, to give the ultimate example, of the asylum seekers whom we imprison at the moment without trial and with no knowledge of any crime they may have committed. It was a move put in by the previous government and prisons or places of detention such as Campsfield where there are many nationalities altogether in prison without free movement, unable to leave an institution which appears to have more physical barriers than Dartmoor.
Because of that situation, I put forward strongly the view that free and informed consent surely is a civilised country's obligation in legislation such as this where we have an opportunity to discuss this matter. We have a chance to put a provision on the face of the Bill. It is frightening for people to give medical data, family data, and such information in such circumstances to a doctor they have never seen before, to a person in authority

CWH 15
over them—perhaps from Customs and Excise—who can be quite fierce with them for reasons of their job. These people probably do not speak English properly and are in fear of deportation. Not all of them are deported, but records are created on all of them.
I believe strongly that as a civilised society, we should insert "free and informed" before "consent".
The Solicitor-General (Lord Falconer of Thoroton): The two amendments that have been put so well by the noble Viscount, Lord Chelmsford, and the noble Baroness, Lady Nicholson of Winterbourne, both deal with the same topic; namely, there is no definition in the Bill of the word "consent". We do not believe that it is necessary either for the purposes advanced by the noble Viscount, Lord Chelmsford, or for the reasons advanced by the noble Baroness, Lady Nicholson, to include a definition of consent. We believe that it is for the courts to determine on a case-by-case basis if consent has been given.
The first proposal, that made by the noble Viscount, Lord Chelmsford, seeks to give a partial definition of consent in a particular set of circumstances, which in effect means accepting a standard form approved by the commissioner. In our view, that is not a desirable approach to be taken. We believe that whether consent has been given is a matter which must be capable of being assessed in all the circumstances of an individual case. We do not feel it either necessary or desirable to be any more prescriptive. To try to be more prescriptive is in our view liable to cause more difficulties than it can solve. People will be raising questions about the particular consent that they gave, perhaps in a long form. We believe the courts can deal with that sort of problem, and that it is better for it not to be dealt with in an amendment of the sort proposed by the noble Viscount.
The same approach follows in relation to the amendment proposed by the noble Baroness, Lady Nicholson. The courts are very practised in determining in many contexts whether consent has been appropriately given. They are well used to considering whether any purported consent which is neither free nor informed, which is the wording of the amendment of the noble Baroness, can properly be considered a true consent at all. These things all need to be judged in the circumstances. We believe that the best course is for the courts to deal with it on a case-by-case basis, which I am sure will give the best protection. In those circumstances, I respectfully ask whether both the noble Baroness and the noble Viscount would consider withdrawing their amendments.
Viscount Chelmsford: Perhaps I may question the Minister a little further. On Second Reading, I thought I understood the noble and learned Lord to say that his initial feeling—and I will not hold him to this—was that a clause or a box in a proposal form would probably be acceptable, but that perhaps a clause in an employment contract was not. I hope I do not put words into his mouth, but it was something of that nature. It means that he is clearly making a judgment, even though he prefers not to do so officially.
CWH 16
It would be helpful for business if some ground rules were laid down. It seemed to me that the Minister was quite keen on giving the commissioner latitude to make decisions, and that this was a sensible route to take. Is he now saying that the commissioner has no power to advise data controllers on the matter?
Lord Falconer of Thoroton: The noble Viscount exactly records what I said on Second Reading. The effect of what I said then seems to indicate that it has to be dealt with on a case-by-case basis, and the best people to deal with it in that way would be the courts and not the data controller. I say that because the courts are focusing on whether it is a real consent, which is what one is looking for.
Viscount Chelmsford: I thank the noble and learned Lord for that answer. I need to go away and reflect on the matter. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Amendment No. 16 not moved.]
On Question, Whether Clause I, as amended, shall be agreed to?
Lord Skelmersdale: I should declare an interest as a director of a mail order company. I spent a moderately happy three hours this morning amending a mailing list. This involved removing names, adding names and recording order numbers and occasionally telephone numbers, by hand, on index cards which are arranged by name and postcode—steam technology perhaps, but nonetheless it is, as I understand it, a relevant filing system under the Bill.
In my case, or rather that of my business, all these cards are as a result of personal intervention by a customer or potential customer answering an advertisement, or telephoning in as a result, say, of a newspaper article; in other words, they are applied for. We have never bought mailing lists, although it is perfectly legitimate to do so.
The point I should like to make is that my actions were, and under this Bill still will be, perfectly—I intended to use the word "kosher" but my noble friend Lord Chelmsford supplied my answer—correct. However, were I a maker of cigarettes this would shortly become illegal under the tobacco advertising directive, which is currently undergoing the process of being signed up to by the Government.
For many years now if you have filled in a questionnaire or applied for an offer for a packet of cigarettes, you have had to sign and declare that you are a smoker over 18 years of age. It follows that if you are sent a letter as a result of being on such a mailing list, you are in exactly the same position as one of my firm's customers—except, of course, that it would be on computer. Why, then, is one to be banned and not the other? It cannot be because of cigarette advertising as the individual has already been in contact with the company and is, by definition, already hooked.
I do not expect an answer today because I have rather sprung this on the noble Lords, but if they will cogitate I shall be very interested in receiving an answer by letter at an appropriate moment.
Lord Williams of Mostyn: I guarantee it.
Clause 1, as amended, agreed to.
Clause 2 [Sensitive personal data]:
4.30 p.m.
Viscount Astor Viscount Astor moved Amendment No. 17:
Page 2, line 46, after ("racial") insert (", national").
The noble Viscount said: In moving Amendment No. 17 I shall also speak to Amendments Nos. 18 and 19. I have tabled Amendments Nos. 17 and 18 purely because in the Crime and Disorder Bill I happened to notice that Clause 26 defines "racial group" with reference to nationality and national origins. I wonder therefore whether, for consistency of legislation, that should be included in this Bill.
I turn to Amendment No. 19. I looked, first, at the directive and then at the Bill and thought what a very unattractive way it was of dealing with legislation. Someone has thought of the word "orientation", which is almost as bad as the words in the Bill. It seems to me that we are getting into a strange kind of legislation. Is there no all-encompassing term that could be used? I am not sure how one defines sex life in law: what does that include; or what does it not include? It might include lots of different things in Scotland that it might not include in England, as we know!
Is there not an all-encompassing legal term that the Minister could suggest which would say that people's private lives remain their private lives—a more general thing—rather than this laborious way of saying what it might include? Looking at this rather extraordinary list, it seems to me that it is a recipe for wrangles in the future. I look forward with interest to the Minister's reply. I beg to move.
Lord Williams of Mostyn: I shall speak to Amendments Nos. 17, 18 and 19 together. The noble Viscount asks what is sex life and what does it include. I do not think I should venture too keenly into that territory; otherwise we shall both be sharing an unfortunate headline. What I say is that we have amply covered those areas that need to be covered—or, indeed, uncovered—in this context because we have put in Clause 2(f) the general description of "his"—which includes her—"sexual life". Therefore, sensitive personal data relate to data which are information as to sexual life. We believe that that is the best definition we can get.
Certainly one is dealing here with sensitive personal data. We have tried to get the definitions right. In other contexts—certainly the Crime and Disorder Bill or in race relations legislation—nationality is included. What we have to look at here is sensitive personal data. We believe that the fact, as a matter of information, that an individual is of a particular nationality (though it will give no indication of his racial or ethnic origin) is not sufficiently sensitive to require the application to that information of the more restrictive regime (which is the personal data), which is the sensitive regime, rather than the general personal data regime. We have reached that
CWH 18
conclusion, which we believe to be right. Data about nationality are not of the same sensitivity as data relating to racial or ethnic origin.
The third matter relates to colour or nationality, so colour is included here. We think that the issue of colour ought to be regarded as in itself information as to racial or ethnic origin. It is not the same thing, but it does seem to be information as to racial or ethnic origin, which is already within the Bill's definition. I do not believe there is a real ambiguity there, and I hope. I have been able to satisfy the noble Viscount as to his queries and questions.
Viscount Astor: I am grateful to the Minister for his reply. I note that the Bill virtually copies out word for word what Article 8 of the directive says, except for one interesting gap. Article 8 says "religious or philosophical beliefs", whereas the Bill says "religious or other beliefs". Presumably the Home Office believes you can have philosophical beliefs and you can also have other beliefs, and that is therefore the only word which is not the same. However, I am grateful for the noble Lord's explanation and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 18 and 19 not moved.]
Clause 2 agreed to.
Clauses 3 and 4 agreed to.
Schedule 1 [The data protection principles]:
Viscount Astor Viscount Astor moved Amendment No. 20:
Page 38, line 16, leave out ("necessary.") and insert ("appropriate,").
The noble Viscount said: Amendment No. 20 is a probing amendment. I wonder why the word "necessary" is there because it seems not to be necessary. I wonder whether the Minister could explain for whom and what purpose "necessary" is included.
I see that Amendment No. 22 is grouped with this amendment. This amendment attempts to strengthen the provision. Subparagraph (1)(b) states:
"the data controller ensures that … the data subject has, is provided with, or has made readily available to him, the information specified".
But qualifying this requirement by stating,
"so far as practicable before the relevant time",
and,
"as soon as practicable after that time",
seems to weaken the provision. I wondered why that was that case. I have put this amendment down so that we can elucidate an answer from the Minister. I beg to move.
Baroness Turner of Camden: I shall speak to Amendment No. 23, as it is grouped with Amendment No. 20. This follows up what a number of noble Lords said at Second Reading in relation to insurance fraud and fraudulent claims. It will be recalled that at Second Reading I and several other noble Lords referred to the difficulties that could arise if it was not possible to retain statistics against future fraudulent activity. It is believed essential, as a safeguard against fraudulent activities of

CWH 19
habitual claim-makers, for files and other records relating to earlier investigations of suspect or potentially fraudulent claims to be retained for future reference. This appears at present to be in conflict with the fifth data protection principle which requires that,
"Personal data processed for any purpose or purposes shall not be kept for longer than is necessary for that purpose or those purposes".
I am advised that the ability of insurers to avoid payment of fraudulent claims is very much dependent upon their being able, often with the assistance of loss adjustors, to assess details of earlier claims made by policy-holders who would otherwise falsely be able to maintain that no such earlier incidents had occurred.
The amendment that has been drafted is fairly self-explanatory. It says that it,
"shall be permitted for whatever period is deemed appropriate by the Commissioner".
In other words, the responsibility in relation to authorising the retention rests clearly with commissioner, and it is felt that that in itself would give sufficient protection in terms of data protection.
Incidentally, while speaking on the issue of fraudulent claims, I take this opportunity to thank the Minister for his kindness in writing to me and to my colleagues on the whole issue of fraudulent claims. I beg to move.
Lord Skelmersdale: I have a related point to make. In the cards to which I referred a few moments ago, I might very well come across one which said "give no credit" on the basis that in previous years the customer had not paid. How long would I be expected, or be allowed, to keep that on the card? I might want to keep it until I discovered that the person had moved and therefore the information was irrelevant. I might want to keep it for two years, until they had settled their bill. In all this, there must be a length of time, I suspect, which the Government have in mind.
The Earl of Northesk: I note that Amendment No. 26 is in this grouping, so I shall speak to it now. Part II of Schedule 1 sets out the interpretation of the data protection principles appearing in Part I of the schedule, against which the legitimacy of data processing is tested. In respect of the seventh principle—that requiring the proper integrity of processing systems—the Bill seeks to transpose the provisions of Articles 17.3 and 17.4 of the directive. However, it seems that in this transposition the specific provisions have been changed. My amendment seeks to return the interpretation of the directive's provision on to the face of the Bill.
Article 17.3 of the directive states:
"The carrying out of processing by way of a processor must be governed by a contract or legal act binding the processor to the controller".
Article 17.4 states:
"For the purposes of keeping proof, the parts of the contract or the legal act relating to data protection and the requirements relating to the measures referred to in paragraph I shall he in writing or in another equivalent form".
CWH 20
However, as currently drafted in the Bill, paragraph 13(a) of Schedule 1 requires contracts with the processors of personal data to be in writing and on strict construction; that is to say signed. To my interpretation, the provisions in the directive were directed towards securing evidence of the terms of the contract under which the data controller authorises and legitimises processing on his behalf by the data processor. In effect, the Bill as drafted goes beyond the requirements of the directive and seeks a more prescriptive approach. I believe that this will have unforeseen and unwelcome consequences which, if enacted, will cause the Bill to operate to the great disadvantage of many traders.
In particular, the British Retail Consortium has raised concerns about the effect that these provisions will have on the agency mail order trade in the United Kingdom and the millions of women who act as informal agents for the industry. According to the analysis of the industry conducted by the Monopolies and Mergers Commission and set out in its report on the proposed merger between the Littlewoods Organisation plc and Freemans plc in 1996, the agency mail order sector had sales of £3.25 billion, primarily conducted through non-commercial agents. On the commission's analysis, these agents were described as being predominantly women aged between 25 and 55, overwhelmingly not in employment or even part-time employment, with 62 per cent of their number drawn from socio-economic group C2, D and E.
The commission also estimated that agency mail order was used by 20.75 million people in the UK, 7.4 million of whom were acting in the capacity of agents. Of these, it was further estimated that some 2.5 million were described as "traditional agents", buying for more than one customer—that is to say, likely to be buying for persons outside their own households.
One of the strengths that has characterised the way in which mail order has been conducted throughout this century is its informality. The requirement for agency mail order companies suddenly to suspend operations with their agents while some 7.4 million processing contracts are issued and returned duly signed by the agent is a burden being imposed by the Bill as drafted, and yet the directive itself does not seek this. My amendment would ensure that it would be sufficient that processing was conducted on the terms of a written memorandum of agreement tendered in the regular and periodic communications with agents rather than requiring the company to refuse to do business with them in the absence of a signed copy of a written agreement. This would seem entirely equitable and completely within the original intention and spirit of the directive.
4.45 p.m.
Lord Falconer of Thoroton: There are four amendments in the group. They are all slightly different from one another and I shall deal with them one at a time.
The noble Viscount, Lord Astor, moved Amendment No. 20. At present Principle 4 in Schedule 1 says:
"Personal data shall he accurate and, where necessary. kept up to date".

CWH 21
The noble Viscount wants to replace "where necessary" with "where appropriate". Why, he asks me, is it "where necessary" rather then "where appropriate". As the noble Viscount knows, the reason we are bringing in this legislation is in large measure that we have to give effect to the directive. We are required to make provision at the level set by the directive. This provision of the Bill, the fourth data protection principle, follows the corresponding provision of the directive (Article 6.1(d)) word for word. It would not therefore be appropriate for us to delete the word "necessary" and put in the word "appropriate". I hope that that answers the noble Viscount's first amendment.
His second amendment, Amendment No. 22, seeks to reduce the flexibility that a data controller has in giving information to the data subject about the information that the data controller holds on the data subject. The extensive interpretive provisions in paragraphs 2 and 3 of Part II of Schedule 1, which the noble Viscount seeks to amend, are intended to give effect to certain transparency requirements in the directive. It may help if I briefly explain how they work.
Articles 10 and 11 of the directive require certain information to be provided to individuals about whom data are collected. Essentially, the information is the name of the controller, the purposes of the processing and any other information needed to make the processing fair. Article 10 deals with data which are collected from the data subjects themselves. Article 11 deals with data collected from persons other than the data subjects. That is the situation covered in paragraph 2(1)(b) to which the amendment relates. Paragraph 2(1)(b) requires the information to be provided to the data subjects before the relevant time,
"or as soon as practicable after that time".
The noble Viscount wishes to delete those last words.
The "relevant time- is defined in paragraph 2(2). It means the time when the data controller first processes the data or, in essence, the time when the data are first disclosed by the controller, if he has the intention to disclose them.
I return to the noble Viscount's amendment. I do not think it is desirable to make this change. It would make it very difficult, if not impossible, for controllers to comply with the requirements of the paragraph. The Committee will remember that the Bill is concerned here with data which are collected otherwise than from the data subject: they may be collected, for example, from some sort of public register. If the controller collects them by entering them directly from the register on to his portable computer, he is already processing them. Without the words which the noble Viscount's amendment would remove, the controller would be required already to have given the relevant information to the data subjects.
It is difficult to see how that would work in practice. We should be putting controllers in the position of having to choose between not collecting the data from third-party sources and doing so but not complying with the law. We believe, therefore, that the wording that is already in the Bill is essential to the practical operation of this provision. Having explained that, I respectfully invite the noble Viscount to withdraw the amendment.
CWH 22
I turn to the amendment moved by the noble Baroness, Lady Turner of Camden. As I understand her point, the insurance industry is concerned that it should be able to keep information about claims so that when a person makes a further claim one would be able to refer back to that particular information that one already has. The basic principle is that you are entitled to keep the information for as long as necessary. If the position is that it is necessary to keep that information against another claim being made, there would be no infringement of the relevant data protection principle. I cannot tell the Committee how long is necessary because that will depend on a particular case; nor I imagine would the Data Protection Registrar be able to say how long is necessary because it will depend upon the individual case concerned. However, I would like to emphasise that the data protection principles permit the retention of information for as long as necessary, which we believe meets the point made by both the noble Baroness, Lady Turner, and the noble Lord, Lord Norton. We believe that the position is covered.
There is a separate provision in the Act, Section 32(5), which permits material to be held purely for statistical purposes and then there is no limit in time. But although I may have misunderstood it, I do not believe that is what the noble Baroness has in mind. If it is purely statistical and does not relate to an individual person, then the data protection business would not apply and one would not be worried about it. But I believe it is the first situation. I hope that puts the minds of the noble Baroness and the noble Lord at rest and in those circumstances they will withdraw their amendment.
Finally the noble Earl, Lord Northesk, seems, with the greatest respect, to be operating under a significant misapprehension, although I may have misunderstood the position. He says that in paragraph 13 of Part II of Schedule 1 to the Bill, where it says,
"the processing is carried out under a contract in writing under which the data processor is to act only on instructions from the data controller",
that means the contract must not only be in writing but must also be signed. That is not my understanding of the Bill, nor is it the understanding of the Bill of those who were responsible for giving instructions for its drafting. The concern which underlay much of the very good speech made by the noble Earl in support of his amendment is probably misplaced. Speaking as a lawyer, I can tell the Committee it is absolutely right that where it says "contract in writing" you do not need to have it signed, so that is a genuine misapprehension.
Having said that, there may be a point which we should consider, where one has a contract which was evidenced in writing but was originally made orally. We may not have to deal with that, but there are a number of points on paragraph 13 which we could usefully consider without giving any guarantee of coming back with anything. The point which underlay the noble Earl's concern was probably, with respect, misplaced and I hope in those circumstances he will withdraw his amendment.
Baroness Turner of Camden: I would like to thank the Minister for clarification. He is quite right in his interpretation of my concerns. I was thinking in terms of material which was not necessarily statistics. I am grateful for the explanation he has given. I would like to think about it and perhaps the people who have been sending me briefing material would be appropriately satisfied.
Viscount Astor: My Amendment No. 20 was the original amendment in this group. I am grateful for the answer of the Minister, which I will study carefully, and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Nicholson of Winterbourne Baroness Nicholson of Winterbourne moved Amendment No. 21:
Page 38, line 25, leave out ("adequate") and insert ("equivalent").
The noble Baroness said: The purpose of the amendment is to ensure that data will only be transferred to third countries outside the European Union which have an equivalent level of protection in relation to the processing of personal data. I am sure that the Minister will see the irony in this, in that the United Kingdom, until now at least, has been one of the less well protected of the developed nations, particularly in the European Union, prior to this Bill due to the deliberately weak interpretation of the Council of Europe directive of 1981; but we have moved on and we are taking on this directive now, for which the Committee is most grateful. Therefore, it warrants a careful look before we authorise the transfer of personal data outside the European Union.
I look at the USA, where the privacy law was drafted in 1970 and therefore predates the computer explosion; at the Far East, where protection is not a top priority; and at the Gulf and Africa. This should remind the Ministers that there are international customers whose details are held on databases of multinational companies in the United Kingdom.
I also remind the Ministers that while paragraph 14 of Schedule 1 lists the factors which are to be taken into account when considering at an adequate level of protection, it does not set minimum standards. I suggest that by adopting the requirement of an equivalent level of protection we would achieve a standard which could be modified, with regard to subject access and non-disclosure provisions, as time moves on. Effective safeguards for the transfer of data to developed and underdeveloped economies outside the European Union is, surely, very important. I beg to move.
Viscount Astor: Amendment No. 27 is grouped with the amendment of the noble Baroness, Lady Nicholson of Winterbourne. This is an extremely important area, because the free flow of data, including personal data which will be covered by the Bill, is of enormous commercial importance to companies both in this country and, for example, in the United States. British pharmaceutical manufacturers transfer large quantities of patient data to their US affiliates to secure approval of new medicines. Airlines and financial institutions
CWH 24
maintain transatlantic databases for customers, and companies that do business on the Internet routinely transfer personal data to and from the United States.
Under the directive, personal data may be transferred to countries outside the EU. such as the United States, only if those countries ensure an "adequate level of protection".
Many British and American companies believe that data transferred to the United States from an EU country can be protected adequately through a combination of industry codes and contractual guarantees. Many companies have developed codes of conduct and plan to require their US partners to give contractual undertakings to comply with those codes.
As I understand it, however, European Commission officials have questioned whether data transfers to the USA can continue after the directive takes effect in October, unless the United States enacts a national data protection law similar to Directive 95/46 or takes other similar measures. I also understand that there is no prospect that the United States Congress will enact a comprehensive data protection law before this October. In fact, no law is even under discussion in the United States. There is a possibility that the US Federal Trade Commission will enforce privacy codes under provisions of US law that prohibit "unfair" or "deceptive" practices, but that issue has not yet been resolved.
Schedule 1, Part II, of the Bill contains provisions for interpreting the data protection principles. It states that the determination whether there is an adequate level of protection is made case by case, taking account of relevant factors. The existence of a data protection law is one factor, but others include codes of conduct and any security measures taken in the country to which data are transferred.
My amendment would make it absolutely clear that contracts are among the security measures to be considered under Part II of Schedule 1. It is consistent with the policy of the directive. The amendment would eliminate uncertainty about the appropriateness of contractual arrangements as one part of a programme to ensure an adequate level of protection of personal data transferred, for example, to the USA.
Having spoken to this amendment, which is simple but requires a somewhat convoluted explanation, perhaps I may briefly comment on the amendment proposed by the noble Baroness, Lady Nicholson of Winterbourne, to replace the word "adequate" with "equivalent". This amendment would, I feel, be quite wrong. It is almost impossible to say "absolutely equivalent". "Adequate" is sufficiently challenging. The danger of using "equivalent", of course, is that it amounts in effect to exporting EU law to other countries, and other countries, particularly the United States, would be quite paranoid about such behaviour.
5 p.m.
Lord Falconer of Thoroton: These two amendments raise the important issue about the exportation of information beyond the EU. The noble Baroness, Lady Nicholson, seeks to remove the word "adequate" and

CWH 25
replace it with the word "equivalent" in Schedule I, which is in the data protection principles, and the noble Viscount, Lord Astor, seeks to include contractual issues as being one of the protections one has to consider when dealing with the question of adequacy. The Government take very seriously the position of other countries and their laws in relation to data protection. Indeed, when the Home Secretary went to the United States of America with the Prime Minister recently he discussed data protection with his counterparts there.
Having said that, I have to say that in relation to the amendment of the noble Baroness, Lady Nicholson, we could not contemplate matters of the sort she proposes for a number of reasons. First, as she knows, the Bill is to implement the directive. The directive sets the standards for transfers to third countries at the level of adequacy: the question of adequacy is itself to be monitored by the European Commission. To move away from that definition, as the amendment proposes, is to take the Bill out of line with the directive by imposing restrictions on British business which will not apply to our European competitors. We are not prepared to put our businesses at that sort of unnecessary trading disadvantage. Adequacy was the level agreed on by our EU partners as appropriate, and we do not intend to depart from it at this stage.
We believe that the adequacy of protection test provides a balanced approach. On the one hand, it ensure sufficient protection for the particular personal data concerned, consideration having been given to all the circumstances of the case, while on the other hand it has sufficient latitude to allow for variation in the requirements as they relate to particular cases. Equivalence of protection, which is what the amendment contends for, establishes a much stricter test, requiring exactly the same level of protection in the receiving country as is provided here, although the circumstances of a particular transfer may not require them.
I understand the noble Baroness's desire to ensure proper protection of individual's personal data, but we believe that proper protection is already provided by the Bill as it stands in a practical way in accordance with that which all our EU partners regard as appropriate. In the light of those comments, I would urge the noble Baroness, with respect, to withdraw her amendment.
As far as the amendment of the noble Viscount, Lord Astor, is concerned, he wishes to include in the list of matters that are to be considered for the purposes of applying the adequacy test a reference to contractual arrangements, particularly by reference to security of the data. Paragraph 14, as I have indicated, lists those circumstances to which regard should be had, and most of those are linked to the country or territory itself. They are the country-wide or territory-wide circumstances which prevail.
The noble Viscount's amendment seeks to qualify one of those general country-wide or territory-wide sets of circumstances, namely the security arrangements, by requiring consideration to be given to the arrangements made between contracting parties. A requirement to consider specific arrangements of this kind—even if it
CWH 26
were possible, given the multiplicity of contractual arrangements that might be found within any country—would not be consistent with the more general approach set out in the paragraph.
This is not to discount the relevance of contractual arrangements to transfers of personal data to countries outside the European Economic Area. Your Lordships will be aware that contractual arrangements feature in Schedule 4, which sets out the circumstances where transfers may take place to countries without adequate levels of protection. Paragraph 2 of that schedule allows transfers where these are necessary for the performance of a contract between the data subject and the data controller; and paragraph 3 of that schedule allows transfers where these are necessary for the conclusion or performance of a contract between a data controller and a person other than the data subject.
Finally, in paragraph 8 of that schedule there is the model contract approach where transfers are made on terms of a kind approved by the commissioner, but that is in the other schedule. We believe that it is not appropriate to include the amendment that the noble Viscount seeks, because it does not seem to us appropriate to have regard to the form of that particular schedule. In light of what I have said, I hope that the noble Viscount will agree to withdraw his amendment.
Baroness Nicholson of Winterbourne: I thank the noble and learned Lord the Solicitor-General for his clear explanation. If he believes that proper protection is more suitably addressed with "adequate", then I am very happy to accept his reasoning and I will not raise the amendment again. I believe that all EU partners should march together on this sort of matter, if not on one or two others.
I would argue, however, with the noble Viscount, Lord Astor, that "equivalent" would have been impossible to achieve. It would have been perfectly possible to achieve. We merely have to look at the other data protection laws in the countries to which we are exporters. Enforcing EU law in other countries is surely a noble aim for all of us. I beg leave to withdraw the amendment.
Viscount Astor: Before the noble Baroness withdraws the amendment, perhaps I may reply to the Minister. I shall, of course, briefly reply to the noble Baroness. She is right that we could have an "equivalent" level of protection if other countries have a data protection law, but the problem is that some of them do not. If they do not have a data protection law, we cannot have the word, "equivalent", because it would not work.
Perhaps I could address the points made by the Minister on my amendment. I quite understand what he says but I believe there is concern from industry about transfer particularly to the USA, and these concerns are ones that have come from the European Commission when it has been talking particularly to companies that do business both in this country and in America. This is an important issue. I am not sure exactly what the answer is, but I am sure that we will have to clarify the

CWH 27
situation before we reach the end of the Bill's proceedings. However, I thank the Minister for his helpful reply.
Amendment, by leave, withdrawn.
[Amendment Nos. 22 and 23 not moved.]
Lord Falconer of Thoroton Lord Falconer of Thoroton moved Amendment No. 24:
Page 40, leave out lines 25 and 26 and insert—
("() he contravenes section 9 by failing to comply with a notice given under subsection (1) of that section to the extent that the notice is justified,
() he contravenes section 10 by failing to comply with a notice given under subsection (1) of that section. or").
The noble and learned Lord said: This is a technical provision which relates to the powers of the commissioner to take enforcement action for breach of the sixth data protection principle. That principle requires data to be processed in accordance with the data subject's rights. One of those rights is the right conferred by Clause 9 to prevent certain processing which is causing, or is likely to cause, harm of the type specified there. So if data are processed in contravention of that right, that is something in respect of which the commissioner can act in furtherance of her duties to enforce the data protection principles.
Paragraph 9 of Part II of Schedule 1 explains in more detail when a data controller is to be taken as failing to process in accordance with the data subject's rights. As regards the rights in Clause 9, it currently provides that a breach will occur where a data controller fails to comply with a notice duly given under Clause 9, requiring him not to process. However, Clause 9 makes clear that the giving of a notice cannot by itself be conclusive as to the right. For example, under Clause 9(3) a court can only order compliance with a notice if it appears to be justified to that extent. A notice will only, of course, be justified if it shows reasons to believe that the processing in question is the cause of substantial damage or substantial distress which would be unwarranted. Only to that extent should the notice be enforceable. This amendment achieves that result and, therefore, brings the powers of the commissioner into line with those of the court. I beg to move.
Viscount Astor: My Amendment No. 25 is grouped with the Minister's amendment. Mine is a drafting amendment. I am struggling to understand why I regarded it as necessary, but I know that there was a very good reason. I believe the reason was that under Clause 7 failing to supply information includes Clause 8 but, as I read it, makes Clause 7 supplementary to Clause 8, and that seemed to me not what the Bill intended.
Perhaps between now and the next stage those drafting the Bill would look at the matter and see whether I am talking absolute nonsense, and whether this Clause needs to be improved.
Lord Falconer of Thoroton: We understood why the noble Viscount, Lord Astor, had tabled the provision, but we think it is unnecessary. He included Clause 8 in
CWH 28
those clauses which would be the subject of enforcement. We do not think it is necessary because Clause 8 is supplementary to Clause 7, and therefore you would never seek to enforce a right under Clause 8 because Clause 8 creates no rights at all; it simply adds to rights which are specifically derived from other clauses. We understand why the amendment was tabled, but we do not think it is necessary.
Viscount Astor: I am grateful to the noble and learned Lord, Lord Falconer of Thoroton, for confirming that I did indeed have some logic in tabling my amendment and I am grateful for his explanation.
On Question, amendment agreed to.
[Amendments Nos. 25 to 27 not moved.]
Schedule 1, as amended, agreed to.
Schedule 2 [Conditions relevant for purposes of the first principle: processing of any personal data]:
[Amendment No. 28 not moved.]
Viscount Astor Viscount Astor moved Amendment No. 29:
Page 42, line 5, after ("other") insert ("similar").
The noble Viscount said: This is a simple drafting amendment. The reason I tabled it was that the
"other functions of a public nature"
referred to in paragraph (5)(1)(d) should be similar to those outlined in sub-paragraphs (a) to (c). I wonder whether the noble Lord might comment. I beg to move.
Lord Williams of Mostyn: Schedule 2 follows Article 7 of the directive very closely. That article sets out conditions which must be met if processing is to meet the fair and lawful requirement in the first data protection principle. Paragraph 5 deals with processing which is necessary in the public interest. The first three paragraphs are intended to cover processing such as that carried out by the courts, by central government and by those exercising statutory functions. There may be other circumstances where the public interest requires data to be processed. That is the purpose of paragraph 5(d).
The amendment in the name of the noble Viscount, Lord Astor, would add a restriction to paragraph 5(d). We do not believe it is necessary because paragraph 5(d) already contains safeguards. First, the processing must be necessary; secondly, the functions must be public functions; and, thirdly, they must be exercised in the public interest.
We do not see any benefit in the addition of the word "similar". The amendment would require those other functions to be similar to those of the Crown and central government. I cannot presently think of any such functions. We feel it adds a restriction which is too restrictive and unnecessary. I hope that I have demonstrated that the safeguards are fully contained within sub-paragraph (d).
Viscount Astor: With the Minister's explanation, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 2 agreed to.
Schedule 3 [Conditions relevant for purposes of the first principle: processing of sensitive personal data]:
Viscount Astor Viscount Astor moved Amendment No. 30:
Page 42, leave out lines 23 and 24.
The noble Viscount said: This is a probing amendment and it considers the power in Schedule 3 under paragraph (2)(a). I am concerned as to why this power is necessary. Sub-paragraph 1 states that:
"The processing is necessary for the purposes of exercising or performing any right or obligation which is conferred or imposed by law on the data controller in connection with employment".
However, the power in sub-paragraph (2)(a) allows the Secretary of State to,
"exclude the application of sub-paragraph (1)".
I do not understand that: and the amendment gives the Government an opportunity to explain the need for those powers. I beg to move.
5.15 p.m.
Lord Williams of Mostyn: In drawing up the third schedule, we paid close attention to the requirements of Article 8 of the directive. Paragraph 2 follows closely the corresponding provision in Article 8. It provides for the processing of sensitive data, which is necessary to meet legal rights and obligations in the employment field. It makes provision for the Secretary of State to make an order attaching conditions to such processing, but it also allows the Secretary of State, by order, to prohibit such processing again in particular cases. If the noble Viscount's amendment were to succeed, it would remove the second of those powers from the Secretary of State.
We believe that paragraph 2 of Schedule 3 gives proper effect to the requirements of the directive. Sometimes, as the directive recognises, there will be the need for processing sensitive data in the employment field. But sometimes the Secretary of State in this country will need to be able to regulate such processing, in particular by the obligation of the provision of adequate safeguards.
We also need the power for prohibition of processing in particular cases. That is why we have included in the Bill the order-making power in paragraph 2(2) to which the noble Viscount's amendment is directed. It is possible—and reasonably to be anticipated—that there may be cases where processing simply should not take place at all. We want that power, even if it is only rarely to be exercised.
I hope that explains to the noble Viscount the thinking behind the construction of this section of the Bill.
Viscount Astor: I am grateful to the Minister for his explanation. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Viscount Astor Viscount Astor moved Amendment No. 31:
Page 43, line 2, at end insert ("to that end,").
The noble Viscount said: This is a simple drafting amendment. I wonder whether my words might improve the Bill. I beg to move.
Lord Williams of Mostyn: I believe that the noble Viscount and I are at one in what we wish: in other
CWH 30
words, to which end we are intent upon deliberately moving. We believe that when one has the word "deliberately" in this context in this part of the Bill, that is a necessary implication of what the noble Viscount wants. He says that his amendment may improve, may give clarity, may give desirable certainty. If it does have that effect, our minds are certainly riot closed to it.
Viscount Astor: I am grateful that the noble Lord sees that there could possibly be some merit in the amendment, and I am sure that those drafting the Bill will consider this important issue very carefully. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Earl of Northesk The Earl of Northesk moved Amendment No. 32:
Page 43, line 14, at end insert—
(" . The processing is

(a) for any of the purposes mentioned in subsection (1) of section 28; and

absolutely necessary for the purposes of a particular enyuiry.").

The noble Earl said: As I understand it, under the 1984 Act sensitive personal data held for specified purposes of law enforcement and tax collection remained subject to the first data principle. However, Clause 28 has the effect of wholly exempting these purposes whenever their application to a particular case would be likely to prejudice any of the matters mentioned.
In this context, the first data protection principle, as now defined in Schedule 1, embraces the application of Schedule 3, which imposes new conditions on the holding of sensitive data. Those data, defined in Clause 2, include such matters as political opinions and sexual life. As drafted, the exemption under Clause 28 will in principle leave the police, and other bodies, free to hold such data concerning any individual. The intent of the amendment to Schedule 3 is to make it clear that, notwithstanding what may happen to amendments to Clause 28 later in Committee, the restrictions on processing sensitive data will nonetheless remain, thereby doing a certain amount to restore the position with respect to sensitive data to that which prevailed under the 1984 Act.
That deals with Amendment No. 32. I note that Amendment No. 36 is grouped with it and I wish to speak to that also. I suspect that I may be retreading some ground already covered by the noble Baroness, Lady Turner, in Amendment No. 23. Amendment No. 36 draws on the authority in Article 8.2(b) and 8.5 of the directive, which permits processing, where necessary, for carrying out obligations and specific rights under employment law as well as the processing of data relating to offences, and so on, subject to, among other things, specific safeguards. The amendment, therefore, seeks to allow the collection of data in respect of criminal records being kept for the purpose of use in considering employment matters.
As a member of the All-Party Retail Group, I am acutely aware of the difficulties experienced by that industry in respect of staff theft. Only last week, the British Retail Consortium published its 5th annual retail

CWH 31
crime survey. This indicated that, while theft by staff has fallen, it still remains a significant problem, with some 17,000 staff being apprehended for theft or fraud in 1996–97. The cost of staff theft is estimated at £374 million, but this is likely to be an underestimate because of undetected theft. It is, therefore, very important to be able to build comprehensive records of dishonest staff, as the industry is only too well aware that they frequently move from company to company, taking advantage of their position of trust, before being discovered and dismissed or prosecuted. Such records would, undoubtedly, act as a disincentive to employees whose main purpose is to feather their nest through dishonest means.
I am aware of the provisions of the Rehabilitation of Offenders Act in relation to its purpose in allowing rehabilitation of those who have taken the opportunity to lead an honest life. However, there is nonetheless a need to safeguard business—and, hence, consumers. Amendment No. 36 will provide this vital safeguard, as well as closing off a potential loophole that criminals could use to their advantage were the Bill to be enacted as drafted.
The whole matter is also an issue of concern to other interested groups like the CBI, the ABI and the British Bankers Association. Indeed, it may well be that the Government have in mind the issuance of an order under paragraph 9 of Schedule 3, to address the problem. For the avoidance of doubt, there is merit in putting the purpose on the face of the Bill. I beg to move.
Baroness Young of Old Scone: Perhaps I may speak on Amendments Nos. 33 and 34, which have been grouped with Amendment No. 32. Again, I should perhaps point out that the purpose of my amendments is to seek information and assurances.
Amendment No. 33 seeks to clarify the circumstances under which a not-for-profit organisation might process sensitive data relating to possible risks to children and young persons. The Bill, quite rightly, includes provisions in Schedule 3 to control the processing of sensitive personal data. It does not, however, appear to allow for the processing of that kind of data by those not-for-profit organisations which have close contact with children and young persons in circumstances where no crime has been committed.
Voluntary organisations with youth programmes receive many applications for positions as voluntary youth leaders, working closely with vulnerable young children in positions of trust. I am sure everyone is aware of the cunningness and persistence, now emerging as a pattern, practised by paedophiles in inserting themselves into organisations. This often happens over a long period of years. It is essential for voluntary organisations with youth programmes to maintain and process personal data on applications from those seeking to become voluntary youth leaders. Information about personal references, police checks and various other inquiries undertaken by voluntary organisations is vital to establish the suitability of these applicants to work with young persons.
CWH 32
It is important, too, for these data to be kept and processed over a substantial period of time in view of the persistence of paedophile rings in not only applying on one occasion but also on successive occasions over many years. It is also important that this data can be held on a national as well as a local basis since many of these rings are well organised.
The second amendment, Amendment No. 34, covers a similar subject to Amendment No. 86. I should like to thank the Minister for responding promptly to a letter I sent some time ago on appropriate safeguards under this amendment. It may well be that he will simply wish to restate his reassurance to me then about it being an issue which was possible, provided appropriate safeguards were undertaken, and that it might well be the subject of subsequent subordinate legislation.
The issue in question is whether voluntary organisations can be exempt from subject information and non-disclosure provisions where information is held to assist in the prevention and detection of crime. I wish to declare an interest and give two specific examples of some voluntary organisations. One is the Royal Society for the Protection of Birds of which I am Chief Executive, and the Royal Society for the Prevention of Cruelty to Animals. Those gather substantial information on possible or actual breaches of the law which are not held or collated otherwise by the police authorities.
I am merely probing whether there is in the Bill the possibility of such voluntary organisations maintaining and processing such information. That has substantial benefits in logging possible infringements in the law. Individually, they may not lead to court action but together they may build up a picture of law breaking which would be extremely useful to the statutory and police authorities and assist them in the detection and prevention of crime in the future.
The provision also has the benefit of being able to draw together national information rather than simply local information held currently by police authorities. Much of the crime in which an organisation such as my own would be concerned—in terms of infringement of wildlife law and in particular trade in protected species—is a national and international trade rather than just a local one. At the moment the police authorities do not collate this information nationally. It is important that it is drawn together nationally, because that can reveal patterns which can subsequently aid the statutory authorities in the protection and apprehension of crime. It would be a major step backwards in the upholding of the law if voluntary organisations were prevented by the Bill from holding that information under the sensitive personal data provisions.
I simply seek assurances that the Bill will not prevent either of the two circumstances outlined in Amendments Nos. 33 and 34 happening. I beg to move.
Lord Williams of Mostyn: I am speaking to Amendments Nos. 32, 33, 34 and 36. The noble Earl, Lord Northesk, dealt with a particular point about Clause 28(1). As I understand it, that is to be the subject of a government amendment which will be Amendment No. 83, which we are likely to deal with on Wednesday.

CWH 33
If it is to the convenience both of the noble Earl and of the Committee, perhaps I can deal with matters more fully then. I am grateful.
Amendments Nos 33 and 34 relate to particular problems of the processing of sensitive data. These two amendments together would add new conditions under which sensitive data could be processed. Nobody could sensibly object to the issues. Indeed, in part, if one looks at paragraph 4 of Schedule 3, one sees particular reference to those organisations. We believe, however, that these amendments are much too widely drafted. Amendment No. 34, for example, would allow processing of sensitive data in any situation where the data controller could argue that it was necessary to assist with the prevention and detection of crime. It makes no reference to suitable safeguards. That is a very dangerous step indeed. It is not consistent or consonant with the spirit or the underlying philosophy of the Bill.
Paragraph 9 of Schedule 3 to the Bill allows the Secretary of State by order, subject to the affirmative resolution procedure, to specify additional circumstances in which sensitive data may be processed. Any processing of data authorised under an order would need to be carefully defined and, in particular, would need the application of suitable safeguards. We believe that that is the right context for considering in more detail the matters raised by the noble Baroness, which I recognise as being areas of legitimate concern, and, if I may say so, of genuine widespread public anxiety. However, we believe that is the place to deal with such a situation.
Amendment No. 36 is the last amendment in this group to which I speak. As we have already seen on a number of occasions, Schedule 3 sets out threshold conditions. We have taken the general approach in Clause 2 of the Bill in that we include data relating to offences in our general definition of "sensitive personal data". So data of that sort can be processed in any of the conditions specified in Schedule 3.
Paragraph 2 of that schedule specifically speaks about processing in the employment context, and it makes general provision to allow it. However, we must be mindful of the requirements of the directive and, therefore, it also allows such processing to be made, subject to conditions, by order, so that in any case where our existing laws do not appear to furnish safeguards to the necessary extent, those safeguards may be added. That is an extremely important proviso.
There is the general power of paragraph 9 of the schedule to provide further new conditions in which sensitive data may be processed. If it became necessary to deal with changing circumstances, which none of us can presently anticipate in detail, any exercise of that power would have to bear in mind the limitations set down in the directive. I know that these are important matters. That is why I have taken a moment or two longer than usual to deal with the concerns that have been expressed.
5.30 p.m.
Baroness Young of Old Scone: Perhaps I may just ask the Minister for clarification. I entirely accept the assurances that he has given about further safeguards being available under the legislation to deal with some of these specific circumstances.
However, he mentioned paragraph 4 of the schedule and said that provisions were there for the sort of voluntary organisation that I described. I take the point that there are provisions within Schedule 4 of the Bill for voluntary organisations of certain sorts, but they would not cover the provisions that I described in either of my two amendments. I just wanted to make that point for clarification.
Lord Williams of Mostyn: The noble Baroness makes a correct point. I said that this general area of concern is dealt with in paragraph 4 of Schedule 3. I understand that the specific organisations to which she referred might well not fall within the enabling provisions of paragraph 4 of the schedule.
The Earl of Northesk: I am grateful for the response of the Minister. I shall read carefully what he said, specifically with respect to my Amendment No. 36. As regards Amendment No. 32, I look forward to our further discussions on the matter. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment Nos. 33 and 34 not moved.]
Lord Teviot Lord Teviot moved Amendment No. 35:
Page 43. line 22, at end insert—
(". The personal data are processed for research purposes by a recognised record office regularly open to the public which complies with a code of practice approved by the Secretary of State.").
The noble Lord said: This is the first of my three amendments which deal with archival matters. For many years, I have been a genealogist and record agent, researching in archives. Therefore, I must declare an interest. The amendment attempts to regularise the position of record offices which have been swept up into the Bill. Perhaps it is behoven to me to describe the term "record office". I take it to mean a place or repository of archives or records to which the public have access. The term "holding" is one of the activities defined under "processing" in Clause 1, and that is why record offices are affected by the Bill.
Unless those record offices are authorised to continue keeping and accepting on deposit "sensitive" personal data, albeit under strict conditions, there is a real fear that future generations of genealogists, family historians and other researchers will be denied information—much of it quite innocuous—about their ancestors which has hitherto been freely available. The proposed code of practice in the amendment would specify the classes of records that they would be allowed to process, the period before which the material would not be made available for research, and the conditions which would apply during a transitional period, as envisaged in the

CWH 35
EU Directive 95/46. This would simply give official recognition to what is current normal practice in record offices. I beg to move.
Lord Williams of Mostyn: I am grateful for the clarity of the exposition which the noble Lord has given to the Committee. I indicated earlier that when we brought forward Schedule 3 we tried to follow the provisions of Article 8 of the directive very closely. That sets out specific circumstances in which member states may allow sensitive data to be processed.
In Article 8.4 is found a provision allowing member states to specify additional circumstances in which sensitive data may be processed on the ground of substantial public importance. That provision is reflected in paragraph 9 of Schedule 3, which allows the Secretary of State by order to specify further circumstances in which sensitive data may be processed.
I am happy to say that we undoubtedly recognise that there will be circumstances beyond those set out in Schedule 3 in which substantial public interest requires personal data to be processed. We have a strong preference to follow the approach for which we have made provision and to deal with those further circumstances as and when they arise, as and when the case is made for them, by means of the Secretary of State's order made by virtue of the power given to him under paragraph 9.
We have not decided on specific activities which will need to be covered by such an order, or orders. As far as my personal interest is concerned—this is not governmental policy—I very much sympathise with the cause for which the noble Lord contended and I am more than happy to consider any activities which the noble Lord. or others, wish to put forward in due time when the Bill becomes law, for possible inclusion. I hope that is of assistance.
Lord Teviot: I am grateful to the noble Lord. We in the archive profession are extremely grateful to the Government for the differences in the Bill from the White Paper. Many of our fears have been allayed by the Bill and I am grateful for what the Minister has said. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 36 not moved.]
Schedule 3 agreed to.
Schedule 4 agreed to.
Clause 5 agreed to.
Clause 6 [The Commissioner and the Tribunal]:
Viscount Astor Viscount Astor moved Amendment No. 37:
Page 4, line 17. after ("Chancellor") insert (", after consultation with the Lord Advocate.").
The noble Viscount said: This may be described as a Scottish amendment. If noble Lords look at Clause 6(4), they will see that the tribunal shall consist of—
"(a) a chairman appointed by the Lord Chancellor after consultation with the Lord Advocate".
It then goes on under paragraph (b):
CWH 36
"such number of deputy chairmen so appointed as the Lord Chancellor may determine".
However, when it comes to deputy chairmen, the poor Lord Advocate is missed out. It seems to me that if he was being consulted on who should be chairman, it should be certainly reasonable in the light of devolution and all these things that he should be consulted with regard to deputy chairmen, and it should be on the face of the Bill.
Lord Falconer of Thoroton: With respect, I agree with the point made by the noble Viscount, Lord Astor, but we feel that the Bill achieves it in a legalistic way:
"such number of deputy chairmen so appointed",
that is, appointed by the Lord Chancellor after consultation with the Lord Advocate. That is how it works. That is the intention; that is the effect as a matter of wording. So I believe we have met the point.
Viscount Astor: I am interested by the Minister's reply, and indeed both Ministers seem to be in agreement. I am always nervous when two such distinguished lawyers are in agreement over such a small clause. I bow to superior legal knowledge. I will be consulting before Report stage with others who will not have the legal knowledge of both noble Lords. I am grateful for the explanation. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 6 agreed to.
Schedule 5 agreed to.
Clause 7 [Right of access to personal data]:
Lord Teviot Lord Teviot moved Amendment No. 38:
Page 5, line 5, after ("communicated") insert ("or made available").
The noble Lord said: Many classes of records containing personal data are defined as "sensitive" in the Bill because they touch on political or religious affiliations. For example, political party subscription lists or church registers are already held by local record offices in manual files. Record offices fear that Clause 7, as it stands, will oblige them to search through many such sources before replying to a person's written request and that this would stretch their resources unnecessarily. They would, however, be happy to make the material available to the searcher or his commissioned agent, as is the usual practice now. I beg to move.
Baroness Turner of Camden: I shall speak to Amendment No. 41, which is grouped with Amendments Nos. 38 and 42. I will probably be told that this is not necessary, but this again is another attempt by me to deal with the issue of fraud.
Subsection (6) refers to situations where it is reasonable in all the circumstances to comply with the request under subsection (4)(c) without the consent of the other individual concerned. My amendment seeks to write in an additional clause where the data relevant to the request are being or are likely to be processed under subsection 28(1). Subsection 28(1) of course is the provision that relates to crime which includes fraud. It

CWH 37
may well be that this is by way of a probing amendment and I will perhaps be told that it is quite unnecessary, but I would be grateful if the noble and learned Lord could let me have his views on this amendment.
5.45 p.m.
Lord Falconer of Thoroton: I shall speak to Amendments Nos. 38 and 41, the latter having just been moved by the noble Baroness, Lady Turner of Camden, and Government Amendment No. 42. I will first consider the amendment of the noble Lord, Lord Teviot.
It is the Government's view that "communicated" does not constrain the means by which the information is to be provided. Clause 8(2) provides for data subjects to be given access to their data otherwise than by being given a hard copy of their consent. The wording in Clause 8(2) is consistent with that. Moreover, there is a very good reason for using "communicated". It is the word used by the directive. We might be running the risk of contravening the directive if, by using a different term, we were to make provision for an approach which the directive did not contemplate. We are compelled to stay with that word, and moreover the amendment would not make any difference. I would respectfully invite the noble Lord to withdraw his amendment.
If I may move to the amendment of the noble Baroness, Lady Turner of Camden, I understand entirely what she is trying to achieve by this and other amendments, but I am not sure that the amendment would necessarily have the desired effect. Clause 7(6) sets out the conditions to which regard must be had by a data controller in deciding whether it would be reasonable to give subject access in circumstances in which a third party, who would not be consented, would be identified. My noble friend's amendment would add to the list of express considerations the fact that Clause 28(1) was applicable to the relevant data, and, as she has explained, this clause provides an exemption from the subject information provisions of the Bill. It applies very broadly where personal data are processed for law enforcement purposes, and giving subject access would prejudice those purposes in a particular case.
The difficulty I have with my noble friend's amendment is that I cannot see what additional benefit it would bring. My noble friend's intention is to ensure that where third party data are being used for law enforcement purposes, that is relevant to the question whether those data should be disclosed without the third party's consent. I tend to agree, but I believe it to be the case that those data would not be disclosed in any event since they benefited from the exemption under Clause 28(1).
If one looks at Clause 28(1) it specifically says,
"Personal data processed for any of the following purposes—
(a) the prevention or detection of crime …
"are exempt from the first data protection principle and section 7 in any case in which the application of those provisions to the data would he likely to prejudice any of the matters mentioned in this subsection".
So the way in which Clause 28(1) would work is to give a complete exemption in any event. Even if I am wrong about that I would point out that the test in Clause 7(6)
CWH 38
is non-exhaustive—there can be other matters apart from those specified in Clause 7(6) which can be taken into account. It would be open to controllers to have regard to other considerations that are not specifically mentioned, and even if there are other relevant circumstances they must have regard to them.
I hope that I have understood the purpose of the amendment. It does not achieve what I believe is a perfectly legitimate purpose. That is either covered under the exemption under Clause 28(1) or, if it is not, by the fact that it is a non-exhaustive list that could be taken into account. I hope that the noble Baroness will consider my reply, and I invite her to withdraw her amendment.
The last amendment in this group is a government amendment. It is a technical amendment. It improves the drafting of "relevant day" in Clause 7(9). That is the day from which, as provided in Clause 7(7), the timetable within which a data controller must comply with a subject access request begins to run. The amendment makes it clearer that the relevant day is either the day on which the data controller receives the request itself or the day on which any condition is allowed by the Bill to attach to the request is subsequently fulfilled. These conditions may be the payment of a fee, the provision of information about the identity of the person making the request and the data in question or the consent of a third party, where relevant. At the appropriate moment I will move that amendment.
Lord Teviot: I thank the noble and learned Lord very much for his comments on my Amendment No. 38. Obviously the word "communicated" is not appropriate. However, I shall read in Hansard every word he says, and, if necessary and if it is not covered, try to improve the wording at the next stage of the Bill. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Nicholson of Winterbourne Baroness Nicholson of Winterbourne moved Amendment No. 39:
Page 5, line 15, at beginning insert ("Subject to subsection (2,6) below,").
The noble Baroness said: These are two probing amendments. I ask the Minister and my noble and learned friend the Solicitor-General to look at the principle underlying them. I accept that the wording may not be adequate. Nonetheless, there is a point here that the Government should consider in the light of their manifesto and their correct statements of empowerment of the individual citizen.
I speak on this amendment only about government records. The Minister will see at once that I have excluded, because I have not included them, the records held by such government agencies as the police, the Inland Revenue and so on. I speak of the commonality of government records which reflect a government service to the individual citizen such as records of the National Health Service, social security and much of the work carried out by local authorities.
If I comment a little critically on the accuracy and security of those records, it does not mean that I do not fully recognise that accuracy and security, in particular

CWH 39
in digitally compiled and held records, are entirely concomitant with the amount of funds available to put into them. In other words, with public pressure on hip transplants, it is unlikely that data entry clerks will be paid the high salaries required for the small margin of error that would be tolerated in a commercial environment in inputting that data.
The purpose of the amendments is to look at who owns those records and who controls their dissemination; and to put a marker down for citizens' ownership, or possibly citizen control, in terms of the organisation of the movement of that material. In other words, my amendments seek to shift the burden of authorisation from the Government to the individual. When one answers a beguiling advertisement to buy something by post through the newspapers, one ticks a box if one does not want one's name to go forward. It would be perfectly possible to achieve such a situation, for example, with National Health Service records.
Let me give support to what I am offering in these probing amendments from the Audit Commission. In its report last week, A Ghost in the Machine,published on 19 February 1998, the commission found that:
"Soaring levels of computer fraud within the NHS, schools and London town halls are costing the taxpayer at least £4 million a year."
I am not commenting on the cost, but only on the accuracy and in particular on the security of the Government's records. The Audit Commission goes on to claim that:
"More than half of the capital's councils and hospitals suffer from hacking and other forms of computer abuse and the problems will get worse with the growth of the Internet."
The commission also found that:
"senior employees are responsible for up to a quarter of such crimes.
"Losses per incident have gone up by 25 per cent in the past four years … as hacking has trebled."
That caught my eye because I was the person who framed the computer hacking legislation and obtained the mechanism for getting that into law. Perhaps I may consider again unlawful access of government-held material on behalf of citizens' personal data. I quote here from someone senior in a higher level security organisation. There is reference to a number of accounts and records being accessed and then this unlawfully gathered information offered for sale. I am sure that is also true.
We address the problems of merging information later on in the Bill. I do not intend to move into that particular group of amendments and materials at this inapposite moment, save to say that I came across in the other place the way local authority material could be unlawfully accessed. In other words, it has become so attractive that it is now a magnet for unlawful access. I found with the poll tax that data from different sources on pensioners that had not been drawn together before under the data function were being put on records and held in local treasurers offices. Some resultant records were almost instantly accessed by hackers. If one looks at the way in which local authorities organise their material, naturally
CWH 40
however much effort they put in. they do not have the money to make that material "unhackable—inaccessible unlawfully.
When we turn to national government records, I believe that the best example is the National Health Service. I came across the problems myself with CJD when I sought a health Minister's approval and his agreement to release the knowledge to CJD victims of child growth hormone, as to which young people have been treated with child growth hormone which might trigger CJD which was derived from human cadavers and with which young people had been treated by the scientifically created material a little later on in the 1970s who were therefore not at risk. The Minister refused to release those health records to the families. I then asked a range of Parliamentary Questions on who in the UK owned the National Health Service records; and in 1992 I was given the knowledge that in fact it was the state. At that time it was deemed on a Treasury QC's advice to be the Secretary of State. Now that ownership has been passed down to the chairmen of National Health Service trusts.
When I look at how medical records are being used internationally, I see on 16th February an excellent article in the Washington Post which tells us that there has been an intrusion into medical records with,
"the great computer in the sky having a list of every drug you take from which can be deduced your likely diseases".
In other words, USA citizens are now receiving letters from drug companies asking them to refill their prescription or to vary it or to try a new drug that has been found—a probable breach of medical ethics.
In Europe, we take these things just as seriously. Commissioner Mario Monti, who is seeking his brief from the Council of Ministers on guidelines for the protection of individuals with regard to the Internet, describes a most important premise. As he states, the Commission will pay particular attention to:
"The practical enforcement of the right to be informed of data processing operations involving oneself and of the right to object to any processing".
That is the basis of my probing amendments.
As I mentioned at Second Reading, I am well aware, from the work I did on the access to medical records Bill, the computer hacking Bill, the Copyright Act, the access to employee and access to schools records legislation, that in Britain we have not had a right to privacy. Certainly personal privacy rights at the moment, at least for the print media, appear to revolve around curtains. I am not attempting to find rats in the arras when I say that it is very important to take the decision that a measure of personal privacy is inherent in this Bill and that we do not have a right as a member of the European Union to push that aside. We have to accept and honour it. Certainly, if I have identified correctly the coming Internet Commission investigation, it also rests on the right personal privacy and data rights.
I believe, therefore, that the authorisation of the use of personal information, when held by government on citizens for services for which citizens pay through their tax bill, should rest with the citizens themselves.
Medical records offer the best example. I do not criticise hard-pressed medical professionals or suggest that they are in any way acting outside their duty of confidentiality: I am sure that they are not. My point, however, is that medical professionals no longer have effective ownership or control or authorisation of use of patient records as the patients' data are now so widespread on a number of different computer systems. Although the National Health Service, particularly through the excellent Caldecote Report, which came out in November 1997, offers the new National Health Service number as a protective measure, this is too simplistic. With IT, the patient record has passed on from general practitioners to be held and processed by a very wide variety of staff. I doubt very much whether the patient's doctor would feel that he or she had the capacity to control use of the record any more.
It is difficult to contain information in the modern world, but the person who cares most about accuracy and use is the citizen himself. I suggest therefore that whether it is a question of record ownership, control, authorisation of use, or accuracy and security of the records, the citizen's rights should predominate. The European convention states that our citizens have rights of privacy. To exercise that right with government records such as health, we should move choice from the state to the individual.
I say again that this is a probing amendment. I would ask the Government to give the serious philosophy of my point active consideration. I beg to move.
6 p.m.
Lord Falconer of Thoroton: The right of a data subject to obtain details on the information on him or her being processed by a data controller is fundamental to data protection. At present the Bill treats all data controllers, whether they are private or public, in exactly the same way as regards subject access requests. The amendment would introduce special rules for subject access requests made to government departments. It seeks to do it on the basis that government departments, when confronted with a request, set out to develop their procedures on the basis of treating all data subjects making such requests as having a prima facie claim to ownership of any personal data relevant to those requests.
I have listened genuinely carefully to what the noble Baroness has said in moving the amendment, but I do not fully understand the purpose lying behind the first limb of the amendment. It will be the case, I believe, that, subject to any subject access exemptions that apply, individuals will be entitled to gain access to all personal data held about them by government departments, and indeed any other bodies. I am not sure or clear how the question of ownership affects that position. They do not need a reference to ownership to get all of the rights that are referred to in the Bill.
My belief is that the question of ownership does not arise in relation to information. Ownership of information per se is not a concept that is known to English law. The whole data protection regime proceeds on the basis of that premise. We should therefore be
CWH 42
entering deep and uncharted waters were we to follow the approach advocated in the first limb of the amendment. Surely the important point in data protection terms is that individuals should be able to get the access they need. We believe that the Bill provides properly for this, subject to appropriate exemptions, and I see no justification—indeed, simply a recipe for confusion—for going further. That is the first limb of the proposed amendment.
As to the second limb, which relates to the price to be paid for information, in the White Paper on our proposals for data protection published in July last year we made it clear that we would be maintaining the £10 maximum subject access fee, which we believe to be by no means onerous. That is still our intention. It will, of course, be open to data controllers to charge a lower amount or nothing at all. We shall be setting fees in an order to be made by the Secretary of State once the Bill has been passed. I do not believe that we are proposing anything other than very modest fees in this respect.
In the light of what I have said, I hope that the noble Baroness will not press her amendment.
Baroness Nicholson of Winterbourne: I thank the Minister for those helpful illuminations. I know about that as a co-sponsor of the right of access to medical records Bill, a co-sponsor of the right of access to schools' records Bill and as the initiator of the rights of employee records access.
I turn to the NHS—my core example—for the substance of my argument. I have here an excellent document which is a best practice statement about confidentiality in the NHS. It is a statement to be given to the patients as a best practice statement from the department:
"We only ever use or pass on information about you if people have a genuine need for it in your and everyone's interests. Wherever we can we shall remove details which identify you".
There are two big gaps in that. The judgment of whether it is in "your and everyone's, interest" rests entirely with the Government. There is no guarantee—in fact there is the reverse of a guarantee—that personal data detail will be removed.
Here is further proof in a World Health Organisation document—this is again a European Union Rights of Patients consultation under the auspices of the WHO, another EU piece of material. The European Union believes strongly that:
"Confidential information can only be disclosed if the patient gives explicit consent".
I fully accept that that ownership of information is not in English law. But what about control of its use?
As I said at the beginning, perhaps my phraseology is not adequate for this. I of course perforce must withdraw the amendment. However, I would wish to have a meeting, perhaps with the Minister or with the noble and learned Solicitor-General, to discuss whether or not some form of citizen control of use could be built into records of services from the Government to the individual. These are services for which the individual pays—such as health and social security—and which would not in any way unsettle Government need to

CWH 43
perform national actions for the citizens. If commercial companies can do it, why cannot the Government? I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 40 not moved.]
Baroness Turner of Camden Baroness Turner of Camden had given notice of her intention to move Amendment No. 41:
Page 5, line 47, at end insert ("and
() whether data relevant to the request is being, or is likely to be, processed under section 28(1)").
The noble Baroness said: I had already spoken to this because it was grouped with Amendment No. 38. I should like to thank the noble and learned Lord for his explanation. I shall not move the amendment.
[Amendment No.41 not moved.]
Lord Williams of Mostyn Lord Williams of Mostyn moved Amendment No. 42:
Page 6, leave out lines 19 to 24 and insert—
("the day on which the data controller receives the request or, if later, the first day on which the data controller has all of the following—

the required fee,

(a) the information referred to in subsection (3), and

(b) in a case falling within subsection (3), and

© in a case falling with in subsection (4) but not within paragraph (b) or © of that subsection, the consent of the other individual concerned.").
On Question, amendment agreed to.
Clause 7, as amended, agreed to.
Clause 8 [Provisions supplementary to section 7]:
Viscount Astor Viscount Astor moved Amendment No. 43:
Page 7, line 5, leave out ("a trade secret") and insert ("an intellectual property right the disclosure of which would give rise to an action for breach of confidence").
The noble Viscount said: This amendment involves the words "trade secret" and their definition. It seems to me that an intellectual property right which would give rise to an action for breach of confidence is capable of interpretation by the courts, whereas the words "trade secret" are not a clearly defined term of intellectual property law. My amendment, therefore, seeks to clarify those issues.
I am concerned by the meaning of those words. They can mean almost anything, from a complicated chemical formula to the number of hours spent working on some deal. They could indeed be what time a factory starts. They seem to be words for which I have been unable to find any definitions that have been used adequately in English case law. My amendment is an attempt to clarify the situation. It is difficult. It is one of those issues where, if one looks at it, one realises more and more that it is something which may be further elucidated if we had the freedom of information Bill coming on at the same time, but that of course is no part of this process. It will not come in this Session. I do not believe that there is an adequate definition in law of "trade secret" and the Government need to give some thought to the matter.
My second amendment, Amendment No. 44, is an extension of that theme. I believe that there should be a specific provision allowing information involving intellectual property, as it were, in addition to trade secrets—because what might be intellectual property might indeed not be a trade secret or it might be—to be exempt from the data subject's right to be informed of the logic involved in certain automated decision-making.
That is consistent with the directive, under Recital 41, which states that this right is not intended to allow either trade secrets or intellectual property to be adversely affected. As I understand it, "trade secret" at the moment can include intellectual property, but it is not clear in legislation. Page 18 of the Government's White Paper on freedom of information (in relation to commercial confidentiality specifically) refers not only to trade secrets but also to intellectual property. Therefore, there is an inconsistency in that respect.
I am concerned that knowing the logic involved in certain circumstances would increase the incidence of fraud, which is also the third leg to the amendment. Businesses have a duty to prevent the commission of crime and the amendment seeks to ensure that they are able to do so. This is a difficult area, and the Bill does not adequately define these two areas. I hope that the Government will consider the issue. I beg to move.
Lord Falconer of Thoroton: I am grateful to the noble Viscount, Lord Astor, for moving the amendment and also for his Amendment No. 44 which puts forward an alternative formulation of trade secret; namely,
"or intellectual property or would, or is likely to, facilitate the commission of a criminal offence".
One proposal that he puts forward is to delete the reference to "trade secret" and replace it in effect by reference to an intellectual property right; the other proposal is to keep in "trade secret" and put in the words "or intellectual". If I may say so, that is a very legalistic way of dealing with the issue.
Perhaps I may deal with both the noble Viscount's amendments. The noble Viscount is concerned that this safeguard for "trade secrets", which is contained in Clause 8(5), is not sufficiently wide to protect intellectual property. His second amendment is to prevent the commission of offences. In bringing forward this particular provision in Clause 8(5), we have paid particular attention to the question of intellectual property. The provisions of Clause 8(5) protect commercial or other information from disclosure. Intellectual property rights are not just—or perhaps even mainly—about disclosure. The Bill is not intended to affect any protected restrictions on the use by the data subject of information acquired by this route. Where it is necessary to protect information from disclosure, whether or not that information is the subject of intellectual property rights, we consider that that information will have the necessary quality of a trade secret. As a lawyer, I know from my own experience that "trade secrets" is a phrase used in a large number of decided cases in order to define certain sorts of information which people are not allowed to disclose.

CWH 45
As to the facilitating of criminal offences, I am not convinced that there is a problem here. Clause 8(5) is concerned with a very narrow set of circumstances. It is about the situation in which an individual seeks access to the logic underlying a fully automated decision. It is pertinent to ask what criminal offences may be facilitated by the provision of limited information of this kind. The answer is, I suggest, that the offences would be those relating in some way to the way in which the organisation in question carries out its business. It is difficult to see what more general opportunities for criminal activity might be facilitated. That being so, I would suggest that the expression "trade secret" is again sufficiently wide to mean that the organisation would not have to reveal information of a kind likely to assist criminal activity.
I note the concern that the noble Viscount has expressed about the phrase "trade secret", but it does the trick and it is the best way to deal with the matter. In the light of what I have said, I would hope that the noble Viscount will feel able to withdraw his amendment.
Viscount Astor: I thank the noble and learned Lord the Solicitor-General and I will certainly withdraw the amendment. I quite understand what he said about intellectual property rights. I am still somewhat concerned, however, about the openness of trade secrets. As he said, this can be interpreted in a fairly wide way, and I am concerned about what will and will not be interpreted as a trade secret. However, I will study carefully what the noble and learned Lord said, and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 44 not moved.]
Clause 8 agreed to.
6.15 p.m.
Clause 9 [Right to prevent processing likely to cause damage or distress]:
Lord Williams of Mostyn Lord Williams of Mostyn moved Amendment No. 45:
Page 7, line 34, leave out from ("manner") to ("likely") and insert—
("(a) is causing or is").
The noble Lord said: Amendments Nos. 45 and 49, which are government amendments, are grouped with Amendments Nos. 46, 47, 48, 51 and 55. It may be for the Committee's convenience, if I speak to Amendments Nos. 45 and 49. To save the noble Viscount, I can dispose of Amendments Nos. 51 and 55 immediately. The noble Viscount indicates that there may be deficiencies in the Scottish context. There may well be, but I have not been able to consider the matter. If it is helpful and saves the noble Viscount indicating his area of concern—and I do not know whether it is right—I will undertake to consider the suggested changes. If change is necessary, we shall bring forward appropriate amendments in due time.
I shall therefore speak to Amendments Nos. 45 and 49, which are government amendments. These are partly technical adjustments to the test which has to be
CWH 46
satisfied by a data subject so that he has the right to prevent certain processing of data about him taking place. The test, basically, is that he has to show, with reasons, that the processing of the data, generally or for a particular purpose or in a particular manner, is not warranted as causing, or likely to cause, substantial harm. The amendments make it clear that it is the harm itself—the substantial damage or substantial distress—which must be unwarranted. We have therefore tried to make the test more clearly dependent on the likely effects of the processing, and thus easier to apply.
In bringing forward these amendments, we took carefully into account representations from the media, to whom, as always, I am most grateful for their constructive approach as to the desirability of clarifying this aspect. I beg to move.
Viscount Astor: I am grateful to the noble Lord for saying that he will consider my Amendments Nos. 51 and 55. I was looking forward to the Solicitor-General explaining to me why I would be wrong in saying why distress is not a term of art in Scots law, but that can no doubt wait for another occasion.
Perhaps the Minister could comment briefly on Amendment No. 47 which leaves out "substantial" and inserts "significant". I was concerned that the threshold was really too high and that the harm should only be significant, rather than substantial. Could the noble Lord comment briefly on that?
Lord Williams of Mostyn: There ought to be a reasonably high threshold for the use of the remedy, because we are stopping potentially perfectly lawful processing at what is otherwise too low a level. The directive itself looks to a high threshold, "compelling legitimate grounds" I believe is the phrase. The noble Viscount wants to substitute "significant" for "substantial", but we think substantial is what we are looking to. That is the term used elsewhere in the Bill, so it has the virtue of consistency and of putting into effect domestically what the directive requires.
Viscount Astor: I am grateful for the noble Lord's explanation.
Lord Norton: I wish to speak on Amendment No. 46. This is a probing amendment. Clause 9 puts into effect Article 14 of the directive, of which the Minister has pointed out the most important words are "compelling legitimate grounds". It does not seem to me that these words easily translate into substantial damage or substantial distress. Substantial damage is a concept which is easy enough to understand. It is not just material measurable damage; it is serious damage. Is it right to process data that will materially damage an individual but not substantially damage? I suspect an individual may well consider that he has compelling legitimate grounds when no damage is caused—a personal detail of a person's health records for instance. Compelling legitimate grounds, it seems to me. in essence is an emotional measure that could result in damage. How can substantial distress be measured? It is subjective.

CWH 47
In the days of the reforms of the noble and learned Lord, Lord Woolf, it must be better to bring more certainty to the law rather than to include subjective grounds which have to be left to the courts to decide. In this probing amendment I am asking whether the Minister would consider a more certain objective test, to the benefit of the data subjects and the data controllers.
Lord Williams of Mostyn: I am grateful for that careful review, which the noble Lord has put forward. If the amendment were accepted it would substitute what is a less rigorous test of material damage. I have travelled part of this ground in my response to the invitation of the noble Viscount when he wished our policy answered, as it were.
We do not feel it is right to make the change the noble Lord, Lord Norton, suggests. After all, the new regime introduces a completely new concept into data protection law. It bears repetition, I hope, that it gives individuals the right to object to processing which is in all respects lawful, and if there is to be a block on that the test should be set high, and that is why we have set it high. It is not to be overlooked perhaps that in the same section of the Bill one finds the word "unwarranted". We believe that our phrase, "substantial damage or substantial distress", is capable of being adjudicated on by the appropriate body. Material damage sets the hurdle quite low, and when one is dealing with interference with an activity which is otherwise lawful one needs to have a higher threshold simply than material damage.
On Question, amendment agreed to.
The Deputy Chairman of Committees (Lord Strabolgi): I must inform the Committee that if Amendment No. 46 is agreed to I cannot call Amendments Nos. 47 or 48.
[Amendments Nos. 46 to 48 not moved.]
Lord Williams of Mostyn Lord Williams of Mostyn moved Amendment No. 49:
Page 7, line 35, at end insert ("and
(b) that damage or distress is or would be unwarranted").
The noble Lord said: I have already spoken to this. I beg to move.
On Question, amendment agreed to.
Lord Norton Lord Norton moved Amendment No. 50:
Page 7, line 40, at end insert—
("() The data controller must within the prescribed period respond in writing to any person who has given a notice under subsection (1), indicating—

(a)whether he intends to comply with the notice, or any part of it; and

(b)if he intends not to comply with the notice, or any part of it. his reasons for so doing.

() In this section "the prescribed period" has the same meaning as in section 7.").
The noble Lord said: I also speak in respect of Amendment No. 52. In Clause 9 there is no requirement for the data processor to respond to the notice in writing from the data subject. An unscrupulous data processor
CWH 48
could just ignore matters and the data subject would have the problem of not knowing whether the request for the non-processing of data had been successful, or worse, the data subject would not know the grounds upon which his request had been rejected when the processing took place. This amendment would force the data controller to respond to the data processor's letter within the prescribed period as defined in the Bill, setting out whether the data controller agrees to the request, and, if not, on what reasons the processing is taking place. It provides the link between the data processor and the controller from a dialogue before the matter has to be taken to the courts. The Data Protection Registrar has welcomed this amendment. I beg to move.
Lord Williams of Mostyn: I also speak to Amendments Nos. 50 and 52 in the name of the noble Lord. I agree that the consequence of his amendments would be to put upon data controllers the responsibility of making a particular reply.
I sympathise with the thinking behind these amendments. Notices under Clauses 9 and 10 are not on all fours of course with subject access requests under Clause 7, because the only satisfactory way to comply with the subject access request is to reply to it in writing, either enclosing the information requested specifying what further details are needed or explaining why the information requested cannot be supplied.
I agree with what the noble Lord has said. A notice objecting to processing can be complied with simply by the data controller stopping the processing. It is not on this scheme essential to inform the individual in writing that this has been done. Because it is not essential that the data controller should write to the individual to explain the extent to which he does not intend to comply and why he has taken that decision, there is a query about the virtue of the scheme. Therefore, I believe there is some force in what the noble Lord has said and I undertake to consider it further.
Lord Norton: I am grateful to the Minister for his very positive response and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 51 not moved.]
Clause 9, as amended, agreed to.
Clause 10 [Right to prevent processing for purposes of direct marketing]:
[Amendment No. 52 not moved.]
Baroness Young of Scone Baroness Young of Scone moved Amendment No. 53:
Page 8, line 13, leave out ("or marketing material") and insert (", marketing or promotional material, excluding information-based material not of a direct selling nature,").
The noble Baroness said: This is a rather sensitive area in that we all have very strong views about the issue of direct marketing. However, I seek clarification on the definition of direct marketing material for the benefit of the not-for-profit sector which relies very much on material that could be so defined for the communication with supporters and members.
The Bill rightly includes clauses to protect individuals from unwelcome and unsolicited direct marketing material. I must confess I am rather a fan of junk mail in that it opens one's eyes to the range of goods and services that one might otherwise never have dreamt existed. The definition of direct marketing material used in the Bill could be subject to misinterpretation in the case of not-for-profit and voluntary sector organisations. Voluntary sector organisations recognise the legitimate wishes of individuals not to be showered with large quantities of direct mail seeking funds.
However, in many cases when the not-for-profit sector is communicating with supporters or members, it is doing so in a way which is dual purpose. It is primarily providing factual information on its work or on issues in which it and the data subjects have a mutual interest. It may at the same time also be soliciting support in that issue. This support may be of a financial nature but it could equally be of a non-financial nature. I am talking about circumstances when voluntary organisations and charities, for example, send out briefing material to supporters on issues and perhaps ask them to return cards saying that they are concerned about that issue, so that the degree of that concern can be communicated to Government or other opinion formers or decision makers. It is really to seek assurance from the Minister that he will consider whether a more detailed definition of marketing material may be inserted into the Bill to ensure that legitimate material coming from the voluntary sector, which I believe is in the public interest, will not be disbarred by this provision in the Bill.
6.30 p.m.
Lord Elton: As one not so keen as the noble Baroness on receiving junk mail, perhaps I may use this opportunity to put an idea in the Minister's mind, if it is not already there. Many of us in receipt of torrents of the stuff are quite unaware from where our name and address have been obtained, in particular if they are supposed to be in some sense secure. Perhaps the noble Lord may have in mind the possibility of requiring agencies who precipitate this material to put a code on the address label which indicates the source. Instead of writing to 33 sellers of shoes, motor cars, aeroplanes, boats, and so on, we can write to one agency which has a central address list that they sell to others. It would make life much easier.
Lord Skelmersdale: I am glad I gave way to my noble friend Lord Elton. I should like to begin by declaring an interest as chairman of a medium-sized medical charity, which of course uses mailing lists all the time. I can see no earthly reason why a charity should be absolved from the responsibility of removing a name from a mailing list when it is asked to do so. After all, under the Bill commercial firms are asked to do exactly the same thing.
As regards the point made by my noble friend Lord Elton, what happens if it is impractical to code the address labels, for example, where a manual system is being used? That is what I referred to earlier. That manual system may not only be the construction's
CWH 50
mailing list; it might be direct typing of envelopes. It would take forever to put a different code on the individual envelopes. I do not think that that is a good idea.
Lord Williams of Mostyn: I am sorry to bring harmony where there is apparent disharmony between the noble Lords. I am deeply saddened by the mental picture of the noble Lord laboriously going through typing envelopes. I am sure there should be a law against it.
In respect of the observation made by the noble Lord, Lord Elton, a similar parallel right can be seen at page 5 of the Bill in Clause 7(1)(c)(ii). That is a scheme which exists, but only in respect of a data access request. I cannot do more than say that his proposition is a novel one, plainly not without instant controversy. But I shall certainly put my mind to it.
On the earlier question that the noble Baroness raised, it is giving the citizen of this country an entirely new right. She rightly observed that direct marketing is defined in the Bill as encompassing all advertising and marketing material directed to particular individuals. It is not simply the bargain offers for 300 tulip bulbs—"Hurry while stocks last"—that irritates people. Individuals find other forms of advertising—some from non-profit-making organisations, some from religious organisations, some from what many of us would call fringe or cult organisations—of irritation sometimes; some people evidently find them of fascination.
All that this does is to give citizens the right to prevent all kinds of intrusive direct marketing material being sent to them by any means. It does not stop any data controller entering into the process and sending out the material; indeed, he is perfectly entitled to do so. On the other hand, citizens who do not wish to receive this material to which they are entitled, are now, quite rightly, able to say, "Do not send me this material"; in other words, they have the right to prevent such processing for direct marketing purposes. We do not see any reason to draw a distinction between those who are doing the processing. We are protecting here someone who does not wish his data to be used in this way, with the consequence of having material which may or may not be junk.
Viscount Astor: I have not spoken so far on this amendment, but perhaps I would like to speak in favour of the Government. The Minister has made a good point. I suppose I ought to declare an interest as my wife is a jeweller and sends out a Christmas catalogue. A few years ago she went through the rather disastrous process of buying a mailing list, which she then utilised. However, all she received for the next month were furious telephone calls from wives saying, "Has my husband been into your shop, and, if so, what did he buy and who for?". That explains the dangers of buying mailing lists. The citizen does have certain rights to be able to say, "I do not want any more".
Lord Skelmersdale: Before the noble Baroness decides what to do with this amendment. perhaps I may respond very briefly to the Minister, whose answer in a sense I pre-empted. I would not like him to go away this

CWH 51
evening with the idea that I spent a lot of time typing envelopes myself. What I do is something of which the Government would approve; namely, employ people on a part-time basis to type the envelopes for me. The Minister should approve of that.
Baroness Nicholson of Winterbourne: Could I just remind noble Lords that many people enjoy receiving such material. If they did not enjoy receiving it, those companies which send direct mail letters would not do it because it is an extremely expensive exercise. It is a pity to destroy harmless pleasure for a lot of people and clamp down on this too hard. I myself have just sent out a couple of thousand appeal letters for Iraqi refugees, with an 18 per cent. response rate, which is well above the norm of 2 per cent. I should remind noble Lords that there are such things as window envelopes.
Quite apart from that, we are talking about an important right because some people are thoroughly irritated by it. Nevertheless, it is trivialising to clamp down on direct mail when it is a commercial operation that only works if it is cost effective; and, therefore, it is self-limiting.
Lord Williams of Mostyn: I am inclined to take that point. Some people like it and they can have it; some people do not like it, and they do not have to.
Baroness Young of Old Scone: I thank the Minister for his answer. I am not sure that I accept that it deals totally with my concern, which is the circumstance where a voluntary organisation or a charity is giving information to the public through this method, but could be prevented from doing so because such information happens to contain a request for support of some sort associated with it. However, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn
Clause 10 agreed to.
Clause 11 [Compensation for failure to comply with certain requirements]:
Lord Falconer of Thoroton Lord Falconer of Thoroton moved Amendment No. 54:
Page 8, line 15, leave out ("An individual") and insert ("A person").
The noble and learned Lord said: This is a technical amendment. Clause 11 of the Bill presently says:
"An individual who suffers damage by reason of any contravention by a data controller",
has a right to compensation. We do not intend to exclude companies who suffer damage as a result of any contravention of any requirements of the Bill in the appropriate case. We therefore wish to amend Clause 11 by changing the word "individual" to the word "person", so that it is not restricted simply to individuals. In those circumstances, I beg to move.
On Question, amendment agreed to.
[Amendment No. 55 not moved.]
Clause 11, as amended, agreed to.
Clause 12 [Rectification, blocking, erasure and destruction]
Lord Falconer of Thoroton Lord Falconer of Thoroton moved Amendment No. 56:
Page 9, line 1, leave out ("it may also") and insert ("or
(b) is satisfied on the application of a data subject that personal data of which he was the data subject and which have been rectified, blocked, erased or destroyed were inaccurate,
it may").
The noble and learned Lord said: This is another amendment designed to fill a gap in the Bill. Clause 12(1) provides for individuals to go to court to seek an order requiring controllers to rectify, block, erase or destroy data about them which are inaccurate. Clause 12(3) complements this provision. It deals with the situation in which, before the rectification and so on, the data were disclosed to third parties. It allows courts which make an order under subsection (1) for rectification to make a further order requiring the controller to tell such third parties of the rectification and so on.
However, as the provision stands at present it is not comprehensive. It does not deal with the situation in which the controller rectifies inaccurate data otherwise than in pursuance of a court order but then refuses to tell third parties to whom the accurate data have already been disclosed of the rectification. The directive requires such third parties to be told of the rectification, whether or not the rectification was done in response to a court order. The purpose of the amendment is to correct this small deficiency. It means that courts will be able to make an order requiring controllers to tell third parties of rectification of personal data whether or not the rectification was made following an order under Clause 12(1).
A feature of this Bill is that individuals will be able to seek redress either by going to court or by seeking the assistance of the Data Protection Commissioner. Clause 38 of the Bill provides a power for the Data Protection Commissioner to issue an enforcement notice requiring the data controller to tell third parties to whom previously inaccurate data have been disclosed of rectifications which have been made. That clause mirrors the provision in Clause 12. Unfortunately, however, it also mirrors the deficiency. The purpose of the amendments to Clause 38 is to make a similar change to the enforcement notice power of the commissioner to that which I have already described in relation to the courts' order-making power. I beg to move.
Viscount Astor: My amendment is grouped with the noble Lord's and it was put down purely to ask a question of the noble Lord. The clause, as it stands, would result in a situation where the wider the dissemination of the data, the lesser the duty to notify third parties of the rectification. Have the Government considered in what circumstances and how that would

CWH 53
operate, in particular where it says in line 6, in relation to the number of persons who would have to be notified, what really is meant by that?
Lord Skelmersdale: Before the Minister responds to my noble friend, I am not quite sure whether this is a data processing gremlin or whether I am getting tired a little early this evening. The amendment says:
"insert ("or (b)".
I have looked very carefully at page 9, line 1, and I cannot find (a). Is this in fact felicitously drafted, or is it, as I suggested, a gremlin? If it is infelicitously drafted, perhaps these words should appear a little later in subsection (3), rather than in line 1. It might read rather more happily, but I am sure that the Minister would like to take this away and think about it.
Lord Falconer of Thoroton: I am obliged. Let me deal first with the point of the noble Viscount, Lord Astor. First of all, the more you disseminate the error, the more people you may have to contact. As far as the court is concerned, it must consider whether it is reasonably practicable to make an order for correction. One thing it must bear in mind is the number of people who have been told. It is a provision that is put in specifically to assist data controllers, and it is a factor to be borne in mind in considering whether to make such an order. We think it is sensible, but in certain cases it would be an almost impossible task to get in touch with everybody, and then the court has to consider in those circumstances whether it is practicable to impose such a burden on a data controller. We think that is sensible and that is why it is there.
As far as the point made by the noble Lord, Lord Skelmersdale, is concerned, it is a good point, but I am told the point is taken care of in the new printing of the Bill. But I am grateful to the noble Lord for raising it.
6.45 p.m.
Lord Skelmersdale: I am grateful to the noble and learned Lord. I shall study the reprint of the Bill avidly before Report stage.
Lord Falconer of Thoroton: If the noble Lord has time after putting the addresses on all the envelopes he was dealing with!
On Question, amendment agreed to.
[Amendment No. 57 not moved.]
Clause 12, as amended, agreed to.
Clause 13 [Automated decision-taking]:
[Amendments Nos. 58 and 59 not moved.]
On Question, Whether Clause 13 shall be agreed to?
Viscount Astor: I wonder whether I could ask the Minister at this stage what the Government's view is about the report of the Select Committee on Delegated Powers and Deregulation. It recommended that the Bill
CWH 54
should be amended to make the power in Clause 13(5) subject to the affirmative resolution procedure. I wonder whether the Minister has considered this.
Lord Williams of Mostyn: Yes, it is intended that it should be dealt with when we discuss Clause 16 this coming Wednesday.
Viscount Astor: I am grateful to the Minister.
Clause 13 agreed to.
Clause 14 [Jurisdiction and procedure]:
Lord Falconer of Thoroton Lord Falconer of Thoroton moved amendment No. 60:
Page 10, line 5, leave out ("held by") and insert ("processed by or on behalf or).
The noble and learned Lord said: These are two technical improvements to the description of the powers of the courts in proceedings for the enforcement of the rights of subject access. The first identifies the data in question as being,
"those processed by or on behalf or',
rather than "held by" a data controller. The amendment reflects the wording of the subject access right in Clause 7 itself, as it properly should. According to the definition of "processing" in Clause 1, the holding of data is only one aspect of processing, and it is not our intention so to limit the data to which Clause 14(2) refers.
The second amendment deals with a slight gap in the power conferred on courts by Clause 14(2). Where a subject access right is disputed, it may be important for the court itself to have sight of the data in question so that it can form its own view as to whether access should be given to a plaintiff. But it is clear that, pending the court's decision, the plaintiff himself should not have access to that data, whether under the rules of discovery or otherwise; that would be to give de facto subject access before the existence of the right itself had been properly determined.
The Bill as drafted gives that essential protection to "information constituting data". "Data" is a term which is defined in Clause 1 of the Bill, but the subject access right in Clause 7 is not just in terms of data. It also, in Clause 7(1)(d), extends to information as to the logic of certain decision taking. That information may or may not constitute data for the purposes of the definition in Clause 1. For example, the information may not be recorded in any form, it may simply lie in the knowledge of the data controller. It may be important, if subject access to such information is contested, for a court to be able to ask for and consider that information before deciding whether a plaintiff should be given access to it. The second amendment provides that missing power. I beg to move.
On Question, amendment agreed to.
Lord Falconer of Thoroton Lord Falconer of Thoroton moved Amendment No. 61:
Page 10, line 5, after ("controller") insert ("and any information as to the logic involved in any decision-taking as mentioned in section 7(1)(d)").
The noble and learned Lord said: I have already spoken to this amendment. I beg to move.
On Question, amendment agreed to.
Clause 14, as amended, agreed to.
Clause 15 agreed to.
Clause 16 [Prohibition on processing without registration]:
Viscount Astor Viscount Astor moved Amendment No. 62:
Page.11, line 13, leave out subsection (3).
The noble Viscount said: Clause 16(3) seems to give the Secretary of State quite wide powers to disapply Clause 1 where it appears to him that the processing is likely to prejudice the rights and freedoms of data subjects. Concerns had been expressed about the width of the power, so I simply put down the amendment to give the Minister the opportunity to explain slightly more concerning the circumstances under which they would be used. I beg to move.
Lord Falconer of Thoroton: As the noble Viscount, Lord Astor, has indicated, subsection (3), which his amendment would delete, allows the Secretary of State to make notification regulations specifying exemptions from the prohibition on processing without a register entry. Such processing, therefore, would not need to be notified to the commissioner. It is the Government's wish that the notification arrangements should be as simple as possible for the data controllers.
One of the perceived problems for the present registration arrangements is that they are unnecessarily burdensome. I know that the Data Protection Registrar has already taken steps within the constraints of the present law to make the arrangements more user friendly. I very much welcome that, but I hope that we shall be able to devise arrangements for notification under the Bill that take that process further.
One of the ways in which notification can be simplified is to remove some processing from the requirement to be notified. The Bill already provides that the processing of manual records does not need to be notified (except that to which the preliminary assessment procedure under Clause 21 applies). There is also an exemption for processing whose sole purpose is the keeping of a public register. But the key provision for exemptions is Clause 16(3), to which the noble Viscount's amendment relates.
The Committee might well ask what categories of processing the Government intend to exempt under this provision—the very question the noble Viscount asked. No firm decisions have yet been taken. The Bill provides for the notification regulations to be drawn up in consultation with the data protection commissioner. Of course, the commissioner does not yet exist, but the Government are already in discussion with the Data Protection Registrar about the content of the notification regulations. The scope of the exemptions from notification is one of the important matters that are
CWH 56
being considered. I am sorry not to help further, but I hope I have indicated the general purpose of the exemption power.
Lord Norton: I wish to speak to Amendment No. 66, which is grouped with Amendment No. 62. This is a probing amendment. Under this clause, the commissioner has to review the working of notification regulations from time to time so as to maintain an up-to-date registration system. Purpose is critical to the notification process. At present there are some 78 purposes, and since three of the eight data protection principles relate to the purpose, it is obviously important to define purpose clearly.
It is important that purpose is not defined too broadly and the right balance is struck. It is for this reason that I have tabled this probing amendment seeking to establish the extent to which the commissioner shall he allowed to emphasise the relationship between the processing of data and its purpose.
Lord Falconer of Thoroton: The duty laid on the commissioner in Clause 24(2) to keep the working of notification regulations under review is expressed in a general form, leaving the commissioner to determine how to fulfil this duty. The notification regulations themselves cover a variety of issues. My noble friend's amendment draws out for particular attention from that range of issues one section, Section 15(1)(d), which specifies just one of the "registrable particulars" which have to be notified to the commissioner by data controllers. The "registrable particular" is a description of the purpose or purposes for which the data are being, or are to be, processed. The amendment would require the commissioner to review the way data are processed in order to establish whether the processing is being undertaken in accordance with the processes specified in the notification. That is how I understand the amendment.
The role of the commissioner in reviewing the operation of the notification regulations is to consider how the regulations work in relation to the matters to which they relate. The regulations themselves govern the system whereby data controllers are required, in the interests of transparency, to inform the commissioner of certain details about who they are and what they do.
The detail of how purposes are to be described in the context of Clause 15(1)(d) is certainly relevant in this context. So is the manner in which data controllers are to inform the commissioner of those purposes. However, the "appropriateness" or otherwise of their processing is, so far as I can see, not relevant.
It is important to be quite clear that notification differs significantly from the current system of registration. Registration is about direct controls on processing activities themselves. Notification is not: it is, as I have said, about transparency only.
The extent to which data are processed in a manner appropriate to any purpose seems to me essentially a matter concerned with regulating processing, not transparency. The data protection principles set out rules for appropriate processing. The Commissioner has

CWH 57
powers to enforce those. That, it seems to me, is the right context in which to look at the appropriateness of processing.
In any event, the absence of a specific requirement to undertake a review of the kind proposed in the amendment would not prohibit such a review taking place, were the commissioner to consider one necessary and relevant to the purposes with which he is charged in this provision of the Bill.
In the light of those comments, I invite the noble Viscount to withdraw the amendment.
Viscount Astor: I am grateful to the noble and learned Lord the Solicitor-General for his explanation of Clause 16. I am still somewhat concerned that the Secretary of State has an overriding power on this issue, which does not seem to be subject to the limitations that the Bill generally provides everywhere else. I will read carefully what the Minister has said, but this is an issue to which we may wish to return on Report. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 16 agreed to.
Clauses 17 to 20 agreed to.
Clause 21 [Preliminary assessment by Commissioner]:
Lord Falconer of Thoroton Lord Falconer of Thoroton moved Amendment No. 63:
Page 13. line 15, leave out ("significant damage or") and insert ("substantial damage or substantial").
The noble and learned Lord said: This is another technical amendment. It will provide consistency in the way that damage or distress is qualified in the different clauses of the Bill. Clause 9(1) already refers to "substantial damage or substantial distress". The amendment will bring the wording of Clause 21 into line with that of those other clauses and ensure that this threshold is applied consistently. I beg to move.
The Earl of Northesk: I note that my Amendment No. 64 is grouped with this amendment and I wish to speak to it. The purpose of Amendment No. 64 is to restrict the circumstances in which the commissioner will be allowed to extend the amount of time that will be given to the consideration of processing which has been notified.
Specifically, the timing of business ventures is important. Indeed, in some cases it is vital if companies are to be the first to launch a new commercial project. The planning of the launch is precise and businesses require a high degree of certainty in respect of their business and legal obligations to meet their projections.
As the Bill is currently drafted, the commissioner may extend the notice period by a further 14 days if "special circumstances" exist. It is conceivable that such circumstances could be extraneous—for example, by virtue of the commission being subject to too great a weight of notifications for its staff adequately to deal with them—and yet they could impact considerably and detrimentally upon the commercial viability of the company concerned. With this in mind I suggest that any additional time required for further consideration as
CWH 58
to whether processing is permitted to progress should only be granted in circumstances that are truly "exceptional".
7 p.m.
Lord Falconer of Thoroton: Clause 21 provides the commissioner with 28 days (or 28 days plus one extension of a further 14 days) within which to determine whether a preliminary assessment of a particular notification is required and then to undertake that assessment. The amendment raises the issue of whether the conditions permitting the commissioner the extra 14 days are the right ones. The amendment proposes a much stricter condition; namely, that the circumstances should be "exceptional" rather than special. As at present advised, we do not see the need for the conditions to be made more restrictive.
The 28 days provided in the Bill already strike a fine balance between the time needed to give proper consideration to the assessment and the interests of the data controller, who is unable to process the data during this period (unless the commissioner has given his opinion on the processing's likely compliance with the legislation). The processing which will be subject to preliminary assessment is processing which is particularly likely to cause significant damage or distress to data subjects or otherwise significantly to prejudice their rights and freedoms. Although only a small quantity of processing is expected to fall within this category, it justifies the special attention it will receive in the preliminary assessment. The further 14 days should be available to the commissioner, if needed, on the basis of "special circumstances" as the Bill provides. This is a relatively modest provision for extension in already restricted circumstances. In the light of those comments, I hope that the noble Earl will feel able to withdraw his amendment.
On Question, amendment agreed to.
[Amendments Nos. 64 and 65 not moved.]
Clause 21, as amended, agreed to.
Clauses 22 and 23 agreed to.
Clause 24 [Functions of Commissioner in relation to making of notification regulations]:
[Amendment No. 66 not moved.]
Clause 24 agreed to.
Clauses 25 to 26 agreed to.
Clause 27 [National security]:
Lord Williams of Mostyn Lord Williams of Mostyn moved Amendment No. 67:
Page 15, line 43, at end insert ("any of the provisions or).
The noble Lord said: Grouped with this amendment are Amendments Nos. 69, 70, 72, 73, 84, 91, 94, 95, 98, 99, 110, 111, 114 and 120. It is an extended set of technical amendments, which perform identical functions on a number of exemption provisions. They rectify an unintended effect which derives from the way that the exemptions are expressed at present. They seem to operate on an overly rigid all-or-nothing basis, so that

CWH 59
if an exemption is justified in respect of one part of a clause, for example, the whole clause inevitably ceases to apply. That is not what we set out to achieve.
Particularly in exemptions relating to Clauses 27 and 31, which potentially disapply a wide range of clauses in the Bill, the exemption should not extend just to those clauses which are appropriate in any given circumstances, but only to the appropriate parts of those clauses. Sometimes it will be right for the whole clause to be disapplied, but not always. We wish to build in a flexibility which is presently missing.
It may also be an important factor in Clauses 28 and 37 to make further exemptions from the Bill; we need to be able to express exemptions precisely, so that everyone knows how we wish them to apply. We do not wish them to apply more broadly than is properly justifiable. That is the basis for these numerous technical amendments. I beg to move.
On Question, amendment agreed to.
Baroness Nicholson of Winterbourne Baroness Nicholson of Winterbourne moved Amendment No. 68:
Page 15. leave out line 44.
The noble Baroness said: I wish to say that these amendments are drawn to my attention by the excellent organisation Liberty, although I do not in fact belong to it. However, the concerns are mine as well, or I would not be putting them forward. I want to encapsulate them all by suggesting that the clause contains a very large exemption, about which a number of people are extremely concerned. The objective behind the amendment is to ensure that the security services comply with the data protection principles; that they are required to register under the Bill; and that they comply with the notification requirements of Part III.
Perhaps I may remind noble Lords that the security services—the Secret Intelligence Service, GCHQ and the Security Service—have been exempt from the protections provided to individuals by the 1984 Act. It is proposed in this particular clause that processing of data for the purpose of safeguarding national security will be exempt from all of the data subjects' rights in Part II of the Bill, from the enforcement provisions in Part V and even from the need to register under Part III of the Bill.
Is this really necessary? These are blanket exemptions. Do all the data protection principles set out in Schedule 1 have to be set aside? For example, the requirement that data be,
"adequate, relevant and not excessive in relation to the purpose or purposes for which they are processed"—
that is the third principle; that data be,
"accurate and, where necessary, kept up to date"—
the fourth principle; that it should be,
"processed fairly and lawfully"—
the first principle. Why should these principles not apply to the security services? Personally, I should have thought that it was exceptionally important that they did. On top of that, is it necessary or acceptable in a democratic society that these simple, essential principles should be set aside?
There is also a point of applying the principles specified by the court on an application for judicial review to remove the requirement if a tribunal should reach a decision by applying the test which would he applied in judicial review proceedings. Perhaps the justification of this suggestion is that the judicial review test is too strict, as the tribunal would only allow an appeal where a Minister's decision was considered so unreasonable as to be perverse.
To delete Clause 27 entirely is one way forward, and I have attached my name to the amendments which would do just that. The purpose, as I have already stated, is simply to stop this proposal that the security services should be totally exempt. I beg to move.
Lord Williams of Mostyn: In this grouping, if I have it correctly, are Amendments Nos. 68 and 71, the amendments to which the noble Baroness, Lady Nicholson of Winterbourne, has just spoken, Amendment No. 74 also in her name, Amendment No. 75, which is a government amendment and Amendment No. 79, which is the further national security amendment in the name of the noble Baroness.
I understand the underlying concerns expressed by the noble Baroness and, as she says, by a number of organisations of repute in this country. Clause 27: the point of it is to safeguard national security. It is self-evident. There are going to be circumstances in which personal data will need to be processed by the appropriate agencies to safeguard national security. Clause 27 makes it possible for that processing to be carried out without the otherwise subsisting controls putting national security at risk. There will be nothing between any of us in this Committee on the need for a national security exemption. The real question is what should the scope of the exemption be.
The noble Baroness believes that national security can be adequately protected by an exemption from fair processing, subject information and non-disclosure exemptions and that exemption can never be necessary from the other principles or notification requirements. if I have her argument right. This is where we part company. The exemptions as currently drafted can apply only if they are required. I refer to Clause 27(1)(c) on page 16 of the Bill. So a requirement is needed. If the exemptions are not required, the Bill will not allow them to be applied. However, if they were to be required, I believe that they should be available.
It is plain that applying any of the data protection principles could have the potential to damage national security. The noble Baroness's amendments would have the effect of placing compliance with all the requirements that she would exclude from the scope of the exemptions above. That would have the consequence of putting that interest, which I recognise, above the national interest in national security, and there, again, we part company.
The noble Baroness's amendments would require the security agencies to notify their processing to the Data Protection Commissioner. Notification is about transparency, and it must be reasonably anticipated as being possible that such transparency will not always

CWH 61
be compatible with safeguarding national security. If an exemption is needed in those cases we believe, quite adamantly, that it should be available.
The noble Baroness rightly said that the new Bill will provide a fuller application of data protection regime principles to national security activities than is now the case. I repeat this because I recognise its importance. We say that the Bill allows exemptions to be claimed only if and to the extent that they are required for the purpose of safeguarding national security. If they are required, then they must be available.
Baroness Nicholson of Winterbourne: Could I question the Minister on requirements, if they are required, before the Bill comes before their Lordships' House? I have knowledge of the mechanisms of requirements in terms of authorisations for telephone tapping by the Home Secretary. I know that, had the Home Secretary been required to sign all the authorisations for all the tapping that was going on, he would not have had time to do anything else. Therefore, if I recall correctly, the police were evading the issue, very intelligently, and perfectly within the law—although outside the spirit of what I understood to be the law—because they were tapping the echoes and not the data-flow. Every data-flow creates an echo and they were tapping the echoes. The number of activities, therefore, were many. When the Minister talks about exemptions and requests for exemptions, I simply wonder how that will be achieved and monitored.
Lord Williams of Mostyn: I recognise that one is putting that duty on a Minister of the Crown. If, in the past, Secretaries of States did not discharge their duties properly, that is a matter of regret to me. There are, of course, different controls for the interception of communications which are subject, in any event, to review and to reporting by the reviewing commissioner. One sees the answer to the noble Baroness's question: it is a certificate signed by a Minister of the Crown, asserting the requirement that is needed.
There has to come a time, when, however alert one is to individual liberties, the executive needs to take decisions on national security matters. Those are particularly sophisticated and subtle questions. I regret to say this. But the world in which we live makes them not suitable for general public debate. I suppose some people would say that that is totalitarian, but in fact it is not. It recognises that there are difficult decisions to be made. They will have to be made by a Secretary of State, who, after all, is a member of an elected Government, a subject of controls of different sorts—sometimes rightly from the media, sometimes from another place should it wish to be alert to the powers that it has—and subject to Members of your Lordships' Chamber.
The Secretary of State will have to certify the requirement. That is a solemn obligation which I do not myself believe a responsible politician would lightly set on one side.
Baroness Nicholson of Winterbourne: I thank the Minister for that further explanation. There are many things that cannot be discussed in public but accuracy and fairness are both vital imperatives in a democratic society, and that citizens' privacy should not be invaded by the security services without due course is a bulwark of freedom. There is little that I can add to the points that I have made and I am confident that the Minister has taken them into account. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Williams of Mostyn Lord Williams of Mostyn moved Amendments Nos. 69 and 70:
Page 15, line 44, leave out ("any or).
Page 16, line 1. leave out ("any of the provisions of').
The noble Lord said: I have already spoken to Amendments Nos. 69 and 70. I beg to move.
On Question, amendments agreed to.
[Amendment No. 71 not moved.]
Lord Williams of Mostyn Lord Williams of Mostyn moved Amendments Nos. 72 and 73:
Page 16, line after ("exemption") insert ("from that provision").
Page 16, line 5, leave out ("the exemption") and insert ("exemption from all or any of the provisions").
The noble Lord said: I have already spoken to this amendment and to Amendment No. 73. I beg to move.
On Question, amendments agreed to.
[Amendment No. 74 not moved.]
Lord Williams of Mostyn Lord Williams of Mostyn moved Amendment No. 75:
Page 16, line 35, at end insert—
("() No power conferred by any provision of Part V may he exercised in relation to personal data which by virtue of this section are exempt from that provision.").
The noble Lord said: This is a purely technical amendment to ensure that exemption from Part V of the Bill, which relates to enforcement powers, operates effectively. Clause 26 of the Bill gives technical effect to exemptions from the data protection principles. Parts II and III of the Bill provide that references to personal data or processing in those provisions must be read subject to the exemptions. No equivalent technical provision had been made for exemptions from Part V. That is an omission, and this amendment seeks to put it right. I beg to move.
On Question, amendment agreed to.
Clause 27, as amended, agreed to.
Lord Williams of Mostyn: Perhaps I may say one thing before I move the adjournment. It is possible that for a short period of time, because I have another duty elsewhere, I shall not be able to be in the Committee on Wednesday. The Solicitor-General will be here.

CWH 63
No discourtesy is intended. It is simply that there is another matter to which I have to attend for a brief period which overlaps with the considerations of the Committee. Therefore I beg to be excused, not reproved, for my absence.
CWH 64
I move to more joyful news. This may be a convenient moment for the Committee to adjourn.
The Committee adjourned at nineteen minutes past seven o'clock until Wednesday next at four o'clock.

  Foreign and Commonwealth Office: Supplementary Estimate
  Lord Hogg of Cumbernauld
  asked Her Majesty's Government:

  What changes they propose to make in the Foreign and Commonwealth Office cash limits and running cost limits for 1997–98. [HL659]

  The Parliamentary Under-Secretary of State, Foreign and Commonwealth Office (Baroness Symons of Vernham Dean)
  Subject to parliamentary approval of the necessary Supplementary Estimate the cash limit for Class II, Vote 2 (Other External Relations) will be increased by £17,945,000 from £229,815,000 to £247,760,000. The increase is required to cover UK contributions to certain OSCE, United Nations and WEU Missions of £26,429,000. This will be partly offset by recoveries of £5,000,000 from the United Nations. There is a reduction of £3,788,000 because of a negative Overseas Price Movement. This will be partly offset by transfers in of £304,000, a total of £204,000 from the Department of the Environment, Transport and the Regions (Class V, Vote 2 and Class VI, Vote 3), Department of Trade and Industry (Class IV, Vote 1) and the Ministry of Defence (Class I, Vote l) in respect of their contributions to the United Nations Convention on the Law of the Sea following UK accession, and a further £100,000 from the Ministry of Defence (Class I, Vote 1) in respect of their contribution to the grant-in-aid to the Atlantic Council of the UK.

  The cash limit for Class II, Vote 1 (Overseas Representation) will be reduced by £16,850,000 from £628,876,000 to £612,026,000. This reduction takes account of negative Overseas Price Movements of £20,742,000 (£10,095,000 running costs, £10,417,000 other current and £230,000 capital) which has offset a £4,000,000 running cost claim to cover major international conferences. There have also been three transfers to other government departments: £10,000 to the Cabinet Office (Class XVIII, Vote 2) for information work; £137,000 to the Department for International Development (Class II, Vote 5) for Know How Fund staff and £4,000 to the Privy Council Office (Class XVIII, Vote 3) to help fund the new UK Anti Drugs Co-ordinator and his Deputy. These have been partially offset by two transfers in; £25,000 from the Ministry of Defence (Class I, Vote 1) and £18,000 from the Northern Ireland Office (Class XV, Vote 1) for the Whitehall District Heating System.

  The gross running costs limit on Class II, Vote 1 will be reduced by £6,701,000 from £534,813,000 to £528,112,000. The Wilton Park section of the Vote has been increased by £498,000 gross running costs, £29,000 other current, £65,000 capital and £351,000 appropriations in aid. These increases have been fully
  WA 58
  offset by reductions in the Overseas Representation section of the Vote.

  The net running cost limit for Wilton Park has been increased by £149,000 from £638,000 to £787,000.

  The cash limit for Class II, Vote 4 (The British Council) will be reduced by £1,637,000 from £97,884,000 to £96,247,000 because of negative Overseas Price Movements of £1,637,000.

  The net decrease to the Vote will not add to the planned total of public expenditure.

  Nuclear Policy
  Lord Judd
  asked Her Majesty's Government:

  Whether they endorse the conclusions of the Carnegie Commission on Preventing Deadly Conflict with regard to nuclear weapons that "governments should eliminate the practice of alert procedures (e.g. relying on continuously available weapons) and set an immediate goal to remove all weapons from active deployment—that is, to dismantle them to the point that to use them would require reconstruction"; and what steps they are taking towards this objective. [HL578]

  Baroness Symons of Vernham Dean
  In the Strategic Defence Review and elsewhere, the Government are examining all aspects of their nuclear policy. This examination includes measures advocated by the Carnegie Commission, such as de-alerting and related concepts.

  Several of the Carnegie Commission's recommendations are already government policy. The Government hope to ratify the Comprehensive Test Ban Treaty this year and have committed themselves to support for a Fissile Material Cut-Off Treaty.

  Government Departments: Policy Co-ordination
  Lord Judd
  asked Her Majesty's Government:

  What arrangements they have made to facilitate policy co-ordination between the Foreign and Commonwealth Office and the Department for International Development and to enable the respective Secretaries of State and other Ministers to meet regularly for this purpose; how many such meetings there have been since May 1997; and what arrangements have been made for wider co-ordination with other departments and Ministries, including Defence; Trade and Industry; Environment, Transport and the Regions; Health; Social Security; Agriculture, Fisheries and Food; and the Treasury. [HL579]

  Baroness Symons of Vernham Dean
  Ministers and officials of the Department for International Development and the Foreign and Commonwealth Office have regular meetings to discuss a wide range of policy and operational matters. Likewise, co-ordination with other departments is conducted on a regular basis by Ministers and officials as necessary.

  Iraq: UNSCOM Costs
  Lord Kennet
  asked Her Majesty's Government:

  What has been the cost to the United Nations of the United Nations Special Commission (UNSCOM)'s activity in Iraq so far; whether in their view, or to their knowledge in the view of the United States, it will ever be possible for UNSCOM to certify, without the continuing military occupation of that country, that Iraq retains no capability to recommence its weapons of mass destruction programmes; and in the absence of any such certainty, what are the implications for the raising of economic sanctions in Iraq. [HL586] [10 February]

  Baroness Symons of Vernham Dean
  I refer to my Answers of 1 December regarding UNSCOM's operating costs. Iraq is not under military occupation. Security Council Resolution 687 makes it clear that, when the Security Council is satisfied that Iraq has fully complied with the requirement to eliminate its weapons of mass destruction and is co-operating fully with UNSCOM over Ongoing Monitoring and Verification, the restrictions on exports from Iraq will be lifted.

  Middle East: UNSCOM's Remit
  Lord Kennet
  asked Her Majesty's Government:

  Whether United Nations Security Council Resolution 687 calls for ridding the entire Middle East of weapons of mass destruction (WMDs); and if so what steps are being taken to widen UNSCOM's remit to ensure the absence of WMDs in other Middle Eastern countries, and in particular those in Israel.[HL588] [10 February]

  Baroness Symons of Vernham Dean
  UNSCOM's remit under Security Council Resolution 687 (SCR 687) is to oversee, in conjunction with the International Atomic Energy Agency (IAEA), the dismantling of Iraq's arsenal of Weapons of Mass Destruction (WMD) and to maintain a monitoring programme to ensure that it is never rebuilt. SCR 687 takes note that Iraqi compliance will represent a step towards the goal of establishing in the Middle East a zone free from weapons of mass destruction, a concept we have consistently supported.

  UN Charter and Use of Force
  Lord Kennet
  asked Her Majesty's Government:

  Whether they accept the United States interpretation of international law which would allow it to attack Iraq in the absence of either an immediate threat to its security or a specific Security Council Resolution; and whether this indicates a change in the British Government's interpretation of the Charter of the United Nations. [HL590]

  Baroness Symons of Vernham Dean
  The Government's interpretation of the Charter of the United Nations has not changed. Any use of force requires to WA 60
  be justified under international law, notably the United Nations Charter. It is well established that, under the Charter, force may be used in self-defence or under the authority of the Security Council.

  British Indian Ocean Territory Citizens
  Lord Beaumont of Whitley
  asked Her Majesty's Government:

  Whether the Foreign Secretary's statement that he is exploring the possibility of granting British citizenship to all the citizens of the overseas territories includes the people of the British Indian Ocean Territory who were moved from Chagos Islands to Mauritius to make way for a United States military base. [HL604]

  Baroness Symons of Vernham Dean
  The Foreign Secretary's statement applies to all British Dependent Territory Citizens (BDTCs). In considering this matter further, the Government will take account of the unique circumstances of BDTCs from the British Indian Ocean Territory.

  International Court of Justice: Judgments
  Lord Monkswell
  asked Her Majesty's Government:

  Which countries have judgments of the International Court of Justice against them; and for each country what are the relevant judgments. [HL606]

  Baroness Symons of Vernham Dean
  There are about 63 judgments of the International Court of Justice. Copies of the UN Publication Summaries of Judgements, Advisory opinions and Orders of the International Court of Justice: 1948–1991, and of the Court's Annual Reports to the General Assembly for the following years are held in the House of Commons Library.

  UN Subscription Arrears
  Lord Monkswell
  asked Her Majesty's Government:

  Which countries have not paid their subscriptions to the United Nations; and for each country what is the outstanding amount due. [HL607]

  Baroness Symons of Vernham Dean
  According to the most recent complete data published by the UN, as at 31 December 1997, 85 member states owed a total of $474 million to the UN Regular Budget, and 170 member states owed $1,574 million to UN
  WA 61
  peacekeeping budgets. Complete data on the status of 1998 contributions are not yet available. The details are listed below.

  Member States with outstanding contributions in respect of 1997 and prior years to the UN Regular Budget at 31 December 1997

  US Dollars

  Afghanistan

  144,635

  Albania

  106,508

  Angola

  215,278

  Antigua and Barbuda

  71,508

  Argentina

  4,112,379

  Armenia

  1,406,762

  Azerbaijan

  1,872,225

  Belarus

  4,654,034

  Bhutan

  106,508

  Bosnia and Herzegovina

  973,857

  Brazil

  16,703,941

  Bulgaria

  766,857

  Burundi

  250,255

  Cambodia

  106,508

  Cape Verde

  279,997

  Central African Republic

  581,887

  Chad

  277,723

  Comoros

  606,890

  Congo

  215,278

  Costa Rica

  83,341

  Cuba

  354,093

  Democratic People's Republic of Korea

  350,097

  Democratic Republic of Congo

  106,508

  Djibouti

  160,376

  Dominica

  322,514

  Ecuador

  277,328

  El Salvador

  106,508

  Equatorial Guinea

  140,902

  Estonia

  838,235

  Gambia

  369,062

  Georgia

  2,202,468

  Ghana

  106,508

  Grenada

  314,556

  Guatemala

  319,952

  Guinea

  128,904

  Guinea Bissau

  284,635

  Guyana

  37,105

  Haiti

  354,045

  Honduras

  154,886

  Iran (Islamic Republic of)

  3,718,316

  Iraq

  7,188,218

  Israel

  3,857,817

  Kazakstan

  1,000,000

  Kenya

  103,324

  Kyrgyzstan

  453,977

  Latvia

  1,738,191

  Lesotho

  85,019

  Liberia

  767,629

  Lithuania

  1,413,999

  Madagascar

  81,124

  Mali

  51,772

  Mauritania

  74,459

  Mauritius

  106,508

  Morocco

  9,276

  Nicaragua

  261,586

  Niger

  144,454

  Panama

  77,013

  Paraguay

  106,508

  Qatar

  396,968

  Republic of Moldova

  1,209,917

  Rwanda

  196,464

  Saint Kitts and Nevis

  23,353

  Saint Vincent and Grenadines

  242,759

  Sao Tome and Principe

  407,229

  Seychelles

  282,546

  Sierra Leone

  188,935

  Solomon Islands

  177,835

  WA 62

  Member States with outstanding contributions in respect of 1997 and prior years to the UN Regular Budget at 31 December 1997

  US Dollars

  Somalia

  803,816

  Sudan

  107,813

  Surinam

  106,508

  Swaziland

  46,427

  Tajikistan

  1,931,815

  Togo

  232,968

  Trinidad and Tobago

  238,648

  Turkmenistan

  17

  Uganda

  36,512

  Ukraine

  17,661,894

  United Republic of Tanzania

  105,604

  United States of America

  373,239,953

  Uruguay

  426,032

  Uzbekistan

  2,140,917

  Vanuatu

  215,278

  Venezuela

  599,998

  Yemen

  224,390

  Yugoslavia

  10,642,874

  Total

  473,591,663

  Member States with outstanding contributions in respect of 1997 and prior years to UN peacekeeping budgets at 31 December 1997

  US Dollars

  United States of America

  939,730,922

  Ukraine

  207,583,065

  Russian Federation

  135,721,701

  Japan

  89,032,241

  Belarus

  50,381,334

  Poland

  12,209,317

  Brazil

  11,812,885

  Germany

  10,359,020

  Iran (Islamic Republic of)

  10,254,495

  France

  9,438,605

  Libyan Arab Jamahiriya

  5,519,961

  Uzbekistan

  5,432,654

  Italy

  5,315,133

  Kazakhstan

  5,165,323

  Azerbaijan

  4,539,503

  Yugoslavia

  4,228,918

  Georgia

  4,195,704

  Iraq

  4,186,627

  United Arab Emirates

  3,398,493

  Republic of Moldova

  3,135,365

  Croatia

  2,750,355

  Latvia

  2,587,218

  Indonesia

  2,267,199

  Spain

  2,124,198

  Turkey

  1,924,703

  Peru

  1,799,986

  Argentina

  1,719,558

  Armenia

  1,666,978

  Nigeria

  1,377,650

  Austria

  1,354,560

  Bulgaria

  1,303,480

  Netherlands

  1,285,780

  Kyrgyzstan

  1,236,109

  Turkmenistan

  1,236,109

  Democratic P. R. of Korea

  1,175,775

  Cuba

  1,158,424

  Lithuania

  1,095,458

  Estonia

  1,001,324

  Tajikistan

  985,503

  Syrian Arab Republic

  955,169

  Qatar

  942,899

  Belgium

  922,120

  China

  841,750

  Chile

  798,368

  Saudi Arabia

  785,658

  WA 63

  Member States with outstanding contributions in respect of 1997 and prior years to UN peacekeeping budgets at 31 December 1997

  US Dollars

  Greece

  713,212

  Ecuador

  688,979

  Venezuela

  658,339

  Guatemala

  601,785

  Trinidad and Tobago

  537,557

  Uruguay

  516,810

  Bosnia and Herzegovina

  462,734

  Czech Republic

  381,926

  Portugal

  375,619

  Gabon

  355,944

  Liberia

  329,817

  El Salvador

  318,183

  Dominican Republic

  310,346

  The Former Yugoslavia Republic of Macedonia

  300,483

  Bolivia

  298,972

  Mongolia

  295,494

  Romania

  291,060

  Israel

  268,072

  Congo

  260,126

  Cambodia

  256,149

  Honduras

  246,047

  Panama

  245,643

  Costa Rica

  237,608

  Nicaragua

  214,457

  New Zealand

  204,679

  Vietnam

  199,006

  Central African Republic

  198,744

  Equatorial Guinea

  196,576

  Madagascar

  192,337

  Sierra Leone

  191,947

  Mauritania

  191,862

  Yemen

  190,667

  Gambia

  178,843

  Republic of Korea

  178,092

  Democratic Republic of the Congo

  177,826

  Lebanon

  172,182

  Burundi

  167,349

  Comoros

  164,482

  Fiji

  154,277

  Djibouti

  151,907

  Vanuatu

  151,248

  Guinea

  149,584

  Niger

  147,794

  Sudan

  147,771

  Somalia

  145,588

  Burkina Faso

  143,709

  Saint Vincent and Grenadines

  142,229

  Chad

  142,123

  Sao Tome and Principe

  140,812

  Mexico

  139,380

  Cape Verde

  139,146

  Rwanda

  134,527

  Afghanistan

  133,863

  Guinea Bissau

  133,034

  Mali

  132,105

  Tunisia

  130,785

  Togo

  130,454

  Luxembourg

  130,347

  Maldives

  128,463

  United Republic of Tanzania

  128,363

  Algeria

  119,775

  Seychelles

  110,822

  Grenada

  105,224

  Solomon Islands

  100,722

  Belize

  96,777

  Senegal

  96,547

  Dominica

  89,986

  Bahrain

  82,163

  Marshall Islands

  81,049

  Thailand

  79,995

  Slovenia

  78,565

  Cameroon

  77,912

  WA 64

  Member States with outstanding contributions in respect of 1997 and prior years to UN peacekeeping budgets at 31 December 1997

  US Dollars

  Oman

  65,054

  Swaziland

  62,324

  Haiti

  58,816

  Bhutan

  53,835

  Kenya

  52,973

  Philippines

  52,882

  Saint Lucia

  48,215

  Papua New Guinea

  45,274

  CÔte d'Ivoire

  44,704

  Guyana

  44,375

  Ethiopia

  36,438

  Zimbabwe

  36,380

  Angola

  36,204

  Benin

  33,014

  Australia

  30,202

  Morocco

  29,367

  Bahamas

  28,794

  Iceland

  27,907

  Barbados

  27,046

  Singapore

  25,126

  Lesotho

  22,937

  Monaco

  22,425

  Albania

  21,069

  Samoa

  20,835

  Mozambique

  19,468

  Paraguay

  18,492

  Kuwait

  18,322

  Bangladesh

  17,587

  Sri Lanka

  17,383

  Antigua and Barbuda

  16,318

  Lao People's Democratic Republic

  14,951

  Uganda

  11,017

  Pakistan

  10,562

  Nepal

  10,465

  Malta

  10,365

  Malawi

  9,598

  Surinam

  9,513

  Andorra

  9,493

  Zambia

  8,654

  San Marino

  8,033

  Myanmar

  6,063

  Brunei Darussalam

  5,871

  Saint Kitts and Nevis

  5,570

  Ghana

  4,855

  Eritrea

  4,613

  Micronesia

  3,220

  Mauritius

  3,069

  Jamaica

  1,842

  Botswana

  1,213

  Palau

  950

  Namibia

  942

  Jordan

  190

  Norway

  40

  Total

  1,574,079,552

  Outstanding contributions in respect of 1998 dues to the UN Regular Budget as at 15 Janaury 1998

  Fifteen major contributors:

  USA

  297,727,256

  Japan

  189,093,100

  Germany

  50,929,603

  France

  68,292,675

  Italy

  56,724,775

  United Kingdom1

  53,141,600

  Russian Federation

  28,636,251

  Canada

  29,430,971

  Spain

  27,037,337

  Netherlands

  17,025,845

  WA 65

  Outstanding contributions in respect of 1998 dues to the UN Regular Budget as at 15 Janaury 1998

  Fifteen major contributors:

  Brazil

  15,921,637

  Australia

  15,460,437

  Sweden

  0

  Belgium

  11,525,835

  Republic of Korea

  9,729,096

  All other member states

  129,779,518

  Total

  1,000,455,936

  Note:

  1 The UK paid $26,251,950 of its 1998 Regular Budget subscription on 28 January.

  UN Resolutions
  Lord Monkswell
  asked Her Majesty's Government:

  Which countries are not in compliance with United Nations resolutions; and what are the brief details of those resolutions. [HL608]

  Baroness Symons of Vernham Dean
  The UN Security Council has adopted 1,152 resolutions, the General Assembly over 8,600. These are publicly available. The information requested in the Question could only be obtained at disproportionate cost.

  Northern Ireland: Abortion Law
  Lord Braine of Wheatley
  asked Her Majesty's Government:

  What aspects of the laws relating to abortion in Northern Ireland need clarifying and whether their desire to clear up the present uncertainty includes liberalising the law. [HL529]

  The Parliamentary Under-Secretary of State, Northern Ireland Office (Lord Dubs)
  The existing statute law in Northern Ireland is unsatisfactory. It simply prohibits illegal abortions but does not specify the grounds on which abortions can be legally performed. There is a lack of clarity with regard to who should decide on abortions and on what grounds High Court Judges and the Standing Commission on Human Rights have commented critically on this uncertainty.

  The Government have no plans to liberalise the law or to extend the Abortion Act 1967 to Northern Ireland. The Government recognise that this is a highly controversial and sensitive issue and wish to take a considered view before any decision on future action is taken. There would be full consultation with Northern Ireland elected representatives before any introduction of proposals for legislative change. Our strong preference would be for any legislation to be handled by a devolved administration or by way of a private Member's Bill from a Northern Ireland Member.

  Land Registration Act: Entry into Force
  Lord Aberdare
  asked Her Majesty's Government:

  When they anticipate that the provisions of Section 1 of the Land Registration Act 1997 will come into force under the terms of Section 5(2) of the Act. [HL540]

  The Lord Chancellor (Lord Irvine of Lairg)
  Section 1 of the Act, together with the associated parts of Section 4 and Schedules 1 and 2, will be brought into force on 1 April 1998 by the Land Registration Act 1997 (Commencement) Order 1997 (SI 1997/3036) which was made on 9 December 1997. The remaining provisions of the Act came into force on 27 April 1997.

  Lord Chancellor's Residence: Works of Art
  Lord Freyberg
  asked the Chairman of Committees:

  What paintings and other works of art will adorn the Lord Chancellor's refurbished residence, and from which national, Government and public collections will they be borrowed. [HL698]

  The Chairman of Committees (Lord Boston of Faversham)
  These loans have been arranged between the Lord Chancellor and the lending galleries and are not a matter for the House authorities.

  Defence Supplementary Estimate
  Lord Gregson
  asked Her Majesty's Government:

  What changes have been made to the Class 1 cash limits and the defence operating costs limit for 1997–98. [30412]

  The Minister of State, Ministry of Defence (Lord Gilbert)
  The Government have decided that, subject to parliamentary approval of the necessary Supplementary Estimate, an addition should be made to the defence budget to cover the additional costs of operations by UK forces in Bosnia in the current financial year. These costs are estimated to be £189 million. Some £11 million will be met from technical adjustments, leaving £178 million which will be met from the Reserve.

  A Spring Supplementary Estimate is, therefore, to be presented to Parliament to take on to Vote the additional provision of £178 million. The Supplementary estimate will also make adjustments between the defence operating costs programme (mostly Votes 1 and 2) and the defence equipment programme (Vote 3) to reflect the expected pattern of expenditure on the defence programme generally.

  Because of the adjustment between operating costs and the equipment programme, the additional funding will be drawn on to Class 1, Vote 3 and token increases of £1K will be taken on Votes 1 and 2. The cash limits on votes 1 and 2 will, however, be reduced and that on vote 3 increased by more than the amount of the

  WA 67
  additional funding to reflect the realignment. The cash limit changes will be as follows:

  £'000s

  Current cash

  Revised cash

  Class 1 Vote

  limit

  Change

  limit

  1

  10,096,130

  -3,786

  10,092,344

  2

  4,754,337

  -59,263

  4,695,074

  3

  6,112,530

  241,068

  6,353,598

  Total

  20,962,997

  178,019

  21,141,016

  The impact of these changes on the Ministry of Defence Operating Cost limit is as follows:

  £'000s

  Current cash

  Revised cash

  Class 1 Vote

  limit

  Change

  limit

  1

  10,090,598

  -3,786

  10,086,812

  2

  4,754,337

  -59,263

  4,695,074

  3

  735,976

  -1,720

  734,256

  Total

  15,580,911

  -64,769

  15,516,142

  Because the increase on the defence budget cash limit will be met from the Reserve, which is part of the Government Control total, it will not add to the planned total of public expenditure.

  Depleted Uranium
  The Countess of Mar
  asked Her Majesty's Government:

  What health and safety category has been allocated to materials using depleted uranium technology; what is the relevant EU legislation; and whether they will place in the Library of the House of Lords a copy of the health and safety regulations issued to civilian and military personnel concerning the proper use, handling and transportation of DU munitions and other materials in the United Kingdom. [HL432]

  Lord Gilbert
  Under the United Nations system of classification for dangerous goods, depleted uranium falls into Class 7, radioactive, as a material of low specific activity. The most relevant piece of EU legislation is Council Directive 80/836/Euratom, as amended by 84/467/Euratom, laying down basic safety standards for the protection of workers and the general public against the dangers arising from ionising radiation. This EU legislation was largely implemented in the UK by the Ionising Radiations Regulations 1985, a copy of which was placed in the Library of each House in that year. Other legislation contributed to full implementation of the Directive. A revised Directive, Directive 96/29 Euratom, which will repeal those of 1980 and 1984 with effect from 13 May 2000, was adopted on 13 May 1996. The Health and Safety Commission has recently agreed to the publication of a Consultative Document containing proposals for revising the Ionising Radiations Regulations 1985. Other relevant domestic legislation will be amended or augmented as necessary.
  WA 68
  Directive 80/1107/EEC on the protection of workers from risks related to exposure to chemical, physical and biological agents at work is also relevant. This Directive is implemented in Great Britain in part by the Control of Substances Hazardous to Health Regulations 1994. Because of its chemical toxicity, depleted uranium is subject to the provisions of these regulations as a substance hazardous to health.

  With regard to the safety advice issued within MoD concerning the safe handling and use of depleted uranium munitions, I refer the noble Countess to the Answer I gave in my letter of 2 February, subsequently published in the Official Report on 17 February, cols. 17–22. In addition, I have made arrangements to have placed in the Libraries of both Houses copies of Joint Service Publication 392, Instructions for Radiological Protection. Chapter 48 deals with radiological protection arrangements for uranium.

  The Countess of Mar
  asked Her Majesty's Government:

  Whether any British troops were exposed to any of the products of combustion from depleted uranium (DU) ammunition from friendly fire; contact with enemy tanks, other vehicles or equipment damaged by DU munitions; or other contamination created by disturbance of sand by atmospheric conditions and troop vehicle movements; and, if they were, what measures they are taking to monitor their health status. [HL473]

  Lord Gilbert
  Some British Service personnel may have come into contact with the products of combustion of depleted uranium during, or immediately following, the Gulf conflict. No specific measures are being taken to monitor their health, although some of them may have attended the MoD's Medical Assessment Programme, MAP. None of those veterans who have so far been examined by the MAP has to my knowledge displayed any symptoms consistent with exposure to depleted uranium.

  A very small number of British troops, who expressed concern that they might have inhaled DU dust during training in the Gulf before the start of hostilities, were subjected to Whole Body Monitoring in February 1991 by the Defence Radiological Protection Services, DRPS, at the Institute of Naval Medicine. This process failed to detect any DU contamination in these individuals.

  Vitamin B6
  The Countess of Mar
  asked Her Majesty's Government:

  To what extent their proposed restrictions on the retail sale of Vitamin B6 are consistent with the recent remarks of the Secretary of State for Health on Radio 4's Today programme about the need to end the concept of the "nanny state" and to provide consumers with the information they need about risks in order that they may make informed personal choices. [HL567]
  WA 69
  The Parliamentary Secretary, Ministry of Agriculture, Fisheries and Food (Lord Donoughue)
  The proposed limit of 10mg per daily dose applies to the level of Vitamin B6 in dietary supplements sold under food law. Such products will also carry a warning about the risk of harmful effects from consuming high doses of Vitamin B6 over extended periods. Higher dose products licensed as medicines for the treatment of specific clinical conditions will continue to be available from pharmacies and on prescription for those who need them. These arrangements will ensure that consumers have access to information on the risks associated with Vitamin B6 that will allow them to make an informed personal choice about its use.

  Vitamin B6: Dr. Dalton's Study
  Baroness Wharton
  asked Her Majesty's Government:

  Whether they intend to review their plans for restrictions on the retail sale of Vitamin B6 in the light of the observation on 3 February by Dr. K. Dalton that her study on Vitamin B6 was a preliminary communication. [HL610]

  Lord Donoughue
  The Government have no plans to review the proposed controls on the level of Vitamin B6 in dietary supplements sold under food law in the light of the observation made by Dr. K. Dalton.

  Vitamin B6: Representations to the COT
  Baroness Wharton
  asked Her Majesty's Government:

  How the Minister for Food Safety was able to determine which representations from scientists should be copied to the Secretariat of the Committee on Toxicity of Chemicals in Food, Consumer Products and the Environment (COT), and whether they will now make available to COT copies of all 10,200 representations received since July 1997. [HL611]

  Lord Donoughue
  Most of the representations received on the Government's proposed controls on Vitamin B6 in dietary supplements, many of which are in the form of standard letters, do not comment in detail on the scientific basis of the advice provided by the COT. The Chairman and members of the COT are already familiar with the criticisms of their review that are made in such representations. In these circumstances, there would be no benefit in copying all of the representations to the COT. Those representations which appear to present new information on the safety of Vitamin B6 and are supported by detailed scientific arguments have been copied to the COT secretariat as a matter of course.

  Agriculture Council, 16–17 February
  Lord Howell
  asked Her Majesty's Government:

  What was the outcome of the Agriculture Council held in Brussels on 16 to 17 February. [HL660]

  Lord Donoughue
  My right honourable friend the Minister of Agriculture, Fisheries and Food chaired the second meeting under the United Kingdom Presidency of the European Union Council of Agriculture Ministers on 16–17 February in Brussels. I represented the United Kingdom at that meeting.

  The Council had a presentation by the Agriculture Commissioner of the Commission's proposals for prices fixed under the Common Agricultural Policy (CAP) for the 1998/1999 year. These proposals were described by the Commissioner as broadly a standstill in present CAP support arrangements, pending the forthcoming negotiations on further reform of the CAP in the context of Agenda 2000. Ministerial colleagues in the Council commented on their key priorities within this set of proposals. My right honourable friend the Minister of Agriculture, Fisheries and Food agreed to take them forward as quickly as possible; that work will begin immediately.

  The Council also held a first debate on the Commission's proposals for reform of the tobacco regime, which also form an element of the Agenda 2000 strategy. On behalf of the United Kingdom, and with support from Sweden and Denmark, I expressed concern at the relatively modest nature of these reform proposals and urged more radical steps to reduce support for tobacco production in the Community, bearing in mind the inconsistency with EU efforts to limit tobacco consumption for health reasons. Detailed work on this proposal will now begin.

  The Council held a second full debate on proposed amendments to the EU banana regime in response to the recent findings of the WTO Appellate Body. My right honourable friend the Minister of Agriculture, Fisheries and Food concluded in the light of the debate that further detailed work should continue, and that the Council should resolve this issue quickly, both in order to meet WTO obligations and to give reassurance to EU and ACP banana growers about their futures.

  There was a further discussion in the Council of the Commission's proposals in respect of the Community's beef promotion scheme. Final agreement did not prove possible in view of the requirement to achieve unanimity on this proposal. My right honourable friend the Minister of Agriculture, Fisheries and Food undertook as Council President to consider the options for taking this proposal forward.

  The Commissioner gave the Council a full report on the exchanges he had had with the United States on the negotiation of an EU/US veterinary and phytosanitary equivalence agreement. The Council noted that there had been positive developments in recent contacts between the two sides, and expressed the hope that the terms of an agreement would be ready for endorsement by the Council at its March meeting.
  WA 71
  I expressed the concerns of the United Kingdom at the recent interruption to supplies of fish from Russian freezer vessels into the UK, in particular Scotland, and the risk this created to jobs in fish processing. The Commissioner undertook to carry out an urgent examination of the problem.

  Finally, the Council discussed the forthcoming OECD Agriculture Ministerial meeting in Paris in March, where consideration would be given to progress on agricultural reform over the last decade. Ministers in the Council debated the line which the European Union would take at this meeting. My right honourable friend the Minister of Agriculture, Fisheries and Food concluded that there should be co-ordination of the EU line in a High Level Group which will convene in Brussels next week for this purpose.

  Rent Comparisons
  Lord Dean of Beswick
  asked Her Majesty's Government:

  What are the average weekly rents currently being paid by tenants in:

  (a) council houses

  (b) housing associations; and

  (c) the private sector. [HL617]

  The Parliamentary Under-Secretary of State, Department of the Environment, Transport and the Regions (Baroness Hayman)
  The most recent information available on average rents in England is:

  £ per week

  (a) council tenants

  41.18 (at 30 April 1997)

  (b) housing association tenants

  46.74 (at 31 March 1997)

  (c) private tenants

  76.00 (April 1996 to March 1997 average)

  Council and housing association rents are from returns by local authorities and housing associations. The figure for the private rented sector is an estimate from the Survey of English Housing and, like all such estimates, is subject to sampling variability.

  Disabled Tax Class Vehicle Registrations
  Lord Morris of Manchester
  asked Her Majesty's Government:

  How many vehicles have been registered in each of the last five years in the disabled class for first registration of vehicles in the United Kingdom. [HL662]

  Baroness Hayman
  Statistics for the number of vehicles registered in each of the last five years in the disabled tax class are only available for Great Britain.

  Numbers for the last five calendar years are:

  1993: 69,200

  1994: 81,700

  1995: 94,600

  1996: 111,100

  1997: 122,100

  WA 72
  Lord Morris of Manchester
  asked Her Majesty's Government:

  What representations they have received from the Disabled Drivers' Association in regard to the fee for first registration of vehicles in the United Kingdom in the Disabled class. [HL666]

  Baroness Hayman
  The Disabled Drivers' Association have responded to the recent consultation exercise carried out by the Driver and Vehicle Licensing Agency. Their views have been taken into account and vehicles first registered in the disabled tax class will be exempt from the fee.

  Murder Statistics for Major Cities
  Lord Mason of Barnsley
  asked Her Majesty's Government:

  How many murders were committed in Glasgow, Cardiff, Liverpool, London and Belfast during the calendar years 1996 and 1997. [HL593]

  The Parliamentary Under-Secretary of State, Home Office (Lord Williams of Mostyn)
  The available information for Cardiff, Liverpool and London relates to recorded offences of homicide (i.e. offences of murder, manslaughter and infanticide) and has been provided by the appropriate police forces in England and Wales. In 1996, there were six homicide offences recorded in the Cardiff area, 14 recorded in the Liverpool City area and 144 recorded in the London area (covering the Metropolitan Police District and the City of London). There were 24 homicides recorded in Glasgow in 1996. There were 17 homicides recorded in Belfast in 1996 and 28 offences recorded in 1997.

  Comparable information for the cities other than Belfast is not yet available for 1997.

  Prisoners: Shackling
  Baroness Kennedy of The Shaws
  asked Her Majesty's Government:

  What steps they are taking to ensure that First Step Agencies within the prison system are observing the Prison Service's guidelines, in the light of the shackling of a 30 year-old pregnant woman from Brockhill Prison, Worcestershire, to a radiator at Leek Magistrates' Court. [HL594]

  Lord Williams of Mostyn
  The decision to secure the prisoner concerned to the radiator at the court stemmed from the lack of secure custody facilities there, but it was still wrong. The Prison Service and the escort contractor involved, Premier Prison Services, regret what happened. Premier's staff otherwise looked after the prisoner well while she was in their custody and the company has an excellent record of prisoner care generally.

  All escort contractors have been reminded in writing that prisoners should not be secured to fixed objects. In addition, the Prison Service will be reviewing with

  WA 73
  contractors their operational procedures to see whether, in the light of this case and the inadequate facilities at many courts, any further changes are necessary.

  Institutional Child Care Costs
  Lord Northbourne
  asked Her Majesty's Government:

  What is their estimate of the daily cost of providing high quality institutional child care for a nine-hour day for a child in its first, second, third, fourth and fifth years respectively. [HL645]

  The Minister of State, Department of Health (Baroness Jay of Paddington)
  There are no centrally collected statistics in the form requested on the cost of providing institutional child care for young children. This is due in part to the huge diversity in the types of provision available. The gross cost per child per annum (excluding capital charges) of day care, mainly for children in need, provided by social services departments in England in 1995–96, as estimated by the Chartered Institute for Public Finance and Accountancy, was £6,293. Families in receipt of Income Support or Family Credit would not be charged for this service. It has also been estimated by the Daycare Trust that in 1997 the typical childcare costs for parents for a full time place for a child under 5 at a private day nursery were between £70 and £180 per week.

  Health Improvement Strategy: Consultation
  Lord Morris of Manchester
  asked Her Majesty's Government:

  Whether they will ensure that the forthcoming Green Paper on public health strategy will contain a commitment to raising health standards of those over the age of 65; and whether specific health targets will be set for older people. [HL559]

  Baroness Jay of Paddington
  My right honourable friend the Secretary of State for Health launched the Government's Green Paper Our Healthier Nation with a statement in another place on 5 February. The Green Paper sets out a new strategy for health in England. The strategy's two key aims are:

  to improve the health of the population as a whole by increasing the length of people's lives and the number of years people spend free from illness; and

  to improve the health of the worst off in society and to narrow the health gap.

  Those two aims clearly apply to people over 65. The strategy also proposes four national targets for improving health. Two—for reducing accidents and suicides—are not couched in age-specific terms. The remaining two—for reducing mortality from heart disease and stroke and from cancers—are both proposed for people aged under 65. Death cannot be prevented indefinitely, so these targets have been set to recognise the fact that it is amongst younger people that the earliest signs of progress are likely to become apparent.
  WA 74
  The targets will therefore provide a sensitive early indication of progress overall. Efforts to reduce heart disease and cancer mortality will not be restricted only to those people aged under 65 years.

  My right honourable friend the Secretary of State for Scotland published the Green Paper Working Together For a Healthier Scotland on the same day. The Green Paper sets out proposals for improving the health of the population in Scotland.

  My right honourable friend the Secretary of State for Wales will shortly be publishing a consultation paper on a health strategy for Wales.

  The strategy for improving the health and social well-being of the people of Northern Ireland, Well Into 2000, was published in December 1997.

  Consultation on both the English and Scottish Green Papers runs to 30 April.

  Academic Awards: Jewish Holders
  Lord Tebbit
  asked Her Majesty's Government:

  Whether, in discussions between Department of Health officials and the Commission for Racial Equality concerning the number of academic awards granted to medical consultants from ethnic minorities, persons of Jewish origin are regarded as members of an ethnic minority. [HL614]

  Baroness Jay of Paddington
  People of Jewish origin are regarded as a racial group, and as such are protected by race relations legislation. However, the ethnic origin categories used by the Office for National Statistics do not include a separate Jewish category. Since these are the categories used for ethnic monitoring of the distinction awards scheme, it is not possible to identify the proportion of award holders who are Jewish. The discussions with the commission concerned a number of measures to be introduced in the 1998 awards round to secure better data, monitoring of outcomes, representation of ethnic minority consultants on awards committees, and some changes to the criteria for awards.

  Vitamin B6: Professor Beckett's Letter
  Earl Baldwin of Bewdley
  asked Her Majesty's Government:

  Whether the Chairman of the Committee on Toxicity of Chemicals in Food, Consumer Products and the Environment (COT) has yet replied to the letter which he recently received from Professor Arnold Beckett and 200 other scientists opposing his recommendations on the safety of Vitamin B6. [HL599]

  Baroness Jay of Paddington
  The Chairman of the Committee on Toxicity of Chemicals in Food, Consumer Products and the Environment (COT) has replied to Professor Beckett's letter. A copy of the reply has been placed in the Library.

  Vitamin B6: COT Power to Review Recommendations
  Earl Baldwin of Bewdley
  asked Her Majesty's Government:

  Whether the Chairman of the Committee on Toxicity of Chemicals in Food, Consumer Products and the Environment (COT) is able to review his previous recommendations on the safety of Vitamin B6 other than at the request of the Minister; and what steps would need to be taken to permit such a review to proceed. [HL598]

  Baroness Jay of Paddington
  The Chairman of the Committee on Toxicity of Chemicals in Food, Consumer Products and the Environment could initiate a review of the Committee's previous recommendations on Vitamin B6 if he were convinced that this was necessary.

  To do so he would direct the Secretariat to prepare papers for the Committee.

  Vitamin B6: Literature Considered by the COT
  The Countess of Mar
  asked Her Majesty's Government:

  In relation to their assertion on 30 October 1997 (WA 254) that the Committee on Toxicity of Chemicals in Food, Consumer Products and the Environment (COT) "made their recommendations after considering the totality of the published literature on Vitamin B6 toxicity", whether that "totality" refers to the 106 papers named in the list placed in the Library of the House or to the 10,000 papers referred to by Professor Arnold Beckett in a recent letter to the Chairman of the COT; and, if the former, whether the COT consider the remaining 9,894 papers irrelevant. [HL566]

  Baroness Jay of Paddington
  The Secretariat of the Committee on Toxicity of Chemicals in Food, Consumer Products and the Environment (COT) have not been provided with the search terms that Professor Beckett used and cannot directly verify his statement which indicated that "many address the issue of safety" and therefore presumably there are others that do not.

  The searches carried out by the Secretariat identified those papers critical to the COT's assessment.

  Health Authority Allocations
  Lord Dean of Beswick
  asked Her Majesty's Government:

  What are the present financial allocations to the regional health authorities and what these represent in per capita terms in each area. [HL616]

  Baroness Jay of Paddington
  As a result of the abolition of regional health authorities on 31 March WA 76
  1996, allocations for 1996–97 onwards have been made directly to health authorities (HAs).

  The most recent allocations relate to 1998–99 and the table shows general allocation and general allocation per weighted head of population for each HA in England. Allocations per head of weighted population are being equalised over time.

  1998–99 general allocations and allocation per weighted head of population for health authorities in England

  Health Authorities

  Allocation

  Allocation per weighted head

  £000s

  £

  Bradford

  229,200

  450

  Calderdale and Kirklees

  272,948

  459

  County Durham

  298,927

  448

  East Riding

  261,793

  454

  Gateshead and South Tyneside

  187,624

  460

  Leeds

  339,927

  457

  Newcastle and North Tyneside

  248,792

  462

  North Cumbria

  144,729

  463

  North Yorkshire

  318,712

  464

  Northumberland

  141,701

  461

  Sunderland

  147,757

  450

  Tees

  269,175

  451

  Wakefield

  152,248

  471

  Barnsley

  110,005

  440

  Doncaster

  138,789

  447

  Leicestershire

  378,967

  448

  Lincolnshire

  278,608

  463

  North Derbyshire

  167,949

  465

  North Nottinghamshire

  174,754

  452

  Nottingham

  286,648

  447

  Rotherham

  119,916

  450

  Sheffield

  271,140

  471

  South Derbyshire

  246,395

  459

  South Humber

  145,527

  477

  Bedfordshire

  224,367

  448

  Berkshire

  310,601

  446

  Buckinghamshire

  263,789

  460

  Cambridge and Huntingdon

  170,382

  454

  East Norfolk

  270,403

  461

  North West Anglia

  180,010

  451

  Northamptonshire

  252,747

  466

  Oxfordshire

  234,530

  454

  Suffolk

  280,922

  476

  Barking and Havering

  190,213

  468

  Barnet

  155,454

  491

  Brent and Harrow

  239,173

  496

  Camden and Islington

  251,800

  500

  Ealing, Hammersmith and Hounslow

  359,671

  479

  East and North Hertfordshire

  205,436

  471

  East London and the City

  366,867

  445

  Enfield and Haringey

  248,639

  471

  Hillingdon

  118,252

  464

  Kensington, Chelsea and Westminster

  212,220

  443

  North Essex

  370,351

  453

  Redbridge and Waltham Forest

  231,328

  484

  South Essex

  303,047

  450

  West Hertfordshire

  235,060

  476

  Bexley and Greenwich

  222,784

  493

  Bromley

  134,830

  471

  Croydon

  152,812

  464

  East Kent

  289,217

  463

  East Surrey

  182,949

  483

  East Sussex, Brighton and Hove

  372,547

  469

  Kingston and Richmond

  156,580

  496

  Lambeth, Southwark and Lewisham

  442,521

  466

  Merton, Sutton and Wandsworth

  322,343

  487

  WA 77

  1998–99 general allocations and allocation per weighted head of population for health authorities in England

  Health Authorities

  Allocation

  Allocation per weighted head

  £000s

  £

  West Kent

  406,653

  472

  West Surrey

  274,394

  489

  West Sussex

  342,161

  463

  Avon

  429,674

  466

  Cornwall and Isles of Scilly

  227,525

  465

  Dorset

  327,559

  477

  Gloucestershire

  242,648

  479

  Isle of Wight

  67,949

  504

  North and East Devon

  221,388

  474

  North and Mid Hampshire

  215,612

  480

  Portsmouth and South East Hampshire

  240,760

  468

  Somerset

  210,919

  467

  South and West Devon

  280,719

  469

  Southampton and South West Hampshire

  235,558

  464

  Wiltshire

  251,545

  481

  Birmingham

  506,138

  464

  Coventry

  142,724

  448

  Dudley

  134,546

  459

  Herefordshire

  72,096

  466

  North Staffordshire

  221,771

  451

  Sandwell

  146,261

  460

  Shropshire

  178,325

  458

  Solihull

  83,831

  472

  South Staffordshire

  239,424

  466

  Walsall

  120,285

  446

  Warwickshire

  218,459

  481

  Wolverhampton

  118,036

  456

  Worcestershire

  222,806

  475

  Bury and Rochdale

  183,925

  449

  East Lancashire

  253,100

  451

  Liverpool

  253,814

  465

  Manchester

  250,313

  473

  Morecambe Bay

  151,742

  485

  North Cheshire

  151,836

  482

  North West Lancashire

  234,450

  447

  Salford and Trafford

  224,171

  459

  Sefton

  145,852

  468

  South Cheshire

  292,831

  465

  South Lancashire

  138,391

  479

  St. Helen's and Knowsley

  162,218

  451

  Stockport

  126,212

  447

  West Pennine

  225,704

  446

  Residence

  1978

  1988

  1998

  No. 10 and No. 11 Downing Street

  The Prime Minister, Mr. Callaghan; the Chancellor of the Exchequer, Mr. Healey.

  The Prime Minister, Mrs. Thatcher; the Chancellor of the Exchequer, Mr. Lawson.

  The Prime Minister, Mr. Blair; the Chancellor of the Exchequer, Mr. Brown.

  Admiralty House

  The Secretary of State for Defence, Mr. Mulley; the Secretary of State for Northern Ireland, Mr. Mason; the Secretary of State for the Home Department, Mr. Rees.

  The Secretary of State for Northern Ireland, Mr. King; Lord Havers; the Attorney General, Sir Patrick Mayhew.

  The Deputy Prime Minister, Mr. Prescott; the President of the Board of Trade, Mrs. Beckett; the Secretary of State for Defence, Mr. Robertson.

  Carlton Gardens

  The Foreign Secretary, Mr. Owen.

  The Foreign Secretary, Sir Geoffrey Howe.

  The Foreign Secretary, Mr. Cook.

  Government House in Pimlico

  N/A

  The Home Secretary, Mr. Hurd.

  The Secretary of State for Northern Ireland; Dr. Mowlam.

  Bute House

  The Secretary of State for Scotland, Mr. Millan.

  The Secretary of Slate for Scotland, Mr. Rifkind.

  The Secretary of State for Scotland, Mr. Dewar.

  Hillsborough Castle

  N/A

  The Secretary of State for Northern Ireland, Mr. King.

  The Secretary of State for Northern Ireland. Dr. Mowlam.

  WA 78

  1998–99 general allocations and allocation per weighted head of population for health authorities in England

  Health Authorities

  Allocation

  Allocation per weighted head

  £000s

  £

  Wigan and Bolton

  273,219

  441

  Wirral

  163,688

  457

  England total

  22,895,307

  464

  Vitamin B6: MPs' Letter to the COT
  Baroness Wharton
  asked Her Majesty's Government:

  Whether the Chairman of the Committee on Toxicity of Chemicals in Food, Consumer Products and the Environment (COT) has yet replied to the letter which he recently received from 47 Members of the House of Commons opposing his recommendations on the safety of Vitamin B6. [HL612]

  Baroness Jay of Paddington
  The Chairman of the Committee on Toxicity of Chemicals in Food, Consumer Products and the Environment (COT) has asked the Secretariat to reply on his behalf. Letters were sent out to Members on 17 February 1998.

  Ministers' Official Living Accommodation
  Lord Marlesford
  asked Her Majesty's Government:

  Whether they will list those Ministers, by name and office, who occupied official living accommodation in London or elsewhere, giving in each case the address of the accommodation, in:

  (a) Janaury 1978;

  (b) January 1988; and

  (c) January 1998. [HL396]

  Lord McIntosh of Haringey
  The information requested is set out in the table below.
  WA 79

  Residence

  1978

  1988

  1998

  Chequers

  The Prime Minister, Mr. Callaghan.

  The Prime Minister, Mrs. Thatcher.

  The Prime Minister, Mr. Blair.

  Chevening

  N/A

  The Foreign Secretary, Sir Geoffrey Howe.

  The Foreign Secretary, Mr. Cook.

  Dorney Wood

  Information is not available.

  The Chancellor of the Exchequer, Mr. Lawson.

  The Chancellor of the Exchequer, Mr. Brown.

  In addition, part of Stormont House is made available to Northern Ireland Office Ministers while on duty.
  WA 80